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29 March 2011
Virginia Man Pleads Guilty to Child Pornography ChargesRead the Press Release
WASHINGTON – An Orange County, Va., man pleaded guilty yesterday in U.S. District Court for the Western District of Virginia to child pornography charges that originated in three different districts.
The guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Timothy J. Heaphy of the Western District of Virginia, U.S. Attorney Neil H. MacBride of the Eastern District of Virginia and U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida.
Anthony C. Jeffries, 24, pleaded guilty to one count of distributing child pornography and one count of possessing child pornography on charges contained in an indictment filed in the Western District of Virginia. In addition, Jeffries pleaded guilty to two separate one-count criminal informations originally filed in the Eastern District of Virginia and the Southern District of Florida charging him with distributing child pornography.
According to information presented in court, Jeffries assisted in running an online forum from his Orange County home that was dedicated to posting pictures and chatting about young girls. The defendant was responsible for one-fourth of the images available on the forum.
In February 2010, undercover FBI agents working in Richmond, Va., and Miami logged onto a peer-to-peer file sharing network and downloaded numerous images of child pornography from Jeffries. In June 2010, a search warrant was obtained and computer equipment was seized from the defendant’s Virginia home. A forensic examination of that equipment revealed thousands of image files, including images of young children engaged in sexual acts with adults.
At sentencing, Jeffries faces a maximum penalty of between five and 20 years in prison for each distribution count and 10 years for each possession count.
The investigation of the case was conducted by the Orange County Sheriff’s Office, the FBI, the Charlottesville Police Department, the University of Virginia Police Department and the High Technology Unit of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS).
Assistant U.S. Attorney Nancy Healey, Trial Attorney Chantel Febus with the Criminal Division’s CEOS and Special Assistant U.S. Attorney Richard Moore are prosecuting the case for the Western District of Virginia. Elizabeth Wu is prosecuting the case for the Eastern District of Virginia and Scott Edenfield is prosecuting the case for the Southern District of Florida.
United States and European Union Launch Formal Negotiations for an Agreement to Protect Personal Information Exchanged in the Context of Fighting Crime and TerrorismRead the Press Release
The following is a joint statement on behalf of the United States and the European Union:
On March 28, 2011, the European Union and the United States opened negotiations on an agreement to protect personal information exchanged in the context of fighting crime and terrorism. The negotiations will build on our long-standing, robust cooperation and agreements in this area. The United States and the European Union are committed to ensuring a high level of protection of personal information, while fighting crime and terrorism. The United States and the European Union are strongly determined to reach, without delay, an agreement that will advance our mutual goals.
U.S. Parole Commission Denies Gargano Application for Mandatory ParoleRead the Press Release
Chevy Chase, MD – On March 25, 2011, the United States Parole Commission denied parole to Henry Gargano, announced Commission Chairman Isaac Fulwood, Jr.
Gargano, who has been incarcerated for 43⅓ years on his current 204-year sentence, applied for release under Section 4206(d) of Title 18. That statute generally requires the Commission to release a prisoner who has served two-thirds or 30 years – whichever is less – on each sentence imposed against him, unless the Commission determines that the prisoner has seriously or frequently violated institution rules or that there is a reasonable probability that the prisoner will commit more crimes.
Gargano was convicted of murder while engaging in an October 27, 1967 bank robbery in Northlake, Illinois. Two police officers died and two others were wounded during that offense. On July 16, 1968, Gargano was sentenced to 199 years for the crime.
In October 10, 1975, he and several other inmates escaped from the federal penitentiary in Marion, Illinois. Before being recaptured, the escapees broke into a private home, tied up the occupants, and stole their car and firearms. Gargano was sentenced to another five years’ imprisonment for the escape. In addition to his actual escape, Gargano also attempted escape on several occasions including the day he was sentenced in 1968, when he was found in possession of a loaded pistol.
Gargano also has over ten years left to serve on his sentences for two prior offenses, a 1956 bank robbery and a 1964 escape. He was on parole from those sentences at the time he committed the 1967 bank robbery.
Chairman Fulwood noted, “As always, public safety is the Commission’s paramount concern. Mr. Gargano’s prison record, on top of his lack of remorse for the crimes that led to his imprisonment, showed that his release would be incompatible with public safety and that he must be denied parole under the statutory standard.”
For more information, please call Johanna Markind at (301) 492-5821 ext. 238.
San Diego Used Car Wholesaler Pleads Guilty to Tax EvasionRead the Press Release
WASHINGTON – Mohammad Jafar Nikbakht, aka Freydoon Nikbakht, pleaded guilty to tax evasion before U.S. District Court Judge John A. Houston in San Diego, the Justice Department and Internal Revenue Service (IRS) announced today. According to the indictment and other documents filed with the court, Nikbakht ran a series of lucrative auto dealerships in the greater San Diego area. Between 1998 and 2007, Nikbakht significantly under-reported income earned from these businesses. The government claims that Nikbakht defrauded the U.S. Treasury of more than $400,000 in income tax revenue through the course of these years.
According to indictment and other documents filed with the court, Nikbakht pleaded guilty to tax evasion for the year 2007. Nikbakht admitted that during that year he earned income through auto dealership operations, including through a dealership called Southern California Car Exchange. Nikbakht further admitted that he willfully failed to file his personal tax return and pay his taxes, and that he engaged in various acts to conceal income from the IRS. For example, Nikbakht admitted that he ran an auto wholesale operation under another dealer’s license and that he instructed the other dealer to write his income payment checks to the order of a third-party or to “cash”.
The government contends that even at his plea hearing, Nikbakht only admitted to a fraction of his misconduct. Additional evidence concerning Nikbakht’s 2007 tax evasion and his alleged tax crimes for prior years as well as allegations that Nikbakht obstructed justice in the tax investigation, will be presented before Judge Houston at a preliminary sentencing hearing scheduled for April 12, 2011.
Nikbakht faces up to five years in prison. In addition, the government is seeking a fine of at least $250,000 and an order requiring Nikbakht to pay full restitution to the IRS as well as the costs of his prosecution.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at www.usdoj.gov/tax/.
Nebraska Man Pleads Guilty and Is Sentenced to 102 Months in Prison for Engaging in a Child Exploitation EnterpriseRead the Press Release
WASHINGTON – Brandon Miller, 23, of Omaha, Neb., was sentenced today to 102 monthsin prison and a lifetime of supervised release after pleading guilty to engaging in a child exploitation enterprise announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney for the Western District of Pennsylvania David J. Hickton, and Homeland Security Investigations (HSI) Special Agent in Charge John Kelleghan.
Before sentencing, Miller pleaded guilty to one count of engaging in a child exploitation enterprise before U.S. District Court Judge Arthur A. Schwab in Pittsburgh. According to court documents and proceedings, Miller and others distributed images and videos of children being sexually abused to other members of an international group that had restricted membership and was formed on a social networking website. Members of the group distributed to one another thousands of sexually explicit images and videos of children, many of which graphically depicted prepubescent, male children, including some infants, being sexually abused and sometimes sodomized or subjected to bondage.
Seven co-defendants have previously pleaded guilty as a result of this investigation. Six have been sentenced to prison and the seventh co-defendant is scheduled to be sentenced in May 2011.
This case was investigated by HSI and the High Technology Investigative Unit of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS). Assistant U.S. Attorney Craig W. Haller and CEOS Trial Attorney Andrew McCormack prosecuted the case.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov
Los Angeles Woman Pleads Guilty to Participating in a Medicare Fraud Scheme Using Fraudulent Medical Clinics and Stolen Doctor Identities to Defraud Medicare of More Than $6.2 MillionRead the Press Release
WASHINGTON— A Los Angeles woman has pleaded guilty to using fraudulent medical clinics and the stolen identities of physicians to defraud Medicare of more than $6.2 million, the Departments of Justice and Health and Human Services (HHS) announced.
Carolyn Ann Vasquez, 46, pleaded guilty yesterday before U.S. District Judge Terry J. Hatter Jr. in the Central District of California. Vasquez admitted that from 2007 to 2008, she conspired with others to use a series of fraudulent Los Angeles-area medical clinics to defraud Medicare. Vasquez admitted that her co-conspirators used the identities and Medicare provider numbers of physicians who both worked and did not work at the clinics to submit false claims to Medicare for reimbursement for services the physicians did not perform and for power wheelchairs, medical equipment and diagnostic tests that the physicians did not order or prescribe. According to court documents, physician assistants recruited to work at the clinics by Vasquez and working at her direction performed these services and prescribed and ordered the wheelchairs, medical equipment and diagnostic tests.
According to court documents, Vasquez told the physicians she recruited that they would be the medical directors of the clinics, but that if they did not want to work full time, the clinics would hire physician assistants. Vasquez assisted the physicians in obtaining Medicare provider numbers and entering into management agreements that gave Vasquez’s co-conspirators authority to operate and manage the clinics in exchange for 75 percent of the reimbursement payments the physicians received from Medicare.
According to court documents, Vasquez’s involvement in the recruitment of the physicians gave her access to their personal and Medicare information, which Vasquez stole to further the fraud scheme at the medical clinics. Vasquez admitted that in approximately 2007, a physician contacted her about a job at one of the fraudulent medical clinics, but the physician decided not to accept the job. Nevertheless, Vasquez’s co-conspirators printed prescription pads with the physician’s name and Medicare provider number on them. Vasquez admitted that she instructed a physician assistant working at one of the fraudulent medical clinics to use the prescription pads to write fraudulent prescriptions and medical documentation for diagnostic tests, power wheelchairs and other medical equipment in the physician’s name even through Vasquez knew that the physician did not work at the clinic. Vasquez admitted that as a result of her conduct, Medicare was defrauded of approximately $6,268,899.
At sentencing, scheduled for July 11, 2011, Vasquez faces a maximum penalty of 10 years in prison and a $250,000 fine.
According to information contained in court documents in this case, Vasquez pleaded guilty in 1993 to participating in a health care fraud scheme. According to court documents, Vasquez and others used telemarketing or "boiler room" schemes to defraud government-funded health care benefit programs of approximately $41 million.
The guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney André Birotte Jr. for the Central District of California; Tony Sidley, Assistant Chief of the California Department of Justice, Bureau of Medi-Cal Fraud and Elder Abuse; Glenn R. Ferry, Special Agent-in-Charge for the Los Angeles Region of the HHS Office of Inspector General (HHS-OIG); and Steven Martinez, Assistant Director in Charge of the FBI’s Los Angeles Field Office.
The case is being prosecuted by Trial Attorney Jonathan T. Baum of the Criminal Division’s Fraud Section. Former Special Trial Attorney Joseph Hudzik participated in the prosecution. The case is being investigated by the FBI.
The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California. The Medicare Fraud Strike Force operations are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009 between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.
Since their inception in March 2007, strike force operations in nine districts have charged 1,000 defendants who collectively have falsely billed the Medicare program for more than $2.3 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about HEAT, go to: www.stopmedicarefraud.gov .
Justice Department Settles Americans with Disabilities Act Lawsuit with Virginia’s Inova Health SystemRead the Press Release
WASHINGTON – The Justice Department has reached a settlement with Inova Health System to ensure effective communication with individuals who are deaf or hard of hearing in the provision of medical services. The agreement, under the Americans with Disabilities Act (ADA) and the Rehabilitation Act, resolves a complaint that Inova failed to provide sign language interpreters to an expectant mother and others who are deaf and need interpreters to communicate effectively with health care providers.
The department’s lawsuit, filed yesterday with a consent decree in the U.S. District Court for the Eastern District of Virginia, alleged that Inova Health System violated the ADA and the Rehabilitation Act by failing to provide appropriate auxiliary aids and services, including sign language interpreter services, to deaf individuals at Inova Fairfax Hospital. Because of the hospital’s failure to provide sign language interpreter services, deaf individuals were denied the benefit of effective communication with hospital staff, the opportunity to effectively participate in medical treatment decisions, and the full benefit of health care services provided by Inova Fairfax Hospital, according to the complaint.
“The ADA protects the right of individuals who are deaf or hard of hearing to be able to access medical services, and this settlement is the latest example of the Justice Department’s unwavering commitment to enforcing the ADA,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “This settlement also demonstrates Inova Health System’s commitment to provide effective communication to people who are deaf or hard of hearing.”
“This settlement shows that Inova and the government share the same goal – making sure that deaf and hard of hearing patients can communicate with their doctors, especially at critical moments in their medical care,” said Neil H. MacBride, U.S. Attorney for the Eastern District of Virginia.
The consent decree, which must be approved by the district court, requires Inova Health System to pay $95,000 to aggrieved individuals and a $25,000 civil penalty; provide training to hospital staff on the requirements of the ADA and the Rehabilitation Act; and adopt specific policies and procedures to ensure that auxiliary aids and services are promptly provided to patients or companions who are deaf or hard of hearing. Inova Health System has also separately agreed to pay a total of $25,000 to two other aggrieved individuals.
The ADA and Rehabilitation Act prohibit discrimination against individuals with disabilities by hospitals. Among other things, the ADA requires doctors, hospitals and other health care providers to provide equal access to patients and companions who are deaf or hard of hearing. When medical services involve important, lengthy or complex oral communications with patients or companions, hospitals are generally required to provide qualified sign language interpreters and other auxiliary aids, free of charge, to individuals who are deaf, are hard of hearing or have speech disabilities. The appropriate auxiliary aid to be provided depends on a variety of factors, including the nature, length and importance of the communication; the communication skills and knowledge of the individual who is deaf or hard of hearing; and the individual’s stated need for a particular type of auxiliary aid.
Those interested in finding out more about this settlement or hospitals’ effective communication obligations under the ADA may call the Justice Department’s toll-free ADA information Line at 800-514-0301 or 800-514-0383 (TDD), or access its ADA website atwww.ada.gov . ADA complaints may be filed by email to [email protected] .
Justice Department Reaches Settlement with Dean Foods CompanyRead the Press Release
WASHINGTON – The Department of Justice announced today that it has reached a settlement with Dean Foods Company that requires Dean to divest a significant milk processing plant in Waukesha, Wis., and related assets that it acquired from the Foremost Farms USA Cooperative, including the Golden Guernsey brand name. The proposed settlement also requires that Dean notify the department before it makes any future acquisition of milk processing plants for which the purchase price is more than $3 million. State attorneys general from Illinois, Michigan and Wisconsin joined in the department’s settlement. In addition, the attorney general for the state of Michigan filed a separate settlement to address competitive concerns regarding school milk in that state. The department said that the divestitures and settlement terms will restore competition in the sale of milk to schools, grocery stores, convenience stories and other retailers in Illinois, Michigan and Wisconsin.
The department’s Antitrust Division and state attorneys general from Illinois, Michigan and Wisconsin, filed a proposed settlement in U.S. District Court for the Eastern District of Wisconsin in Milwaukee. If approved by the court, the settlement would resolve the civil antitrust lawsuit filed by the department and the state attorneys general on Jan. 22, 2010, and would resolve the lawsuit’s competitive concerns.
“The proposed settlements restore competition so that school children and consumers in Illinois, Wisconsin and Michigan, will pay lower prices for their milk,” said Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The divestiture of a significant milk processing plant and the provision that requires Dean to notify the department of future milk plant acquisitions will ensure that competition remains in this important industry.”
In April 2009, Dean acquired Foremost’s Consumer Products Division, including its dairy processing plants in Waukesha and De Pere, Wis. The department learned of the transaction, which was not required to be reported under the premerger notification law, shortly after it was completed. After investigating the acquisition, the department and the state attorneys general filed a lawsuit alleging that Dean’s acquisition would eliminate substantial competition between the two companies in the sale of milk to schools, grocery stores, convenience stores and other retailers, in Illinois, Michigan and Wisconsin.
Given its size, location and distribution network, the department determined that the divestiture of the Waukesha dairy plant addressed the competitive concerns in Illinois and Wisconsin. The Waukesha plant is an efficient dairy processing plant that can serve milk retailers and schools in Milwaukee, Green Bay and Chicago, with approximately 92 percent of the population affected by the merger living within the plant’s service area.
Dean is a Delaware corporation with its principal place of business in Dallas. It is one of the largest food and beverage producers in the United States, with revenues of approximately $12 billion in 2010. Dean’s Dairy Group is the country’s largest processor and distributor of milk and other dairy products.
Foremost Farms is a member-owned business association headquartered in Baraboo, Wis., owned by approximately 2,300 farmers located in seven states. In 2008, its Consumer Products Division had net sales of $233.7 million.
The proposed settlement, along with the department’s competitive impact statement, will be published in the Federal Register, as required by the Antitrust Procedures and Penalties Act. Any person may submit written comments regarding the proposed final judgment within 60 days of its publication to Joshua H. Soven, Chief, Litigation I Section, Antitrust Division, U.S. Department of Justice, 450 5th Street, N.W., Suite 4100, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the court may enter the Final Judgment upon a finding that it serves the public interest.
Federal Court Shuts Down Three Alabama Tax PreparersRead the Press Release
WASHINGTON - A federal court has permanently barred John Lewis, Artels James and Perry Wright from preparing federal tax returns for others, the Justice Department announced today. The civil injunction order was entered by U.S. Judge Virginia Emerson Hopkins for the Northern District of Alabama.
The court found that the three men, working under the trade name “Tax World” in Birmingham, Ala., regularly and repeatedly prepared federal tax returns using at least one of three schemes to generate erroneously large tax refunds for their customers. According to the court, in two of the schemes they prepared tax returns with false or overstated claims for the earned income tax credit, and in the third scheme they created fictitious business deductions that falsely reduced their customers’ tax liabilities. The court also found that Lewis, James and Wright failed to identify themselves properly on the returns they prepared under the “Tax World” business name.
The court ordered Lewis, James and Wright to present a copy of the injunction order to each of their customers since Jan. 1, 2008, and to produce a list of their customers to the government. The court also stated that a failure to obey the order may be punished by criminal contempt.
In the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop tax fraud promoters and preparers of false tax returns. Information about these cases is available on the Justice Department website: www.justice.gov/tax/taxpress2011.htm.
FDA Chemist and Son Charged with Trading on Inside InformationRead the Press Release
WASHINGTON – A Food and Drug Administration (FDA) chemist and his son were arrested in Maryland today in connection with an alleged $2.27 million insider trading scheme, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney for the District of Maryland Rod J. Rosenstein; James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office; and Elton Malone, Special Agent in Charge, Department of Health and Human Services, Office of the Inspector General (HHS-OIG), Office of Investigations, Specials Investigations Branch.
A criminal complaint unsealed today in the District of Maryland charges Cheng Yi Liang, 57, and his son, Andrew Liang, 25, both residents of Gaithersburg, Md., with conspiracy to commit securities and wire fraud, securities fraud and wire fraud relating to their trading in the securities of five companies: Clinical Data Inc., Vanda Pharmaceuticals Inc., Progenics Pharmaceuticals Inc., Middlebrook Pharmaceuticals Inc. and Momenta Pharmaceuticals Inc. They were both arrested at their residence this morning and made their initial appearances in U.S. District Court in Greenbelt, Md. Law enforcement agents executed four search warrants today in connection with the investigation.
“Cheng Yi Liang was entrusted with privileged information to perform his job of ensuring the health and safety of his fellow citizens,” said Assistant Attorney General Breuer. “According to the complaint, he and his son repeatedly violated that trust to line their own pockets. Insider trading is an insidious crime. Together with our law enforcement partners, we will continue to root out corruption in our securities markets at every level. Our use of innovative investigative tools like the security software used in this case will provide an additional deterrent the next time someone sits in front of a computer and thinks about committing a crime.”
“It is unacceptable for any government employee to take confidential information and use it for personal gain,” said U.S. Attorney Rosenstein.
“Those in positions of trust, who have access to privileged and valuable information are expected to follow the law,” said Assistant Director in Charge McJunkin of the FBI’s Washington Field Office. “The charges today represent long hours and hard work by the Special Agents and investigators who are tasked with enforcing laws and regulations designed to ensure the fair operation of our financial markets.”
“Profiting based on sensitive, insider information – as Liang is charged with today – is not only illegal, but taints the image of thousands of hard-working government employees,” said Special Agent in Charge Malone of HHS-OIG Special Investigations Branch. “We will continue to insist that federal government employee conduct be held to the highest of standards.”
According to court documents, Cheng Yi Liang has been employed as a chemist since 1996 at the FDA’s Office of New Drug Quality Assessment (NDQA). Through his work at NDQA, Cheng Yi Liang had access to the FDA’s password protected internal tracking system for new drug applications, known as DARRTS. FDA utilizes DARRTS to manage, track, receive and report on new drug applications. The complaint alleges that by accessing DARRTS, and through other unauthorized means, Cheng Yi Liang was able to review confidential non-public documents or inside information, relating to whether and when certain drug applications would be approved.
The complaint alleges that from approximately November 2007 through March 2011, Cheng Yi Liang and Andrew Liang profited from the inside information by repeatedly trading in securities issued by companies with pending drug applications, allegedly reaping illicit profits of more than approximately $2.27million. According to court documents, the trading was executed in accounts held in the name of Andrew Liang, as well as several accounts in the names of four different nominees. The proceeds from the Liangs’ insider trading were then transferred to various bank and brokerage accounts benefitting the father and son.
According to the complaint, on Jan. 6, 2011, HHS-OIG installed software on Cheng Yi Liang’s work computer, allowing it to collect screen shots from that computer, which revealed Liang was accessing the secure DARRTS database to review information related to a pending drug application submitted by Clinical Data Inc. for an anti-depressant drug called Viibryd. In one instance on Jan. 18, 2011, the software captured information that showed Liang accessed the database and reviewed an internal FDA document recommending approval of Viibryd. The complaint alleges that within minutes, several accounts controlled by Liang and his son purchased 4,875 shares of Clinical Data. Altogether, the defendants, through various accounts which they controlled, acquired 48,875 shares of Clinical Data before Viibryd’s approval was announced on Jan. 21, 2011, and subsequently sold their entire position for a profit of more than $379,000.
The complaint also alleges that Cheng Yi Liang and Andrew Liang traded in advance of a May 6, 2009, announcement by Vanda Pharmaceuticals Inc., that the FDA had approved its drug Fanapt. Utilizing Andrew Liang’s account and several nominee accounts, the Liangs allegedly made a nearly 800 percent profit, netting more than $1 million.
As described in the complaint, the defendants used the proceeds from the scheme to pay various personal expenses, including purchasing cars, paying for travel and paying credit cards bills.
The maximum penalty for conspiracy to commit securities and wire fraud is five years in prison and a fine of $250,000, or twice the gross gain from the offence. The maximum penalty for wire fraud is 20 years in prison and a fine of $250,000, or twice the gross gain from the offence. The maximum penalty for securities fraud is 20 years in prison and a fine of $5 million for each count.
A criminal complaint is merely an accusation, and a defendant is presumed innocent unless proven guilty in a court of law.
In a related action, the Criminal Division’s Asset Forfeiture and Money Laundering Section (AFMLS) filed a civil complaint in the District of Maryland for forfeiture of proceeds from and property involved in the insider trading scheme, specifically, seven brokerage accounts, two bank accounts and two pieces of real property. Also, the Securities and Exchange Commission (SEC) today filed a civil enforcement action against Cheng Yi Liang in the District of Maryland.
This case is being prosecuted by Trial Attorneys Kevin Muhlendorf and Thomas Hall of the Criminal Division’s Fraud Section, Assistant U.S. Attorney David Salem for the District of Maryland, and AFMLS Senior Trial Attorney Pamela J. Hicks. The case was investigated by the FBI’s Washington Field Office, the HHS-OIG and the Market Abuse Unit of the SEC’s Enforcement Division. The investigation is ongoing.
This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the task force visit: www.stopfraud.gov .
California Man Convicted of Conspiracy and Violating the Clean Air Act by Improperly Handling AsbestosRead the Press Release
WASHINGTON – A Santa Clarita, Calif., resident was convicted today of five environmental charges related to the improper renovation of a San Fernando Valley, Calif., apartment complex – work that caused asbestos to be released into the complex and the surrounding community.
Following a two-week trial in U.S. District Court, Charles Yi, 45, was found guilty of five felony offenses, including conspiring to violate the Clean Air Act.
The jury also convicted Yi of failing to notify the Environmental Protection Agency (EPA) and the South Coast Air Quality Management District about a renovation containing asbestos, failing to provide a properly trained person during a renovation containing asbestos, failing to properly remove asbestos and failing to properly dispose of asbestos wastes.
Yi faces a maximum sentence of 25 years in federal prison when he is sentenced on June 6, 2011, by U.S. District Judge Percy Anderson.
Yi was the owner of the now-defunct Millennium Pacific Icon Group, which owned the Forest Glen apartment complex, a 204-unit complex in Winnetka, Calif., that was being converted into condominiums in 2006. Knowing that asbestos was present in the ceilings of apartments in the Forest Glen complex, Yi and his co-conspirators hired a group of workers who were not trained or certified to conduct asbestos abatements. The workers scraped the ceilings of the apartments without knowing about the asbestos and without wearing any protective gear. The illegal scraping resulted in the repeated release of asbestos-containing material throughout the apartment complex and the surrounding area because Santa Ana winds were blowing during the time of the illegal work. After the illegal asbestos abatement was shut down by an inspector from the South Coast Air Quality Management District, the asbestos was cleaned up at a cost of approximately $1.2 million.
“Mr. Yi knowingly violated federal laws that set standards for proper disposal of asbestos and placed the workers that he hired at an unacceptable risk of exposure,” said Assistant Attorney General Ignacia S. Moreno for the Environment and Natural Resources Division. “As this conviction shows, we will aggressively prosecute those who deliberately ignore the nation’s Clean Air Act.”
The federal Clean Air Act requires those who own or supervise the renovation of buildings that contain asbestos to adhere to certain established work practice standards. These standards were created to ensure the safe removal and disposal of the asbestos and the protection of workers.
“Exposure to asbestos can be fatal,” said Nick Torres, Special Agent in Charge of EPA’s criminal enforcement program in California. “The defendant knew his operation produced waste material that contained asbestos and, despite being told by inspectors to stop removing it, the illegal asbestos removal continued. Today’s conviction by a jury shows that the American people will not tolerate those who put illegal financial gain ahead of their obligation to obey the law.”
Previously in this case, two co-conspirators pleaded guilty.
John Bostick, 40, of Santa Clarita, who was the vice president of Millennium Pacific Icon Group, pleaded guilty on February 23, 2011, to conspiring to violate the Clean Air Act. Bostick, who faces a maximum sentence of five years in federal prison, is scheduled to be sentenced by Judge Anderson on May 2, 2011.
On June 14, 2010, Joseph Yoon, 33, of Studio City, Calif., who was the project manager on the Forest Glen conversion, pleaded guilty to conspiracy to violate the Clean Air Act. Yoon, who is scheduled to be sentenced by Judge Anderson on April 25, 2011, faces a maximum sentence of five years in federal prison.
The jury that convicted Yi on the five counts today also acquitted Yi of one count of failing to inspect for asbestos prior to conducting an asbestos renovation.
The case against Yi, Bostick and Yoon was investigated by the EPA’s Office of Criminal Enforcement, the California South Coast Air Quality Management District and the California Department of Toxic Substances Control. The case is being prosecuted by Assistant U.S. Attorney Bayron T. Gilchrist of the Environmental Crimes Section and Senior Trial Attorney David P. Kehoe of the U.S. Justice Department’s Environmental Crimes Section of the Environment and Natural Resources Division.
28 March 2011
Former Owner of Illinois Technology Company Pleads Guilty in Multi-State Scheme to Defraud the Federal E-Rate ProgramRead the Press Release
WASHINGTON – A former owner of an Illinois-based technology company has pleaded guilty to participating in a conspiracy to defraud the federal E-Rate program, the Department of Justice announced today. Tyrone Pipkin was originally charged in U.S. District Court in New Orleans on Nov. 18, 2010, for his role in the conspiracy to defraud the E-Rate program.
Pipkin, a former co-owner of Global Networking Technologies Inc. (GNT), pleaded guilty today in U.S. District Court in New Orleans to conspiring to defraud the E-Rate program by providing bribes and kickbacks to school officials in multiple states. The department said that Pipkin, who acted on his own behalf and on behalf of Computer Training Associates and GNT, participated in the conspiracy beginning on or about December 2001 through September 2005. According to the court document, Pipkin participated in the conspiracy to provide bribes and kickbacks to school officials and employees responsible for the procurement of Internet access services at certain schools in Arkansas, Illinois and Louisiana. In return, those individuals ceded control of the E-Rate competitive bidding process to Pipkin and his co-conspirator, ultimately allowing them to ensure E-Rate contracts at these schools were awarded to their companies.
The schools and school districts affected by the conspiracy are: in Arkansas - Gould and Holly Grove public school districts; in Illinois - Antioch Center, Fairfield Center, Ingleside Center, St. Mary’s Center, Waukegan Center, Zion Center and Niles Terrace Center; and in Louisiana - All Saints School, St. Augustine High School, St. David School and St. Monica School.
The E-Rate program was created by Congress in the Telecommunications Act of 1996, and is administered by the Universal Service Administrative Company, under the oversight of the Federal Communications Commission (FCC). The program provides subsidies to economically disadvantaged schools and libraries. Depending on the financial needs of the applicant schools, the program pays 20 to 90 percent of the cost for Internet access and telecommunications services, as well as internal computer and communications networks.
As a result of the Antitrust Division’s investigation into fraud and anticompetitive conduct in the E-Rate program, including today’s plea, a total of seven companies and 22 individuals have pleaded guilty, been convicted at trial or entered civil settlements. Those companies and individuals have been sentenced to pay criminal fines and restitution totaling more than $40 million. Fifteen individuals have been sentenced to serve jail time.
Pipkin is charged with conspiracy, which carries a maximum penalty of five years in prison and a $250,000 criminal fine for individuals. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either amount is greater than the statutory maximum fine.
The plea announced today resulted from an investigation by the Department of Justice Antitrust Division’s Dallas Field Office, the FBI’s Dallas Field Office and the FCC’s Office of Inspector General, with assistance from the U.S. Attorney’s Office for the Eastern District of Louisiana. Anyone with information concerning violations of the E-Rate program is urged to call the Antitrust Division’s Dallas Field Office at 214-661-8600 or visit www.justice.gov/atr/contact/newcase.htm.
Federal Court Shuts Down Missouri Tax Preparer Who Promoted Tax ScamRead the Press Release
WASHINGTON – A federal court has permanently barred Gerald A. Poynter II of Kansas City, Mo., from preparing federal tax returns for others and from promoting a fraudulent tax scam, the Justice Department announced today.
The court found that Poynter, who uses the business name “Jerry Love Ministries” prepares false Internal Revenue Service (IRS) forms to help his customers claim fraudulent tax refunds based on phony reporting of large income tax withholding. The court order states that Poynter’s scheme is a version of the repeatedly rejected “redemption” scheme used by tax defiers to evade tax obligations or obtain wrongful financial benefits. According to the court, proponents of that scheme claim that the U.S. government is in possession of money rightfully owned by taxpayers. The court found that Poynter told his customers that he could recover that money for them for a fee, and that he then generated fraudulent IRS forms to support false tax refund claims on their behalf.
According to the court, Poynter helped at least 165 customers make fraudulent refund claims totaling more than $64 million. The IRS catches the vast majority of false “redemption” claims, and civil and criminal penalties for taxpayers who file such claims can be severe.
The IRS recently advised taxpayers to beware of tax scams like return preparer fraud. In the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions against tax-fraud promoters and dishonest tax return preparers. Information about these cases is available on the Justice Department website .
California Man Pleads Guilty and Is Sentenced to 7 Years in Prison for Conspiracy to Distribute and Receive Child PornographyRead the Press Release
WASHINGTON – Paul Schwartz, 49, of Lathrop, Calif., was sentenced today to sevenyears in prison after pleading guilty to conspiracy to distribute and receive child pornography, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney for the Western District of Pennsylvania David J. Hickton, and Homeland Security Investigations (HSI) Special Agent in Charge John Kelleghan.
Before sentencing, Schwartz pleaded guilty to one count of conspiracy to distribute and receive child pornography before U.S. District Court Judge Arthur A. Schwab. According to court documents and proceedings, Schwartz and others distributed images and videos of children being sexually abused to other members of an international group that had restricted membership and was formed on a social networking website. Members of the group distributed to one another thousands of sexually explicit images and videos of children, many of which graphically depicted prepubescent, male children, including some infants, being sexually abused and sometimes sodomized or subjected to bondage.
This case was investigated by HSI and the High Technology Investigative Unit of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS). Assistant U.S. Attorney Craig W. Haller and CEOS Trial Attorney Andrew McCormack prosecuted the case.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov
25 March 2011
Two Russell County, Ala., Sheriff’s Detectives Indicted for Assaulting a Man in CustodyRead the Press Release
WASHINGTON – The Justice Department announced today the arrest of Russell County Sheriff’s Office Detectives Kirby Dollar, 37, and Timothy Watford, 42. A federal grand jury in Montgomery, Ala., returned an indictment on March 22, 2011, charging Dollar and Watford with civil rights offenses related to their assault of a man in custody on Nov. 26, 2010.
If convicted, the defendants face maximum penalties of 10 years in prison on the civil rights charges.
The charges set forth in an indictment are merely accusations and the defendants are presumed innocent until proven guilty.
The case is being investigated by the Mobile, Ala., Division of the FBI – Montgomery Office . The case is being prosecuted by Assistant U.S. Attorney Nathan D. Stump of the Middle District of Alabama and Civil Rights Division Trial Attorney Benjamin J. Hawk.
Statement of the Attorney General on the Retirement of Bureau of Prisons Director Harley LappinRead the Press Release
WASHINGTON – The Attorney General made the following statement today:
During my tenure as both Attorney General and Deputy Attorney General, it has been a privilege to work closely with Director Harley Lappin. For more than a quarter of a century, including eight years as Director, his service to the Bureau of Prisons has helped improve public safety, strengthen our corrections systems, and advance the Justice Department’s most critical goals.
Throughout his career, Director Lappin has lent his invaluable insights and expertise to address prison overcrowding and expand prisoner development and rehabilitation programs. He has worked tirelessly to provide people who have committed crimes with the job skills and educational opportunities necessary to make positive contributions once they reenter our communities. Despite growing demands and unprecedented public safety, national security, and budgetary challenges, he has consistently found ways to reduce costs and increase efficiency. In addition to acting as a sound steward of taxpayer dollars, he has also served as an example of integrity and professionalism.
I am grateful for Director Lappin’s wise counsel, as well as his dedication to the Justice Department. And I am certain that, for years to come, the Bureau of Prisons and the American people will continue to benefit from his enduring contributions.
Miami Doctor Sentenced to 24 Months in Prison for Role in $37 Million Medicare Fraud Scheme Involving Miami-Area Home Health AgenciesRead the Press Release
WASHINGTON – A Miami-area doctor, Fred Dweck, was sentenced to 24 months in prison today for his role in a wide-ranging Medicare fraud scheme involving several Miami-area home health agencies, the Departments of Justice and Health and Human Services (HHS) announced today.
U.S. District Judge Adalberto Jordan also sentenced Dweck to three years of supervised release following his prison term and ordered him to pay $22 million in restitution jointly and severally with his co-defendants and co-conspirators in a related case. The restitution is to be paid to the victim in this case, the Centers for Medicare and Medicaid Services (CMS).
According to court documents, Dr. Dweck was the physician at Courtesy Medical Group, a Miami medical clinic that purported to provide health care services to Miami-area residents. The clinic was at various times owned by two of Dweck’s co-defendants, Auturo Fonseca and Yudel Cayro. At his plea hearing, Dweck admitted that while employed at the clinic, he wrote hundreds of prescriptions and signed hundreds of plans of care and medical certifications for Medicare beneficiaries to receive purported home health services. These services included twice or three-times daily skilled nursing visits to provide diabetic insulin injections. Dweck admitted that, in fact, these Medicare beneficiaries were able to care for themselves and did not actually need or qualify for the expensive home health services. Dweck also admitted to having prescribed unnecessary physical therapy services for many of the same Medicare beneficiaries.
According to court documents, the owners of Courtesy Medical Group would solicit and accept bribes and kickbacks from patient recruiters and the owners of Miami-area home health agencies in return for providing the bogus prescriptions signed by Dweck. Those prescriptions would then be used by dozens of Miami-area home health agencies to fraudulently bill the Medicare program for millions of dollars in unnecessary services.
Dweck admitted that in total, from about August 2006 through December 2009, he referred approximately 858 patients through Courtesy Medical Group and other Miami-area clinics for these unnecessary home health and therapy services, resulting in more than $37 million being fraudulently billed to the Medicare program. Of that amount, more than $22 million was actually paid out by the Medicare program to various Miami-area home health agencies. According to court documents, more than $16 million of those fraudulent billings stemmed from prescriptions issued by Dweck through Courtesy Medical Group, of which close to $10 million was actually paid out by Medicare.
Today’s sentence 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.
The case was prosecuted by Trial Attorney N. Nathan Dimock of the Criminal Division’s Fraud Section. The cases were investigated by the FBI and HHS-OIG.
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 Florida and the Criminal Division’s Fraud Section. Since their inception in March 2007, Strike Force operations in nine locations have obtained indictments of more than 1000 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 .
Massachusetts Man Indicted on Child Pornography ChargesRead the Press Release
WASHINGTON – Chris Allen Oake, 59, of Acton, 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.
Oake was arrested on an indictment filed under seal in the District of Massachusetts on March 23, 2011, and unsealed today, which charges Oake with one count of transportation of child pornography, two counts of receipt of child pornography and one count of possession of child pornography.
The penalty for each charge of transportation and receipt of child pornography is a mandatory minimum of five years in prison up to a maximum of 20; and a maximum of 10 years in prison for possession of child pornography.
The charges against Oake are a result of “Operation Nest Egg,” an ongoing and joint investigation led by the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), the U.S. Attorney’s Office for the Southern District of Indiana, HSI and the U.S. Postal Inspection Service. Operation Nest Egg, launched in February 2008, targeted approximately 500 individuals located throughout the world for their involvement in an online group dedicated to trading images of child pornography.
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 CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The case against Oake was investigated by HSI, CEOS’s High Technology Investigative Unit, Massachusetts State Police, and the Acton 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.
Justice Department Sues Bakersfield, Calif., Landlord for Sexual HarassmentRead the Press Release
WASHINGTON – The Justice Department today filed suit against Rawland Leon Sorensen, the owner and manager of more than 50 residential rental properties in Bakersfield, Calif., alleging a pattern or practice of sexual harassment in violation of the Fair Housing Act.
The suit, filed in the U.S. District Court for the Eastern District of California, alleges that Sorensen sexually harassed female tenants by making unwelcome sexual comments and advances; exposing his genitals to female tenants; touching tenants without their consent; granting and denying housing benefits based on sex; and taking adverse action against women who refused his sexual advances. Sorensen has operated his rental business for more than 30 years.
“No person should have to fear sexual harassment from a landlord who holds a key to their home,” said Thomas E. Perez, Assistant Attorney General for the Justice Department’s Civil Rights Division. “Sexual harassment in housing is intolerable, and landlords should be on notice that the Justice Department will vigorously prosecute landlords who engage in this type of discrimination.”
“This type of behavior is unconscionable and unacceptable,” said Benjamin B. Wagner, U.S. Attorney for the Eastern District of California. “The U.S. Attorney’s Office is committed to using all of our legal tools to ensure that no one is subjected to this type of harassment.”
The suit seeks monetary damages to compensate the victims, a civil penalty and a court order barring future discrimination.
Fighting illegal housing discrimination is a top priority of the Justice Department. The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status. More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt . Individuals who believe that they may have been victims of housing discrimination can call the Housing Discrimination Tip Line at 1-800-896-7743, email the Justice Department at [email protected] or contact the U.S. Department of Housing and Urban Development at 1-800-669-9777.
Justice Department Files Suit Against Winchester, Va., to Protect Employment Rights of U.S. Marine Corps ReservistRead the Press Release
WASHINGTON - The Department of Justice today filed a lawsuit on behalf of Jon Fultz, a U.S. Marine Corps reservist, against the city of Winchester, Va., alleging that it violated the Uniformed Services Employment and Reemployment Rights Act (USERRA) by failing to properly reemploy Fultz in September 2009 when he returned from military service during which he sustained a knee injury.
Subject to certain conditions, USERRA requires employers to promptly reemploy returning service members in the position they would have held had their employment been not interrupted by military service, or in a position of like seniority, status and pay.
According to the department’s complaint, filed in the U.S. District Court for the Western District of Virginia in Harrisonburg, Va., the city violated USERRA by not reemploying Fultz in his previous pre-service permanent position as a community resource officer assigned to manage its police department’s fleet of motor vehicles. When Fultz returned to work in September 2009, after performing military service where he injured his knee, the city assigned him fleet manager duties. However, the city placed Fultz in a lesser “light duty” status that he did not request, and which subjected him to removal from his job. For the next five months, Fultz satisfactorily performed his fleet manager duties, which were the same as his pre-service duties despite the “light duty” label. During that period, Fultz did not have any workplace problems with his knee that would have caused concern about his job performance, safety or health.
In February 2010, the city, without prior notice, removed Fultz from his position and stopped paying him wages. Although the city told Fultz that its sudden action was due to supposed safety concerns, it did not explain the nature of those concerns or give any factual basis for them. Even when Fultz provided medical information requested by the city to permit his return to work, the city refused to reinstate him, or to identify an alternate city position for which he qualified or could become qualified. The city ultimately terminated Fultz’s employment in October 2010. In its lawsuit, the Justice Department seeks the lost wages and benefits that he would have received if he had been properly reemployed in his pre-service status as a permanent full-duty community resource officer.
“Employers have a legal obligation to reemploy our uniformed service members in the correct position and status after they return from military duty,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Civil Rights Division is committed to protecting the rights of those who, through their bravery and sacrifice, secure the rights of all Americans.”
The Labor Department’s Veterans’ Employment and Training Service investigated and attempted to resolve Fultz’s USERRA complaint before referring it to the Justice Department for litigation.
“Our two agencies work closely together to ensure that our service members are treated right when they return from service” said Ray Jefferson, Assistant Secretary of Labor for Veterans’ Employment and Training.
The Justice Department’s Civil Rights Division has given a high priority to the enforcement of service members’ rights under USERRA. Additional information about USERRA can be found on the Justice Department’s websites at www.usdoj.gov/crt/emp and www.servicemembers.gov, as well as on the Labor Department’s website at www.dol.gov/vets/programs/userra/main.htm
Departments of Justice and Education Reach Settlement with Arizona Department of Education to Ensure That Potential ELL Students Are Properly IdentifiedRead the Press Release
WASHINGTON - The Department of Justice’s Civil Rights Division and the Department of Education’s Office for Civil Rights today entered into a settlement agreement with the Arizona Department of Education (ADE) to ensure that Arizona’s English Language Learner (ELL) students receive the educational services that they need. The agreement requires ADE to revoke its one-question Home Language Survey (HLS), which failed to identify and serve all eligible ELL students, and reinstate its three-question HLS so that all potential ELLs are identified for assessment and service.
“Proper identification of ELLs is the essential first step in ensuring that students receive the services they need to help them overcome language barriers and participate equally in the instructional process,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division at the Department of Justice. “We commend Arizona’s Superintendent of Public Instruction and ADE for voluntarily agreeing to reinstate the three-question HLS and take remedial steps to identify ELL students who were missed by the one-question process.”
“This agreement highlights our commitment to ensuring that all ELL students receive the services they need to learn,” said Russlynn Ali, Assistant Secretary for the Office for Civil Rights at the Department of Education. “All students are entitled to equal opportunities, and this resolution will help to make sure Arizona students receive the education they deserve.”
With the cooperation of ADE and Arizona school districts, the Departments of Justice and Education conducted an extensive investigation of the state’s policies and practices for identifying ELL students. Prior to July 1, 2009, ADE used a three-question Home Language Survey (HLS) that asked:
- “What is the primary language used in the home regardless of the language spoken by the student?”
- “What is the language most often spoken by the student?” and
- "What is the language that the student first acquired?”
Since July 1, 2009, ADE has allowed only a one-question HLS that asks, “What is the primary language of the student?” If a student answered English to this one question, ADE prohibited school districts from assessing the student’s English language proficiency unless and until a teacher documented specific language problems on a form prescribed by ADE, and met with the parents in person to obtain their permission to assess the student.
In the 2009-10 school year, ADE reported almost 100,000 ELL students, which reflected a decline of approximately 33,000 students from the prior school year. School districts attributed at least part of this decrease to the one-question HLS. The federal government’s investigation determined that the one-question HLS failed to identify and serve eligible ELL students in violation of the Equal Educational Opportunities Act of 1974 and Title VI of the Civil Rights Act of 1964. The investigation further revealed that the teacher referral process for the one-question HLS unnecessarily delayed the identification of ELL students, and therefore delayed ELL services, in violation of both laws.
The settlement agreement will ensure that all ELL students who attend Arizona public schools will be identified and served in a timely manner. Under the agreement, ADE will revoke its one-question HLS and its accompanying burdensome teacher referral process and reinstate its three-question HLS and prior HLS policies and practice of giving teachers more flexibility in referring students to be evaluated for English proficiency. ADE has agreed that an answer other than English to any of the three questions on the HLS will trigger timely assessment of the student’s English language proficiency. In order to capture potential ELLs who are now registering for the 2011-2012 school year, ADE will send a directive to each of its local educational agencies in two weeks informing them of the reinstated three-question HLS, and explaining how to identify potential ELL students among those students whose parents already completed the one-question HLS. ADE will also train the local education agencies regarding these changes and monitor them over the next school year to ensure that they are appropriately administering the three-question HLS. As a result of the settlement agreement, new students in Arizona schools who are ELL students will be timely identified, and students who were improperly identified as non-ELL students will be identified and offered ELL services.
The enforcement of the Equal Educational Opportunities Act and Title VI are top priorities of the Justice Department’s Civil Rights Division. Additional information about the Civil Rights Division of the Justice Department is available on its website at www.justice.gov/crt . Enforcement of Title VI is also a top priority of the Department of Education’s Office for Civil Rights. Additional information about the Department of Education’s Office for Civil Rights is available on its website at www.ed.gov/ocr/ .
California Man Sentenced to More Than 10 Years in Prison for Child Pornography ChargesRead the Press Release
WASHINGTON - Charles Douglas Johnson, 47, of Garden Valley, Calif., was sentenced today to 10 years and one month in prison for receiving child pornography, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Benjamin B. Wagner for the Eastern District of California.
U.S. District Judge Edward Garcia also ordered Johnson to serve 10 years of supervised release following his release from prison. Johnson pleaded guilty on Sept. 21, 2010.
According to court documents, images of child pornography were found on Johnson’s work laptop computer after he was terminated for allegedly stealing trade secrets. The computer was returned to the company on July 27, 2007, and the company sent it to a private forensic lab to see if any company trade secrets had been stored improperly on the computer. During this analysis, the forensic analyst found evidence of child pornography. A forensic review revealed 2,100 images of child pornography that had been downloaded onto the computer between Sept. 27, 2005, and June 18, 2007. In addition, 80 videos of child pornography were recovered.
This case was brought as part of Project Safe Childhood (PSC), a nationwide initiative 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), PSC mobilizes federal, state and local resources to locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information, visit www.projectsafechildhood.gov .
This case is the result of a joint investigation by the Folsom, Calif., Police Department; the El Dorado County, Calif., Sheriff’s Department; the FBI’s Cyber Crime Task Force and CEOS’ High Technology Investigative Unit. The case was prosecuted by Assistant U.S. Attorney Michelle Prince for the Eastern District of California and CEOS Trial Attorney Keith Becker of the Justice Department’s Criminal Division.
24 March 2011
Sex Trafficking Ring Leader Sentenced to 40 Years in PrisonRead the Press Release
WASHINGTON – Amador Cortes-Meza, 36, of Tlaxcala, Mexico, was sentenced today by U.S. District Judge Richard W. Story to serve 40 years in federal prison followed by five years of supervised release on charges of sex trafficking of minors; sex trafficking by force, fraud and coercion; transporting minors for the purpose of prostitution; smuggling aliens into the United States for purposes of prostitution; and conspiracy to do the same, announced the Department of Justice.
Cortes-Meza was also ordered to pay restitution to the victims in the amount of $292,000. The sentencing follows Cortes-Meza’s conviction on these charges on Nov. 21, 2010 after a trial.
“The victims suffered sexual abuse, physical assaults, threats of harm to their families, and daily degradation all because of this defendant’s greed and callous disregard for them as individuals. The court’s sentence clearly reflects the seriousness of these awful sex trafficking crimes,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We are committed to prosecuting sex traffickers and vindicating victims’ rights, as they were vindicated today.”
U.S. Attorney for the Northern District of Georgia Sally Quillian Yates said, “No one wants to believe that there are people who will enslave other human beings and require them to commit innumerable commercial sex acts. Yet this intolerable crime is happening right in our own neighborhoods in metropolitan Atlanta. This defendant tricked young girls and juveniles into leaving their families in Mexico, beat them, and forced them into more than 20 acts of prostitution a night here in Atlanta. These survivors courageously testified against the defendant and played a significant role in bringing him to justice. This defendant earned every day of his 40 year sentence.”
“Few crimes are more heinous than the sex trafficking of human beings," said Brock Nicholson, special agent in charge of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE HSI) in Atlanta. “ICE HSI will vigorously pursue and prosecute any members of a criminal organization engaged in this dangerous, dehumanizing and illegal business.”
According to the charges and other information presented in court, Cortes-Meza was the ring leader of an organization that brought 10 victims, including four juveniles, to the United States and forced them into prostitution. Nine of the victims testified at trial that the defendant, his brother, Juan Cortes-Meza, and a nephew, Francisco Cortes-Meza, would trick and deceive young women in Mexico into coming to the United States. Amador and his family members would pretend to be romantically interested in the young girls, many of whom were from rural areas and some of whom did not have much education. The defendant and his co-conspirators would promise the victims they would have a life together and then tell them they needed to travel to the United States to make money working in restaurants or cleaning homes. Victims testified at trial that Amador Cortes-Meza was physically abusive both in Mexico and the United States if they disagreed with his plans or told him no.
The defendant also obtained false identification for the victims and made arrangements to smuggle the victims and himself into the United States.
Victims identified homes in the Norcross, Ga., area where they were housed by the defendant and his co-conspirators. The co-conspirators took turns monitoring the victims, and various drivers transported the victims to residences of clients where the victims were required to engage in commercial sex. The victims testified that when they refused to engage in prostitution, the defendant or his co-defendants would beat them and threaten them and their families with physical harm. The co-conspirators and the drivers split the proceeds of the prostitution.
Five co-defendants previously pleaded guilty to various human trafficking crimes. Francisco Cortes-Meza was sentenced to 20 years in prison. Juan Cortes-Meza was sentenced to 16 years and eight months in prison. Raul Cortes-Meza, the defendant’s nephew, received 10 years in prison.
This case was investigated by special ICE HSI special agents assigned to the Atlanta special agent in charge office. Assistant U.S. Attorney Susan Coppedge and Deputy Chief Karima Maloney of the Justice Department’s Civil Rights Division Criminal Section prosecuted the case.
Human trafficking prosecutions such as this one are a top priority in the Justice Department. In order to bring defendants to justice, victims of crime may be eligible for immigration status in the United States to assist in the prosecution. The Department of Homeland Security Tip Line to report trafficking crimes is 1-866-347-2423.
Second Caesars Palace Nightclub Host Pleads Guilty to Tax CrimeRead the Press Release
WASHINGTON – Ali “Shawn” Olyaie, a former “VIP host” at the Pure Nightclub located in Caesars Palace Hotel and Casino in Las Vegas, pleaded guilty in Las Vegas before U.S. District Court Judge Kent Dawson to one count of filing a false federal individual income tax return for the 2006 tax year, the Justice Department and Internal Revenue Service (IRS) announced today.
According to information disclosed at Olyaie’s plea hearing, during the years 2005 and 2006, Olyaie’s responsibilities as a VIP host at the Pure Nightclub included promoting the club, booking reservations and catering to the club’s clientele. In addition to paying an admissions fee, some Pure patrons typically made cash payments to Pure door personnel and VIP hosts to bypass the general admissions line and to obtain more desirable seating inside the nightclub. The cash payments were collected, pooled and generally distributed on a weekly basis to Pure managers, door personnel and VIP hosts, including Olyaie. Olyaie’s cash distributions from the pool of money collected from patrons of Pure comprised the bulk of his compensation during the time he worked at Pure. Olyaie concealed the cash payments he received by not reporting the income to the IRS on his individual income tax returns during the years he worked at the Pure Nightclub.
Judge Dawson set Olyaie’s sentencing for June 29, 2011, at 9:00 a.m.
On Nov. 9, 2010, Richard Chu, another former VIP Host at the Pure Nightclub, pleaded guilty to filing a false 2006 federal individual income tax return that did not report the cash payments he received at Pure. Chu is also awaiting sentencing.
This case is being investigated by IRS – Criminal Investigation and is being prosecuted by Tax Division Trial Attorneys Christopher J. Maietta and Joseph A. Rillotta.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at www.usdoj.gov/tax/.
Rhode Island La Cosa Nostra Member Pleads Guilty <br /> in Murder-For-Hire CaseRead the Press Release
WASHINGTON – Anthony St. Laurent Sr. pleaded guilty today in federal court in Providence, R.I., to an attempted murder-for-hire, and acknowledged in a written plea agreement his participation in an extortion conspiracy outlined in a previous criminal complaint in which he, his wife Dorothy St. Laurent, his son Anthony St. Laurent Jr. and others extorted protection money from bookmakers in the Taunton, Mass.-area under the threat of violence. St. Laurent Sr. acknowledged in his plea agreement that he is a “made” member of the New England branch of the La Cosa Nostra (NELCN.)
St. Laurent Sr.’s guilty plea before U.S. District Judge William E. Smith was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Peter F. Neronha for the District of Rhode Island and Richard DesLauriers, Special Agent in Charge of the FBI’s Boston Field Office.
According to information presented in court, in 2006 and in 2007, St. Laurent Sr. offered money to individuals, including some known to be violent criminals, to murder Robert “Bobby” DeLuca, another “made” member of the NELCN, in retaliation for Deluca having publicly accused St. Laurent Sr. of being a government informant. According to information presented in court, St. Laurent Sr. phoned an individual in Massachusetts to set up a meeting in Rhode Island on April 12, 2006, at which he solicited the individual to kill DeLuca.
St. Laurent Sr., who is presently detained, faces maximum penalties of 10 years in federal prison, a $250,000 fine and three years of supervised release following his prison term.
Anthony St. Laurent Jr. was sentenced in December 2010 to 78 months in prison, followed by three years of supervised release, to include 500 hours of community service each year during the term of supervised release for his role in the extortion conspiracy. Dorothy St. Laurent was sentenced in December 2010 to three years of probation, the first six months of which will be served in home confinement. She also was ordered to perform 500 hours of community service per year during the term of supervised release.
The case is being prosecuted by Trial Attorney Sam Nazzaro of the Criminal Division’s Gang Unit. Assistant U.S. Attorney William J. Ferland for the District of Rhode Island is assisting with the prosecution of this case.
The matter was investigated by the FBI, with the assistance of the Rhode Island State Police and the Providence Police Department.
Massachusetts Man Pleads Guilty to Child Pornography ChargesRead the Press Release
WASHINGTON - Stanley R. MacKinnon, 66, of Haverhill, Mass., pleaded guilty today to five counts of receipt and attempted receipt of child pornography and one count of possession of child pornography, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney for the District of Massachusetts Carmen M. Ortiz and Robert Bethel, Inspector in Charge of the U.S. Postal Inspection Service (USPIS).
MacKinnon pleaded guilty before U.S. District Court Judge Rya W. Zobel in Boston. MacKinnon was indicted on July 14, 2010. The charges against him were the result of an ongoing national investigation by USPIS of individuals who purchase child pornography via U.S. mail. In pleading guilty, MacKinnon admitted to ordering and purchasing child pornography movies depicting prepubescent minors, and receiving the movies via U.S. mail. MacKinnon also admitted to possessing images of child pornography that he had produced himself approximately 30 years ago.
MacKinnon is scheduled to be sentenced on June 16, 2011. MacKinnon faces a mandatory minimum penalty of five years in prison, a fine of $250,000 and possible restitution.
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, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov .
The case against MacKinnon was investigated by USPIS and the Haverhill 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.
Former Administrative Assistant to U.S. Senator Charged with Making Prohibited Communications to Senate OfficeRead the Press Release
WASHINGTON – The former administrative assistant to a U.S. senator was charged today by a federal grand jury in the District of Columbia with violating criminal conflict of interest laws, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Ronald C. Machen of the District of Columbia; and James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office.
The indictment charges Douglas Hampton, 48, formerly of Las Vegas, with seven counts of violating the criminal conflict of interest laws. Hampton will be arraigned on March 31, 2011, in U.S. District Court in the District of Columbia.
According to the indictment, from January 2007 to April 30, 2008, Hampton was employed as the administrative assistant to a U.S. senator. The administrative assistant and chief of staff positions were the most senior positions in the senator’s office. While he was serving as administrative assistant, Hampton allegedly signed a form certifying that he had completed training required by the Senate Select Committee on Ethics that included training on the one-year post-employment lobbying restrictions mandated by The Honest Leadership and Open Government Act of 2007.
According to the indictment, that legislation was enacted by Congress for the purpose of providing greater transparency and accountability in both Houses by, among other things, slowing down the “revolving door” between congressional employment and post-employment lobbying activities. The legislation prohibits a senior Senate staffer, for a period of one year after termination of employment with the Senate, from knowingly making any communication to a Senate office with the intent to influence official actions on behalf of another person.
The indictment alleges that on May 1, 2008, Hampton left his employment with the U.S. senator and obtained employment as a government affairs consultant with an airline company and an energy company, both headquartered in Las Vegas.
According to the indictment, between May 1, 2008, and May 1, 2009, while he was subject to The Honest Leadership and Open Government Act’s one-year restriction, Hampton knowingly and willfully made, with the intent to influence, communications to staff members of the U.S. senator on behalf of the Las Vegas airline company and energy company, seeking action by the senator and the staff members in their official capacities.
The indictment alleges that Hampton, on behalf of the airline company, sought the assistance of the senator and the staff members in convincing the Department of Transportation to reconsider its position on a fuel surcharge pricing issue and to delay or withdraw an enforcement action regarding fees charged on the company’s website, as well as to help schedule a meeting in March 2009 involving the secretary of transportation and executives from the airline company.
The indictment also alleges that Hampton, on behalf of the energy company, sought the assistance of the senator and the staff members to convince the Department of Interior to expedite release of an environmental impact statement that would allow the energy company to move forward on its delayed proposal to build a coal-fired power plant in eastern Nevada.
The maximum penalty for each of the seven counts alleged in the indictment is five years in prison. Hampton also faces a maximum fine of $250,000 per count.
An indictment is merely an accusation, and a defendant is presumed innocent unless proven guilty in a court of law.
This case is being prosecuted by Trial Attorneys Deborah Sue Mayer and Edward T. Kang of the Criminal Division’s Public Integrity Section, and Assistant U.S. Attorney Bryan Seeley for the U.S. Attorney’s Office in the District of Columbia. The case was investigated by the FBI’s Washington Field Office.
DC-Area Plumber Charged with Obstructing the IRSRead the Press Release
WASHINGTON - Richard Jaensch, a resident of Annandale, Va., has been indicted by a Alexandria, Va., federal grand jury with one count of corruptly endeavoring to impede the Internal Revenue Service (IRS), one count of filing a false claim for a refund and four counts of failing to file a tax return for 2004 through 2007, the Justice Department and the IRS announced today.
According to the indictment, Richard Jaensch, a self-employed plumber, failed to file personal income tax returns between 2001 and 2007, despite the fact that he was required to do so by law. Between 2002 and October 2009, Jaensch obstructed and impeded the IRS by, among other acts: filing numerous documents and pleadings in Fairfax County, Va.; claiming, that he and his wife, a federal employee, were not persons required to file federal income tax returns; that his wife was not a party to the Constitution of the “united States of America” (sic) and that she was not a taxpayer; providing false information to the IRS; and filing with the IRS a false 2008 federal income tax return, Form 1040.
In addition, Jaensch caused his wife to yearly present a letter to her employer directing them to stop withholding federal income taxes from her salary. The IRS began levying his wife’s paycheck and bank accounts to satisfy her outstanding tax liability, and Jaensch continued his obstructive conduct by filing or causing his wife to file correspondence with the IRS claiming that the IRS could not instruct her employer to withhold taxes from her paycheck. In addition, in April 2009, Jaensch electronically filed with the IRS a false 2008 individual income tax return claiming a tax refund of $774,052, which he knew to be false and fraudulent.
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 12 years in prison. The court has not yet set a trial date.
This case was investigated by IRS-Criminal Investigation and is being prosecuted by Department of Justice’s Tax Division Trial Attorney Caryn Finley and Assistant U.S. Attorney Gene Rossi.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at www.usdoj.gov/tax/.
23 March 2011
Second New Jersey Pipe Supply Company and Its Owner Plead Guilty to Fraud and Bribery Conspiracy in Power Generation IndustryRead the Press Release
WASHINGTON — A second New Jersey industrial pipe supply company and its owner pleaded guilty today to participating in a conspiracy to commit fraud and pay bribes to a purchasing manager at Consolidated Edison of New York (Con Edison) in return for the manager’s efforts to steer contracts to the company, the Department of Justice announced today. The owner also pleaded guilty to obstructing the department’s investigation into fraudulent conduct in the power generation industry.
A two-count charge was filed today in U.S. District in Manhattan against Bernard Grobart of New York City and his company, Teneyck Inc., formerly known as Neill Supply Co. Inc. of Lyndhurst, N.J. Grobart and Teneyck pleaded guilty today to participating in a conspiracy to defraud Con Edison. Grobart also pleaded guilty to an obstruction count for instructing a subordinate employee at the company to delete a subpoenaed electronic document. Grobart and Teneyck are scheduled to be sentenced on June 24, 2011.
According to the charge, Grobart and Robert D. Rosenberg, a former sales broker for Neill Supply, paid approximately $297,000 in cash bribes to James M. Woodason, a department manager of the purchasing department at Con Edison. In return, Woodason steered Con Edison industrial pipe supply contracts to Neill Supply by secretly providing Rosenberg with confidential competitor bid information, thereby causing Con Edison to pay higher, non-competitive prices for materials. The department said the conspiracy took place from approximately November 2003 through approximately August 2008. According to the court document, Grobart also directed an employee of Neill Supply to destroy an electronic document that tallied the bribe payments in order to prevent the production of the document to a federal grand jury.
Con Edison is a regulated utility headquartered in Manhattan. It provides electric service to approximately 3.2 million customers and gas service to approximately 1.1 million customers in New York City and Westchester County, N.Y. Con Edison received more than $10,000 in federal funding each year between 2003 through 2010.
Grobart and Teneyck are charged with conspiracy, which carries a maximum fine of $500,000 for companies, and a maximum penalty of five years in prison and a $250,000 fine for individuals. Each of the maximum fines 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. Grobart is also charged with obstruction, which carries a maximum penalty of 20 years in prison and a $250,000 fine.
Today’s pleas arise from an ongoing federal investigation of bid rigging, bribery, fraud and tax-related offenses in the power generation industry. On Nov. 19, 2010, Woodason pleaded guilty to charges that he accepted and agreed to accept bribes from Grobart and Neill Supply, and American Pipe Bending and Fabrication Co. Inc. and its owner, Andrew Martingano. Rosenberg pleaded guilty on Dec. 2, 2010, for his role in the Neill Supply conspiracy. Martingano and American Pipe pleaded guilty on March 14, 2011, to a one-count felony charge for paying and agreeing to pay Woodason $510,000 in bribes in exchange for which Woodason steered an industrial pipe supply contract to American Pipe. The investigation is being conducted by the Antitrust Division’s New York Field Office, with the assistance of the FBI’s New York Division and the Internal Revenue Service-Criminal Investigation. Con Edison cooperated with the department’s investigation.
Anyone with information concerning bid rigging, bribery, tax offenses or fraud in the power generation industry should contact the Antitrust Division’s New York Field Office at 212-264-9308, visit www.justice.gov/atr/contact/newcase.htm or contact the FBI’s New York Division at 212-384-3252.
Pittsburgh Man Pleads Guilty to Racketeering ChargesRead the Press Release
WASHINGTON - A resident of Pittsburgh pleaded guilty today in U.S. District Court for the Western District of Pennsylvania to conspiring to conduct a racketeering enterprise, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney David J. Hickton of the Western District of Pennsylvania.
Kevin Underwood, 29, pleaded guilty to one count of conspiracy before Senior U.S. District Judge Gustave Diamond in Pittsburgh.
According to the guilty plea, Underwood participated in an enterprise, the activities of which affected interstate and foreign commerce, through a pattern of racketeering activity. The enterprise’s activities included multiple acts involving robbery, attempted murder, distribution of controlled substances including cocaine, heroin and crack cocaine, and acts of obstruction of justice and intimidation. Underwood is one of 26 defendants charged in February 2010 with being members of, and conducting racketeering activity through, a criminal organization known as the Brighton Place/Northview Heights Crips street gang that operated on the north side of Pittsburgh.
Underwood is scheduled to be sentenced on July 21, 2011, at 10 a.m. He faces a maximum sentence of 20 years in prison and a fine of $250,000.
This case is being prosecuted by Assistant U.S. Attorneys Charles A. Eberle and Troy Rivetti of the Western District of Pennsylvania and Trial Attorney Kevin Rosenberg of the Criminal Division’s Gang Unit.
The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives; the City of Pittsburgh Police Department; the Allegheny County, Penn., Police Department; and the Allegheny County Sheriff's Office.
Founder of A&O Entities <br /> Convicted in $100 Million Fraud SchemeRead the Press Release
WASHINGTON – Christian M. Allmendinger, 39, of Houston, was convicted by a federal jury today for his role in a $100 million fraud scheme with more than 800 victims across the United States and Canada.
The conviction was announced today by U.S. Attorney for the Eastern District of Virginia Neil H. MacBride and Assistant Attorney General Lanny A. Breuer of the Criminal Division.
“Christian Allmendinger stole millions from elderly retirees to buy flashy cars and a multi-million-dollar home,” said U.S. Attorney MacBride. “This was a national fraud case brought by the Virginia Financial and Securities Fraud Task Force that has real implications to dozens of investors in Richmond, who gave most of their life savings and have seen it all disappear. Mr. Allmendinger has now been held accountable for his crimes, and we will continue to pursue other financial fraudsters who prey on those in Virginia and throughout the country.”
“Christian Allmendinger operated a business that relied on deceit, and he used the profits of his fraudulent scheme to spend lavishly on himself,” said Assistant Attorney General Breuer. “Today a federal jury held him to account. Other would-be criminals should take note.”
On Sept. 7, 2010, a federal grand jury returned an 18-count indictment against Allmendinger and two other principals of A&O Resource Management Ltd. and various related entities that acquired and marketed life settlements to investors. Today, Allmendinger was convicted on one count of conspiracy to commit mail fraud, two counts of mail fraud, one count of conspiracy to commit money laundering, two counts of money laundering, and one count of securities fraud. At sentencing on Aug. 12, 2011, Allmendinger faces up to 20 years in prison on each count except the securities fraud count, on which he faces up to 5 years in prison.
Allmendinger’s co-defendant, Adley H. Abdulwahab, 35, is scheduled for a jury trial beginning July 5, 2011. Evidence at Allmendinger’s trial established that during his involvement with the company, A&O obtained approximately $80 million from approximately 500 investors. The indictment alleges that the A&O fraud scheme as a whole exceeds $100 million and affected more than 800 investors, many of whom were elderly.
According to court records and evidence at trial, Allmendinger was a co-founder and vice president of A&O and was active in the day-to-day management of the companies, as well as in the marketing of A&O life settlement investment products to investors. He and others engaged in a scheme to defraud investors by making misrepresentations about such things as A&O’s prior success, its size and office locations, its number of employees, the risks of its investment offerings, and its safekeeping and use of investor funds. Evidence at trial showed that Allmendinger routinely used investor funds for personal enrichment, including a $2 million home, a Lamborghini Spyder, and a 15-carat diamond ring, among other property.
When state regulators began to scrutinize A&O’s investment products, Allmendinger and his co-conspirators decided to sell A&O in August 2007, which ended Allmendinger’s association with the fraud scheme. The indictment alleges that, through a series of sham sales, co-conspirators, including Abdulwahab and David White, continued the fraud scheme through September 2009.
Five individuals have pleaded guilty in connection with the A&O fraud scheme: White, the former President of A&O; Brent Oncale, former vice president of A&O; Russell E. Mackert, an attorney for A&O; Eric M. Kurz, a wholesaler of A&O investment products; and Tomme Bromseth, an A&O sales agent in the Richmond area.
This continuing investigation is being conducted by the U.S. Postal Inspection Service, Internal Revenue Service, and FBI, with significant assistance from the Texas State Securities Board. These cases are being prosecuted by Assistant U.S. Attorneys Michael S. Dry and Jessica Aber Brumberg from the Eastern District of Virginia and Trial Attorney Albert B. Stieglitz Jr., of the Criminal Division’s Fraud Section.
The investigation has been coordinated by the Virginia Financial and Securities Fraud Task Force, an unprecedented partnership between criminal investigators and civil regulators to investigate and prosecute complex financial fraud cases in the nation and in Virginia. The task force is an investigative arm of the President’s Financial Fraud Enforcement Task Force, an interagency national task force.
President Obama established the 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.
Chinese Counterfeit Perfume Importers Indicted for Allegedly Trafficking in Counterfeit GoodsRead the Press Release
WASHINGTON - A federal grand jury in Brooklyn, N.Y., has returned a two- count indictment against Shaoxia Huang, Shaoxiong Zhou and Shaowu Zhou for trafficking in counterfeit goods and conspiracy, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Loretta E. Lynch for the Eastern District of New York.
The Zhous and Huang, all of Guangdong Province, China, allegedly imported more than 37,000 individual units of counterfeit cosmetic fragrances into the United States. According to the indictment returned yesterday, the counterfeit perfume, believed to have been manufactured in China, bore trademarks belonging to well-known fragrance brands, and were packaged in a manner likely to be confused for genuine fragrances sold under these well-known brands.
Huang and Shaoxiong Zhou were arrested in Las Vegas on March 2, 2011, and have been held in custody since their arrest.
If convicted, each defendant faces up to five years in prison on the conspiracy charge, up to 10 years in prison on the counterfeit products charge, and fines of up to $2,250,000. The indictment also seeks forfeiture of profits from illicit trafficking in counterfeit goods as well as the seizure of the goods.
An indictment is merely an accusation, and defendants are presumed innocent unless proven guilty beyond a reasonable doubt.
The case is being investigated by the New York office of U.S. Immigration and Customs Enforcement - Homeland Security Investigations, and is being prosecuted by Senior Counsel Jason Gull of the Criminal Division’s Computer Crime and Intellectual Property Section.
This indictment is part of a larger department-wide effort led by the Department of Justice Task Force on Intellectual Property (IP Task Force). Attorney General Eric Holder created the IP Task Force to combat the growing number of domestic and international intellectual property crimes, protect the health and safety of American consumers and safeguard the nation’s economic security against those who seek to profit illegally from American creativity, innovation and hard work. The IP Task Force seeks to strengthen intellectual property rights protection through heightened criminal and civil enforcement, greater coordination among federal, state and local law enforcement partners, and increased focus on international enforcement efforts, including reinforcing relationships with key foreign partners and U.S. industry leaders. To learn more about the IP Task Force, go to http://www.justice.gov/dag/iptaskforce/
22 March 2011
Wisconsin Man Charged with<br /> Sexual Exploitation of Minor in BelizeRead the Press Release
WASHINGTON - Today a grand jury in the Eastern District of Wisconsin returned a one-count indictment against U.S. citizen Roland J. Flath for traveling in foreign commerce and engaging in and attempting to engage in illicit sexual conduct with a minor less than 18 years of age, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney James L. Santelle of the Eastern District of Wisconsin; John Morton, Director of U.S. Immigration and Customs Enforcement (ICE); and Assistant Secretary of State for Diplomatic Security Eric J. Boswell.
According to court documents, Flath, 71, of Wisconsin, allegedly traveled to Belize in July 2006 and subsequently sexually molested a minor girl from Belize. Flath was originally charged by a criminal complaint filed in the Eastern District of Wisconsin in October 2010. He was arrested by the Guatemalan National Civil Police on Feb. 20, 2011, expelled to the United States and arrested in the United States by ICE agents and the U.S. Marshal Service.
Flath faces a maximum penalty of up to 30 years in prison and a fine of $250,000. Charges against Flath for aggravated assault of a minor are also pending in Belize.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division’s 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 via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov
This case is being prosecuted by Assistant U.S. Attorney Penelope Coblentz of the Eastern District of Wisconsin and Trial Attorney Mi Yung Park of CEOS. This case is a result of investigative efforts led by ICE Homeland Security Investigations (HSI) in Milwaukee and the U.S. Department of State, Bureau of Diplomatic Security’s Regional Security Office in Belize, with the assistance of the Bureau of Diplomatic Security’s Regional Security Office in Guatemala, ICE HSI’s Attache Office in Guatemala, the U.S. Marshal Service and the Belize Police Department.
Virginia Couple Pleads Guilty to Tax Fraud ConspiracyRead the Press Release
WASHINGTON – Kathryn Charles Miles and husband John Scott Miles, of Mathews County, Va., pleaded guilty to conspiring to impair and obstruct the IRS in the ascertainment and assessment of federal income taxes from 2001 through 2010.
The pleas were announced by U.S. Attorney for the Eastern District of Virginia Neil H. MacBride, Principal Deputy Assistant Attorney General for the Justice Department’s Tax Division John A. DiCicco and the Internal Revenue Service (IRS).
Kathryn Miles, who was charged in October 2010, pleaded guilty March 19, 2011, before U.S. District Judge Raymond A. Jackson in Norfolk, Va. John Miles pleaded guilty today.
At her plea hearing, Kathryn Miles admitted to earning taxable income as a nurse at various Virginia hospitals and with her husband, as an owner and operator of a construction business named “Scotts Construction” and “KCM Construction & Design.” Kathryn Miles and John Miles admitted that in 2001 they joined American Rights Litigators, a business they knew sold and promoted abusive tax schemes, and maintained an annual membership. Kathryn Miles also admitted that, in 2005 and 2006, she submitted six tax returns to the IRS in which she falsely claimed that she earned no wages and in which she did not disclose the operation of her construction business. Kathryn Miles submitted falsified tax documents with each tax return she filed with the IRS and John Miles admitted that he did not file tax returns for tax years 2004 and 2005, despite being required to do so by law.
Judge Jackson released the defendants on bond pending sentencing. Kathryn Miles’s sentencing is scheduled for June 30, 2011 and John Miles’s sentencing is scheduled for July 11, 2011. Both defendants face a maximum potential penalty of five years in prison and a $250,000 fine, and both defendants have agreed to pay all taxes, interest and penalties.
U.S. Attorney MacBride and Principal Deputy Assistant Attorney General DiCicco commended the investigative efforts of the IRS agents involved in this case, as well as Assistant U.S. Attorney Brian Samuels and Tax Division Trial Attorney Justin Gelfand, who are prosecuting this case on behalf of the United States.
Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at www.usdoj.gov/tax.
Occidental Oil Companies to Pay $2.05 Million to Resolve Allegations of Royalty Underpayments from Federal LandRead the Press Release
WASHINGTON – Occidental Petroleum Corporation, Occidental Oil and Gas Corporation, and OXY USA Inc. have agreed to pay the United States $2.05 million plus interest to resolve claims that the companies violated the False Claims Act by knowingly underpaying royalties owed on natural gas produced from federal leases, the Department of Justice announced today. Occidental Petroleum Corporation is an international oil and gas exploration and production company headquartered in Los Angeles.
Congress has authorized federal land to be leased for the production of natural gas in exchange for the payment of royalties on the value of the gas that is produced. Each month, companies are required to report to the Department of the Interior the amount of royalty that is due. This settlement resolves claims that the Occidental oil companies improperly deducted from the royalty values they reported the cost of boosting gas up to pipeline pressures, and failed to properly report and pay royalties related to a natural gas keep-whole agreement, pool pricing for gas and gas re-sold to affiliates.
“Natural gas royalties provide an important source of federal and state income that is essential to support education, critical infrastructure improvements, and natural disaster protection, among other things,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “The Justice Department will protect public lands to ensure that when companies are given the opportunity to extract non-renewable resources from those lands, they pay their fair share of royalties.”
“We remain committed to ensuring that energy companies accurately report production and pay the required royalties,” said Chris Henderson, Acting Assistant Secretary for the Department of the Interior’s Office of Policy, Management and Budget. “We will continue to pursue every dollar due to taxpayers and the federal government from energy production that occurs on federal and American Indian lands.”
The settlement arises from a lawsuit filed by Harrold Wright under the False Claims Act against the Occidental oil companies as well as a number of other companies. Under the qui tam, or whistleblower, provisions of the Act, private citizens may file actions on behalf of the United States and share in any recovery. Because Harrold Wright is deceased, his heirs will receive $91,000, plus interest, as his share of the settlement. The United States initially declined to participate in this case, but was actively involved in the discussions that led to this settlement. The current settlement brings the total recovery in the case to approximately $230 million.
The investigation and settlement of this matter were jointly handled by the Justice Department’s Civil Division and the U.S. Attorney for the Eastern District of Texas, with assistance from the Department of the Interior’s Office of Natural Resources Revenue, Office of the Solicitor and Office of Inspector General.
New Jersey Couple Sentenced for Failing to Pay Employment TaxesRead the Press Release
WASHINGTON - James and Theresa Demuro of Bridgewater, N.J., were each sentenced by U.S. District Judge Garrett E. Brown Jr. to 51 months in prison, followed by three years supervised release, the Justice Department and the Internal Revenue Service (IRS) announced today. Judge Brown also ordered the Demuros to pay restitution to the IRS in the amount of $1,337,952.12.
The DeMuros were convicted following a jury trial that began on Nov. 9, 2010, of one count of conspiracy to defraud the United States and 21 counts of willfully failing to pay over employment taxes. According to the indictment and evidence introduced during trial, the DeMuros co-owned and operated an engineering and surveying firm called TAD Associates LLC dba DeMuro Associates. From 2002 through 2008, they withheld employment taxes from their employees’ paychecks but failed to pay approximately $546,247.39 in taxes to the IRS. In addition, they operated under a prior entity name DA Resources Inc., which they ceased operating in an effort to thwart the ability of the IRS to collect unpaid employment taxes related to that entity.
At trial, the government introduced evidence that, beginning with the first quarter of 2007 through the last quarter in 2008, the defendants paid employees’ wages and withheld employment taxes from paychecks but did not pay any of the employee withholdings to the U.S. Treasury. In addition, the DeMuros withheld funds from their employees’ pay checks for health insurance, child support and retirement savings accounts, and failed to pay these funds over to the appropriate entities.
Evidence was also introduced that the Demuros converted withheld funds for their business and personal use, including more than $280,000 in purchases from QVC, Home Shopping Network and Jewelry Television.
Principal Deputy Assistant Attorney General John A. DiCicco of the Justice Department’s Tax Division commended the IRS Criminal Investigation special agents who investigated the case as well as Tax Division trial attorneys Tino M. Lisella and Jessica L. Nuzzelillo who prosecuted the case. Principal Deputy Assistant Attorney General DiCicco also thanked U.S. Attorney for the District of New Jersey Paul J. Fishman and his entire office for their assistance.
Missouri CPA Pleads Guilty to Mail Fraud and Tax EvasionRead the Press Release
WASHINGTON – Murphy Hubbard, a Springfield, Mo., CPA, pleaded guilty to two counts of mail fraud and one count of tax evasion before Judge James England in the Western District of Missouri, the Department of Justice and Internal Revenue Service (IRS) announced today.
According to the terms of Hubbard’s plea, he has agreed to be sentenced to 42 months in prison and shall be ordered to pay full restitution to the victims in this case, including the IRS.
According to court documents, Hubbard owned and operated an accounting and tax business known as The Hubbard Group PC. Hubbard embezzled more than $400,000 from two trusts placed under his control by local families between 1998 and 2009. The first of these trusts, created by Ms. Hazel Beatrice S. Hirst, of Springfield, designated four local charities as the beneficiaries of her life’s savings. The second trust, established by the heirs of Mr. Noel C. Rummens, of Rogersville, Mo., was created for the express purpose of funding educational expenses for Mr. Rummens’s surviving heirs and relatives. Rather than fulfilling the wishes of these families by faithfully executing their trust agreements, Hubbard instead took the vast majority of this money for himself, using it to pay personal expenses, to buy items such as automobiles and farm equipment, and for travel. Virtually all of the money taken from these trusts went unreported to the IRS, resulting in a tax loss of approximately $79,434.
The case is being prosecuted by Tax Division Trial Attorneys Michael C. Boteler and Mitchell S. Bober, and Assistant U.S. Attorney Steven M. Mohlhenrich. The case was investigated by the IRS – Criminal Investigation Division.
Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at www.usdoj.gov/tax .
Miami Contractor Pleads Guilty to Employment Tax FraudRead the Press Release
WASHINGTON – Reynaldo Orozco pleaded guilty to one count of filing a false tax return before U.S. District Court Judge Adalberto Jordan in the Southern District of Florida, the Department of Justice and the Internal Revenue Service (IRS) announced today. The court set sentencing for June 17, 2011.
According to court documents, during tax years 2004 through 2007, Orozco owned and operated Rock Construction Builders Inc. (RCB), a construction business located in Miami-Dade County, Fla. Orozco issued RCB corporate checks to various other corporations holding them out to be legitimate subcontractors. In truth, these corporations did not perform work for RCB. Orozco cashed the checks at local check cashing stores and used the bulk of the cash obtained in this manner to pay RCB employees. Orozco failed to report the cash wages on quarterly employment tax returns and failed to withhold and pay employment taxes on the wages. From 2004 through 2007, RCB failed to report approximately $3,294,426 in cash wages to the IRS.
Court documents also stated that on Feb. 11, 2005, Orozco made and subscribed to a false IRS Form 941 (Employer’s Quarterly Federal Tax Return) for the quarter ending Dec. 31, 2004. Orozco knew this return was false because it failed to report the substantial cash wages paid to RCB employees that quarter.
Based on the conduct described above, the U.S. Treasury suffered an employment tax loss of approximately $504,047. Orozco faces a maximum of three years in prison.
Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida, and John A. DiCicco, Principal Deputy Assistant Attorney General for the Department of Justice’s Tax Division, commended the IRS special agents who investigated this case and Tax Division Trial Attorneys Matthew J. Mueller and Gregory E. Tortella, who prosecuted the case.
Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at www.usdoj.gov/tax.
Managing Director of Bank’s Investment Company<br /> Convicted of Embezzling More Than $571,000Read the Press Release
WASHINGTON – The former managing director of the Pamrapo Service Corporation (Service Corporation), the investment arm of the former Pamrapo Savings Bank, was convicted today of embezzling more than $571,000 in commissions and fees belonging to the Service Corporation through a mail fraud scheme, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Paul J. Fishman for the District of New Jersey.
The jury returned the guilty verdict against Brian M. Campbell, 42, of Bayonne, N.J., following an eight-day trial before U.S. District Judge Dickinson R. Debevoise in Newark. Campbell was convicted of all 33 mail fraud counts charged in the superseding indictment on which he was tried. The jury was unable to reach a verdict on three counts of money laundering.
According to court documents and evidence presented at trial, Campbell was the managing director and employee of the Service Corporation, d/b/a Pamrapo Financial Center, headquartered in Bayonne. The now-defunct Service Corporation was the investment subsidiary of Pamrapo Savings Bank S.L.A., a savings and loan association. The Service Corporation provided securities and investment services, such as the sale of stocks and bonds, mutual funds, annuities, various types of insurance policies and other money management services, to clients for a fee.
In August 2001, according to court documents and evidence presented at trial, the Service Corporation entered into a contract with Prime Capital Services Inc. (Prime), a broker-dealer of securities transactions. In addition, in August 2001, Campbell entered into a contract with Prime where he agreed to act as a registered representative for Prime on behalf of the Service Corporation. Based on these contracts and the Service Corporation’s own written policy statements, all commissions and fees were required to be paid by Prime, and its sister company, Asset and Financial Planning Ltd., directly to the Service Corporation. Asset and Financial Planning was an investment advisory business that managed investors’ money for a flat rate. Thereafter, the Service Corporation paid Campbell his salary and a portion of the commissions received by the Service Corporation. The government did not allege any wrongdoing on behalf of Prime or Asset and Financial Planning and representatives of these companies testified on behalf of the government at trial.
In August 2001, the Service Corporation’s board of directors and later the Pamrapo Savings Bank’s board of directors revised Campbell’s commission structure, resulting in a substantial pay cut for Campbell.
In early 2007, according to court documents and evidence presented at trial, Campbell contacted representatives from Prime and Asset and Financial Planning, falsely telling them that Pamrapo Savings Bank wanted to get out of the investment advisory business and that the bank wanted all commissions sent directly to Campbell. In May 2007, Campbell sent a letter to Prime’s president, repeating these false statements. During the trial, Campbell’s administrative assistant testified that she typed this letter after Campbell repeatedly requested her to type it. At trial, the bank’s chairman of the board, another director on the board and the bank’s chief financial officer testified that statements Campbell made were false, and that Campbell was not authorized by the bank to speak on its behalf.
On July 25, 2007, Campbell had his father, the bank’s president, sign a letter that directed Prime to send a substantial amount of Prime and Asset and Financial Planning’s commissions and fees directly to Campbell. Campbell did this despite the fact that approximately two days before, he told the general counsel of Prime that he did not believe the bank would change the commission arrangement because it required a board meeting. The testimony at trial established that this letter was concealed from the chief financial officer and the bank’s board of directors.
According to court documents and evidence presented at trial, Campbell concealed the fact that he was receiving these checks from Prime and Asset and Financial Planning by, among other ways, directing his administrative assistant to falsify financial records related to these diverted checks.
Each of the 33 counts on which Campbell was convicted carries a maximum sentence of 20 years in prison and a $250,000 fine, as well as forfeiture and restitution. Sentencing is currently scheduled for June 20, 2011.
The case was investigated by IRS-Criminal Investigation and the Federal Deposit Insurance Corporation–Office of Inspector General. The case was prosecuted by Trial Attorney Keith Liddle of the Criminal Division’s Asset Forfeiture and Money Laundering Section and Assistant U.S. Attorney Anthony Moscato of the U.S. Attorney’s Office Organized Crime/Gangs Unit in Newark.
Former Executive of California Aftermarket Auto Lights Distributor Agrees to Plead Guilty in Price-Fixing ConspiracyRead the Press Release
WASHINGTON – A former executive of a California aftermarket auto lights distributor has agreed to plead guilty for his participation in a global conspiracy to fix the prices of aftermarket auto lights, the Department of Justice announced today. Aftermarket auto lights are incorporated into an automobile after its original sale, often as repairs following a collision or as accessories and upgrades.
According to a one-count felony charge filed today in U.S. District Court in San Francisco, Chien Chung Chen, aka Andrew Chen, conspired with others to suppress and eliminate competition by fixing the prices of aftermarket auto lights. The department said that Chen, a former executive vice president of a U.S. distributor for a Taiwan producer of aftermarket auto lights, participated in the conspiracy from as early as September 2003 until in or about September 2005.
According to the charge, Chen and co-conspirators participated in a conspiracy in which the participants met and agreed to charge prices of aftermarket auto lights at certain predetermined levels. According to the court document, the participants in the conspiracy issued price announcements and price lists in accordance with the agreements reached, and collected and exchanged information on prices and sales of aftermarket auto lights for the purpose of monitoring and enforcing adherence to the agreed-upon prices. The department said that the conspirators met in Taiwan, the United States and elsewhere for their discussions. The plea agreement is subject to court approval.
Chen is the second individual to be charged in connection with the aftermarket auto lights investigation. On Feb. 8, 2011, the department charged Polo Shu-Sheng Hsu for his participation in the aftermarket auto lights price-fixing conspiracy.
Chen is charged with violating the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million criminal fine for individuals. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims, if either of those amounts is greater than the statutory maximum fine.
This case is part of an ongoing investigation of the Antitrust Division’s San Francisco Office and the FBI in San Francisco. Anyone with information concerning illegal or anticompetitive conduct in the aftermarket auto lights industry is urged to call the Antitrust Division’s San Francisco Field Office at 415-436-6660 or visit www.justice.gov/atr/contact/newcase.htm.
Attorney General Launches Law Enforcement Officer Safety InitiativeRead the Press Release
WASHINGTON – In the wake of an increase in law enforcement officer fatalities, Attorney General Eric Holder launched a law enforcement officer safety initiative today, directing every U.S. Attorney to meet with federal, state and local law enforcement officials in their districts to ensure the department’s resources are made available to help stem officer deaths. In addition, Attorney General Holder convened a meeting of law enforcement officers in Washington, D.C., to solicit input for further action to improve officer safety.
“Our law enforcement officers put themselves in harm’s way every day to ensure the safety and security of the American people in cities and communities across the country, and we need to do everything we can to protect them,” Attorney General Holder said.
After a two-year decline in law enforcement fatalities, 2010 was one of the deadliest years on record for law enforcement in nearly two decades. Since the beginning of this year, 27 law enforcement officers around the country were killed either by firearms or felonious assaults, including Deputy U.S. Marshal Derek Hotsinpiller in West Virginia, Deputy U.S. Marshal John Perry in Missouri and U.S. Immigration and Customs Enforcement Special Agent Jaime Zapata in Mexico. This is an increase of more than 13 % in fatalities over 2010, when 20 officers were killed by firearms or felonious assault at this same point in time.
In his memo to U.S. Attorneys, Attorney General Holder laid out several steps for them to take immediately:
Ask local prosecutors to identify the “worst of the worst” – offenders with criminal histories who cycle in and out of local jails and state prisons – and discuss whether any of these repeat offenders may be prosecuted under federal law for offenses that make the offender eligible for a stiffer sentence.
Ensure that our state and local law enforcement partners are fully informed about the resources that the department makes available to help protect officers. The department has developed a number of programs to help our state and local law enforcement partners protect their officers, including:
- VALOR – Preventing Violence Against Law Enforcement and Ensuring Officer Resilience and Survivability – the Bureau of Justice Assistance’s national training initiative to improve the safety of our officers. As part of the VALOR Initiative, a new officer safety website has been established on the secure servers of the Regional Information Sharing Systems (RISS). This site has been designed to serve as a secure “one stop shop” for law enforcement to access all types of officer safety-related information, including awareness materials, videos, information on armed and dangerous subjects, information on concealment methods and a training calendar.
- RISSafe Officer Safety Event Deconfliction System, which the Bureau of Justice Assistance established to share information on planned law enforcement events – such as raids, controlled buy operations, surveillance and warrant service actions – to identify and alert affected agencies and officers of potential conflicts on a 24/7 basis.
- Bulletproof Vest Partnership (BVP), which provides reimbursement for law enforcement agencies that purchased vests that meet program criteria. Since 1999, more than 13,000 jurisdictions have participated in the BVP Program, with $277 million in federal funds committed to support the purchase of an estimated 800,000 vests. This year alone vests purchased using BVP funds have saved the lives of six law enforcement officers.
- A new Bureau of Justice Assistance law enforcement officer safety “toolkit,” which will be developed in the next 60 days, that can be used by federal, state and local law enforcement leaders to learn more about the resources that have been made available to promote officer safety, including training, deconfliction services, funding and other information resources.
Ensure that all federal task forces are making effective use of deconfliction systems . In addition to the case deconfliction that federal task forces use, the Attorney General directed all federally-supported task forces to utilize event deconfliction services provided by the department through RISS.
The attorney general's memo is available at: www.justice.gov/ag/AG_Officer_Initiative_3-22-11.pdf.
21 March 2011
Justice Department Issues Letter Regarding Illegal Exclusion of Individuals with HIV/AIDS from Occupational Training and State LicensingRead the Press Release
WASHINGTON – The Justice Department has issued letters to the attorneys general of all 50 states, as well as U.S. territories to request their assistance in addressing the illegal exclusion of individuals with HIV/AIDS from occupational training and state licensing. Persons with HIV and persons with AIDS are covered by the Americans with Disabilities Act (ADA), which gives federal civil rights protections to persons with disabilities in public accommodations, employment, and state and local government services.
The Justice Department has learned that public and private trade schools for barbering, cosmetology, massage therapy, home health care work and other occupations, as well as state licensing agencies, may be illegally denying individuals with HIV/AIDS admission to trade schools and/or occupational licenses because of their HIV status. However, because HIV cannot be transmitted by casual contact or by the circumstances present in these occupations, HIV-positive status is irrelevant.
In his letter to the attorneys general, Assistant Attorney General for the Civil Rights Division Thomas E. Perez asked that they review their respective jurisdictions’ admission and licensing criteria for trade schools and licensing agencies to identify the existence of any criteria that unlawfully exclude or discriminate against persons with HIV/AIDS, and to take the steps necessary to bring all such programs into compliance with the ADA.
“It is critical that we continue to work to eradicate discriminatory and stigmatizing treatment towards individuals with HIV based on unfounded fears and stereotypes,” Assistant Attorney General Perez said. “The ADA clearly protects individuals with HIV and other disabilities from this kind of exclusion or marginalization.”
The department recently entered into a settlement agreement with Modern Hairstyling Institute Inc., a private cosmetology school in Bayamón, Puerto Rico, for delaying the admission of an HIV-positive individual. That settlement agreement requires the school to remove questions about applicants’ HIV/AIDS status and to promptly enroll the aggrieved individual in its cosmetology program. The department has also addressed related issues in its guidance entitled “Questions and Answers: The Americans with Disabilities Act and the Rights of Persons with HIV/AIDS to Obtain Occupational Training and State Licensing” ( www.ada.gov/qahivaids_license.htm).
Alabama Couple Charged with Tax Evasion and ConspiracyRead the Press Release
WASHINGTON – A superseding indictment was unsealed against Patricia Ervin and Monty Ervin of Dothan, Ala., charging them with three counts of tax evasion and one count of conspiring to defraud the United States, the Justice Department and the Internal Revenue Service (IRS) announced today. Patricia Ervin also remains charged with structuring cash deposits to evade laws requiring banks to report currency transactions in excess of $10,000.
The indictment was announced by Leura G. Canary, U.S. Attorney for the Middle District of Alabama, and John A. DiCicco, Principal Assistant Attorney General for the Tax Division.
According to the indictment, Monty Ervin and Patricia Ervin owned and managed Southern Realty, a property management company in Dothan. As alleged in the indictment, they placed properties in the names of nominees in an attempt to conceal their income and assets from the IRS.
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, Patricia Ervin faces a maximum of 25 years in prison and a maximum fine of $1.25 million. If convicted, Monty Ervin faces 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 and Assistant U.S. Attorney Brent Woodall.
18 March 2011
Samsung SDI Agrees to Plead Guilty in Color Display Tube Price-Fixing ConspiracyRead the Press Release
WASHINGTON – Samsung SDI Company Ltd. has agreed to plead guilty and to pay a $32 million criminal fine for its role in a global conspiracy to fix prices, reduce output and allocate market shares of color display tubes (CDTs), a type of cathode ray tube used in computer monitors and other specialized applications, the Department of Justice announced today.
According to a one-count felony charge filed today in U.S. District Court in San Francisco, Republic of Korea-based Samsung SDI participated in a conspiracy from at least as early as January 1997, until at least as late as March 2006, to suppress and eliminate competition by fixing prices, reducing output and allocating market shares of CDTs to be sold in the United States and elsewhere. According to the plea agreement, which is subject to court approval, Samsung SDI has agreed to cooperate with the department’s ongoing cathode ray tube investigation.
According to the charge, Samsung SDI and co-conspirators agreed to charge prices of CDTs at certain target levels or ranges, to reduce output of CDTs by shutting down CDT production lines for certain periods of time and to allocate market shares of CDTs. As part of the conspiracy, Samsung SDI and co-conspirators exchanged CDT sales, production, market share and pricing information for the purpose of monitoring and enforcing adherence to their agreements. The department charged that the conspirators met in Taiwan, Korea, Malaysia, China and elsewhere for their discussions.
Samsung SDI is charged with violating the Sherman Act, which carries a maximum fine of $100 million for corporations. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
In addition to today’s charge, six individuals have been indicted in connection with the CDT investigation. On Feb. 10, 2009, Cheng Yuan “C.Y.” Lin was indicted for his participation in both the CDT conspiracy and a price-fixing conspiracy in the color picture tube industry. On Aug. 18, 2009, Wen Jun “Tony” Cheng was indicted for his participation in the CDT conspiracy. On March 30, 2010, Chung Cheng “Alex” Yeh was indicted for his participation in the CDT conspiracy. On Nov. 9, 2010, Seung-Kyu “Simon” Lee, Yeong-Ug “Albert” Yang and Jae-Sik “J.S.” Kim were also indicted for their participation in the CDT conspiracy.
This case is part of an ongoing joint investigation by the Department of Justice Antitrust Division’s San Francisco Office and the FBI in San Francisco. Anyone with information concerning illegal or anticompetitive conduct in the cathode ray tube industry is urged to call the Antitrust Division’s San Francisco Field Office at 415-436-6660 or visit www.justice.gov/atr/contact/newcase.htm.
Owner of Renovated Des Moines, Iowa Building Pleads Guilty to Environmental CrimesRead the Press Release
WASHINGTON – The owner of the Equitable Building in Des Moines, Iowa, pleaded guilty today in federal court in Des Moines to conspiracy to violate the Clean Air Act and to violating the Clean Air Act’s work practice standards related to asbestos removal, the Department of Justice Environment and Natural Resources Division and the U.S. Attorney’s Office for the Southern District of Iowa announced.
Bob Knapp, 61, of Des Moines, pleaded guilty before U.S. District Judge James E. Gritzner to one count of conspiracy to violate the Clean Air Act and one count of failing to remove all regulated asbestos containing material from the Equitable Building before commencement of the renovation project that occurred at the building from 2005 until 2008.
The Clean Air Act requires that owners of public buildings that contain asbestos follow federally-established work practice standards to ensure the safe removal of the asbestos. The required standards include providing notice to the U.S. Environmental Protection Agency (EPA) before commencing asbestos removal, adequately wetting the asbestos during the removal and before disposal, and properly disposing of the asbestos at an EPA-approved disposal site.
According to a plea agreement filed with the court, from 2006 through February 2008, Mr. Knapp oversaw the renovation project which involved converting several floors in the Equitable Building into luxury residential condominium units, and renovating other floors to attract additional commercial tenants.
Mr. Knapp admitted that he conspired with Russell Coco, who was also charged and pleaded guilty to the same counts on Feb. 15, 2011, to remove asbestos containing materials from the Equitable Building without complying with the requirements of the Clean Air Act. While Mr. Knapp was overseeing the project, asbestos containing material was removed from the building and disposed of in an uncovered dumpster.
According to the plea agreement, Mr. Knapp has agreed that the characteristics of his offenses put his potential prison sentence in the 33 to 41 month range , and under the law, he may be subject to a fine of up to $250,000. A sentencing date has been set for June 10, 2011.
The investigation was conducted by the EPA Criminal Investigation Division. The case is being prosecuted by the U.S. Attorney’s Office for the Southern District of Iowa together with the Justice Department’s Environmental Crimes Section of the Environment and Natural Resources Division.
Justice Department Reaches Agreement with Rhode Island on Voter Registration at Public Assistance and Disability OfficesRead the Press Release
WASHINGTON – The Justice Department announced today that it has reached an agreement with Rhode Island officials to ensure that all public assistance and disability services offices in Rhode Island offer voter registration services to their clients. The agreement is necessary to bring Rhode Island into compliance with the National Voter Registration Act (NVRA).
The agreement was filed in conjunction with a lawsuit by the Justice Department’s Civil Rights Division alleging that Rhode Island violated federal law by failing to provide voter registration services at all public assistance offices and all offices that provide state-funded programs primarily aimed at persons with disabilities.
Congress enacted the NVRA in 1993 in part to enhance citizen participation in elections by making voter registration opportunities available at offices that provide essential services, like public assistance and disability services.
“The voting process begins with registration, and it is essential that all citizens have unfettered access to voter registration opportunities,” said Thomas E. Perez, Assistant Attorney General for the Justice Department’s Civil Rights Division. “I am pleased that officials in Rhode Island worked cooperatively with the Justice Department to reach this agreement, which will ensure that all citizens who apply for public assistance or disability services in Rhode Island will be able to register to vote as easily and conveniently as possible.”
The two-year agreement, if approved by the district court, commits Rhode Island to undertake a variety of measures, including offering voter registration opportunities to all applicants for public assistance, WIC, rehabilitative services, developmental disabilities services and mental health services; distributing voter registration applications in public assistance and disability services offices and via mail; training employees on NVRA compliance; conducting regular internal compliance audits; and reporting the number of voter registration applications processed by public assistance and disability service offices. In the event compliance is not achieved within two years, the agreement will continue until compliance is reached.
More information about the NVRA and other federal voting laws is available on the Department of Justice website at www.justice.gov/crt/about/vot/. Complaints about discriminatory voting practices may be reported to the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.
Justice Department Officials Raise Awareness of Disaster Fraud <br /> Hotline for Reporting Fraudulent Charitable Contribution SchemesRead the Press Release
WASHINGTON – The Department of Justice reminds members of the public to be aware of and report any instances of suspected fraudulent charitable contribution schemes related to the natural disasters in Japan.
Members of the public should perform due diligence before giving contributions to individuals or organizations soliciting donations or claiming to provide assistance to the victims of natural disasters. Suspected fraudulent charity schemes should be reported to the National Center for Disaster Fraud (NCDF) Disaster Fraud Hotline at 866-720-5721, the Disaster Fraud Fax at 225-334-4707 or the Disaster Fraud e-mail at [email protected] .
“The unprecedented tragedy in Japan is inspiring many Americans to provide assistance to those in need,” said Assistant Attorney General Lanny A. Breuer of the Criminal Division. “To ensure these efforts reach the causes for which they are intended, individuals must be vigilant and wary of fraud schemes that seek to exploit their generosity. Suspicious or illegitimate charities should be reported to the National Center for Disaster Fraud.”
“As we watch one of the worst global disasters of the last century unfold in Japan, Americans will have increasing opportunities to help those affected through the work of dedicated charities,” said U.S. Attorney Jim Letten of the Eastern District of Louisiana, Executive Director of the National Center for Disaster Fraud. “As we should be generous, Americans must also be smart in recognizing that as with other disasters, some will try to exploit that generosity through fraud, deceit and theft. We will therefore depend on the vigilance of our citizens to report any suspected fraudulent charities or conduct to the NCDF.”
The NCDF was created in 2005 in response to a significant amount of fraud associated with federal disaster relief programs following Hurricanes Katrina, Rita and Wilma. The NCDF mission has expanded to include suspected fraud related to any natural or man-made disaster. More than 20 federal agencies, including the Justice Department’s Criminal Division and the U.S. Attorneys’ Offices, participate in the NCDF. The NCDF – based on its extensive expertise and established infrastructure – has helped victims of fraud related to Hurricanes Katrina, Rita, Wilma, Ike and Gustav, as well as those affected by the Gulf Coast oil spill, severe storms in more than 20 different states, earthquakes, tsunamis and wildfires.
To date, the Department of Justice has charged more than 1,300 defendants in 47 judicial districts throughout the country for disaster fraud related to Hurricanes Katrina, Rita and Wilma, the Gulf Coast oil spill and other disasters.
17 March 2011
Operator of Tax Preparation Business Sentenced to 17 ½ Years in Prison in Fraudulent Tax Shelter ConspiracyRead the Press Release
GREENBELT, Md. – U.S. District Judge Roger W. Titus sentenced Irvin Hannis Catlett Jr., 64, of Crownsville, Md., today to 210 months in prison, followed by three years of supervised release for tax offenses in connection with a scheme to prepare individual income tax returns for clients, which reported bogus tax losses from a purported car leasing company. Judge Titus also entered an order of restitution against Catlett for $3,810,244. A federal jury convicted Catlett on Nov. 4, 2010.
The sentence was announced by U.S. Attorney for the District of Maryland Rod J. Rosenstein; Principal Deputy Assistant Attorney General for the Department of Justice’s Tax Division John A. DiCicco; Special Agent in Charge Rebecca Sparkman of the Internal Revenue Service (IRS) - Criminal Investigation Washington, D.C., Field Office; and Special Agent in Charge Robert Geary of the Treasury Inspector General for Tax Administration (TIGTA).
“Irvin Catlett’s ‘tax shelter’ scheme was a fraud,” said U.S. Attorney Rosenstein. “People who want to reduce their taxes should seek reliable and independent advice and avoid con artists selling magical schemes that are too good to be true.”
“Sentences like this one send a loud and clear message that crooked tax return preparers will be investigated, prosecuted and punished for their actions,” said Principal Deputy Assistant Attorney General DiCicco.
“People who create elaborate schemes that have no purpose other than to defraud the Government will be prosecuted,” stated Special Agent in Charge Sparkman. “Today’s sentencing further shows that the IRS-Criminal Investigation is working to stop fraud schemes whose activities unfairly shift the burden to honest taxpayers.”
“Congratulations all around for the excellent work on this case,” said Inspector General George. “This is another example of outstanding collaboration between TIGTA and the IRS’s Criminal Investigation unit to stop fraudulent schemes in their tracks. Those who engage in them will be investigated and prosecuted to the fullest extent of the law. Paid preparers are a critical component in our system of tax administration,” he added. “When preparers violate the law, they harm their victims and severely damage the credibility and reputation of the tax preparation community.”
According to testimony at the nine day trial, Catlett operated Tax Resolutions Inc. located in Laurel, Md. He falsely held out Motors Holding Company Inc., Motors Holding Company II through VI Inc. and Rentown Inc. to his clients as operating businesses involved in automobile leasing and sales. Catlett knew however that these entities were not engaged in automobile leasing and sales, nor in any other legitimate, profit-making business. From 1999 to 2009, Catlett worked with others to sell to clients purported “investments” in the tax shelter entities. These investments were payments to Catlett for the purchase of bogus tax losses, purportedly generated by the tax shelter entities’ automobile leasing operations. Catlett, Walter Cullum and James Unterreiner prepared fraudulent tax returns for their clients that included the fictitious business losses, thereby reducing the amount of taxable income and total tax reported by the clients, and resulting in the clients falsely claiming refunds from the IRS.
Trial testimony further showed that Catlett paid Mark Hunt, an IRS revenue officer, for providing Catlett with IRS taxpayer information on Tax Resolutions’ clients and for allowing Catlett to introduce Hunt to clients and potential clients as Catlett’s connection at the IRS, in order to assure them that the tax returns prepared by Tax Resolutions would not be the subject of adverse IRS actions.
As part of the scheme, Catlett and Cullum supplied clients with copies of stock certificates to assure the clients of the legitimacy of their investment in the tax shelter. Catlett and Cullum also provided clients with fraudulent IRS forms that reported the clients’ portions of fictitious business losses incurred by the tax shelter entities. Catlett instructed Cullum and Unterreiner to prepare client tax returns by first determining each client’s tax without the tax shelter loss, and then adding to the return a fictitious loss from a tax shelter entity large enough to reduce the client’s tax due to zero. Catlett also instructed Cullum and Unterreiner on how to prepare false tax returns so that they could maintain the scheme while Catlett was in prison from November 2002 to September 2004on other charges.
As a result of the scheme, approximately 275 tax returns were filed with the IRS which reported $22,009,021 in bogus Schedule E losses, which resulted in a tax loss to the United States of $3,810,244.
Cullum Jr., 37, of Columbia, Md.; Hunt, 45, of Baltimore; and Unterreiner, 34, of Bowie, Md., pleaded guilty to their participation in the tax evasion scheme and were each sentenced to three years probation. Tressa Nivens, 45, of Frederick, Md., also pleaded guilty to her role in the scheme and was sentenced to two years probation.
U.S. Attorney Rosenstein and Principal Deputy Assistant Attorney General DiCicco praised the IRS and TIGTA for their investigative work and thanked Assistant U.S. Attorney Gregory Bockin and Trial Attorney Shawn T. Noud of the Department of Justice Tax Division, who prosecuted the case.
Maryland Sports Manager Pleads Guilty to Tax Evasion, Conspiracy to Commit Bank and Wire FraudRead the Press Release
WASHINGTON – Nathan A. Peake, 40, a sports manager and resident of Silver Spring, Md., entered a plea of guilty today in U.S. District Court for the the District of Columbia to one count of tax evasion and one count of conspiracy to commit bank and wire fraud.
The plea was announced by U.S. Attorney for the District of Columbia Ronald C. Machen Jr.; Principal Deputy Assistant Attorney General John A. DiCicco of the Department of Justice’s Tax Division; Rebecca A. Sparkman, Special Agent in Charge of the Washington, D.C., Field Office of the Internal Revenue Service (IRS) – Criminal Investigation; D.C. Office of Tax and Revenue Deputy Chief Financial Officer Stephen M. Cordi; and Assistant Inspector General for Investigations Scott Berenberg of the U.S. Department of Commerce Office of Inspector General.
According to court documents, Peake has managed professional basketball players and boxers since 1999 under the name Peake Management Group Inc. (PMG). Peake did not file income tax returns for the years 2000 through 2007, despite earning significant amounts of income over that period of time.
Between 2000 and 2007, Peake diverted approximately $5,836,940 in management and agent fees from his business to personal bank accounts or commercial bank accounts that he controlled in names other than PMG. Peake committed numerous affirmative acts of evasion, including misappropriating proceeds from a $3.5 million commercial line of credit that one of his client athletes guaranteed and ultimately paid off; paying himself and his wife out of those commercial bank accounts that he controlled in names other than PMG; using cash to pay personal and business expenses; withdrawing cash in amounts less than $10,000 (an amount greater would have required banks to file currency transaction reports); and paying personal expenses with business receipts.
In total, Peake admitted to evading in excess of $1 million in income taxes.
In addition, Peake and others conspired to provide false information to several mortgage lenders over a nine-year period regarding Peake employment, income, rental receipts and obligations to the federal government. This included fabricated letters that falsely represented that Peake had filed federal income tax returns, reporting self employment wages, which had been reviewed by a certified public accountant.
Judge Ricardo M. Urbina set a sentencing date of Aug. 2, 2011. Peake faces a maximum prison sentence of 10 years. Under federal sentencing guidelines, the likely range is a prison term of 41 to 51 months.
A co-defendant in the case, Gregory L. McCormick, is awaiting trial on charges, including conspiracy to commit bank and wire fraud.
U.S. Attorney Machen, Principal Deputy Assistant Attorney General DiCicco, IRS Special Agent in Charge Sparkman, D.C. Deputy Chief Financial Officer Cordi, and Assistant Inspector General Berenberg praised the efforts of the many individuals from the IRS – Criminal Investigation, D.C. Office of Tax and Revenue and Department of Commerce Office of the Inspector General who investigated the case, as well as Assistant U.S. Attorney Susan Menzer and Department of Justice Trial Attorney Sean Delaney, who prosecuted this matter.
Federal Court Bars Two Los Angeles Residents from Promoting Sham Trust Tax SchemeRead the Press Release
WASHINGTON – A federal court has issued a preliminary injunction barring Gwenn Wycoff and Frank Ozak, both of Los Angeles, from promoting so-called “common-law trusts” that help individuals evade taxes, the Justice Department announced today. The injunction order, entered by U.S. District Judge Jacqueline H. Nguyen of the U.S. District Court for the Central District of California, will remain in effect while the government’s lawsuit seeking a permanent injunction is pending.
In granting the preliminary injunction, the court found that Wycoff and Ozak promote their scheme through personal appearances, a website and a self-published two-volume work they wrote with others called The Art of Passing the Buck, which contains false statements about the internal revenue laws. The court determined that the trusts promoted by Wycoff and Ozak (including one they created for themselves) are shams and have caused substantial harm to the government. The court found that the total amount of tax deficiencies assessed by the government with respect to four customers mentioned in the court order is more than $1.1 million.
The court also ordered Wycoff and Ozak to post a copy of the injunction order on their website and to provide the government with a list of all persons who have purchased their products, services advice or publications in the past five years.
In the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop tax fraud promoters and preparers of false tax returns. Information about these cases is available on the Justice Department website .