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19 April 2010
Virginia Resident Sentenced to 87 Months in Prison<br /> for Bribing Foreign Government OfficialsRead the Press Release
Charles Paul Edward Jumet of Fluvanna County, Va., was sentenced today to 87 months in prison for paying bribes to former Panamanian government officials to secure maritime contracts, in violation of the Foreign Corrupt Practices Act (FCPA), and for making a false statement to federal agents. In addition to the prison term, U.S. District Court Judge Henry E. Hudson for the Eastern District of Virginia ordered Jumet to pay a $15,000 fine and to serve three years of supervised release following the prison term. The 87-month sentence is the longest prison term imposed against an individual for violating the FCPA.
Jumet, 53, pleaded guilty on Nov. 13, 2009, to conspiring to violate the FCPA and making a false statement to federal agents. The FCPA makes it a crime to pay or offer to pay anything of value to a foreign government official in order to obtain or retain business.
"Today’s sentence – the longest ever imposed for violating the FCPA – is an important milestone in our effort to deter foreign bribery," said Assistant Attorney General Breuer. "As this case confirms, foreign corruption carries with it very serious penalties, which can include substantial prison time for individuals who violate the law."
"Bribery isn’t just a cost of doing business overseas," said U.S. Attorney MacBride. "Today’s sentence makes clear that this is a serious crime that the U.S. government is intent on enforcing."
"Today’s sentencing is an example of how those who intentionally bribe and mislead the government for their personal gain will be prosecuted to the maximum extent," said Assistant Director Henry. "The FBI is committed to pursuing those who disrupt the level playing field to which companies in the U.S. and around the world are entitled."
"This sentence serves as a warning to those who engage in corrupt business dealings ," said ICE Special Agent in Charge Torres. "ICE will continue to work with our law enforcement partners both here and abroad to investigate and prosecute those involved in such illicit activities ."
According to court documents, from approximately 1997 through July 2003, Jumet and others conspired to pay money secretly to Panamanian government officials in exchange for awarding contracts to Ports Engineering Consultants Corporation (PECC) to maintain lighthouses and buoys along Panama’s waterway. In December 1997, the Panamanian government awarded PECC a no-bid 20-year concession. Upon receipt of the concession, Jumet admitted that he and others authorized corrupt payments to be made to the Panamanian government officials. In total, Jumet and others caused corrupt payments of more than $200,000 to be paid to the former administrator and the former deputy administrator of the Panama Maritime Authority and to a former high-ranking elected executive official of the Republic of Panama.
Jumet also made a false statement to federal agents about a "dividend" check payable to the bearer in the amount of $18,000 that was endorsed and deposited into an account belonging to the high-ranking elected Panamanian government official. Jumet falsely claimed that this "dividend" check was a donation for the high-ranking elected official’s re-election campaign, when, in fact, Jumet admitted it was given to the elected Panamanian government official as a corrupt payment for allowing PECC to receive the contract.
In a related case, John Warwick pleaded guilty on Feb. 13, 2010, for his role in the same conspiracy to violate the FCPA. He is scheduled to be sentenced by Judge Hudson on May 14, 2010.
The case was prosecuted by Trial Attorney Rina Tucker Harris of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Michael S. Dry of the U.S. Attorney’s Office for the Eastern District of Virginia. The case was investigated by the FBI’s Washington Field Office, the FBI’s Richmond Field Office and ICE’s Richmond Field Office.
The announcement was made by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Neil H. MacBride of the Eastern District of Virginia; Shawn Henry, Assistant Director in Charge of the FBI’s Washington Field Office; Michael F. A. Morehart, Special Agent in Charge of the FBI’s Richmond Field Office; and John P. Torres, Special Agent in Charge of Immigration and Customs Enforcement (ICE)’s Washington office.
U.S. Seeks Permanent Injunction Against Florida-Based<br /> Drug Compounding LabRead the Press Release
The United States has filed a civil suit on behalf of the Food and Drug Administration (FDA) in U.S. District Court in the Middle District of Florida, against Franck’s Compounding Lab Inc., dba Franck’s Lab, a compounding pharmacy located in Ocala, Fla. The government alleges that Franck’s has been introducing adulterated, misbranded and unsafe drugs into interstate commerce as part of the company’s veterinary pharmaceutical compounding business, and has asked the court for a permanent injunction that would prohibit Franck’s and its CEO, Paul Franck, from using bulk pharmaceutical ingredients in its compounds. According to the government’s complaint, Franck’s compounded a drug mixture last year that killed 21 polo horses belonging to a Venezuelan team that was in Florida to compete for the United States Polo Championships.
Franck’s is in the business of drug compounding, which is the mixing, combining or altering of drugs to accommodate the particular needs of specific patients. Compounding is common in both human and veterinary medical industries, and the FDA and Department of Justice have long recognized that it is a necessary and valuable service. However, the agencies become concerned when pharmacies use compounding as a way to circumvent the regulatory requirements of the drug approval process and potentially put consumers and animals at risk.
Franck’s compounds drugs for human and veterinary use, but the suit for a permanent injunction only pertains to the company’s veterinary practices. In the past year, inspections at Franck’s have revealed that the company compounds most of its veterinary drugs from active pharmaceutical ingredients called "bulk" ingredients. This practice is prohibited by the statutes and regulations that govern veterinary compounding. Animal drugs created from bulk ingredients do not undergo FDA approval, and no clinical testing or other controls are in place to ensure their safety. The government alleges that Franck’s use of a bad mixture of bulk drugs a year ago led to the deaths of the 21 horses.
In addition to using bulk drugs for compounding, Franck’s also eludes the regulatory scheme by creating drugs that are compounded copies or near-copies of approved drugs that are already on the market. Franck’s distributes its drugs throughout the country. The company has refused to stop these practices in spite of several warnings from FDA that its activities were illegal.
"We allege that the practices at issue in this case contributed to deadly results," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "The Justice Department and our federal partners will work together to pursue pharmacies that put the health and safety of animals at risk."
Assistant Attorney General West noted that this case is the product of the cooperative efforts of the Office of Consumer Litigation in the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Middle District of Florida and the FDA’s Office of Chief Counsel.
New Hampshire Tax Shelter Promoter Sentenced<br /> for Conspiring to Defraud the United StatesRead the Press Release
Anthony G. Merlo, a resident of Portsmouth, N.H., was sentenced to 51 months of imprisonment for conspiring to defraud the United States, the Justice Department and the Internal Revenue Service (IRS) announced today.
On May 22, 2009, Merlo pleaded guilty to one count of conspiring to defraud the United States before the Judge Janet T. Neff of the U.S. District Court for the Western District of Michigan. Merlo admitted that in 1995 he became involved with promoting offshore tax shelters with his co-defendants Peter Peggs and Robert Larsen through an insurance company in the U.S. Virgin Islands known originally as Caduceus Life Insurance Company and later known as Security Trust Insurance Company. Merlo admitted that in 1999, he joined a conspiracy with Peggs and Larsen, as well as co-defendants John A. Campbell and Craig Stone, to conceal information and documents from the IRS in connection with the marketing of Security Trust’s tax shelter products.
The tax shelters included purported insurance policies sold to U.S. taxpayer clients as a tax deductible product, with the understanding that the purchasers would have most of their premiums returned to them in a non-taxable manner. The clients would improperly take tax deductions for the purchase of this sham product, and improperly and fictitiously reduce their income taxes.
On Nov. 2, 2009, one of Merlo’s conspirators, John A. Campbell, was sentenced to 60 months in prison.
Acting Assistant Attorney General John DiCicco and Donald A. Davis, U.S. Attorney for the Western District of Michigan, commended the investigative efforts of the IRS agents involved in this case, as well as Tax Division trial attorneys Richard M. Rolwing, Patrick J. Murray, and Jessica Nuzzelillo, who prosecuted the case.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at www.usdoj.gov/tax.
Justice Department Asks Federal Court to Shut Down Ohio Firm That Allegedly Promotes Improper Theft Loss DeductionsRead the Press Release
WASHINGTON - The United States has sued an Ohio man and his company, seeking to bar them from promoting a scheme that allegedly helps customers claim improper theft loss tax deductions, the Justice Department announced today. The suit also seeks to bar the defendants from preparing tax returns for others.
According to the civil injunction lawsuit, filed in the U.S. District Court for the Southern District of Ohio, Tobias Elsass of Columbus, Ohio, who is suspended from the practice of law, is the founder of Fraud Recovery Group, a Worthington, Ohio, company. Elsass and his company allegedly target potential customers who have experienced significant investment losses. In return for a percentage of the anticipated tax refund that will result from the defendants’ services, the government complaint alleges, the defendants prepare federal income tax returns for customers claiming a deduction from the "theft loss" the customer purportedly experienced
Federal tax law allows victims of certain criminal investment frauds to claim a theft loss deduction. But the taxpayer must be able to substantiate that the loss was the result of theft, among other requirements, in order to qualify for the deduction. The complaint alleges that Elsass and Fraud Recovery Group have repeatedly helped customers claim theft loss deductions when the customers did not qualify for them. As a result, the Internal Revenue Service has repeatedly disallowed customers’ deductions, the suit says.
Since 2001, the Justice Department's Tax Division has obtained more than 465 injunctions to stop the promotion of tax fraud schemes and the preparation of fraudulent returns. Information about these cases is available on the Justice Department Web Site.
Alaska Seafood Company Agrees to Pay More Than $500,000 to Resolve Alleged Environmental ViolationsRead the Press Release
WASHINGTON—Westward Seafoods Inc., the operator of a seafood processing plant in Dutch Harbor, Alaska, will pay a $570,000 civil penalty as part of a settlement agreement to resolve alleged violations of the Clean Air Act and the Emergency Planning and Community Right-to-Know Act, the Justice Department and U.S. Environmental Protection Agency (EPA) announced today.
Under the settlement agreement filed in federal court in Alaska, Westward Seafoods, a Seattle-based company, will be required to undertake four measures designed to improve the company’s environmental compliance. The agreement requires the company to create a preventative maintenance and operations plan, develop and implement an annual training plan for all employees responsible for operating generating equipment, develop and submit to EPA an organizational chart that outlines staff that have environmental compliance responsibilities and develop internal procedures for submitting required reports to federal, state and/or local environmental agencies.
The settlement resolves a complaint that alleged that Westward Seafoods had multiple violations of the Clean Air Act from 2002 until 2006. The complaint alleged violations including the burning of approximately 1.3 million gallons of diesel fuel with excessive sulfur; operating three diesel generators while air pollution control devices were inoperable, resulting in excessive emissions of nitrogen oxides; and failing to respond to repeated requests for information from state and federal inspectors.
High sulfur fuel produces higher levels of sulfur dioxide emissions, which has adverse respiratory effects on humans, especially at-risk populations including children, the elderly and asthmatics. Operating the generators without required air control devices caused an increase in nitrogen oxide air pollution, which has adverse respiratory effects on humans and is a leading contributor to ground-level ozone.
The complaint also alleged violations of the Emergency Planning and Community Right-to-Know Act, a law designed to help local communities protect public health, safety and the environment from chemical hazards. The complaint alleged failure to annually report 80,000 pounds of ammonia in use and storage at the Dutch Harbor plant to the State Emergency Response Commission, local fire department and Local Emergency Planning Committee.
"We expect companies that handle hazardous chemicals and operate diesel generators to comply with the law. This settlement is designed to put a system into place that will prevent future violations of the environment and public safety laws," said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division.
"We have laws regulating emissions and chemicals for a reason—these substances can have serious consequences for residents and the environment," said Edward Kowalski, Director of the Office of Compliance and Enforcement in EPA’s Seattle office. "We work closely with the state, and we will act when a facility is not responsive to state requests, or is putting the environment and Alaskans at risk due to unlawful practices."
The consent decree, lodged in the U.S. District Court for the District of Alaska, is subject to a 30-day public comment period and approval by the federal court. A copy of the consent decree is available on the Justice Department Web site at http://www.justice.gov/enrd/Consent_Decrees.html.
16 April 2010
Two Houston-Area Residents Convicted in Medicare Fraud Scheme Involving <br /> Fraudulent Claims of Hurricane Damage to Power WheelchairsRead the Press Release
A federal jury in Houston today convicted Helen Etinfoh, 50, and Paula Whitfield, 43, for their roles in a Medicare fraud conspiracy involving, among other things, fraudulent claims of hurricane damage to power wheelchairs, announced the Departments of Justice and Health and Human Services (HHS).
After a week-long trial, the jury convicted Etinfoh of one count of conspiracy to commit health care fraud and four counts of health care fraud. The jury convicted Whitfield of one count of conspiracy to commit health care fraud and one count of health care fraud. Each conviction carries a maximum sentence of 10 years in prison and a $250,000 fine. Following the jury verdict, Etinfoh was ordered to be detained pending sentencing by U.S. District Judge Ewing Werlein Jr.
According to evidence presented at trial, Etinfoh was the owner and operator of Luant & Odera Inc., a Houston-area durable medical equipment (DME) company doing business as Tonni Medical Equipment & Supplies. Evidence presented at trial established that Whitfield was a recruiter for Luant who was paid kickbacks in exchange for providing the company with beneficiaries in whose names bills could be submitted to Medicare. Evidence at trial showed that Etinfoh and other co-conspirators submitted false and fraudulent claims to Medicare for medically unnecessary DME, including power wheelchairs, wheelchair accessories and motorized scooters. Many of these claims were submitted based on information supplied by Whitfield.
Evidence at trial showed that, based on representations from Whitfield and other recruiters, Luant would bill Medicare under a special code that designated these power wheelchairs as replacements for wheelchairs lost during hurricanes that hit the Houston area in the fall of 2008. In fact, the hurricanes did not damage older wheelchairs. Certain beneficiaries testified that they did not even have a power wheelchair prior to receiving the ones provided to them by Luant. The evidence at trial showed that the hurricane code was used because it allowed Luant to submit claims to Medicare without a doctor’s order.
At trial, beneficiaries in whose names claims were submitted to Medicare testified that recruiters whom they had never met, including Whitfield, came to their homes and offered them free power wheelchairs in exchange for their Medicare information. The beneficiaries, all of whom could walk, testified that they neither needed nor used the power wheelchairs delivered to them by Luant, which were often billed to Medicare at more than $6,000 per chair. Evidence at trial showed that Whitfield split certain of her kickback payments with other recruiters.
Evidence at trial also showed that Etinfoh entered into a fraudulent transaction in August 2008 to sell Luant to co-defendant Ezechukwu J. Ohaka. The evidence at trial showed that Etinfoh and Ohaka made it appear as though the sale was to a different individual because Ohaka was already under investigation for fraud in connection with other companies he operated. Ohaka, who was also charged with one count of conspiracy to commit health care fraud and four counts of health care fraud in an indictment unsealed on July 29, 2009, remains a fugitive and is presumed innocent until proven guilty.
Sentencing for Etinfoh and Whitfield is scheduled for July 23, 2010, before Judge Werlein in Houston.
Today’s verdict was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney José Angel Moreno of the Southern District of Texas; Special Agent-in-Charge Mike Fields of the Dallas Regional Office of HHS Office of the Inspector General (HHS-OIG), Office of Investigations; and the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU).
The case was tried by Trial Attorneys Sam S. Sheldon and Joseph S. Beemsterboer, with assistance from Assistant Chief John S. (Jay) Darden and Trial Attorney Jennifer L. Saulino of the Criminal Division’s Fraud Section. The case was brought as part of the Medicare Fraud Strike Force, supervised by the U.S. Attorney’s Office for the Southern District of Texas and the Criminal Division’s Fraud Section.
Since their inception in March 2007, Strike Force operations in seven districts have obtained indictments of more than 500 individuals who collectively have falsely billed the Medicare program for more than $1.1 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 .
Two Exxon Mobil Subsidiaries in Guam & Northern Marianas Reach Settlement with United StatesRead the Press Release
WASHINGTON—Two subsidiaries of Exxon Mobil Corporation – Mobil Oil Guam Inc. and Mobil Oil Mariana Islands Inc. – have agreed to pay $2.4 million for allegedly violating the federal Clean Air Act by failing to control emissions from their facilities, the Justice Department and U.S. Environmental Protection Agency (EPA) announced today.
Together these two companies allegedly have illegally discharged hundreds of tons of volatile organic compounds into the air each year from their bulk gasoline terminals on Cabras Island in Guam and in the Lower Base area of Saipan.
According to a complaint filed simultaneously with the settlement, Mobil Oil Guam and Mobil Oil Mariana Islands allegedly failed to install vapor pollution controls on thirteen storage tanks and all of their loading racks at gasoline storage facilities on the islands. Both also allegedly failed to comply with pollution limits, install pollution monitors, and submit required reports.
"This agreement will have a meaningful impact for the citizens who live and work around these facilities. By agreeing to install pollution controls on gasoline storage tanks and loading racks, Mobil Oil Guam and Mobil Oil Mariana Islands will eliminate significant levels of hazardous air pollutants," said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division.
"This enforcement action should serve as a warning to other large companies that they need to ensure that each part of their operations complies with the law – even facilities that are more than 7,000 miles from their headquarters," said Jared Blumenfeld, the EPA's regional administrator for the Pacific Southwest region. "In this case, Exxon Mobil stepped forward to address the long-standing pollution problems of its Guam and Saipan subsidiaries."
As part of the settlement, both subsidiaries have agreed to install air pollution controls and monitors, submit required reports, and obtain appropriate permits. The two subsidiaries estimate that they will spend more than $15 million to bring the two bulk gasoline terminals into compliance with the Clean Air Act, reducing their yearly discharge of volatile organic compounds by close to 400 tons.
Bulk gasoline terminals are large storage tank facilities where gasoline is loaded into tank trucks for distribution to gasoline service stations. Vapors containing volatile organic compounds and hazardous air pollutants, including the known human carcinogen benzene, can leak from storage tanks, pipes and tank trucks as they are loaded.
Today’s settlement was lodged in the U.S. District Court for Guam and is subject to a 30-day public comment period and final court approval. A copy of the consent decree is available on the Justice Department Web site at http://www.justice.gov/enrd/Consent_Decrees.html.
Justice Department Sues to Permanently Enjoin<br /> Atlanta-Area Tax Return PreparersRead the Press Release
WASHINGTON-- The United States has filed suit asking the U.S. District Court for the Northern District of Georgia to permanently bar Saloum A. Njie and his company, MIAAS Associates LLC, from preparing federal tax returns for others, the Justice Department announced today.
According to the government’s complaint, since at least 2004, the defendants have prepared tax returns containing material misrepresentations of fact, which defendants knew or should have known were false. The government alleges that the defendants prepare customers’ tax returns that either claim the earned income tax credit for customers who do not qualify for the credit, or overstate the credit amount to which customers are entitled.
Additionally, the complaint alleges that defendants have continued this unlawful practice despite three separate investigations by the Internal Revenue Service, each of which found numerous violations of federal tax law and resulted in thousands of dollars in monetary penalties.
The complaint alleges that defendants’ tax preparation scheme resulted in more than $1 million in understated federal income tax liabilities for their customers, for returns prepared between 2006 and 2009.
Since 2001, the Justice Department’s Tax Division has obtained more than 465 injunctions to stop the promotion of tax fraud schemes and the preparation of fraudulent returns. Information about these cases is available on the Justice Department Web site.
Justice Department Settles Lawsuit Against Pasco, Washington, Company to Enforce Employment Rights of National GuardsmanRead the Press Release
WASHINGTON – The Justice Department announced today that it has entered into a consent decree with Milne Enterprises Inc., d/b/a Milne, Nail, Power Tool & Repair, to resolve the department’s complaint alleging violations of the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA).
The department’s complaint, filed today in the U.S. District Court for the Eastern District of Washington, alleges that Milne violated USERRA by failing or refusing to promptly reemploy Robert Brian Robinson upon his return from military service and by retaliating against him after he exercised his right to reemployment. Mr. Robinson enlisted in the Army National Guard in November 2006. He served on active duty for seven months beginning in March 2007, and later served an additional 15 months, with a tour in Iraq. Upon receiving his first honorable discharge in October 2007, Mr. Robinson sought reemployment, but the department’s complaint alleges Milne failed or refused to reemploy Mr. Robinson. The department’s complaint also alleges that Milne retaliated against Mr. Robinson after he sought reemployment. Under the terms of the consent decree, Milne is required to pay Robinson $13,500 in back pay and other damages and prohibits Milne from retaliating against any persons who exercise their rights under USERRA.
USERRA was enacted in 1994 to protect service members from being disadvantaged in their civilian careers due to serving in the uniformed services. Subject to certain limitations, USERRA requires that individuals who leave their jobs to serve in the U.S. military be timely reemployed by their civilian employers in the same position, or a comparable position, to the position that they would have held had they not left to serve in the military.
"The men and women who put themselves in harm’s way to serve our country deserve to know that they are not also risking losing their jobs when they return home," said Thomas Perez, Assistant Attorney General for the Civil Rights Division. "The department is committed to safeguarding the employment rights of our men and women in uniform."
The Labor Department’s Veterans’ Employment and Training Service investigated and attempted to resolve Robinson’s USERRA complaint before referring it to the Justice Department for litigation.
The Civil Rights Division of the Department of Justice remains committed to the vigorous enforcement of USERRA. Additional information about USERRA can be found on the Justice Department’s Web site at:www.usdoj.gov/crt/emp as well as on the Labor Department’s Web site at http://www.dol.gov/vets/programs/userra/.
Justice Department Files a Complaint Alleging Employment Discrimination by City University of New York, John Jay CollegeRead the Press Release
WASHINGTON – The Justice Department filed a lawsuit alleging that John Jay College engaged in a pattern and practice of discrimination by requiring all non-U.S. citizens to present certain work authorization documents, to the exclusion of other acceptable documents, thereby imposing unnecessary and discriminatory hurdles to employment for work authorized non-U.S. citizens. John Jay College is a New York City public college in the City University of New York (CUNY) system.
The Immigration and Nationality Act (INA) prohibits employers, both private and public, from imposing different or greater employment eligibility verification (I-9) standards on non-citizens as compared to U.S. citizens. Nevertheless, John Jay College imposed different and greater requirements on non-U.S. citizens as compared to applicants and employees who were U.S. citizens.
"Every individual who is authorized to work in this country has the right to know they will be free from discrimination as they look for a job, and that they will be on the same playing field as every other applicant or worker," said Thomas E. Perez, Assistant Attorney General for the Justice Department’s Civil Rights Division.
John Jay, until sometime in 2009, required more or different employment eligibility verification documents issued by INS or DHS for non-citizens, as compared to U.S. citizens, in order for non-U.S. Citizens to either be hired or re-verify their employment eligibility. Moreover, the department found that John Jay College fired a lawful permanent resident based upon her citizenship status after rejecting her valid work authorization documents.
The employee provided John Jay with her unrestricted Social Security card and driver’s license for the purpose of employment verification. John Jay required that she also produce her Green Card, even though the documents she had already produced were legally sufficient for a showing of employment eligibility. John Jay’s standard practice or operating procedure resulted in a violation of the INA, commonly referred to as document abuse.
The Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) is responsible for enforcing the anti-discrimination provisions of the INA, which protect U.S. citizens and certain work-authorized individuals from citizenship status discrimination. The INA also protects all work-authorized individuals from national origin discrimination, over-documentation in the employment eligibility verification process, and retaliation.
For more information about protections against employment discrimination under the immigration laws, call 1-800-255-7688 (OSC’s worker hotline) (1-800-237-2525, TDD for hearing impaired), 1-800-255-8255 (OSC’s employer hotline) (1-800-362-2735, TDD for hearing impaired), or 202-616-5594. Email [email protected], or visit the Web site at www.justice.gov/crt/osc.
Fourth New Orleans Police Officer Charged in Danziger Bridge CaseRead the Press Release
WASHINGTON – A one-count bill of information filed today in federal court charges New Orleans Police Department (NOPD) Officer Robert Barrios with conspiring with fellow NOPD officers to obstruct justice by covering up a police-involved shooting in the days after Hurricane Katrina, the Justice Department announced today.
The Sept. 4, 2005, shooting on the Danziger Bridge left two civilians dead and four others seriously injured. According to the bill of information, Barrios and other officers rode in a large Budget rental truck to the Danziger Bridge, where they encountered a group of civilians who were walking across the bridge to get food and supplies from a supermarket.
On the east side of the bridge, officers fired at the group of civilians, killing one man and seriously wounding four members of a family. Officers then traveled to the west side of the bridge, where they encountered Lance and Ronald Madison, who were crossing the bridge on their way to the dentistry office of one of their other brothers. On the west side of the bridge, an officer shot and killed Ronald Madison, a 40-year-old man with severe mental and physical disabilities.
The bill of information charges Barrios with agreeing with other officers to obstruct justice during the investigations that followed the shooting. Specifically, it charges that Barrios and other officers discussed the stories that they would tell about what happened on the bridge and that, on Jan. 25, 2006, before the officers gave formal, audiotaped statements about the incident, they gathered with supervisors in an abandoned and gutted out building, where they again went over the stories they would tell on tape. The bill of information alleges that the purpose of the conspiracy Barrios joined was to provide false and misleading information in order to ensure that the shootings would appear to be legally justified and that the involved officers would therefore be shielded from liability. The defendant faces a possible maximum sentence of five years in prison and a fine of $250,000.
These charges against Barrios follow guilty pleas from three other former NOPD officers involved in the Danziger Bridge case. Michael Lohman, a former lieutenant, pleaded guilty to conspiring to obstruct justice, and admitted that he knew of, facilitated and participated in the creation of false reports about the shooting. Jeffrey Lehrmann, a former NOPD detective who then became an agent with U.S. Immigration and Customs Enforcement, pleaded guilty to covering up a felony, and admitted that he too participated in the cover-up of the Danziger Bridge shooting. Lehrmann admitted during his plea hearing that officers had coordinated efforts to provide false statements, and that a supervisor assigned to investigate the shooting had made up witnesses and planted evidence. Most recently, on April 7, 2010, former NOPD Officer Michael Hunter pleaded guilty to conspiring to obstruct justice and to covering up a felony he observed while he was on the bridge on Sept. 4, 2005. Hunter, in his plea hearing, admitted that he drove the Budget truck to the Danziger Bridge on the day of the shooting, and that he and other officers opened fire on civilians who did not appear to have any weapons, and who were "casually walking on the roadway" when the police arrived. Hunter stated that a supervisor on the scene held out his assault rifle and, in a sweeping motion, fired repeatedly at civilians who had, by that time, taken cover behind a concrete barrier. Describing the shooting of Ronald Madison that occurred a few minutes later, Hunter stated that another NOPD officer shot Madison in the back, without warning, as Madison ran away, unarmed, following his brother toward a nearby motel. After Madison was shot, according to Hunter, the supervisor who had shot people earlier on the east side of the bridge, repeatedly kicked or stomped on Madison as he lay wounded and dying.
This case, which is ongoing, is being investigated by the New Orleans Field Office of the FBI, and is being prosecuted by Deputy Chief Bobbi Bernstein and Trial Attorney Forrest Christian of the Justice Department’s Civil Rights Division, along with Assistant U.S. Attorney Julia K. Evans for the Eastern District of Louisiana.
Financial Fraud Enforcement Task Force Launches StopFraud.govRead the Press Release
President Obama’s Financial Fraud Enforcement Task Force today announced the launch of StopFraud.gov. StopFraud.gov is a one-stop shop for the American people to learn how to protect themselves from fraud and to report it wherever - and however - it occurs. It will also serve as a hub of information about the task force’s work.
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 Financial Fraud Enforcement Task Force is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud, but one of our best partners in the fight is a vigilant, informed public," said Robb Adkins, Executive Director of the Financial Fraud Enforcement Task Force. "Throughout government there are resources to help hardworking, honest Americans protect themselves from fraud and report fraud, and StopFraud.gov will connect the public with those valuable tools."
StopFraud.gov combines resources from a wide range of federal agencies on ways consumers can protect themselves from fraud and report fraudulent activity. It also features access to the latest announcements, press releases, speeches and information regarding the Financial Fraud Enforcement Task Force.
The Financial Fraud Enforcement 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, visit StopFraud.gov.
Federal Officials Close the Investigation into the Death of Martin Lee AndersonRead the Press Release
WASHINGTON -- The Justice Department will not pursue federal criminal civil rights charges against the eight Bay County, Fla., Boot Camp staff members involved in the incident that resulted in the death of 14-year-old Martin Lee Anderson, the department announced today.
Officials from the Civil Rights Division of the Justice Department, the U.S. Attorney’s Office for the Northern District of Florida, Office of Intergovernmental and Public Liaison, the Community Relations Service and the FBI met today with Anderson’s parents and their representatives to inform them of this determination. The department’s decision is based on the facts developed during a comprehensive independent investigation.
The department devoted significant time and resources to investigate the tragic events of Jan. 5, 2006 in Panama City, Fla., surrounding Anderson’s death. A team of experienced prosecutors and agents reviewed the thousands of pages of evidence generated by the state investigation and criminal trial. They conducted a detailed and lengthy analysis of a NASA-enhanced video recording of the events that preceded Anderson’s death. Federal officials also took numerous additional investigative steps, including, but not limited to, conducting independent interviews of more than 40 witnesses and a review of Bay County Boot Camp procedures.
Under the applicable federal criminal civil rights laws, prosecutors must establish, beyond a reasonable doubt, that an official "willfully" deprived an individual of a constitutional right, meaning that the official acted with the deliberate and specific intent to do something the law forbids. This is the highest standard of intent imposed by law. It is different and higher than the intent required for proof of the state offense with which the staff members had been charged. Neither accident, mistake, fear, negligence nor bad judgment is sufficient to establish a federal criminal civil rights violation.
After a careful and thorough review, a team of experienced federal prosecutors and FBI agents determined that the evidence was insufficient to pursue federal criminal civil rights charges. Accordingly, the investigation into this incident has been closed.
Federal Court Shuts Down Illinois Tax PreparerRead the Press Release
WASHINGTON - A federal judge in Chicago has issued a preliminary injunction against a Joliet, Ill., tax return preparer, the Justice Department announced today. The order bars Sidney Dove, individually and doing business as Sid’s Tax Service, from acting as a tax return preparer, representing customers before the Internal Revenue Service, and providing tax advice to others. The order remains in effect until further notice. The court had entered a temporary restraining order against Dove on April 1, 2010.
The court found that Dove prepared tax returns for customers containing false itemized deductions, and false business and rental expense deductions. The court found that Dove knew or should have known that the information reported on the returns he prepared was unrealistic and without a reasonable basis.
The government’s complaint alleged that Dove prepared returns for others claiming inflated or fabricated charitable contribution and business expense deductions, and false tuition and rental expense deductions. Court papers allege that the annual tax loss from Dove’s return preparation cost the government millions in lost tax revenue.
In the past decade, the Justice Department's Tax Division has obtained more than 465 injunctions against tax fraud promoters and tax return preparers. Information about these cases is available on the Justice Department's Web site.
Clinic Employee Pleads Guilty for Role <br /> in Fraudulent Testing SchemeRead the Press Release
Miami resident Hans Lobato pleaded guilty today to engaging in a fraudulent medical testing scheme, announced the Departments of Justice and Health and Human Services (HHS).
Lobato, 25, pleaded guilty today before U.S. District Court Judge Alan S. Gold in the Southern District of Florida to one count of conspiracy to commit health care fraud. As a result of his participation in the scheme, Lobato submitted or caused to be submitted $7.425 million in false or fraudulent claims to the Medicare program. Medicare paid approximately $5.336 million of those claims.
At sentencing, scheduled for July 23, 2010, Lobato faces a maximum penalty of 10 years in prison and a $250,000 fine. Lobato was originally charged by indictment in the Eastern District of Michigan, but consented to have his case transferred to the Southern District of Florida for his plea and sentencing.
According to the plea documents, Lobato and several co-conspirators opened a Detroit-area clinic called Ritecare LLC in August 2007. Lobato admitted that, at the direction of co-conspirators, he paid patient recruiters who brought beneficiaries to Ritecare. Lobato admitted knowing that the patient recruiters would use a portion of that money to pay the patients kickbacks for agreeing to be seen at Ritecare and subjecting themselves to medically unnecessary tests. Lobato admitted that he also paid kickbacks directly to Medicare beneficiaries in exchange for the beneficiaries subjecting themselves to medically unnecessary tests.
Lobato admitted that he instructed patient recruiters and Medicare beneficiaries to claim they had symptoms justifying medically unnecessary tests, including costly nerve conduction studies, on numerous occasions. Consequently, the patients’ medical records contained false symptoms allowing Ritecare to deceive Medicare as to the legitimacy and medical necessity of the tests.
Today’s guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge Andrew G. Arena of the FBI’s Detroit Field Office; and Special Agent in Charge Lamont Pugh III of the HHS Office of Inspector General’s (OIG) Chicago Regional Office.
The case was prosecuted by Senior Trial Attorney John K. Neal and Trial Attorney Gejaa T. Gobena of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.
Since the inception of Strike Force operations in March 2007, Strike Force operations in seven districts have obtained indictments of more than 500 individuals who collectively have falsely billed the Medicare program for approximately $1.1 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
Attorney General Holder Recognizes Nine Individuals, One Organization, <br /> for Outstanding Service to Crime VictimsRead the Press Release
Attorney General Eric Holder recognized nine individuals and one organization for outstanding work on behalf of crime victims in an awards ceremony hosted by the Department of Justice today.
The Attorney General’s annual victims’ service awards are presented as a prelude to the nation’s observance of National Crime Victims’ Rights Week, April 18-April 24, 2010. This year’s theme - “Crime Victims’ Rights: Fairness. Dignity. Respect,” - highlights the importance of affording crime victims these rights and recognizes individuals and organizations that have demonstrated a commitment to this effort.
The award presentation, along with the Candlelight Observance held yesterday in Washington, D.C., was organized by the Department of Justice’s Office of Justice Programs (OJP) and its Office for Victims of Crime (OVC). In addition to the Attorney General, others participating in the awards ceremony were Assistant Attorney General for OJP Laurie O. Robinson and Acting Director for OVC Joye E. Frost.
The recipients of today’s awards were nominated by their colleagues in the victim service and criminal justice fields. Their awards recognize their courageous responses in the aftermath of a crime, as well as their professional efforts to better serve the needs of victims with disabilities; to assist U.S. citizens victimized outside the United States; and to ensure that victims receive the compensation and other services available to them at the state and local level. The following awards were presented by the Attorney General:
National Crime Victim Service Award: Honors extraordinary efforts in direct service to crime victims.
Recipient: Americans Overseas Domestic Violence Crisis Center (AODVC), Portland, Ore., assists Americans who are survivors of domestic violence overseas. The center provides a continuum of services, including long-term case management, safety planning and relocation, legal assistance, professional counseling and assistance with basic needs.
Award for Professional Innovation in Victim Services: Recognizes a program, organization, or individual that has helped to expand the reach of victims’ rights and services.
Recipient: Gael Strack, San Diego. for advocating for victims of domestic violence and their children. She co-founded the first Family Justice Center in San Diego, which integrates multiple critical services for domestic violence victims, including legal, medical and police services, along with counseling, daycare and a comforting environment. In addition, she has taught women, students and community leaders about the signs of domestic violence through her many co-authored books, articles, classes and trainings.
Recipient: Barri Rosenbluth, Austin, Texas, for her leadership in the innovative design, policy development, and community engagement related to youth victims of dating and sexual violence. She created and expanded the Austin, Texas-based Expect Respect program, which provides counseling and support groups in the Austin-area for K-12 youth hurt by dating and sexual violence. This program serves thousands of youth and adults each year, and has become a model that is nationally recognized for addressing and preventing dating and sexual violence.
Allied Professional Award: Recognizes an individual or organization outside the victim assistance field for services or contributions to the victims’ field.
Recipient: Joanne Archambault, Addy, Wash., for her dedication to ensure that crime survivors receive competent, compassionate care, and that dangerous predators are brought to justice. She served for 23 years as a law enforcement officer with the San Diego Police Department. Since retiring, she founded the nonprofit organization, End Violence Against Women International, and Sexual Assault Training & Investigations Inc., which helps thousands of multidisciplinary professionals stay current through electronic newsletters, training materials, and other resources available on www.mysati.com.
Recipient: Carolyn Morgan, Philadelphia. for being an outspoken advocate for people with disabilities, particularly those who have been victims of crime. Ms. Morgan, who is herself a person with a disability, has worked with individuals and groups on both the local and state level to build awareness, educate, and foster collaborations with first responders. She co-founded Self-Advocates United As 1, an advocacy group comprised of people with intellectual disabilities.
Volunteer for Victims Award: Honors individuals for their uncompensated efforts to reach out to victims.
Recipient: Kelly Jolkowski, Omaha, Neb., for assisting families of the missing, following her own experience of her 19-year old son who has been missing since 2001. She and her husband, Jim Jokowski, founded Project Jason, a nonprofit organization that seeks to provide families of the missing with knowledge, raise public awareness about missing loved ones, and try to affect state laws with regard to the manner in which missing persons cases are handled by law enforcement. In a short time, Project Jason has assisted thousands of families, by raising public awareness through the media, disseminating posters, and providing hundreds of referrals.
Ronald Wilson Reagan Public Policy Award: Honors an individual whose leadership, vision, and innovation results in significant changes to public policy and practice benefiting crime victims.
Recipient: Larry Tackman, Albuquerque, N.M., retired as a director of the New Mexico Crime Victims Reparation Commission, and has been a diligent and progressive manager of crime victim compensation, victim assistance programs, and victims’ rights in New Mexico. Mr. Tackman was instrumental in the formation of the annual Advocacy in Action Conference and the Basic Victim Advocacy Training in New Mexico, which allows for victim service providers and allied professionals to receive the education and training needed to support the state’s crime victims. In addition, as the first president of the National Association of Victims of Crime Act Assistance Administrators, he helped establish its mission to focus on the identification and replication of promising practices to improve administrative oversight of funding programs to aid crime victims.
Federal Service Award: Honors exceptional contributions and extraordinary impact on behalf of victims in Indian Country, on military installations, in national parks, or in other areas governed by federal jurisdiction.
Recipient: Marcia L. Rinker, U.S. Attorney’s Office, Washington, D.C., for serving on the District’s Domestic Violence Fatality Review Board and the D.C. Homicide Coalition to develop ways to strengthen the resources available for crime victims in the District of Columbia. Ms. Rinker is the only homicide advocate and provides support to more than 30 homicide prosecutors, in addition to constantly ensuring that victims are aware of their rights and receive necessary services.
Federal Service Award: Honors exceptional contributions and extraordinary impact on behalf of victims in Indian Country, on military installations, in national parks or in other areas governed by federal jurisdiction.
Recipient: U.S. Army Master Sgt. Verlean K. Brown, Deployed Sexual Assault Response Coordinator, Sherwood, Ark., for implementing the Sexual Assault Prevention and Response program in a combat environment, and for establishing supportive relationship with the U. S. Air Force Sexual Assault Response Coordinators. She has assisted 100 service members and supervised and trained 200 victims’ advocates. In addition, MSG Brown has conducted more than 40 education and training classes for 2,000 soldiers, airmen, and civilians.
Special Courage Award: Recognizes extraordinary bravery in the aftermath of a crime or courageous act on behalf of a victim or potential victim.
Recipient: Michelle Corrao, Noblesville, Ind., was abducted 13 years ago at her own front door by three men. Kidnapped, raped and beaten unconscious, she was bound and thrown into a car trunk. She knew she would die, so she, with much difficulty removed her rings and bracelet and tucked them under the trunk carpet in hope that her body could eventually be identified. But from the terror and despair of the dark trunk came salvation in the face of off-duty Fort Wayne, Ind., Detective, Art Billingsley, who happened to make a stop when he saw some suspicious activity around the car. Ever since, Ms. Corrao was able to overcome her own victimization and has dedicated her career to share the extraordinary message of the profound impact that first responders have on victims to a broad audience including law enforcement, medical personnel, clergy, criminal justice students, prosecutors and government officials.
More information about National Crime Victims’ Rights Week, the Crime Victims Fund, and victim assistance and compensation programs is available at: www.ojp.gov.
15 April 2010
Statement from Attorney General Eric Holder on the Passing of Dr. Benjamin HooksRead the Press Release
"Today, we mourn the loss of Dr. Benjamin Hooks, one of our nation’s great civil rights leaders. Dr. Hooks served our country in many ways – as a pastor, a judge, a lawyer, an activist, a businessman and a veteran. During WWII, Staff Sergeant Hooks battled oppression overseas. He then returned home to fight for the cause of equal justice and the struggle for equal opportunity. Dr. Hooks’s extraordinary efforts in support of civil rights helped to open the doors of opportunity to the many who have followed in his footsteps, and his visionary leadership helped to steer the NAACP through one of its most challenging eras. Throughout his life, Dr. Hooks always, as he put it in his 1992 farewell address, ‘fought the good fight’ and ‘kept the faith.’
As we remember and honor his many achievements and contributions, our thoughts and prayers are with the Hooks family. Although Dr. Hooks will be sorely missed, there is much to celebrate in the life he lived, in the example he set and in the inspiration his memory will continue to provide our nation."
Site Owner Agrees to Pay for Cleanup of New Jersey Superfund SiteRead the Press Release
WASHINGTON—Wall Herald Corporation has agreed to pay approximately $20 million for past and future cleanup costs incurred by the federal government at the Monitor Devices Superfund site in Wall Township, N.J., according to a settlement filed today in federal court in Trenton, N.J., the Justice Department and U.S. Environmental Protection Agency (EPA) announced today.
Under the settlement, Wall Herald, a privately held corporation, will reimburse EPA for its investigation of soil and ground water at the site and the development of the cleanup plan. In addition, the money provided in the settlement will pay for the cost of completing the cleanup. The settlement agreement resolves a complaint filed in the district of New Jersey in 2007.
The Monitor Devices site is located in the industrial park section of the Monmouth Executive Airport. The ground water at the site is contaminated with hazardous chemicals, including trichloroethylene, which is a solvent used to clean metal parts that can cause nervous system effects, liver and lung damage.
"Today’s settlement demonstrates that we will ensure that Superfund sites in our communities around the country and here in New Jersey are cleaned up, and that parties responsible for those sites bear the cost of the cleanup," said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division.
"This settlement is proof positive that the Superfund process works," said Regional Administrator Judith Enck. "EPA didn’t just wait around for this company to agree to pay up, we went forward with the work we needed to do while negotiating this settlement."
Wall Herald is the current owner of the Monitor Devices site, and has owned the property since the early 1960s. From 1977 to 1980, Wall Herald leased a portion of the site to Monitor Devices Inc., a company that went bankrupt in 1988. Monitor Devices manufactured and assembled circuit boards used by companies in the computer industry and circuit panels that were plated with copper, lead, nickel, gold and tin. The manufacturing process generated wastewater which was discharged directly onto the ground, resulting in contaminated soil and ground water at the property.
In 1986, the New Jersey Department of Environmental Protection began investigating the extent of the soil, subsurface soil and ground water contamination and the site was added to the Superfund list that same year. EPA assumed the lead of the investigation into the extent of the ground water and soil contamination in the mid-90s and later determined that the ground water required remediation. EPA will begin the ground water cleanup this spring.
The consent decree, lodged in the U.S. District Court for the District of New Jersey, is subject to a 30-day public comment period and approval by the federal court. A copy of the consent decree is available on the Justice Department Web site at http://www.justice.gov/enrd/Consent_Decrees.html .
Miami Beach Hotel Developers Charged with Conspiring<br /> to Defraud United StatesRead the Press Release
WASHINGTON - Mauricio Cohen Assor and his son, Leon Cohen-Levy, each with residences in Miami Beach, Fla., have been charged in a criminal complaint with conspiring to defraud the United States, the Justice Department and the Internal Revenue Service (IRS) announced today. Both defendants were arrested in New York City this morning after a complaint was issued yesterday. A detention hearing is scheduled for Friday in New York.
According to court documents, Mauricio Cohen Assor and Leon Cohen-Levy were the developers and owners of several residential hotels known by the trade name Flatotel. In 2000, the defendants sold one of their New York hotels and generated proceeds of $33 million. The income earned from the sale of the hotel was never reported on United States tax returns by the Cohens or by any of their related entities.
According to court documents, the Cohens made extensive use of nominee entities formed in tax haven jurisdictions, including the Bahamas, the British Virgin Islands, Panama, Liechtenstein and Switzerland, in order to defraud the United States. As part of the conspiracy, the Cohens used foreign nominee entities to conceal their income and assets from the IRS, failed to file U.S. income tax returns, filed false income tax returns, falsified tax reporting forms, and caused the fraudulent preparation of false IRS forms to disguise their beneficial ownership in bank accounts held in nominee names.
According to court documents, Cohen Assor caused an account to be opened in the name of Whitebury Shipping Time-Sharing Ltd., a British Virgin Islands corporation. The account was opened at a private bank affiliated with a large international banking firm. According to IRS documents, Whitebury was the beneficial owner of the account opened in the nominee name. However, internal bank documents stated that Mauricio Cohen Assor was the true owner of the account. At its height, the Whitebury bank account had assets in excess of $45 million. From tax years 2003 through 2007, the Whitebury account generated at least $3.5 million of gross income. None of this income was reported to the IRS by the defendants.
According to court documents, the Cohens used another bank account in the name of their business, American Leisure Resorts, to pay for personal expenses and purchase luxury items for themselves and their family members. The Cohens used these funds to pay for their mortgage,
their living expenses, a $67,000 Dodge Viper automobile, a $188,000 Bentley automobile and $700,000 worth of other vehicles.
A criminal complaint merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the Cohens each face a maximum of 5 years in prison and a maximum fine of $250,000.
Acting Assistant Attorney General John DiCicco and Jeffrey H. Sloman, U.S. Attorney for the Southern District of Florida, commended the investigative efforts of the IRS agents involved in this case, as well as Senior Litigation Counsel Kevin M. Downing and Trial Attorneys Mark F. Daly and John E. Sullivan of the Tax Division, and Assistant U.S. Attorney Jeffrey A. Neiman, who are prosecuting the case.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at www.usdoj.gov/tax/.
Former U.S. Army Reserve Officer Pleads Guilty to Accepting Illegal Gratuities Related to Contracting When Serving at Camp Arifjan, KuwaitRead the Press Release
A former captain in the U.S. Army Reserve pleaded guilty today to accepting thousands of dollars in gratuities from a contractor during his deployment to Kuwait, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division.
Markus E. McClain, 31, of Brandon, Miss., pleaded guilty today before U.S. District Court Judge Reggie B. Walton in the District of Columbia to a criminal information charging him with accepting an illegal gratuity.
According to the court document, then-Lt. McClain served in 2004 in a unit at Camp Arifjan, Kuwait, responsible for administering contracts for buses, non-tactical vehicles and other materiel. According to the court document, representatives from a company that held a contract to provide buses to the U.S. military offered McClain cash and other things of value in return for the extension of its contract. While McClain initially declined this offer, he admitted he later accepted $15,000 in cash from a senior executive of the company. McClain admitted that this payment was for or because of actions he took in an effort to secure the extension of the company’s contract.
McClain faces up to two years in prison and a fine of $250,000 at sentencing. In addition, McClain agreed to pay $30,000 in restitution to the United States. A sentencing date has not yet been set by the court.
This case is being prosecuted by Trial Attorneys Richard B. Evans and Kevin O. Driscoll of the Criminal Division’s Public Integrity Section, and Trial Attorneys Mark W. Pletcher and Emily W. Allen of the Criminal and Antitrust Divisions. The case is being investigated by the Army Criminal Investigations Division, the Defense Criminal Investigative Service, the FBI, the Internal Revenue Service, the Special Inspector General for Iraq Reconstruction (SIGIR), U.S. Immigration and Customs Enforcement at the Department of Homeland Security, and members of the National Procurement Fraud Task Force and the International Contract Corruption Task Force (ICCTF).
Today’s charge is an example of the Department of Justice’s commitment to protect U.S. taxpayers from procurement fraud through the National Procurement Fraud Task Force. The National Procurement Fraud Initiative, announced in October 2006, is designed to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in contracting activity for national security and other government programs. The ICCTF is a joint law enforcement agency task force that seeks to detect, investigate and dismantle corruption and contract fraud resulting from U.S. Overseas Contingency Operations, including Afghanistan, Iraq and Kuwait.
Anyone with information concerning illegal conduct in the procurement of goods or services involving DOD contracts in Iraq or Afghanistan is urged to contact the National Procurement Fraud Task Force at 202-514-7023 or the Public Integrity Section at 202-514-1412.
Former NSA Senior Executive Charged with Illegally Retaining Classified Information, Obstructing Justice and Making False StatementsRead the Press Release
A federal grand jury in the District of Maryland has returned a 10-count indictment charging former National Security Agency (NSA) senior executive Thomas A. Drake with the willful retention of classified information, obstruction of justice and making false statements, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division.
According to the indictment, Drake, 52, was a high-ranking NSA employee from 2001 through 2008, where he had access to highly classified documents and information. The indictment alleges that between approximately February 2006 and November 2007, a newspaper reporter published a series of articles about the NSA. The indictment alleges that Drake served as a source for many of those articles, including articles that contained classified information. The indictment also alleges that Drake took a series of steps to facilitate the provision of this information to the reporter, including:
- exchanging hundreds of e-mails with and meeting with the reporter;
- researching stories for the reporter to write in the future by e-mailing unwitting NSA employees and accessing classified and unclassified documents on classified NSA networks;
- copying and pasting classified and unclassified information from NSA documents into untitled word processing documents which, when printed, had the classification markings removed;
- printing both classified and unclassified documents, bringing them to his home, and retaining them there without authority;
- scanning and emailing electronic copies of classified and unclassified documents to the reporter from his home computer; and
- reviewing, commenting on, and editing drafts of the reporter’s articles.
"As alleged, this defendant used a secret, non-government e-mail account to transmit classified and unclassified information that he was not authorized to possess or disclose. As if those allegations are not serious enough, he also allegedly later shredded documents and lied about his conduct to federal agents in order to obstruct their investigation," said Assistant Attorney General Lanny A. Breuer. "Our national security demands that the sort of conduct alleged here – violating the government’s trust by illegally retaining and disclosing classified information – be prosecuted and prosecuted vigorously."
"The FBI takes very seriously allegations involving government employees who willfully retain or disclose classified information they are not authorized to possess. Working with prosecutors, we will continue to investigate and pursue charges against these individuals whose actions cannot be justified or tolerated," said Arthur M. Cummings II, FBI Executive Assistant Director, National Security Branch.
The indictment alleges that Drake received training regarding the protection of classified information, including the instruction not to remove classified information from the NSA. The indictment also alleges that Drake signed acknowledgments affirming that any documents or information he intended for public disclosure were required to be submitted to the NSA for pre-publication review. At no time, according to the indictment, did the NSA authorize Drake to de-classify information or to disclose classified information to unauthorized persons, nor did the NSA authorize Drake to copy and print classified information in a manner that removed its classification markings or to possess classified documents or information at his home.
The indictment alleges that in approximately November 2005, a former congressional staffer asked Drake to speak with a reporter. Between November 2005 and February 2006, according to the indictment, Drake signed up for a free account and then paid for a premium account with an e-mail service that enabled its users to exchange secure e-mails without disclosing the sender or recipient’s identity. Using an alias, Drake allegedly then contacted the reporter and volunteered to disclose information about the NSA. The indictment alleges that Drake directed the reporter to create the reporter’s own secure e-mail account. After the reporter created such an account, Drake also allegedly required the reporter to agree to certain conditions, including never revealing Drake’s identity; attributing information gathered from Drake to a "senior intelligence official"; never using Drake as a single source for information; never telling Drake who the reporter’s other sources were; and not commenting on what people, to whom Drake recommended the reporter speak, said to the reporter.
Drake allegedly attempted to conceal his relationship with the reporter and prevent the discovery of evidence linking Drake to his retention of classified documents after the FBI began a criminal investigation into the disclosure of classified information. Specifically, Drake allegedly shredded classified and unclassified documents, including his handwritten notes that he had removed from the NSA; deleted classified and unclassified information on his home computer; and made false statements to FBI agents.
The indictment charges Drake with five counts of willfully retaining documents that relate to the national defense. These include four classified e-mails and an additional classified document. In addition, the indictment charges Drake with obstruction of justice for allegedly destroying and deleting documents with the intent to impede and obstruct the federal investigation into alleged disclosures of classified information. The indictment also charges Drake with four counts of making false statements to FBI agents.
Willful retention of classified documents carries a maximum penalty of 10 years in prison. Obstruction of justice carries a maximum penalty of 20 years in prison. The charge of making a false statement carries a maximum penalty of five years in prison. Each of the charged counts carries a maximum fine of $250,000.
The case is being prosecuted by Senior Litigation Counsel William M. Welch II of the Criminal Division and Trial Attorney John P. Pearson of the Criminal Division’s Public Integrity Section. This case is being investigated by the FBI and the NSA Office of Security & Counterintelligence. The National Security Division also provided assistance in this matter.
An indictment is merely an allegation. Defendants are presumed innocent unless proven guilty in a court of law.
Former Lee County, Mississippi, Deputy Sheriff Pleads Guilty to Civil Rights ViolationsRead the Press Release
WASHINGTON – Michael Shane Minich, 35, a former Lee County, Miss., Sheriff’s Deputy, pleaded guilty today before U.S. District Judge Sharion Aycock, in Aberdeen, Miss., to depriving citizens of their civil rights under color of law by secretly removing cash from their wallets during traffic stops, the Justice Department announced today.
The four-count information to which Mr. Minich pleaded guilty alleged that he deprived four different individuals, all of whom were Hispanic, of their constitutional right to be free of unreasonable search and seizure. Each offense carries a maximum possible penalty of one year in prison, one year of supervised release and a $100,000 fine. As an additional condition of his plea, Mr. Minich agrees to make no attempt at any time to regain his Mississippi Law Enforcement Professional Certification.
"A law enforcement officer who abuses his authority by depriving citizens of their civil rights not only violates the law, but also the public trust," Assistant Attorney General Thomas E. Perez for the Civil Rights Division said. "We will aggressively prosecute any law enforcement officer inclined to violate the most basic constitutional rights of our citizens."
"It is reprehensible when a law enforcement officer commits a crime against the people he has sworn to protect," stated Daniel McMullen, Special Agent in Charge of the FBI in Mississippi. "Citizens have the right to demand the highest level of competence and integrity from all law enforcement officers and anything less will not be tolerated. The investigation and prosecution of the small minority who abuse their positions continues to be a top priority for the FBI. I commend the investigators, the prosecutors and, especially Lee County Sheriff Jim Johnson, for their professional handling of this matter. Sheriff Johnson personally brought the actions of former deputy Minich to the attention of the FBI and worked hand in hand with our agents assigned to the Tupelo office during this investigation. "
Sheriff Johnson stated: "I want to thank the FBI and Special Agent in Charge Daniel McMullen, as well as the United States Attorney’s Office for the Northern District of Mississippi, for their assistance in this matter. The working relationship that my office has with the FBI allowed us to work together to investigate and prosecute this crime. My office will not tolerate this type of behavior from anyone, especially from someone that has sworn to uphold the law. Our goal was not only to see that justice was done, but to ensure that Mr. Minich would no longer be in a position to do this again."
This case was investigated by the Lee County Sheriff’s Office and the Federal Bureau of Investigation in the Tupelo, Miss., office and is being prosecuted by Assistant U.S. Attorney Robert W. Coleman, II, of the U.S. Attorney’s Office for the Northern District of Mississippi and Trial Attorney Erin Aslan of the Justice Department’s Civil Rights Division.
Detroit-Area Patient Recruiter Sentenced to 27 Months in Prison <br /> for Medicare Fraud SchemeRead the Press Release
A Michigan man was sentenced today in Detroit to 27 months in prison for his role in a wide-ranging conspiracy to defraud the Medicare program, announced the Departments of Justice and Health and Human Services (HHS). U.S. District Court Chief Judge Gerald E. Rosen also ordered Wayne Smith, of Jackson, Mich., to pay $4.9 million in restitution, jointly with co-defendants, and to serve three years of supervised release following his prison term.
Smith, 47, pleaded guilty on Dec. 10, 2009, to one count of conspiracy to commit health care fraud. Between approximately October 2006 and March 2007, Smith and his co-conspirators caused more than $6.5 million in false and fraudulent claims to be submitted to the Medicare program for services supposedly provided by Sacred Hope Center Inc., and Xpress Center Inc., purported infusion clinics. Medicare actually paid more than $4.9 million of those claims.
Evidence presented during the sentencing hearing established that beginning in approximately October 2006 and continuing until March 2007, Smith recruited more than 40 patients to Sacred Hope and Xpress Center. Both clinics existed for the purpose of causing fictitious claims for injection and infusion therapy services to be billed to Medicare. According to court documents, owners of Sacred Hope and Xpress Center, including Miami residents Daisy Martinez and Jose Rosario, came to Detroit to start the clinics because of heavy law enforcement scrutiny in Florida of fraudulent infusion clinics. Smith was hired to recruit and pay kickbacks to Medicare beneficiaries to come to the clinic. Daisy Martinez, Jose Rosario and more than a dozen other defendants have previously pleaded guilty or been convicted at trial for their roles in the two fraudulent clinics. Martinez was recently sentenced to 96 months in prison for her role in the scheme.
According to evidence presented in court, during the time that Sacred Hope and Xpress Center were open, the clinics routinely billed the Medicare program for services allegedly performed, but in reality the services were medically unnecessary and/or never provided. Evidence presented at sentencing and during the trial of Dr. Toe Myint, the doctor at Sacred Hope, showed that the clinics’ owners purchased only a small fraction of the medications for which the clinic billed the Medicare program. According to evidence presented at trial, medications at the clinic were prescribed based not on medical need, but based on what medications were likely to generate Medicare reimbursements.
Evidence presented at sentencing established that Medicare beneficiaries were not referred to Sacred Hope or Xpress Center by their primary care physicians, or for any other legitimate medical purpose, but were recruited by Smith to come to the clinic in exchange for the payment of kickbacks. Smith recruited the beneficiaries in downtown Detroit and drove them to the Detroit suburbs of Southfield and Livonia, Mich., where the clinics were located. Trial evidence showed that in exchange for the kickbacks Smith paid them, the Medicare beneficiaries visited the clinics and signed documents indicating that they had received the services billed to Medicare. Kickbacks came in the form of cash and prescriptions for controlled substances.
Today’s sentencing was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge Andrew G. Arena of the FBI’s Detroit Field Office; and Special Agent in Charge Lamont Pugh III of the HHS Office of Inspector General’s (OIG) Chicago Regional Office.
This case was prosecuted by Senior Trial Attorney John Neal and Trial Attorney Benjamin D. Singer of the Criminal Division’s Fraud Section. The FBI and HHS Office of Inspector General (HHS-OIG) conducted the investigation. The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.
Since the inception of Strike Force operations in March 2007, Strike Force operations in seven districts have obtained indictments of more than 500 individuals who collectively have falsely billed the Medicare program for approximately $1.1 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
Arkansas Private Banking System Barred from Operating<br /> by Federal CourtRead the Press Release
WASHINGTON - A federal judge in Fayetteville, Ark., has barred Wayne Hicks and his company, My Icis Inc., from operating a private banking system that allegedly helped customers avoid taxes by shielding their identities and other financial transactions from the Internal Revenue Service (IRS), the Justice Department announced today. Hicks and My Icis agreed to the injunction order. Hicks is serving a five-year prison sentence after pleading guilty to conspiracy to defraud the United States.
According to the government complaint in the civil injunction case, Hicks owned and operated My Icis, Inc., a Berryville, Ark., company that helped customers set up purportedly anonymous bank accounts to hide their identities, income and other financial transactions, including deposits, wire transfers and bill payments. According to the complaint, Hicks admitted in his criminal case that My Icis helped customers "get out of the traditional banking system and successfully shield their financial transactions from the government, more specifically the IRS, and thereby avoid paying federal income taxes." Hicks also admitted that, from 2003 through 2006, his customers deposited approximately $100 million in his banking system. Hicks promoted his scheme through Web sites, seminars and online newsletters.
According to the complaint, Hicks also promoted his banking system at Pinnacle Quest International (PQI) seminars in 2005 in the Mexican resorts of Cancun and Ixtapa. On March 31, 2010, eight people associated with PQI were convicted of tax, wire fraud and money laundering charges by a federal jury following a month-long trial in Pensacola, Fla. The United States also obtained a civil injunctionagainst PQI and its principals on May 16, 2008.
John A. DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division, thanked Grayson Hoffman, the Justice Department trial attorney who handled the case, and Sean Flannery, the IRS revenue agent who conducted the investigation.
In the past decade, the Justice Department’s Tax Division has obtained more than 465 injunctions against tax fraud promoters and dishonest tax return preparers. Information about these cases is available on the Justice Department’s Web Site.
Arkansas Man Sentenced for Conspiring to Commit Murders of African-AmericansRead the Press Release
WASHINGTON – The Justice Department announced that Paul Schlesselman was sentenced today on federal charges for conspiring to murder dozens of African-Americans, including then-Senator and presidential candidate Barack Obama, because of their race.
On Jan. 14, 2010, Schlesselman pleaded guilty to one count of conspiracy, one count of threatening to kill and inflict bodily harm upon a presidential candidate, and one count of possessing a firearm. Today, U.S. District Judge J. Daniel Breen sentenced Schlesselman to 10 years in prison and three years supervised release.
Schlesselman of West Helena, Ark., admitted that he conspired to murder several people, with a focus on targeting African-Americans. He stated that beginning on or about Sept. 1, 2008, and continuing until Oct. 22, 2008, he conspired to transport firearms and ammunition in interstate commerce, steal firearms from a licensed firearm dealer and transport in interstate commerce a short-barreled shotgun, all for the purpose of committing murders, robberies and burglaries. Schlesselman acknowledged that he intended to culminate his racially-targeted killing spree by assassinating then-Senator Obama.
"Our nation has made great progress in advancing civil rights, but this unthinkable conspiracy is a reminder that hate-fueled violence continues to be a very real problem in so many communities," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "Tragedy was averted thanks to the capable work of the Crockett County Sheriff’s Department and their willingness to work with the ATF, the Secret Service and the FBI."
"Crimes committed against individuals because of their race will not be tolerated," said Lawrence J. Laurenzi, U.S. Attorney for the Western District of Tennessee. "I commend the work of the investigative agencies in thwarting what could have been a series of tragic events."
This case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives; the U.S. Secret Service, the Federal Bureau of Investigation; and the Crockett County Sheriff’s Office. The case was prosecuted by U.S. Attorney Larry Laurenzi, Assistant U.S. Attorney James Powell, and Civil Rights Division Trial Attorney Jonathan Skrmetti.
14 April 2010
Roanoke, Virginia, Neo-Nazi Sentenced for Threats, Witness IntimidationRead the Press Release
WASHINGTON -- William A. "Bill" White, the self-proclaimed commander of the neo-Nazi group the American National Socialist Workers Party, was sentenced today in federal court for threatening two individuals and for attempting to intimidate litigants in a federal housing discrimination lawsuit, the Justice Department announced.
White was sentenced by U.S. District Judge James C. Turk to 30 months in federal prison. White was also sentenced to three years of supervised release, during which he is prohibited from maintaining a Web site and using the Internet for employment or for a hobby.
White was convicted in December 2009, for three counts of communicating threats in interstate commerce, and one count of witness intimidation. One additional count of conviction for communicating threats in interstate commerce was dismissed by Judge Turk in February 2010.
In December, a jury found White guilty of threatening a bank employee who White mistakenly believed was assigned to handle a financial dispute involving his Citibank accounts. The defendant made dozens of phone calls to Citibank offices in an attempt to identify and locate the victim. White eventually discovered the victim’s office and home telephone numbers and email address, and left voice mails and sent her an email which referenced the murder of a federal judge.
The jury also found White guilty of using intimidation to delay or prevent the testimony of African-American tenants in a discrimination case against their landlord. On May 23, 2007, White mailed letters to the African-American tenants at their Virginia Beach, Va., homes, using the letterhead of the White National Socialist American Working Party, a Nazi swastika and White’s signature and title. The letters read, in part: "I do not know [name redacted] but I do know your type of slum [racial epithet], and I wanted you to know that your actions have not been missed by the white community … and we know that you are and will never be anything other than a dirty parasite – and that our patience with you and the government that coddles you runs thin." In addition to the letter, White also included a copy of the ANSWP Magazine titled "The Negro Beast and Why Blacks Who Work Aren’t Worth the Cost of Welfare." The letter and magazine were sent directly to the children of one of the victims.
White was also convicted for making threats to a university administrator who was responsible for implementing a diversity program. On Oct. 31, 2007, White called the victim’s home and office, attempting to verify her home address. White spoke with the victim’s secretary and told her that people like the victim should be hunted down and shot. Later that morning, White posted the victim’s personal information on various Web sites. Included in the postings was the text, "Go to their homes here," "We shot Marxists sixty years ago, we can shoot them again!" and "You know what to do. Get to work!"
"Our nation will not tolerate the acts of individuals who, fueled by bigotry and hate, threaten or intimidate individuals because of their race," said Assistant Attorney General Thomas E. Perez for the Civil Rights Division. "William White tried to disguise his hateful behavior as speech protected by the First Amendment. The jury rejected this defense in December, and this sentence demonstrates that all threatening and intimidating behavior, no matter how a perpetrator tries to mask it, will be subject to the same punishment under the law."
"Racial prejudice has no place in a civilized society. No one who lives in this community should feel at liberty to threaten or intimidate others as an expression of that racial animus. While the First Amendment protects everyone’s right to free expression, it does not protect hate-mongers like Bill White," said U.S.Attorney Timothy J. Heaphy for the Western District of Virginia. "The Department of Justice will react swiftly when anyone attempts to threaten or intimidate other people due to their race. The White case demonstrates our commitment to vigorously prosecuting anyone who commits a hate crime in this district."
The case was investigated by Special Agent David Church of the FBI. The case was prosecuted by trial attorneys John Richmond and Cindy Chung from the Civil Rights Division of the Department of Justice, with assistance from Assistant U.S. Attorney C. Patrick Hogeboom, III for the Western District of Virginia.
Justice Department Sues to Stop <br /> Birmingham-Area Tax Return PreparersRead the Press Release
The United States has asked a federal court to stop three Birmingham-area tax return preparers from preparing tax returns for others, the Justice Department announced today.
The government complaint, filed in U.S. District Court in Birmingham, alleges that John Lewis, Artels James and Perry Wright, working under the trade name "Tax World," prepare returns for customers that falsely claim the earned income tax credit and report other false income and expense items.
The government complaint alleges that Lewis, James and Wright prepared returns claiming the earned income tax credit, or claimed a far greater credit than warranted, on customers’ returns even though they knew or should have known that the customers were not entitled to the credit claimed.
The complaint alleges that defendants employed two schemes to wrongfully claim the credit: falsely claiming dependents or qualifying children where the claim could not be substantiated; and overstating earned income. The complaint also alleges that Lewis, James and Wright claimed fabricated business deductions on some customers’ returns.
Over the past decade, the Justice Department’s Tax Division has obtained more than 465 injunctions to stop tax fraud promoters and dishonest tax preparers. Information about these cases is available on the Justice Department Web site.
Former Hope, Idaho Resident Indicted on Tax ChargesRead the Press Release
WASHINGTON - A federal grand jury in Boise, Idaho, has returned an indictment charging Michael Fitzpatrick, formerly of Hope, Idaho, with tax evasion and failing to file tax returns, the Justice Department and Internal Revenue Service (IRS) announced today.
According to the indictment, which was returned yesterday and filed today, from about 2002 through 2004 Fitzpatrick marketed and sold products that claimed to allow people to completely eliminate their credit card debt and other types of debt. Fitzpatrick sold these debt elimination products through the internet and through paid agents. Fitzpatrick operated under several different business names, including Dynamic Solutions Inc. and NAES Inc.
The indictment further alleges that Fitzpatrick failed to file individual income tax returns for 2003 and 2004. Fitzpatrick used offshore bank accounts and bank accounts held under the names of businesses and nominees to disguise payments for personal expenses.
In addition, the indictment alleges that Fitzpatrick, as the President of Dynamic Solutions, a Washington corporation, failed to file a corporate income tax return for 2004. Additionally, as the President of NAES, a Nevada corporation, Fitzpatrick failed to file a corporate income tax return for 2004.
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, Fitzpatrick faces a maximum of 14 years in prison and a maximum fine of $700,000.
The case is being investigated by IRS - Criminal Investigation and is being prosecuted by Tax Division Trial Attorneys Lori A. Hendrickson and Jennifer R. Laraia.
Former ATF Agent Pleads Guilty to Making False StatementsRead the Press Release
Ramon Bazan, a former Special Agent of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), pleaded guilty today in U.S. District Court in the District of Columbia to a one-count criminal information charging him with making false statements in connection with a series of fraudulent visa referrals, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division.
According to court documents, Bazan, 57, served as the ATF Assistant Country Attaché at the U.S. Embassy in Mexico City, Mexico, from 2003 to 2008. During this time, the embassy maintained a visa referral program that helped expedite the processing of non-immigrant visa applications for Mexican nationals and other foreign citizens, whose travel to the United States would advance the national interests of the United States or U.S. diplomacy efforts in Mexico. As the ATF Assistant Country Attaché, Bazan had the authority to make visa referrals through this program.
From February 2006 through August 2008, Bazan submitted fraudulent visa referrals on behalf of Mexican nationals who were friends, and in some instances relatives, of Bazan’s colleagues. According to court documents, Bazan admitted that in connection with these referrals, he falsely represented that the visa applicants were official ATF contacts and that the applicants provided assistance necessary to the ATF. Bazan also admitted that he falsely claimed that certain applicants were associated with the ATF canine program and that the purpose of the applicants’ travel to the United States was to visit the ATF canine facility in Front Royal, Va. In fact, according to the court document, the individuals on whose behalf Bazan submitted the fraudulent visa referrals were not official contacts of the ATF, had not provided assistance to the ATF and were not associated with the ATF canine program.
Bazan faces a maximum sentence of five years in prison, a $250,000 fine and three years of supervised release following his prison term. Bazan’s sentencing is scheduled for July 9, 2010, before U.S. District Court Judge Paul L. Friedman.
This case is being prosecuted by Trial Attorneys Justin V. Shur and Marc E. Levin of the Criminal Division’s Public Integrity Section. This case is being investigated by the Department of Justice, Office of the Inspector General; U.S. State Department’s Bureau of Diplomatic Security; and ATF’s Office of Professional Responsibility.
Costa Rica-Based Business Opportunity Fraud Operator Sentenced to 115 Months in Prison by Miami JudgeRead the Press Release
WASHINGTON – Dilraj "Rosh" Mathauda was sentenced yesterday by U.S. District Court Judge Joan A. Lenard in Miami to a term of 115 months in prison and five years of supervised release for illegally operating a series of Costa Rica-based business opportunity fraud ventures, the Justice Department and the U.S. Postal Inspection Service announced. A hearing to determine the amount of restitution owed by Mathauda will be scheduled within 90 days.
On January 13, 2010, Mathaudapleaded guilty in Miami federal court to conspiracy to commit mail and wire fraud. He was arrested on July 30, 2009, following his indictment by a Miami federal grand jury on June 9, 2009. The indictment charged that Mathauda and his co-conspirators sold beverage and greeting card business opportunities, including assistance in establishing, maintaining, and operating such businesses. The charges form part of the government’s continued nationwide crackdown on business opportunity fraud.
Mathauda worked for USA Beverages Inc. and Omega Business Systems Inc. Beginning in 2005, USA Beverages sold business opportunities to own and operate coffee beverage display racks. USA Beverages rented office space in Las Cruces, N.M., to make it appear to potential purchasers that USA Beverages’ operations were fully within the United States. However, USA Beverages actually operated from Costa Rica.
Mathauda also worked for Omega, a Wisconsin and Florida corporation, that in 2007 and early 2008 sold business opportunities to own and operate greeting card display racks. Omega rented office space in Madison, Wis., to make it appear to potential purchasers that Omega’s operations were fully within the United States. However, Omega actually also operated from Costa Rica as well.
To fraudulently induce others to purchase the business opportunities, Mathauda and his co-conspirators made, and caused others to make, numerous false statements to potential buyers. Potential purchasers were falsely told that the companies were established years earlier, had a significant number of distributors across the country, and had a track record of success. Potential purchasers were referred to references who told false tales of their success as business opportunity owners. Through these and other misrepresentations, purchasers of the business opportunities were led to believe that they would likely earn substantial profits.
"As the prison sentence the court ordered in this case demonstrates, business opportunity fraud is a serious crime," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "This sort of scheme can and does cause major financial hardship for consumers who are trying to start a business and earn a living."
"This sentence illuminates our zeal to bring justice to those who threaten American consumers," said U.S. Postal Inspector in Charge, Henry Gutierrez, based in Miami. "The U. S. Postal Inspection Service, Department of Justice and all their law enforcement partners are dedicated to ensuring tough and appropriate consequences for those who opt to engage in these criminal scams."
"The U.S. Postal Inspection Service remains vigilant in investigating and rooting out business opportunity fraud. Consumers must be aware that false references and empty promises of assistance locating display racks and merchandise are extremely common in this type of scam," added U.S. Postal Inspector in Charge Pete Zegarac, based in Phoenix. "These companies took over the corporate identities of businesses established long ago – so even claims of being in business for many years must be viewed with great caution."
Assistant Attorney General West commended the investigative efforts of the Postal Inspection Service, as well as the Federal Trade Commission, which previously brought a related civil suit and made a criminal referral. This matter is being prosecuted by trial attorneys in the Justice Department’s Office of Consumer Litigation.
13 April 2010
Patient Recruiter Pleads Guilty for Role in Fraudulent Medicare Testing SchemeRead the Press Release
Detroit-area resident Emma King pleaded guilty today to engaging in a fraudulent medical testing scheme, announced the Departments of Justice and Health and Human Services (HHS).
King, 61, pleaded guilty today to one count of conspiracy to commit health care fraud before U.S. District Court Judge Patrick J. Duggan in the Eastern District of Michigan. King faces a maximum penalty of 10 years in prison and a $250,000 fine. A sentencing date has not yet been scheduled.
According to the plea documents, be ginning in approximately September 2007, King began recruiting and transporting patients to a clinic called Ritecare LLC. Ritecare, was owned and operated by co-conspirators and had locations in Detroit and Livonia, Mich. King admitted that she and a co-conspirator paid kickbacks to Medicare beneficiaries that she recruited and transported to Ritecare. According to the plea documents, the owners and operators of Ritecare were the source of the funds used by King to pay the Medicare beneficiaries she recruited. King admitted that she would keep part of the funds she received from the owners and operators of Ritecare to secure patients as a kickback for referring the Medicare beneficiaries she recruited. Typically, the owners of Ritecare would provide $100-$150 per patient King recruited, with King retaining $50-$75 of that amount for the referral.
According to the plea documents, the patients King recruited had to subject themselves to medically unnecessary tests to receive the money. Per instructions from the owners and operators of Ritecare, King admitted that she instructed the patients to claim they had certain symptoms to trigger medically unnecessary tests. Consequently, the patients’ medical records contained false symptoms allowing Ritecare to deceive Medicare as to the legitimacy and medical necessity of the tests it performed.
King admitted that she was responsible for recruiting at least 269 patients to Ritecare. Through her recruitment efforts, King caused the submission of approximately $940,760 in false or fraudulent billings by Ritecare. Medicare paid approximately $533,643 on those claims.
Today’s guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge Andrew G. Arena of the FBI’s Detroit Field Office; and Special Agent in Charge Lamont Pugh III of the HHS Office of Inspector General’s (OIG) Chicago Regional Office.
The case was prosecuted by Senior Trial Attorney John K. Neal and Trial Attorney Gejaa T. Gobena of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.
Since their inception in March 2007, Strike Force operations in seven districts have obtained indictments of more than 500 individuals who collectively have falsely billed the Medicare program for approximately $1.1 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov
Justice Department Granted Order to Ensure Students in Walthall County, Mississippi, Have Equal OpportunitiesRead the Press Release
WASHINGTON – A federal court has ordered the Walthall County, Miss., School District to eliminate policies that have resulted in significant racial segregation among students in the school district, the Justice Department today announced.
The United States filed a motion on Dec. 21, 2009, in U.S. District Court for the Southern District of Mississippi arguing that the Walthall School District is in flagrant violation of a prior court order from 1970, the Equal Protection Clause and Title IV of the Civil Rights Act of 1964.
"More than 55 years after Brown v. Board of Education, it is unacceptable for school districts to act in a way that encourages or tolerates the resegregation of public schools," said Thomas E. Perez, Assistant Attorney General in charge of the Justice Department’s Civil Rights Division. "We will take action so that school districts subject to federal desegregation orders comply with their obligation to eliminate vestiges of separate black and white schools."
According to the motion, the district's practice of permitting hundreds of students – the vast majority whom are white – to attend schools outside their assigned residential attendance zone without restriction prompted a disproportionate number of white students to attend a single school in the district, leaving a number of other schools disproportionately black.
Indeed, evidence in the case suggested that the community regarded certain schools in the district as "white schools" or "black schools." The United States also asserted that officials in certain district schools grouped, or "clustered," white students together in particular classrooms, resulting in large numbers of all-black classes at every grade level in those schools.
The order issued today by the court requires the district to modify its transfer policy to permit students to transfer to a school outside their residential zone only if the student can demonstrate a compelling justification for the transfer. The court further ordered the district to implement protocols to ensure that students within district schools will hereafter be assigned to classrooms in a manner that will not lead to segregation.
The enforcement of the Equal Protection Clause and Title IV in school districts is a top priority of the Justice Department’s Civil Rights Division. Additional information about the Civil Rights Division of the Justice Department is available on its Web site at www.justice.gov/crt.
Former UBS Client Pleads Guilty to Hiding Assets<br /> in Secret Offshore Bank AccountsRead the Press Release
WASHINGTON - Paul Zabczuk, a resident of The Woodlands, Texas, pleaded guilty to filing a false tax return in Ft. Lauderdale, Fla., the Justice Department and Internal Revenue Service (IRS) announced today. Sentencing has been set for June 22, 2010, before Judge William Dimitrouleas of the U.S. District Court for the Southern District of Florida. Zabczuk remains free on $1 million bail pending sentencing, where he faces a maximum sentence of three years in prison.
According to court documents and statements made in court, Zabczuk admitted to filing a false tax return for 2004 wherein he failed to report that he had an interest in or a signature authority over financial accounts at UBS AG, one of Switzerland’s largest bank. He also failed to report income earned on his UBS Swiss bank account. The UBS account was opened in the name of ODF Limited, a nominee Bahamian corporation. For years 2002 through 2007, the tax loss associated with the ODF Limited account at UBS is approximately $267,597. The highest balance of all of the assets the defendant owned and controlled offshore was approximately $529,194.
According to court documents, Zabczuk provided consulting services relating to the purchase and sale of chemicals by companies involved in drilling for oil. Zabczuk directed his foreign clients to make payments to his company in offshore bank accounts he controlled in the Bahamas and in Switzerland. He also funded his offshore accounts by disguising payments made from his domestic corporation to his offshore corporation as commissions. Zabczuk would repatriate funds to the United States by making cash withdrawals at UBS branches in Nassau, Bahamas; London; and Zurich, Switzerland. He would also wire transfer funds from UBS AG to an agent in the People’s Republic of China, who would then purchase furniture and other antiques on his behalf, which were then sent to the United States for the defendant’s personal use and for resale.
According to court documents, in or about April 2009, with the assistance of a Swiss banker, Zabczuk transferred his funds from UBS AG to a smaller "off the radar" Swiss bank. The account at the second Swiss bank was opened in the name of a Panamanian nominee entity - Vangas Holdings. In September 2009, Zabczuk instructed the Swiss banker to transfer his assets to a bank in the People’s Republic of China.
In February 2009, UBS entered into a deferred prosecution agreement under which the bank admitted to helping U.S. taxpayers hide accounts from the IRS. As part of their agreement, UBS provided the United States government with the identities of, and account information for, certain United States customers of UBS’s cross-border business, including the defendant. Paul Zabczuk is the eighth former client of UBS to plead guilty to a tax felony.
Acting Assistant Attorney General John DiCicco and U.S. Attorney Jeffrey H. Sloman commended the investigative efforts of the IRS agents involved in this case, as well as Senior Litigation Counsel Kevin M. Downing and Trial Attorneys Mark F. Daly and John E. Sullivan of the Tax Division, and Assistant U.S. Attorney Jeffrey A. Neiman, who are prosecuting the case.
United States citizens who have an interest in, or signature or other authority over, a financial account in a foreign country with assets in excess of $10,000 are required to disclose the existence of such account on Schedule B, Part III of their individual income tax return. Additionally, United States citizens much file a Report of Foreign Bank and Financial Accounts (F-Bar) with the U.S. Treasury, disclosing any financial account in a foreign country with assets in excess of $10,000 for which they have a financial interest in or signature authority, or other authority over.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at www.usdoj.gov/tax/.
Former U.S. Army Colonel Pleads Guilty to Accepting Illegal Gratuities Related to Contracting in Support of Iraq WarRead the Press Release
A retired colonel in the U.S. Army pleaded guilty today to accepting thousands of dollars in gratuities from a contractor during his deployment to Iraq as a contracting officer’s representative, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division.
Kevin A. Davis, 52, of Springdale, Md., pleaded guilty today before U.S. District Court Judge Reggie B. Walton in the District of Columbia to a criminal information charging him with three counts of accepting an illegal gratuity. According to the court document, Col. Davis served in 2004 as the senior member of the source selection board responsible for the award of a contract valued at nearly $12 million to build and operate several Department of Defense warehouses around Iraq. In the period during and after the solicitation of the warehouse contract, Davis accepted two airplane tickets and $50,000 in cash from the contractor who submitted the successful bid for the contract. Davis admitted that he accepted the airplane tickets and money with the understanding and belief that they were for or because of his assistance to the contractor who received the warehouse contract.
"Today’s guilty plea by a retired colonel in the U.S. Army is a powerful reminder that fraud can corrupt even those we think of as incorruptible," said Assistant Attorney General Lanny A. Breuer. "The Public Integrity Section and our law enforcement partners will continue to unravel these complex and wide-ranging contractor fraud schemes in Iraq, Afghanistan and Kuwait."
"This guilty plea by Kevin Davis, a co-conspirator in a large contract fraud scheme, is further evidence of SIGIR’S collective efforts to root out public corruption within the Iraq program," said Stuart W. Bowen Jr., Special Inspector General for Iraq Reconstruction (SIGIR). "SIGIR remains committed to investigating wrongdoing and enforcing accountability in concert with our partner law enforcement agencies."
"This case illustrates that the Defense Criminal Investigative Service (DCIS) and its law enforcement partners, in conjunction with the Department of Justice, will not stand to have the contracting process circumvented for personal gain. Cleaning up contract fraud in Southwest Asia, to include bribery and gratuities, is the highest priority for DCIS. While we applaud this result today, it also sets forth a good example of conduct that cannot - and will not - be tolerated," said James Burch, Deputy Inspector General for Investigations, DCIS.
"Today's plea is a perfect example of our collaborative and continued commitment to investigate and hold accountable all those who would commit fraud against the U.S. Army," said Brigadier General Colleen McGuire, the Provost Marshal General of the Army and the Commanding General of the U.S. Army Criminal Investigation Command. "The Army's Criminal Investigation Command continues to work in cooperation with our inter-agency law enforcement partners in theaters around the world to protect Army and National interests."
Davis faces up to two years in prison and a fine of $250,000 per charged count. In addition, Davis agreed to pay $62,500 in restitution to the United States. A sentencing date has not yet been scheduled by the court.
This case is being prosecuted by Trial Attorneys Richard B. Evans and Kevin O. Driscoll of the Criminal Division’s Public Integrity Section, and Trial Attorneys Mark W. Pletcher and Emily W. Allen of the Criminal and Antitrust Divisions. The case is being investigated by the Army Criminal Investigations Division, the Defense Criminal Investigative Service, the FBI, the Internal Revenue Service, the Special Inspector General for Iraq Reconstruction (SIGIR), U.S. Immigration and Customs Enforcement at the Department of Homeland Security, and members of the National Procurement Fraud Task Force and the International Contract Corruption Task Force (ICCTF).
Today’s charges are an example of the Department of Justice’s commitment to protect U.S. taxpayers from procurement fraud through the National Procurement Fraud Task Force. The National Procurement Fraud Initiative, announced in October 2006, is designed to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in contracting activity for national security and other government programs. The ICCTF is a joint law enforcement agency task force that seeks to detect, investigate and dismantle corruption and contract fraud resulting from U.S. Overseas Contingency Operations, including Afghanistan, Iraq and Kuwait.
Anyone with information concerning illegal conduct in the procurement of goods or services involving DOD contracts in Iraq or Afghanistan is urged to contact the National Procurement Fraud Task Force at 202- 514-7023 or the Public Integrity Section at 202-514-1412.
Former Owner and CEO of Kentucky Business Pleads Guilty for Role in Conspiracy to Inflate Personal Earnings as Part of Purchase AgreementRead the Press Release
The founder and chief executive officer of Image Entry Inc., pleaded guilty today for his role in a conspiracy to inflate his earnings resulting from the company’s 2001 acquisition by SourceCorp Inc., announced Assistant Attorney General of the Criminal Division Lanny A. Breuer and U.S. Attorney James T. Jacks of the Northern District of Texas.
Bill D. Deaton, 62, of Ocala, Fla., pleaded guilty before U.S. Magistrate Judge Paul D. Stickney to a one-count criminal information charging him with conspiracy to commit wire fraud. Image Entry is a London, Ky., data processing company with facilities located in the southeastern and midwestern United States. SourceCorp, a consulting and information management corporation located in Dallas, purchased Image Entry in March 2001.
According to court documents and evidence presented at the hearing, the purchase agreement between Image Entry and SourceCorp contained three elements: approximately $32.8 million paid to Deaton at closing; an additional approximately $11 million would be held back and paid during the three succeeding years if Image Entry met its earnings targets; and an additional amount, referred to as an "earn out," of up to $25 million to be paid in three annual installments if Image Entry exceeded its target earnings. Specifically, in the first and second years after the purchase, the earn out would be triple the amount by which Image Entry exceeded its earnings target. In year three, the earn out would be calculated at quadruple the amount by which Image Entry exceeded its earnings target.
Deaton admitted that he and others conspired to fraudulently inflate Image Entry’s reported earnings, and subsequently Deaton’s earn out payments, by failing to report and recognize operating expenses incurred by Image Entry. Instead, Deaton admitted that he and his co-conspirators diverted the operating expenses for payment by Deaton using funds drawn from non-Image Entry accounts under Deaton’s control. According to the plea agreement, up to $971,036 in Image Entry operating expenses were diverted and paid in this manner, thus fraudulently inflating the incentive payments Deaton received by $1.9 million.
Deaton also admitted that he and others fraudulently inflated Image Entry’s reported earnings, and thereby Deaton’s earn out payment, by causing Image Entry employees to limit or entirely omit certain quality control procedures for a customer, the U.S. Department of Commerce, National Oceanic and Atmospheric Administration. Deaton admitted that Image Entry continued to recognize revenues as if the quality control procedures were still being performed.
According to court documents, Michael Wayne Sulfridge was Image Entry’s former vice-president of corporate finance and reported directly to Deaton. Deaton admitted that he paid Sulfridge additional compensation and bonuses, beyond his established salary, from Deaton’s personally-owned funds drawn from non-Image Entry accounts. Deaton admitted that these payments were not reflected as part of Image Entry’s operating expenses.
Deaton admitted that he and Sulfridge signed false certifications and provided them to SourceCorp, which falsely represented that Image Entry’s financial statements and the results of its operations and cash flows were presented fairly and in accordance with generally accepted accounting principles.
Sulfridge pleaded guilty on May 15, 2009, to a criminal information charging him with one count of conspiracy to commit wire fraud and securities fraud, and one count of tax evasion. A sentencing date is not currently scheduled in this matter.
At sentencing Deaton faces a maximum penalty of five years in prison and a fine of $250,000. Sentencing has been scheduled for July 2, 2010.
The case was prosecuted by Assistant Chief William H. Stapleton Jr., of the Criminal Division’s Fraud Section and James Etri of the U.S. Securities and Exchange Commission, acting as a Special Attorney assigned to the Criminal Division. The case was investigated by the FBI. The U.S. Attorney’s Office for the Northern District of Texas provided assistance in this case.
The SEC and the Criminal Division are Co-Chairs of the Securities Fraud Working Group of the Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
Federal Court Shuts Down Florida Tax PreparerRead the Press Release
WASHINGTON - A federal district court in Florida has permanently barred Jacksonville resident Shirley Clark from preparing tax returns for others, the Justice Department announced today. Judge Marcia Morales Howard of the U.S. District Court for the Middle District of Florida entered the permanent injunction against Clark and her firm, Nichet Corp. Clark consented to the injunction, which requires her to turn over her customer list to the Justice Department.
The government in the case alleged that Clark prepared at least 1,250 federal tax returns for her customers from 2004 until 2007 and claimed nearly $750,000 in fraudulent fuel tax credits on those returns. The complaint also alleged that Clark prepared returns that fabricated income and expenses for customers in order to fraudulently maximize the earned income tax credit.
The fuel tax credit is available only to taxpayers who use fuel to operate farm equipment or for other off-highway business uses. The complaint alleged that Clark fraudulently claimed this credit for truck drivers who were not qualified to receive the credit. The complaint also asserted that Clark claimed absurdly large credits by falsely reporting purchases of huge quantities of gasoline; in most cases, the cost of the gasoline was more than the customers’ annual income.
Fuel credit scams are on this year’s IRS list of the Dirty Dozen Tax Scams. In the past few years the Justice Department has obtained injunctions shutting down many tax preparers who claim the phony credits on customers’ returns.
In the past decade, the Justice Department’s Tax Division has obtained more than 465 injunctions against tax fraud promoters and tax return preparers. Information about these cases is available on the Justice Department’s Web site.
12 April 2010
Wyoming Used Car Dealer Sentenced to 37 Months in Prison<br /> for Odometer Tampering Fraud SchemeRead the Press Release
WASHINGTON – Randy Lee (aka Jimmy Lee) was sentenced today in connection with an odometer tampering scheme that defrauded scores of victims in and around Colorado, the Justice Department announced. U.S. District Court Judge Alan B. Johnson in Cheyenne, Wyo., sentenced Lee to a term of 37 months in prison and a term of 3 years of supervised release during which he cannot be involved in the sale of motor vehicles. The court will determine the amount of restitution Lee owes within 90 days.
On Jan. 21, 2010, after a two-week trial, a federal jury in Cheyenne convicted Lee on eleven of fourteen felony counts with which he was charged. The jury convicted Lee of one count of conspiracy, five counts of odometer tampering, and five counts of securities fraud related to fraudulent motor vehicle titles. The jury acquitted Lee of two counts of providing false odometer certifications and one count of mail fraud. According to the charges and the evidence presented at trial, from as early as 2002 and through at least 2006, the defendant defrauded buyers of used motor vehicles by misrepresenting the mileage of the vehicles when sold.
On July 23, 2009, a Casper, Wyo., federal grand jury returned an indictment charging Lee and a co-defendant, Jay Lee, in a 28-count indictment alleging the above offenses, all of which related to an odometer tampering scheme. Jay Lee remains at large. Anyone with information on his whereabouts is asked to contact the law enforcement officials identified below.
At trial, the jury heard evidence that the defendants, who bought and sold vehicles on behalf of a Cheyenne used auto dealership, purchased pickup trucks in Wyoming and surrounding states, rolled back the odometers to false, lower mileages, obtained fraudulent Wyoming titles, and then resold the trucks to auto dealers and consumers in Wyoming and Colorado. The odometers were often rolled back more than 100,000 miles. While some of the vehicles were sold with notice of an odometer discrepancy, none were sold with information about the size of the discrepancy.
"This type of scheme defrauds consumers out of one of the biggest investments they will ever make. Dishonest dealers who roll back odometers cheat customers out of their hard-earned money, impede intelligent buying choices, and raise safety concerns by misrepresenting the true condition of the vehicles they sell," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "The Justice Department will seek tough sentences for those who engage in these illegal practices."
Assistant Attorney General West thanked the agencies that worked collaboratively to achieve this result. The underlying investigation was conducted by the Wyoming Department of Transportation’s Office of Compliance and Investigation and the U.S. Department of Transportation’s National Highway Traffic Safety Administration in Denver. The case was prosecuted by attorneys in the Office of Consumer Litigation in the Justice Department’s Civil Division. The case was prosecuted by David Sullivan and Alan Phelps of the Department of Justice’s Office of Consumer Litigation.
UBS Client Pleads Guilty to Failing to Report over $1 Million<br /> in Swiss Bank AccountsRead the Press Release
WASHINGTON - Harry Abrahamsen, a resident of Oradell, N.J., pleaded guilty today to failure to file a Report of Foreign Bank or Financial Accounts (FBAR), the Justice Department and Internal Revenue Service (IRS) announced. In his plea, Abrahamsen admitted that he concealed over $1 million in Swiss bank accounts.
Abrahamsen made his first appearance in federal court and pleaded guilty before U.S. District Judge Dennis M. Cavanaugh to a one-count Information which charges him with willful failure to file a report of foreign bank and financial accounts.
At his plea hearing, Abrahamsen admitted that he failed to file an FBAR for calendar year 2005. Abrahamsen also failed to report his account at UBS AG in Switzerland on his individual income tax return for that year and failed to report a second account opened in his daughter’s name. Additionally, Abrahamsen failed to report income deposited in and earned on the UBS bank accounts. The UBS accounts, originally opened in 1992, were transferred into the name of Primrose Properties S.A., a nominee Panamanian corporation, in 2000. Abrahamsen established Primrose in early 2000 with the assistance of a Swiss lawyer and Swiss banker, in order to hide these accounts from the IRS.
Abrahamsen also admitted that he funded the UBS accounts with approximately $1.3 million in false and inflated expenses paid by his pre-press printing business, SJT Imaging Inc., to a Swiss company. The inflated expenses were then deducted on SJT Imaging’s corporate tax returns, which allowed Abrahamsen to under report personal income for the years 1999 through 2003.
Judge Cavanaugh released the defendant on a $300,000 bond pending sentencing, which is scheduled for July 27, 2010. Abrahamsen faces a maximum potential penalty of five years in prison and a maximum fine of $250,000 or twice the amount of financial gain to the defendant or loss to the IRS. Additionally, Abrahamsen has agreed to pay a civil FBAR penalty based on 50% of the highest balance contained in his UBS account for calendar years 1999 through 2007.
Acting Assistant Attorney General John DiCicco and U.S. Attorney Paul J. Fishman commended the investigative efforts of the IRS agents involved in this case, as well as Trial Attorney Michael C. Vasiliadis, and Assistant U.S. Attorney Stacey A. Levine, who are prosecuting the case.
In February 2009, UBS entered into a deferred prosecution agreement pursuant to which the bank admitted to helping U.S. taxpayers hide accounts from the IRS. As part of their agreement, UBS provided the United States government with the identities of, and account information for, certain U.S. customers of UBS’s cross-border business.
United States citizens who have an interest in, or signature or other authority over, a financial account in a foreign country with assets in excess of $10,000 are required to disclose the existence of such account on Schedule B, Part III of their individual income tax return. Additionally, U.S. citizens much file an FBAR with the United States Treasury, disclosing any financial account in a foreign country with assets in excess of $10,000 for which they have a financial interest in or signature authority, or other authority over.
U.S. Sues Missouri Lawyer to Halt Alleged Tax-Fraud SchemesRead the Press Release
WASHINGTON – The United States has asked a federal court to permanently bar Philip A. Kaiser, a St. Louis tax lawyer, from promoting several allegedly fraudulent tax schemes, the Justice Department announced today. According to the civil injunction suit, filed in the U.S. District Court in St. Louis, Kaiser has sold schemes that help wealthy clients:
- Use sham transactions to claim massive charitable contribution deductions, with little or no money actually going to any legitimate charity;
- Evade income tax on business earnings by using sham transactions with sham corporations to reduce customers’ reported federal income tax liabilities;
- Illegally circumvent the contribution limits for Roth IRAs; and
- Evade federal income tax on gains from stock sales by using the Derivium tax scheme to disguise the sales as "loans."
In an example detailed in the government complaint, two Chesterfield, Mo., dentists allegedly used Kaiser’s charitable-contribution scheme to claim more than $750,000 in charitable tax deductions for purported contributions for the benefit of two St. Louis-area private schools when in fact, according to the complaint, the schools have received less than $2,000.
Under another scheme, referred to as the PIRAC scheme, Kaiser allegedly helps customers with existing businesses evade Roth IRA contribution limits, and later withdraw funds from their Roth IRAs without paying income tax. An example in the complaint alleges that a Clayton, Mo., couple who owned an executive search firm participated in Kaiser’s PIRAC scheme. The IRS allegedly audited the couple’s tax returns, and the couple agreed to pay additional tax, interest and penalties of $74,123, relating to their participation in Kaiser’s scheme. The complaint says that the couple has sued Kaiser alleging legal malpractice. Trial of that case in the Circuit Court for St. Louis County, Mo., is scheduled for May 3, 2010.
The complaint alleges that the IRS conducted an investigation of 75 self-directed Roth IRA accounts established under Kaiser’s direction. The investigation revealed that, for 56 of those accounts, approximately $145,000 in customers’ initial Roth IRA contributions grew to over $9,979,921. The other 19 customers were able to turn their initial contributions into $35.5 million.
The Internal Revenue Service’s recently announced list of the "Dirty Dozen" tax scams for 2010 includes abusive Roth IRA schemes.
Since 2001, the Justice Department’s Tax Division has obtained more than 460 injunctions to stop the promotion of tax fraud schemes and the preparation of fraudulent returns. Information about these cases is available on the Justice Department Web Site.
More Than $40 Million Worth of Gold, Silver and Jewelry Forfeited in International Money Laundering CaseRead the Press Release
More than $40 million worth of gold, silver and other jewelry forfeited in an international money laundering investigation have arrived in Austin, Texas, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division; Special Agent in Charge John P. Gilbride of the Drug Enforcement Administration’s (DEA) New York Field Division; and Eugene C. Corcoran, U.S. Marshal for the Eastern District of New York. The jewelry was originally seized as the result of a money laundering investigation that identified two companies in the Colon Free Zone in Colon, Panama, that were responsible for laundering narcotics proceeds from the United States.
"This forfeiture of more than $40 million in jewelry should remind criminals around the globe that they will be found, prosecuted and stripped of assets that are not theirs to keep," said Assistant Attorney General Lanny A. Breuer. "With increased international cooperation, we are steadfastly working to forfeit money launderers’ dirty assets and proving that, in fact, crime doesn’t pay."
"This unique seizure represents a model of international cooperation, persistence and diligence," said DEA Special Agent in Charge John P. Gilbride. "Criminals who attempt to thwart the efforts of international law enforcement through complex trade-based money laundering schemes will not triumph. The DEA along with our partners will continue to pursue all avenues to deny drug traffickers and money launderers the one thing they value the most – their profit."
"The U.S. Marshals Service is proud to support our partners in the Drug Enforcement Administration and international law enforcement community in this highly successful asset seizure operation. This seizure demonstrates extreme skill, utilizing technology and strategic outreach to our international partners spreading the footprints of justice and the rule of law across the globe," said Eugene C. Corcoran, U.S. Marshal for the Eastern District of New York.
The investigation that resulted in this forfeiture led to the first U.S. indictment of an offshore business engaged in the illicit black market peso exchange, a money laundering operation through which narcotics proceeds earned in the United States are exchanged for Colombian pesos and then used to purchase goods in the Colon Free Zone. During the course of the investigation, Yardena Hebroni and Eliahu Mizrani were identified as major money launderers based in Panama. Hebroni and Mizrani used a wholesale jewelry business, Speed Joyeros S.A., and a related company identified as Argento Vivo S.A., to facilitate their illegal money laundering activities. Based on a joint investigation conducted with the government of Panama, Speed Joyeros S.A., Argento Vivo S.A., Hebroni and Mizrahi were charged with laundering millions of dollars in narcotics proceeds through their companies in Panama. Hebroni and both companies pleaded guilty to money laundering in the Eastern District of New York. Mizrahi, who had been a fugitive, later pleaded guilty to money laundering and was sentenced in February 2008.
According to evidence presented in the case, Hebroni and her companies were involved in a money laundering conspiracy that included coordinating and receiving drug proceeds from the United States through cash pick-ups, wire transfers, cashiers checks and third party bank checks. Specifically, Hebroni and Mizrahi operated and built Speed Joyeros S.A. and Argento Vivo S.A., which together did more than $100 million in business annually, knowing that the primarily Colombian-based customers were laundering millions of dollars in drug money from the United States through bulk purchases of jewelry. According to court documents, Speed Joyeros S.A. and Argento Vivo S.A. were heavily involved in the black market peso exchange.
During the course of the investigation, more than $2 million in U.S. currency was seized in the form of cashier and/or bank checks. Four checks totaling more than $862,000 were issued to a Panamanian-based company identified as Speed Joyeros S.A. Numerous drug-related assets were identified in Panama and later seized by Panamanian authorities in accordance with a seizure order issued in the Eastern District of New York as part of these cases.
On May 17, 2006, U.S. District Court Judge Jack B. Weinstein signed a final order of forfeiture directing that the government of Panama transfer custody of the assets seized in Panama to the government of the United States. The assets transferred to the United States include approximately 468 boxes of gold and silver jewelry, as well as gemstones and watches, weighing ten tons, seized from Speed Joyeros S.A. and Argento Vivo S.A.
This case was the first bilateral U.S./Panama investigation resulting in a Colon Free Zone company being seized and brought to justice in the United States.
The seizure and investigation was led by the DEA’s New York Field Division, Long Island District Office; DEA’s Panama Country Office; and the Criminal Division’s Asset Forfeiture and Money Laundering Section (AFMLS). The cases were prosecuted by Justice Department Trial Attorneys Laurel Loomis Rimon and Armando Bonilla, formerly of AFMLS, and Trial Attorney Eric Snyder, formerly of the Criminal Division’s Narcotic and Dangerous Drug Section. In addition, the U.S. Marshals Service was instrumental in the transfer of assets from Panama to the United States. The Criminal Division’s Office of International Affairs and the U.S. Attorney’s Office in the Eastern District of New York provided assistance throughout the investigation and prosecution of these cases. The Department of Defense was also instrumental by providing a C-130 aircraft from the U.S. Air Force’s 302nd Reserve Air Wing, Peterson Air Force Base in Colorado to transport the forfeited assets back to the United States.
The forfeited assets will be liquidated, with the final proceeds from those sales placed into the Department of Justice’s Assets Forfeiture Fund. The Assets Forfeiture Fund can be used to enhance future criminal investigations, recognize the critical assistance of our foreign law enforcement counterparts and support other law enforcement initiatives.
Los Angeles Business Owner Pleads Guilty to Submitting Nearly <br /> Half a Million Dollars in False and Fraudulent Claims to MedicareRead the Press Release
The owner and operator of a Los Angeles durable medical equipment (DME) company pleaded guilty today to submitting nearly one half of a million dollars in false claims to Medicare, announced the Departments of Justice and Health and Human Services.
Sylvester Ijewere, 49, pleaded guilty today before U.S. District Court Judge Dale S. Fischer in the Central District of California to one count of health care fraud. Ijewere, the owner of Maydads Medical Supply, admitted that between June 2007 and October 2009, he schemed with others to purchase fraudulent prescriptions and medical documents. Ijewere admitted that he used those documents to submit false claims to Medicare for expensive, high-end power wheelchairs and other DME. Approximately 50 percent of the Medicare beneficiaries to whom Ijewere claimed Maydads supplied with power wheelchairs and other equipment lived more than 100 miles from Maydads’ Los Angeles-area offices.
Ijewere admitted that he knew the beneficiaries who received the power wheelchairs did not need them or the other equipment they received from Maydads. Ijewere also admitted that he knew the doctor and beneficiary information he used to support Maydads’ false and fraudulent claims to Medicare came from fraudulent medical clinics and patient recruiters. As a result of this scheme, Ijewere admitted that he submitted or caused the submission of approximately $471,345 in false and fraudulent claims to Medicare through Maydads.
At sentencing, scheduled for Aug. 16, 2010, Ijewere faces a maximum penalty of 10 years in prison and a $250,000 fine.
Today’s result 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 (Cal DOJ); Glenn R. Ferry, Special Agent-in-Charge for the Los Angeles Region of the HHS Office of Inspector General (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 and Assistant U.S. Attorney Kerry C. O’Neill of the Central District of California. The case is being investigated by Cal DOJ and HHS OIG . 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.
Since their inception in March 2007, Strike Force operations in seven districts have obtained indictments of more than 500 individuals who collectively have falsely billed the Medicare program for approximately $1.1 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS OIG are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT) , go to: www.stopmedicarefraud.gov
Justice Department to Monitor Election in Walnut, CaliforniaRead the Press Release
WASHINGTON – The Justice Department today announced that it will monitor the municipal election on April 13, 2010, in the city of Walnut, Calif., to ensure compliance with the minority language requirements of the Voting Rights Act of 1965.
The Voting Rights Act requires certain jurisdictions with substantial language minority citizen populations to provide all voting materials and assistance in certain minority languages, as well as in English. In April 2007, the Justice Department brought a lawsuit against the city of Walnut alleging violations of the Voting Rights Act involving Korean-speaking and Chinese-speaking voters. The parties subsequently settled the lawsuit, and a federal court entered an order in the case in November 2007.
Under the Voting Rights Act, the Justice Department is authorized to ask the U.S. Office of Personnel Management (OPM) to send federal observers to areas that are specially covered in the act itself or by a federal court order. Federal observers will be assigned to monitor polling place activities for the election in Walnut according to the 2007 federal court order. The observers will watch and record activities during voting hours at polling locations in this jurisdiction, and Civil Rights Division attorneys will coordinate the federal activities and maintain contact with local election officials.
Each year, the Justice Department deploys hundreds of federal observers from OPM, as well as departmental staff, to monitor elections across the country. To file complaints about discriminatory voting practices, including acts of harassment or intimidation, voters may call the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.
Visit www.usdoj.gov/crt/voting/index.htm for more information about the Voting Rights Act and other federal voting laws.
9 April 2010
Former Jackson County Deputy Sentenced to 14 Years in Prison for Civil Rights ViolationRead the Press Release
WASHINGTON– A former Jackson County, Mo., sheriff’s deputy was sentenced in federal court today for violating the civil rights of a teenage girl whom he sexually assaulted in his patrol car, the Justice Department and the U.S. Attorney’s Office for the Western District of Missouri announced today.
Steven W. Burgess, 35, of Independence, Mo., was sentenced by U.S. District Judge Ortrie D. Smith this morning to 14 years in federal prison without parole.
On Nov. 12, 2009, Burgess pleaded guilty to depriving a 15-year-old girl of her Constitutional rights by sexually assaulting her while she was in his custody. Burgess was on-duty and in uniform when he encountered the victim and some friends in Haynes Park in Sibley, Mo., at approximately 2 a.m. on July 24, 2007. Burgess told the victim’s friends to leave the park, but ordered her to stay at the park with him.
Burgess then put the victim in handcuffs and, while patting her down, inappropriately touched her in a sexual manner. Burgess removed the handcuffs and told her to get into the car, keeping the door open and her feet touching the ground outside the car. Burgess stood in front of her and compelled her to perform oral sex on him while she sat in his patrol vehicle. At one point, Burgess made her get on her knees to perform oral sex on him.
Afterward, Burgess took the victim to her aunt’s house. He told her that she could not tell anyone about the forced oral sex, or he would disclose that she had been caught in the park drinking. Once inside the house, she told her family what had happened and was immediately taken to Children’s Mercy Hospital.
Burgess violated the victim’s right not to be deprived of liberty without due process of law, which includes the right to bodily integrity. Burgess used force against his victim and placed her in fear of death, serious bodily injury and kidnapping.
“A law enforcement officer who abuses his authority by sexually assaulting a child not only violates the law, but also the child’s civil rights and the public trust,” Assistant Attorney General Thomas E. Perez for the Civil Rights Division said. “Today’s sentence should remind any law enforcement officer inclined to violate the most basic Constitutional rights of our citizens that we will aggressively prosecute.”
“No one is above the law,” U.S. Attorney Beth Phillips said. “When a uniformed law enforcement officer violates the civil rights of a vulnerable victim, especially in such a repugnant manner, he must be held to the highest standard of justice. Today’s lengthy prison sentence holds this defendant accountable for violating the public trust and abusing his position of authority to victimize a young girl. We are sending a strong message to our community that civil rights violations won’t be tolerated.”
This case was prosecuted by Assistant U.S. Attorney K. Michael Warner and Trial Attorney Eric L. Gibson with the Criminal Section of the Civil Rights Division. It was investigated by the Jackson County Sheriff’s Department and the Federal Bureau of Investigation.
Clinic Owners Who Moved Medicare Fraud Scheme from Miami <br /> to Detroit Sentenced to Three Years in PrisonRead the Press Release
Miami residents Jose and Denisse Martinez were each sentenced today to three years in prison for their role in running a Canton, Mich.,-based drug infusion clinic designed to defraud Medicare, announced the Departments of Justice and Health and Human Services (HHS). U.S. District Court Judge Victoria Roberts also ordered Jose and Denisse Martinez to pay $649,000 in restitution, jointly with co-defendants, and to each serve three years of supervised release following their prison terms.
Jose Martinez, 33, and Denisse Martinez, 27, each pleaded guilty on Sept. 24, 2009, to one count of conspiracy to commit health care fraud. In approximately five months of operating the purported clinic, the defendants billed nearly $1 million in fraudulent claims to Medicare.
According to court documents, Jose Martinez opened RDM Centers Inc., a medical clinic purporting to specialize in providing injection and infusion services to Medicare beneficiaries, in September 2006. Jose Martinez’s then-wife, Denisse Martinez, managed and operated the clinic. According to court documents, the Martinezes came to Detroit from Miami for the sole purpose of committing Medicare fraud.
In their pleas, both defendants acknowledged that they hired Dr. Alan Silber and other employees to work at RDM Centers in order to create the appearance that the clinic was a legitimate health care facility providing necessary services to patients.
In their pleas, both Jose and Denisse Martinez admitted that during the time RDM Centers was open, the clinic routinely billed Medicare for services that were medically unnecessary or never provided. Both defendants admitted that they purchased only a small fraction of the medications for which the clinic billed the Medicare program. Both defendants also admitted that patients were prescribed medications at the clinic based not on medical need, but on which medications were likely to generate the highest Medicare reimbursements.
Denisse Martinez admitted in her plea that, despite having no medical training, she completed the clinic’s patient records by filling in, among other things, the "diagnosis" and "treatment" sections of the patient charts, which were then provided to Dr. Silber for his signature.
According to information contained in the plea documents, Medicare beneficiaries were not referred to RDM Centers by their primary care physicians, or for any other legitimate medical purpose, but rather were recruited to come to the clinic through the payment of kickbacks by co-defendant William Reeves. In exchange for their kickbacks, the Medicare beneficiaries would visit the clinic and sign false documents indicating that they had received the services billed to Medicare. Kickbacks came in the form of cash and prescriptions for controlled substances.
Jose Martinez stated in his plea that he provided cash to Reeves to use for the kickback payments to beneficiaries. Reeves recruited the Medicare beneficiaries from impoverished neighborhoods in central Detroit and drove them approximately 30 miles to RDM Centers. Denisse Martinez stated in her plea that she understood the patients at the clinic were induced to visit RDM Centers through the payment of kickbacks. Jose and Denisse Martinez also admitted to being aware that certain Medicare beneficiaries demanded that they be provided prescription drugs, including Vicodin, in exchange for their participation in the fraudulent scheme and that these drugs were in fact provided.
Between approximately November 2006 and March 2007, the Martinezes and their co-conspirators filed $970,631 in false and fraudulent claims with the Medicare program. According to court documents, Medicare paid more than $649,000 of those false claims.
Co-defendants Silber and Reeves were convicted by a federal jury on April 2, 2010, for their roles in the fraudulent scheme. Sentencing is scheduled for Aug. 6, 2010.
Today’s result was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge Andrew G. Arena of the FBI’s Detroit Field Office; and Special Agent in Charge Lamont Pugh III of the HHS Office of Inspector General’s (OIG) Chicago Regional Office.
The case was prosecuted by Special Assistant U.S. Attorney Thomas Beimers from the Eastern District of Michigan as well as Senior Trial Attorney John K. Neal and Trial Attorney Benjamin Singer of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.
Since their inception in March 2007, Strike Force operations in seven districts have obtained indictments of more than 500 individuals who collectively have falsely billed the Medicare program for approximately $1.1 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
8 April 2010
Ponzi Scheme Operator<br /> Pleads Guilty to Tax ChargesRead the Press Release
WASHINGTON - John S. Lipton, formerly of Mission Viejo and Laguna Hills, Calif., pleaded guilty today before U.S. District Judge Dale S. Fischer in Los Angeles to conspiracy to defraud the United States and tax evasion, the Justice Department and Internal Revenue Service (IRS) announced.
Lipton and several co-defendants were indicted on charges stemming from the operation of the Genesis Fund, a bogus foreign currency exchange investment fund that operated as a Ponzi scheme from May 1998 to June 2002 and received investments of millions of dollars. The remaining defendants are scheduled to begin trial in September 2010.
According to a plea agreement, Lipton admitted that he used, and conspired with others to use, foreign trusts, corporations, and bank accounts to receive distributions from the Genesis Fund and did not report these distributions or income to the IRS. Lipton also admitted that he directed the transfer of approximately 19 boxes of Genesis Fund documents that were responsive to a grand jury subpoena to Costa Rica. Lipton also admitted that he did not file any federal individual income tax return from 1989 through 2005.
According to the indictment, the defendants falsely claimed that investors received monthly returns of 4 percent, when investments were actually used to make "profit" distributions to defendants and early investors. Lipton was one of the founding members of the Genesis Fund and its principal manager. The defendants promoted the Genesis Fund as having no reporting obligations to the IRS. Bank accounts in the names of trusts and offshore bank accounts were allegedly used to receive distributions from the Genesis Fund that were not reported to the IRS. Some of the defendants allegedly created "disclosed" and "undisclosed" Genesis Fund accounts for themselves and certain Genesis Fund investors in order to conceal from the IRS all but a small portion of Genesis Fund distributions. In addition, some Genesis Fund investors were allegedly advised to create nominee offshore corporations and bank accounts to receive distributions from the Genesis Fund.
The indictment further alleges that to obscure the operations of the Genesis Fund and to limit scrutiny of its operations by investors and the government, the defendants caused the Genesis Fund to maintain no financial statements or other statements of operation. Additionally, in or about April 2000, to conceal the true nature of its operations from investors and the government, Genesis Fund’s administrative operations were relocated from Anaheim, Calif., to Costa Rica. At about the same time, paper records were moved to Costa Rica and electronic data on computers was destroyed.
Judge Fischer scheduled a sentencing hearing for Aug. 2, 2010.
Three defendants, Richard B. Leonard, Victor H. Preston, and Teresa R. Vogt, have entered guilty pleas in this matter. The trial of the remaining four defendants on the tax fraud and conspiracy charges is set for September 2010. A separate trial on the severed charges related to the Ponzi scheme will be scheduled after the tax fraud trial.
"The government will continue to unravel schemes promoted and used by taxpayers to evade their federal tax obligations," said John A. DiCicco, Acting Assistant Attorney General of the Justice Department’s Tax Division. "As April 15th approaches, taxpayers should be confident that those who promoted fraudulent tax evasion schemes will be investigated and prosecuted."
"The Genesis fund, that operated as a Ponzi scheme, led IRS agents on a financial trail from the Caribbean to Hong Kong to Costa Rica and numerous other offshore locations around the world," said Victor S O. Song, Chief, IRS Criminal Investigation. "This signals the new era of solving global financial fraud -- the veil of offshore secrecy has been lifted and the IRS will do what is necessary to expand international cooperation to obtain financial evidence."
Acting Assistant Attorney General DiCicco commended the special agents from the IRS - Criminal Investigation Division who investigated the case, as well as Tax Division trial attorneys Lori A. Hendrickson, Ellen M. Quattrucci, Danny N. Roetzel, and Matthew J. Kluge who are prosecuting the case. Acting Assistant Attorney General DiCicco also thanked the U.S. Attorney’s Office in Los Angeles for its valuable support throughout the litigation of this matter.
Phoenix Men Charged in Money Laundering <br /> and Tax Fraud SchemeRead the Press Release
WASHINGTON – Gino Carlucci and Wayne Mounts, both residents of Phoenix, were indicted today on money laundering and tax related charges, the Department of Justice and Internal Revenue Service (IRS) announced.
Carlucci was charged with conspiracy to commit money laundering, conspiracy to defraud the United States, filing a false income tax return, and witness tampering. Mounts was charged with conspiracy to commit money laundering and conspiracy to defraud the United States.
According to the indictment, Carlucci and Mounts created a scheme to defraud a tax return preparer named Joseph Flickinger as well as his taxpayer clients of funds and assets by operating a fraudulent casino investment scam. Carlucci and Mounts caused wire transfers from Flickinger and his clients to be made to bank accounts controlled by either Carlucci and Mounts that were purportedly related to an investment in a casino in Antigua. Carlucci and Mounts diverted these funds to themselves by using cash withdrawals, cashiers’ checks, and by otherwise causing their associates to give them the money.
According to the indictment, Carlucci filed a false income tax return for 2004 that failed to report any of the money he received in the scheme and used for his own benefit. Mounts failed to file a tax return for 2004 despite receiving substantial income from the scheme. Carlucci and Mounts used some of the money to buy a luxury boat that they hid from the government.
An indictment is merely a formal charge by the grand jury. Each defendant is presumed innocent unless and until proven guilty in a U.S. District Court.
If convicted, Carlucci faces a maximum potential sentence of 48 years in prison and a maximum fine of $1,250,000. If convicted, Mounts faces a maximum potential sentence of 25 years in prison and a maximum fine of $750,000.
The case is being prosecuted by Tax Division attorneys Richard Rolwing and Monica Edelstein. 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/.
Justice Department Signs Agreement with the Unified Government of Wyandotte County and Kansas City, Kansas, to Ensure Civic Access for People with DisabilitiesRead the Press Release
WASHINGTON - The Justice Department today announced an agreement with the Unified Government of Wyandotte County and Kansas City, Kansas, to improve access to all aspects of civic life for persons with disabilities. The agreement was reached under Project Civic Access (PCA), the department’s wide-ranging initiative to ensure that cities, towns and counties throughout the country comply with the Americans with Disabilities Act (ADA).
"Civic access is a civil right, and individuals with disabilities must have the opportunity to participate in public programs, services and activities on an equal basis with their neighbors," said Thomas E. Perez, Assistant Attorney General of the Civil Rights Division. "I commend officials from the Unified Government for making this commitment to its residents with disabilities, and for working with us to attain equal access to all of its programs, activities and services."
PCA was initiated to ensure that persons with disabilities have an equal opportunity to participate in civic life, a fundamental part of American society. As part of the PCA initiative, Justice Department investigators, attorneys and architects survey state and local government facilities, services and programs in communities across the country to identify the modifications needed for compliance with ADA requirements. The agreements are tailored to address the steps each community must take to improve access. This agreement is the 176th under the PCA initiative.
"We appreciate the commitment to accessibility and ADA compliance made by each of the 176 cities, counties, and other government entities who have entered into a PCA agreement with the Justice Department," said Assistant Attorney General Perez. "We hope that all local governments throughout the country are committed to achieving full compliance with the ADA, particularly as we prepare to celebrate the 20th anniversary of this landmark civil rights law in July."
Under the agreement announced today, the Unified Government of Wyandotte County and Kansas City, Kansas, will take several important steps to improve access for individuals with disabilities, such as:
- Making physical modifications to facilities surveyed by the department so that parking, routes into the buildings, entrances, service areas and counters, restrooms, public telephones, and drinking fountains are accessible to people with disabilities;
- Surveying other facilities and programs and making modifications wherever necessary to achieve full compliance with ADA requirements;
- Ensuring that buildings and outdoor facilities that will be built or altered by or on behalf of the Unified Government comply with the ADA’s architectural requirements;
- Posting, publishing and distributing a notice to inform members of the public of the provisions of Title II and their applicability to the Unified Government’s programs, services and activities;
- Officially recognizing the Kansas telephone relay service as a key means of communicating with individuals who are deaf, are hard-of-hearing, or have speech impairments and training staff in using the relay service for telephone communications;
- Undertaking the required planning and modifications to ensure equal, integrated access to emergency management for individuals with disabilities, including emergency preparedness, notification, evacuation, sheltering, response, clean up, and recovery;
- Developing a method for providing information for interested persons with disabilities concerning the existence and location of the Unified Government’s accessible services, activities and programs;
- Installing signs at any inaccessible entrance to a facility directing individuals with disabilities to an accessible entrance or to information about accessing programs and services at other accessible facilities; and
- Implementing a comprehensive plan to improve the accessibility of sidewalks, transportation stops, and pedestrian crossings by installing accessible curb ramps throughout Wyandotte County and Kansas City.
Located in northeast Kansas in the heart of the Midwest, Wyandotte County and its county seat, Kansas City, are home to an estimated 154,250 Kansans. According to census data, 24.6 percent of Wyandotte residents – about one in every four residents – is a person with a disability.
Today’s agreement was reached under Title II of the ADA, which prohibits discrimination against individuals with disabilities by state and local governments. The agreement requires most actions to be completed within 3 years. For the required accessibility modifications to sidewalks, pedestrian crossings, and transportation stops, which includes the installation of large numbers of curb ramps, the Unified Government will work with the disability community to prioritize and complete these modifications within 10 years. The department will actively monitor compliance with the agreement, which will remain in effect until the department has confirmed that all required actions have been completed.
People interested in finding out more about the ADA, today’s agreement with Wyandotte County and Kansas City, Kansas, the Project Civic Access initiative, or the ADA Best Practices Tool Kit for State and Local Governments can access the ADA Web page at www.ada.gov or call the toll-free ADA Information Line at (800) 514-0301 or (800) 514-0383 (TTY).
Idaho Businessman Pleads Guilty <br /> to Failure to Pay Employment TaxesRead the Press Release
WASHINGTON—Roberto Trevizo Corral, a resident of Nampa, Idaho, pleaded guilty today before U.S. Chief Magistrate Judge Candy W. Dale in Boise, Idaho, to one count of failure to collect and pay over employment taxes, the Justice Department and Internal Revenue Service (IRS) announced.
According to court documents, Corral is the president of AG Services Inc., also known as Corral Agriculture, Inc., an agricultural employer in Idaho that provides agricultural labor to area farmers.
According to the criminal information, during calendar year 2004 and continuing through Jan. 31, 2005, Corral willfully failed to truthfully account for and pay over to the IRS withheld income taxes and Federal Insurance Contributions Act (FICA) taxes owed on behalf of AG Services, Inc. and its employees.
According to the plea agreement, Corral admitted that he was responsible for paying over all of the payroll taxes his corporation was required to pay to the IRS, including AG Services, Inc.'s matching share of FICA tax, for calendar years 2002, 2003, 2004 and 2005. Corral admitted to willfully failing to pay over in excess of $700,000 in payroll taxes. Corral has agreed to pay restitution to the IRS of $771,252.
Sentencing is scheduled for June 28, 2010. Corral faces a maximum sentence of five years in prison and a maximum fine of $250,000.
Acting Assistant Attorney General John A. DiCicco of the Justice Department’s Tax Division commended the efforts of the special agents from IRS - Criminal Investigation Division who investigated the case, as well as Tax Division trial attorneys Christopher S. Strauss and John P. Scully who are prosecuting the case. Acting Assistant Attorney General DiCicco also thanked the United States Attorney’s Office in Boise, Idaho for its support in this matter.
Federal Court in Chicago Bars Tax Preparer <br /> from Preparing Returns for CustomersRead the Press Release
A federal judge in Chicago has permanently barred Matoi Rimes, individually and operating as Rimes Accounting Service, from preparing federal tax returns for anyone who is not a member of his immediate family, the Justice Department announced today. Rimes is also barred from owning, working for, or volunteering for a tax return preparation business.
The court also ordered Rimes to provide his customer lists to the government and to mail copies of the court order to his customers.
According to the government complaint, Rimes prepared 3,111 tax returns since Jan. 1, 2006. Court papers allege that Rimes inflated and fabricated deductions on his customers’ tax returns, and stole over $7,000 in improperly-claimed customer tax refunds using the Refund Anticipation Loan Program (RAL). On at least 16 customer returns submitted to RAL, Rimes falsely reported inflated refund amounts, compared to refund amounts actually claimed by customers. Rimes deposited the inflated refund amounts into his bank account and retained the difference between the inflated amount and the amount reported to his customers, without the consent or knowledge of those customers.
Based on examination results of a small portion of Rimes’ customers’ returns, court papers allege that actual government tax losses are over $230,000.
Since 2001, the Justice Department’s Tax Division has obtained more than 460 injunctions against tax-fraud promoters and tax preparers. Information about these cases is available on the Justice Department Web Site.
Federal Court Shuts Down Nebraska Tax PreparerRead the Press Release
WASHINGTON – A federal court in Lincoln, Neb., has issued a permanent injunction barring a Lexington, Neb., tax preparer, Donald R. Ondrak, and his company, Don Ondrak P.C., from preparing tax returns for others, the Justice Department announced today. Ondrak agreed to the injunction order.
The government complaint in the civil case alleged that Ondrak prepared federal income tax returns for customers that unlawfully understate income and employment tax liabilities by under-reporting income, overstating expenses and claiming improper deductions for non-deductible personal expenses.
The complaint said that Ondrak helped clients use sham entities and bogus transactions in order to fraudulently understate their tax liabilities. According to the complaint, the Internal Revenue Service examined approximately 400 returns that Ondrak prepared and found that a significant number of them understated the customer’s tax liability. The complaint said the tax loss from Ondrak’s alleged misconduct between 2004 and 2007 was estimated to be in the tens of millions of dollars.
In the past decade, the Justice Department’s Tax Division has obtained more than 460 injunctions against tax fraud promoters and tax return preparers. Information about these cases is available on the Justice Department’s Web Site.