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26 March 2010
Justice Department Settles with Louisiana School District to Ensure Students Have Equal OpportunitiesRead the Press Release
WASHINGTON - The Justice Department today announced that it entered into a settlement agreement with the Monroe City School District in Louisiana to address the educational inequities between schools serving virtually all black student populations and those schools that serve most of the district’s white students. The settlement agreement, in the form of a consent decree and subject to court approval, stems from a longstanding desegregation order governing the Monroe City School District to ensure that the district complies with Title IV of the Civil Rights Act of 1964, and provides all students with the equal protections of the law.
The consent decree will, among other things, address disparities between the courses offered at the district’s virtually all black high schools and its high school that serves almost all of the district’s white population, as well as a significant black population. For instance, at a 100 percent black high school, there were no Advanced Placement (AP) courses and only five Gifted and Honors classes. However, at the school with a population that is 43 percent white, the District offered over 70 Gifted, Honors and AP courses. The agreement requires the district to take specific steps to offer the same courses at every high school in the district, including AP, pre-AP, Honors and Gifted classes. Additionally, the agreement requires that the district work with a third-party organization, the Equity Assistance Center of the Intercultural Development Research Association, to ensure an equitable opportunity for all district students to participate in Gifted, Honors, pre-AP and AP programming. The district has already begun the process of engaging the Equity Assistance Center to address these inequities. http://www.justice.gov/crt .
"Education is the most important gift we can give to children to help them succeed, and all students must have access to a quality education that provides them with equal opportunities, regardless of their race," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "We will continue to ensure that all students have such access and will carefully scrutinize school districts that operate pursuant to federal desegregation orders to ensure that these districts are meeting their obligations to their students."
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
Former Department of Energy Employee Pleads Guilty to Criminal Conflict of InterestRead the Press Release
WASHINGTON – Donna J. Scott, 49, a former U.S. Department of Energy (DOE) employee, pleaded guilty today to criminal conflict of interest for personally participating in DOE’s purchase of furniture when she knew her husband had a financial interest in the deals, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney for the District of Maryland Rod J. Rosenstein. Scott’s husband, Timothy Scott, 56, also pleaded guilty today to making a false statement to federal agents when he denied having a financial interest in the furniture purchases.
According to court documents, Donna Scott, of Damascus, Md., was employed by the DOE in various positions between July 2006 and June 2008 in which she coordinated the use and renovation of DOE office space, including as the Assistant to the Director of the Office of Logistics and Facility Operations.
According to court documents, Donna Scott was tasked in 2006 with overseeing the renovation of the lobby and a conference room in a DOE building in Germantown, Md., including the acquisition of new furniture for these spaces. In July 2006, she recommended to a co-worker that the co-worker obtain price quotes for furniture from her husband, Timothy Scott. Timothy Scott provided these price quotes to Donna Scott’s co-worker, both of which referenced Timothy Scott as the manufacturer’s representative. According to court documents, in August 2006, Donna Scott’s co-worker attempted to purchase the furniture using the price quotes provided by Timothy Scott, but was advised that she needed two additional price quotes for each transaction to satisfy competitive bidding requirements. Donna Scott’s co-worker communicated to her the need for the additional price quotes. Donna Scott admitted that she subsequently obtained two additional price quotes for each transaction from her husband and provided them to her co-worker as the competitive price quotes. Donna Scott admitted that she knew, unlike the original price quotes, that none of these new price quotes referenced Timothy Scott by name. Moreover, the additional quotes bid a higher price for the furniture than the initial quote, making Timothy Scott’s original bid the lowest. The DOE ultimately purchased the furniture using the original price quote provided by Timothy Scott
Additionally, according to court documents, Donna Scott was assigned in April 2008 to oversee the renovation of the cafeteria in the DOE’s headquarters in Washington. In April and May 2008, Donna Scott selected furniture worth approximately $300,000 from particular manufacturers for the cafeteria renovation project. Donna Scott admitted that she knew these manufacturers’ representatives planned to use her husband as their dealer of record for these transactions, thus earning her husband a commission. In May and June 2008, Donna Scott arranged for the furniture to be purchased by the General Services Administration (GSA) on behalf of the DOE. As a result, Timothy Scott earned approximately $24,174 in commissions from the manufacturers.
On Sept. 25, 2008, Donna Scott signed and submitted a confidential financial disclosure report in connection with her employment at the DOE, omitting any reference to commissions received by her husband or any other reportable sources of income for him.
According to his plea agreement, federal agents interviewed Timothy Scott on March 24, 2009, about business he and his companies conducted related to the DOE, as well as Donna Scott’s role in his obtaining that business. Federal agents asked Timothy Scott if he had received any compensation related to the renovation of the headquarters cafeteria in 2008. Timothy Scott admitted that he lied to the agents, telling them he had attempted to get business and make sales during that renovation, but that he was unable to receive any compensation related to that project.
Donna and Timothy Scott each face maximum sentences of five years in prison and fines of $250,000 or the greater of twice the gross gain or loss from the offense. U.S. District Judge Peter J. Messitte has scheduled sentencing for June 3, 2010.
This case was prosecuted by Trial Attorney Timothy J. Kelly of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Stacy Dawson Belf of the District of Maryland. The case was investigated by the DOE and GSA Office of Inspector General.
Chicago Man Charged with Providing Material Support to Al Qaeda by Attempting to Send Funds OverseasRead the Press Release
CHICAGO — A Chicago man who claims to be acquainted with an alleged terrorist leader in Pakistan was arrested today on federal charges of providing material support to a foreign terrorist organization for allegedly attempting to provide funds overseas to al Qaeda, federal law enforcement officials announced. Although the defendant, Raja Lahrasib Khan, a Chicago taxi driver and native of Pakistan who became a naturalized U.S. citizen in 1988, allegedly discussed attacking a stadium in the United States this summer, there was no imminent domestic danger, officials said.
The investigation leading to Khan’s arrest is unrelated to a separate investigation that resulted in federal terrorism charges against Chicagoans Tahawwur Hussain Rana and David Coleman Headley in connection with the 2008 terror attacks in Mumbai and a plot to attack targets in Denmark, the officials added.
Khan, 56, of the city’s north side, was charged with two counts of providing material support to terrorism in a criminal complaint that was filed yesterday in U.S. District Court in Chicago and unsealed today following his arrest, announced Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois, and Robert D. Grant, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The investigation is continuing, they said.
Khan was arrested this morning while working in downtown Chicago without incident by the Chicago FBI’s Joint Terrorism Task Force. He was scheduled to appear at 3:30 p.m. today before U.S. Magistrate Judge Geraldine Soat Brown in Federal Court in Chicago.
"While there was no imminent danger in the Chicago area or elsewhere, these charges, once again, affirm that law enforcement must remain constantly vigilant to guard against domestic support of foreign terrorist organizations. I am deeply grateful to the FBI agents and other members of the Joint Terrorism Task Force for their extremely hard work on this matter," said Mr. Fitzgerald.
Mr. Grant said: "Over the past six months, FBI-led Joint Terrorism Task Forces across the country have disrupted plots, charged and apprehended a number of individuals and secured significant intelligence, which has been of benefit here and to our allies overseas. Notable as most of these successes have been, it also illustrates the reality of the environment we face today, along with the critical responsibility domestic law enforcement agencies and intelligence services have in protecting the public from the violent designs of others. It is a complex threat that we face and we are pleased with the results today," he added.
"Today’s arrest and charges are the result of an outstanding cooperative law enforcement and intelligence effort and underscore the domestic and international aspects of the terror threat we face," said David Kris, Assistant Attorney General for National Security.
According to a 35-page complaint affidavit, by at least 2008, Khan, who claims to have known Ilyas Kashmiri for approximately 15 years, learned that Kashmiri was working with al Qaeda, and that Kashmiri was purportedly receiving orders from al Qaeda’s leader, Osama bin Laden. According to Khan, during his meeting or meetings with Kashmiri, among other things, Khan learned that Kashmiri wanted to train operatives to conduct attacks in the United States; Kashmiri showed Khan a video depicting the detonation of an improvised explosive device; and Kashmiri told Khan that he needed money, in any amount, to be able to purchase materials from the "black market."
The complaint identifies Kashmiri as the leader in Kashmir of Harakat ul-Jihad-I-Islami (HUJI), a Sunni extremist group located in Pakistan and Kashmir with links to al Qaeda. In a reported interview last October, Kashmiri purportedly said that he had joined forces with al Qaeda. In January 2010, Kashmiri, together with a former Pakistani military officer, Rana and Headley, were indicted in Chicago for their alleged roles in a conspiracy to murder and maim persons in a planned attack against the facilities and employees of the Danish newspaper Morgenavisen Jyllands-Posten, in Denmark, as retribution for the publication of cartoons that depicted the Prophet Mohammed.
The charges against Khan allege that on Nov. 23, 2009, he sent a money transfer of approximately $950 from a currency exchange located on North LaSalle Street in Chicago to Individual A, who was in either Mirpur or Bhimber, in Pakistan. Khan later spoke with Individual A by telephone and instructed him to give "Lala" 25,000 Pakistani rupees (approximately $300) of the money he had sent. According to the affidavit, Khan told an undercover agent that "Lala," which means "older brother" in Urdu, is a nickname Khan uses to refer to Kashmiri, who he told the agent he had met most recently in 2008 in Miran Shah in northwest Pakistan. Khan also told the agent that Khan believed that his telephones were being monitored, and if Khan or the undercover agent were ever questioned about their discussions regarding "Lala," they should claim to have been referring to Khan’s actual older brother.
Just two weeks ago, on March 11, Khan and an associate, identified as "Individual B," allegedly had a discussion during which they appeared to talk about attacking a stadium in the United States in "August." Among other things, Khan described that bags containing remote controlled bombs could be placed in several different locations, and then "boom, boom, boom, boom." Khan further said that he would ask "Lala" [Kashmiri] to teach him how to conduct such an attack, the complaint alleges. However, there are no allegations that Khan either knew Kashmiri’s current whereabouts or had yet discussed his stadium plan with him.
On March 17, after agreeing to personally deliver to Kashmiri any funds that the undercover agent wanted to provide, Khan allegedly accepted $1,000 (ten $100 bills) from the agent. The complaint states that Khan accepted these funds after having had prior conversations with the undercover agent in which: Khan confirmed that Kashmiri was working with al Qaeda; Khan assured that Kashmiri would use the undercover agent’s funds to purchase weapons and, possibly, other supplies; Khan assured that he had provided Kashmiri with money in the past, including in approximately December 2009; and Khan discussed the possibility of having his son transport the money from the United States to England, where Khan would rendevous with his son, retrieve the money, and deliver it to Kashmiri in Pakistan.
On March 23, government agents at Chicago’s O’Hare International Airport came into contact with Khan’s son, who was traveling to England. During this contact, agents discovered that Khan’s son possessed seven of the ten $100 bills that the undercover agent had given to Khan, according to the affidavit.
Each count of providing material support to a foreign terrorist organization carries a maximum penalty of 15 years in prison and a $250,000 fine. If convicted, the court is required to impose a reasonable sentence under the advisory United States Sentencing Guidelines.
The ongoing investigation is being conducted by the Chicago FBI Joint Terrorism Task Force, with particular assistance from the Chicago Police Department, the Illinois State Police, and the Department of Homeland Security’s U.S. Customs and Border Protection and U.S. Immigration and Customs Enforcement.
The prosecution is being handled by Assistant U.S. Attorneys Christopher Veatch and Steven Dollear, of the Northern District of Illinois, with assistance from the Counterterrorism Section of the Justice Department’s National Security Division.
The public is reminded that a criminal complaint contains mere allegations that are not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
25 March 2010
Two Puerto Rico Police Officers Sentenced for Federal Civil Rights Charges Related to Fatal AssaultRead the Press Release
WASHINGTON – U.S. District Court Judge Daniel R. Dominguez sentenced former San Juan, Puerto RicoPolice Officers, Carlos Pagan Ferrer, 32, and Juan Morales Rosado, 32, today for their role in the fatal assault by San Juan officers against Jose Rivera Robles, an unarmed civilian, the Justice Department announced. Defendants Pagan Ferrer and Morales Rosado both received sentences of 10 years, after conviction at trial for using excessive force, resulting in bodily injury, and for committing various obstruction of justice offenses.
At trial, the government presented evidence that on July 20, 2003, in the course of arresting the victim at a Citgo gas station, defendants Morales Rosado and Carlos Pagan, as well as other co-defendants repeatedly kicked and otherwise assaulted Rivera Robles when he was lying face down on the ground, in no way resisting or posing a threat to the officers. DefendantAaronVidal Maldonado was the senior officer on the scene during the gas station beating, and failed to discourage the excessive force used by his subordinates. After this beating, defendant Vidal Maldonado directed officers to transport the badly injured, semiconscious victim to a nearby police station, where a co-defendant again assaulted the victim in Vidal Maldonado’s presence. The injuries to the victim caused by the beatings resulted in his death.
"Law enforcement officers who use their badges as an excuse to commit egregious acts of violence are an affront to the rule of law," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "The Civil Rights Division will continue to aggressively prosecute officers who abuse their power in this manner."
On December 20, 2009, co-defendants Elias Perocier Morales and Eliezer Rivera Gonzalez were sentenced to 10 years in prison and 6-and-a-half years in prison, respectively, for their roles in the unlawful beating. Co-defendants Aaron Vidal Maldonado and Jose Pacheco Cruz are scheduled for April 30, 2010.
Special Agent Luis Rivero of the FBI’s San Juan Office investigated this matter. The case was prosecuted by Assistant U.S. Attorney Antonio Bazan, Special Litigation Counsel Gerard Hogan, and Trial Attorney Avner Shapiro of the Justice Department’s Civil Rights Division.
Tennessee Man Sentenced to 183 Months in Prison for Burning Islamic CenterRead the Press Release
WASHINGTON – Senior Judge Robert L. Echols of the Middle District of Tennessee today sentenced Eric Ian Baker to 183 months in prison for vandalizing and burning down the Islamic Center of Columbia, Tenn., the Justice Department announced. Baker pleaded guilty on Sept. 18, 2009, to destruction of religious property and using fire to commit a felony.
Baker, 34, previously admitted to the court that he and two others constructed Molotov cocktail explosive devices, ignited them and used them to destroy the mosque on Feb. 9, 2008. Baker further admitted that he committed the arson because of the religious character of the property and that he painted swastikas and the phrase "White Power" on the mosque in the course of the arson.
One of Baker’s co-defendants, Michael Corey Golden, was sentenced to 171 months for his role in the arson. The other co-defendant, Jonathan Edward Stone, pleaded guilty but has not yet been sentenced.
"The right to worship without fear of this kind of violent interference is among our most fundamental civil rights," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "We will aggressively prosecute anyone who seeks to intimidate or injure any congregation because of what they believe, how they worship, or who they are."
"This type of crime strikes at the heart of our civil rights and religious freedoms in America. I am very pleased that through local, state and federal cooperation, all defendants responsible for this vile attack have been brought to justice," said U.S. Attorney Edward M. Yarbrough for the Middle District of Tennessee.
This case was investigated by the FBI, the Bureau of Alcohol, Tobacco, Firearms and Explosives, Tennessee State Bomb and Arson and the Columbia, Tenn., Police Department. Assistant U.S. Attorney Hal McDonough from the U.S. Attorney’s Office in Nashville and Trial Attorney Jonathan Skrmetti from the Civil Rights Division prosecuted the case.
Owner of Los Angeles-Area Company<br /> Sentenced to Nine Years in Prison for Medicare FraudRead the Press Release
A federal court issued an order yesterday sentencing the owner and operator of a Los Angeles-area durable medical equipment (DME) company to prison in connection with an approximately $1 million power wheelchair fraud scheme, announced 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 Office of Inspector General (OIG) for the Department of Health and Human Services (HHS); and Steven Martinez, Assistant Director in Charge of the FBI’s Los Angeles Field Office.
Leonard Nwafor, 44, was sentenced in absentia by U.S. District Judge John F. Walter of the Central District of California to nine years in prison. In addition, Nwafor was ordered to serve three years of supervised release following his prison term, pay $526,243 in restitution and $25,000 in fines, and forfeit more than $526,000 in stolen Medicare funds to the U.S. government.
Nwafor was convicted at trial in September 2008 of conspiracy to commit health care fraud and health care fraud. After his conviction, Nwafor fled the jurisdiction and is considered a fugitive.
At trial, evidence established that Nwafor, through his company, Pacific City Group Inc., aka Pacific City Medical Equipment, submitted $1,109,438 in fraudulent claims to Medicare. As a result of the fraudulent claims, Nwafor received $526,243 in payments from Medicare. The evidence presented at trial showed that almost all the claims Nwafor submitted to Medicare were for expensive, high-end power wheelchairs and wheelchair accessories that were not needed by the beneficiaries.
At trial, elderly and disabled Medicare beneficiaries testified that individuals known as "marketers" approached them on the street, at home or in church and encouraged the beneficiaries to give the marketers their Medicare numbers and other personal information in exchange for free power wheelchairs. Evidence presented at trial established that Nwafor billed Medicare for power wheelchairs on behalf of more than 170 beneficiaries, none of whom actually needed the wheelchairs. The power wheelchairs Nwafor claimed Pacific City provided to the beneficiaries can be billed to Medicare for up to $7,000 each.
The evidence also showed that Nwafor supplied power wheelchairs to beneficiaries who were not able to use the chairs. One beneficiary, who was blind, testified that he could not see to operate the wheelchair and never used it. The same beneficiary also testified that a delivery driver working for Nwafor and the delivery driver’s girlfriend paid him $200 to refer them to other Medicare beneficiaries.
Another beneficiary testified about the aggressive techniques marketers used to recruit her and her husband into the fraudulent scheme. This beneficiary testified that an individual purporting to be from Medicare, but who was actually associated with Nwafor and his co-conspirators, threatened to terminate the Medicare benefits of the beneficiary and her husband unless they accepted two power wheelchairs that the beneficiary and her husband did not need.
The evidence at trial included testimony from Los Angeles-area physicians whose names appeared on prescriptions Nwafor used to support his false claims to Medicare. One of these physicians, a psychiatrist, testified that he does not prescribe power wheelchairs as part of his practice, and had never written a prescription for one. Other physicians testified that the prescriptions bearing their names were phony and that their handwriting was not on any of the prescriptions.
After his conviction, Nwafor admitted in documents he filed with the court that he purchased the prescriptions and documents he used to support his false claims to Medicare from a co-conspirator for approximately $1,300 per prescription. One of Nwafor’s co-conspirators, Ajibola Sadiqr, admitted that he purchased fraudulent prescriptions and documents from Nwafor to perpetrate his own fraudulent power wheelchair Medicare fraud scheme. Sadiqr pleaded guilty and is scheduled to be sentenced on April 12, 2010.
The case was prosecuted by Trial Attorney Jonathan Baum, former Special Trial Attorney Spencer Turnbull and Assistant Chief John S. (Jay) Darden of the Criminal Division’s Fraud Section, with the investigative assistance of the 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 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.govNational Drug Intelligence Center Releases<br /> National Drug Threat Assessment 2010Read the Press Release
The National Drug Intelligence Center (NDIC), a component of the Department of Justice and the nation’s principal center for strategic drug intelligence, has released the National Drug Threat Assessment 2010 (NDTA 2010), detailing drug trafficking and abuse trends within the United States. In releasing the assessment, NDIC Director, Michael T. Walther stated, "The trafficking and abuse of drugs affects everyone. The economic cost alone is estimated at nearly $215 billion annually."
In receiving the 2010 National Drug Threat Assessment, Attorney General Eric Holder stated, "This report presents a comprehensive analysis of the drug threat to our nation and will be valuable in helping direct our fight against drug trafficking and abuse."
The NDTA 2010 addresses emerging developments related to the trafficking and use of illicit drugs, the non-medical use of controlled prescription drugs (CPDs), and the laundering of proceeds generated through illicit drug sales. It also addresses the role that drug trafficking organizations and organized gangs serve in domestic drug trafficking, the significant role that the Southwest Border plays in the illicit drug trade, and the societal impact of drug abuse. NDIC analysts estimate that the overall threat posed by illicit drugs will not diminish in the near term.
Director of National Drug Control Policy, Gil Kerlikowske said, "The 2010 National Drug Threat Assessment highlights diversion and abuse of prescription drugs as a serious and increasing problem. As part of the Obama Administration's comprehensive approach to reduce drug use and its consequences, ONDCP and Federal partner agencies have developed a plan to curb prescription drug abuse, which includes expanding prescription drug monitoring programs and educating healthcare providers and patients about the danger of abusing prescription drugs."
Notably, the NDTA 2010 details the rising availability of most illicit drugs in the United States largely the result of Mexican DTO efforts to increase drug production and distribution. In fact, in 2009 the prevalence of four of the five major drugs—heroin, methamphetamine, marijuana, and MDMA (3,4-methylenedioxymethamphetamine)—was widespread and increasing in some areas. The diversion and abuse of CPDs are also increasing throughout the country. Conversely, cocaine shortages first identified in 2007 persisted in many markets. Additionally, Mexican drug trafficking organizations (DTOs) remain the single greatest drug trafficking threat to the United States.
Significant trends include:
- Increased heroin availability evidenced by higher purity, lower prices, and elevated numbers of heroin-related overdoses and overdose deaths is partly attributable to increased production in Mexico from 17 pure metric tons in 2007 to 38 pure metric tons in 2008, according to U.S. Government estimates.
- Despite recent government of Mexico (GOM) efforts to prohibit the importation of methamphetamine precursor chemicals, methamphetamine availability increased as the result of higher production in Mexico using alternative, less-efficient precursors. Sustained domestic production also contributed to the increased availability levels.
- Cocaine shortages have persisted in many U.S. drug markets since early 2007, primarily because of decreased cocaine production in Colombia but also because of increased worldwide demand for cocaine, especially in Europe; high cocaine seizure levels that continued through 2009; and enhanced GOM counterdrug efforts. These factors most likely resulted in decreased amounts of cocaine being transported from Colombia to the U.S.–Mexico border for subsequent smuggling into the United States.
- The threat posed by the diversion and abuse of CPDs, primarily pain relievers, is increasing, evidenced by the sharp rise in the percentage (4.6% in 2007 to 9.8% in 2009) of state and local law enforcement agencies reporting CPDs as their greatest drug threat. Increased abuse of CPDs has led to elevated numbers of deaths related to prescription opioids, which increased 98 percent from 2002 to 2006.
Mexican DTOs continue to represent the single greatest drug trafficking threat to the United States. Mexican DTOs, already the predominant wholesale suppliers of illicit drugs in the United States, are gaining even greater strength in eastern drug markets where Colombian DTO strength is diminishing. The extent of Mexican DTO influence over domestic drug trafficking was evidenced in several ways in 2009.
- Mexican DTOs increased their cooperation with U.S.-based street and prison gangs to distribute drugs. In many areas, these gangs were using their alliances with Mexican DTOs to facilitate an expansion of their midlevel and retail drug distribution operations into more rural and suburban areas.
- Mexican DTOs increased the flow of several drugs (heroin, methamphetamine, and marijuana) into the United States, primarily because the increased production in Mexico.
- Mexican DTOs smuggled bulk cash drug proceeds totaling tens of billions of dollars from the United States through the Southwest Border and into Mexico. Much of the bulk cash (millions each week) was consolidated by the DTOs in several key areas, including Atlanta, Chicago, Los Angeles, New York City, and North Carolina, where it was prepared for transport to the U.S.–Mexico border and then smuggled into Mexico.
In preparing the 2010 assessment, NDIC partnered with federal, state, and local agencies in the collection of data and information. NDIC conducted thousands of field interviews with law enforcement and public health officials regarding all aspects of illicit drug activities in their jurisdictions. Another significant source of data and information is the National Drug Threat Survey. NDIC annually surveys a national, statistically representative sample of more than 3,069 state and local law enforcement agencies. Data from the survey are used to produce national-, regional-, and state-level statistical estimates, which NDIC intelligence analysts employ when preparing the national assessment.
A copy of the National Drug Threat Assessment 2010 can be found at NDIC’s web site at: http://www.justice.gov/ndic/pubs38/38661/index.htm
Maryland Man Convicted of Sex Trafficking, Firearm and Drug ChargesRead the Press Release
WASHINGTON- The Justice Department announced that Lloyd Mack Royal, III aka "Blyss", aka "B", aka "Furious" was convicted late yesterday of sex trafficking of minors and sex trafficking by force, fraud, and coercion, as well as firearm and drug charges. Two other co-defendants, Angela Samantha Bentolila and Paul Raymond Green, previously pleaded guilty to related charges.
The jury found Royal guilty of 3 counts of sex trafficking, including sex trafficking of minors and sex trafficking by force, fraud, and coercion. The jury also convicted Royal of conspiracy to commit sex trafficking, conspiracy to distribute controlled substances, possession of a firearm in the commission of a crime of violence, and two counts of distribution of controlled substances to a person under the age of twenty-one.
"The defendant preyed upon vulnerable minors and prostituted them by a variety of deplorable means for his own benefit," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "The Department of Justice will continue to devote its full efforts to prosecuting those who commit such exploitative crimes."
"We have made it a priority in Maryland to pursue criminals who lure or coerce children into prostitution," said U.S. Attorney Rod J. Rosenstein. "Maryland’s Human Trafficking Task Force works with law enforcement officers and private sector organizations to identify and rescue victims of human trafficking and prosecute criminals who exploit them. Pimps who victimize children are at the top of our list."
Sentencing before U.S. District Judge Alexander Williams, Jr. is scheduled for April 29, 2010. Royal faces incarceration of up to life in prison and potential fines in excess of $1 million.
In announcing the convictions, Assistant Attorney General Perez, and U.S. Attorney Rosenstein commended the Federal Bureau of Investigation, Montgomery County Police Department and Maryland Human Trafficking Task Force for their work in this cooperative investigation and prosecution. Assistant U.S. Attorney Solette Magnelli and Civil Rights Division Human Trafficking Prosecution Unit Trial Attorney Jim Felte are prosecuting this case for the government.
Justice Department Sues to Permanently Enjoin Orlando Tax PreparerRead the Press Release
WASHINGTON - The United States filed suit today asking the U.S. District Court for the Middle District of Florida to permanently bar Elisa Veronica Barron from preparing federal tax returns, the Justice Department announced. The civil injunction suit alleges that Barron prepares returns through Lancaster Tax Service Inc. in Orlando, Fla.
According to the complaint, Barron prepares tax returns using false information in order to reduce her customers’ tax liabilities. Specifically, the government alleges that Barron knowingly misrepresents her customers’ filing status and claims non-qualifying individuals as dependents on her customers’ returns. Additionally, the complaint alleges that Barron ignores or modifies information provided by her customers for the purpose of claiming false or overstated deductions and for claiming tax credits that her customers were not eligible to claim.
The government estimates in the complaint that this alleged fraudulent tax preparation scheme by Barron resulted in an understatement of her customers’ federal income tax liabilities of more than $1 million for returns that Barron prepared in 2006-2007 alone.
Since 2001, the Justice Department’s Tax Division has obtained more than 455 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 Seeks to Shut Down Miami Tax PreparerRead the Press Release
WASHINGTON – The United States has asked a federal court to permanently shut down a Miami tax return preparer and his business, the Justice Department announced today. The government complaint, filed in U.S. District Court in Miami, alleges that David Santiago and his business, Santiago Investment & Consulting Inc., prepare returns for customers that falsely claim the First-Time Homebuyer Credit and report other false income and expense items.
Congress enacted the First-Time Homebuyer Credit in 2008 to strengthen the real estate market and help the economy. It allowed persons who have not owned a home in the previous three years to claim a credit of up to $8,000 against their federal income taxes if they bought a home after April 8, 2008. The credit has since been expanded to allow, under certain conditions, current homeowners to claim the credit for a purchase of a new home. But in order for a taxpayer to claim the credit a home must have actually been bought during the tax year for which the credit is claimed.
The government complaint alleges that Santiago claimed the credit on customers’ returns even though he knew that they had not bought new homes. The complaint also alleges that Santiago claimed fabricated business deductions on some customers’ returns. Santiago also allegedly failed to keep adequate customer records or copies of the returns he prepared. A preparer’s failure to keep adequate records can subject him to civil penalties and an injunction.
Last October a federal court in Texas permanently barred a woman from preparing returns for others in a case where the Justice Department alleged abuse of the homebuyer credit and other tax law provisions.
Return preparer fraud is identified on the IRS Web site one of the 2010 "Dirty Dozen" tax scams.
Over the past decade, the Justice Department’s Tax Division has obtained more than 455 injunctions to stop tax fraud promoters and dishonest tax preparers. Information about these cases is available on the Justice Department Web site.
Federal Court Orders Kansas Tax Preparer to Stop False ClaimsRead the Press Release
WASHINGTON – A federal judge in Kansas City, Kan., has issued a preliminary injunction barring a Garden City, Kan., tax preparer, Jose Lares, from preparing returns with false dependent exemptions and false filing statuses, the Justice Department announced today. Lares operates Dinero Rapido Tax Service in Garden City. The preliminary injunction was entered by Kathryn H. Vratil, Chief Judge of the U.S. District Court for the District of Kansas.
Lares consented to the preliminary injunction without admitting wrongdoing. It will remain in effect while the case is pending. The Justice Department complaint in the case seeks to bar Lares permanently from preparing any federal tax returns.
According to the government complaint, Lares claims false dependent exemptions and false filing statuses on customers’ returns. Lares previously operated a business in Garden City with a slightly different name —Income Tax Dinero Rapido. The complaint alleges that Internal Revenue Service (IRS) audits of clients of the former company resulted in customers owing more than $2 million. The complaint further states that IRS audits of customers of Lares’s current business, Dinero Rapido Tax Services, has revealed an average tax loss of over $6,000 per return.
Since 2001, the Justice Department’s Tax Division has obtained more than 455 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.
Detroit Woman Who Opened Clinics to Fraudulently Bill Medicare<br /> Sentenced to 96 Months in PrisonRead the Press Release
WASHINGTON – Miami resident Daisy Martinez was sentenced today to 96 months in prison for her role in a series of Detroit Medicare fraud schemes, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan; Special Agent in Charge Andrew G. Arena of the FBI’s Detroit Field Office; and Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services, Office of Inspector General’s (HHS-OIG) Chicago Regional Office. Chief U.S. District Judge Gerald E. Rosen also ordered Martinez to pay $10,765,325 in restitution and to serve three years of supervised release following her prison term.
Martinez, 51, pleaded guilty in the Eastern District of Michigan on Oct. 30, 2009, to one count of conspiracy to commit health care fraud. According to information contained in plea documents, Martinez admitted that in approximately March 2006, she devised a scheme with co-conspirator Jose Rosario to open a clinic that purported to specialize in infusion and injection therapy services in Michigan. In fact, the sole purpose of the clinic was to defraud Medicare. Martinez and her co-conspirators opened Sacred Hope Medical Center Inc., (Sacred Hope) in Southfield, Mich., in October 2006. Martinez was an owner of the clinic, and she also managed the clinic on a day-to-day basis. Martinez and Rosario recruited various co-conspirators into their scheme, including an office manager, Lill Vargas-Arias, to help run the clinic; a physician, purportedly to treat patients at the clinic; and recruiters/drivers, who were in charge of bringing Medicare beneficiaries to the clinic. Rosario pleaded guilty for his role in the scheme on Aug. 18, 2009. Vargas-Arias pleaded guilty on Sept. 2, 2009.
Martinez admitted that during the time Sacred Hope was open, the clinic routinely billed the Medicare program for services that were medically unnecessary or were never provided. Martinez admitted she was aware that the clinic had purchased only a small fraction of the medications that the clinic billed the Medicare program for providing. Martinez also admitted that patients were prescribed medications at the clinic based not on medical need, but on what medications were likely to generate Medicare reimbursements. Martinez, along with Rosario, admitted to helping falsify medical files maintained by the clinic to make the treatments purportedly being given there appear legitimate, when in fact they were not.
Martinez also admitted that Medicare beneficiaries were not referred to Sacred Hope by their primary care physicians, or for any other legitimate medical purpose, but rather were recruited through the payment of kickbacks. In exchange for those kickbacks, Martinez admitted, the Medicare beneficiaries would visit the clinic and sign documents indicating that they had received the services billed to Medicare. Kickbacks came in the form of cash and prescriptions for narcotic drugs. Martinez admitted to knowing that co-conspirator Arnaldo Rosario, who also pleaded guilty for his role in the scheme on Aug. 18, 2009, oversaw and facilitated the payment of cash kickbacks to the Medicare beneficiaries.
Martinez also admitted that beginning in approximately November 2006, she and other co-conspirators opened another, almost identical, infusion and injection clinic called Xpress Center Inc. (XPC)., in Livonia, Mich. As with Sacred Hope, XPC’s sole purpose was to defraud Medicare. Martinez and her co-conspirators used the same fraudulent practices to open and then operate XPC as they did with Sacred Hope, including creating fictitious patient files to cover up fraudulent billings to Medicare. Similarly, Martinez admitted she was fully aware that XPC routinely billed the Medicare program for services that were medically unnecessary and in many instances never provided. Martinez also admitted to knowing that the purpose of the clinic was not to provide legitimate health care to patients, but rather to defraud the Medicare program.
Martinez also admitted that her actions at Sacred Hope and XPC were not her first with Detroit-area clinics that purported to specialize in infusion and injection therapy. In particular, she admitted that in approximately March 2006, Martinez became involved in a scheme to recruit Medicare beneficiaries to come to Dearborn Medical Rehab Center (DMRC), a Dearborn, Mich., clinic that operated similar to Sacred Hope and XPC. Martinez, along with other co-conspirators, agreed to recruit and pay Medicare beneficiaries at DMRC in exchange for a percentage of the Medicare reimbursements that these patients generated. Martinez and her co-conspirators sent Arnaldo Rosario to Detroit to oversee payments to patients, and provided the cash to pay the kickbacks. As with Sacred Hope and XPC, DMRC routinely billed the Medicare program for services that were medically unnecessary and, in many instances, never provided.
Martinez admitted that between approximately March 2006 and March 2007, she and her co-conspirators caused the submission of approximately $15,311,605 in false and fraudulent claims to the Medicare program for services purportedly provided at Sacred Hope, XPC and DMRC. Medicare paid approximately $10,765,325 on those claims.
The case was prosecuted by Senior Trial Attorney John K. Neal and Trial Attorney Benjamin D. Singer of the Criminal Division’s Fraud Section. The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.
Since their inception in March 2007, 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
Court Issues Order Barring Michigan Tax Preparer<br /> from Preparing Federal Tax Returns for OthersRead the Press Release
WASHINGTON – A U.S. District Court has issued an order permanently barring Shawn Robin Gibson, a Detroit tax preparer, from preparing federal tax returns for others, the Justice Department announced today.
Gibson operated businesses that provided tax return preparation services under the names New Detroit Tax Service and Shawn Gibson & Company. The court found that Gibson has admitted that the tax returns he prepared for customers contained falsely claimed Schedule C losses, itemized deductions and Schedule A deductions. In addition, Gibson admitted to preparing false powers of attorney to amend and file his customers’ returns in order to defraud the Internal Revenue Service (IRS) and obtain portions of his customers’ refunds.
Gibson is currently incarcerated after pleading guilty in November 2006, to one count of conspiring to impede, obstruct and defeat the lawful functions of the IRS. In addition, in July 2008, Gibson pleaded guilty to one count of aiding and assisting in the preparation of false and fraudulent income tax returns. The court found that based on his prior criminal convictions and his continued efforts to engage in tax preparation activities while incarcerated, a permanent injunction was appropriate as there is a likelihood that he will commit future violations of the internal revenue laws.
The court also ordered Gibson to provide the government with a list of his customers and to contact all of his customers by mail within 30 days of the date he is released from prison and provide them with a copy of the Court’s injunction order.
Comentarios del Secretario de Justicia de los Estados Unidos Eric Holder en la Cumbre de Fraude Hipotecario en PhoenixRead the Press Release
Gracias a todos por venir. La cumbre de hoy marca otro paso importante en nuestra tarea enérgica, integral y colaborativa para luchar contra el fraude hipotecario y proteger a los propietarios de viviendas estadounidenses.
Aquí en Phoenix, y en ciudades de todo el país, los delitos de fraude hipotecario han alcanzado proporciones de crisis. Pero estamos defendiéndonos. Y con la Unidad Especial de Control contra el Fraude Financiero que el Presidente Obama creó en noviembre pasado, estamos enfrentando los desafíos y consecuencias del fraude hipotecario de maneras audaces, innovadoras y coordinadas.
El Departamento de Justicia toma como un honor liderar esta iniciativa histórica. Y nos enorgullece trabajar en asociación con el Buró Federal de Investigaciones [Federal Bureau of Investigation (FBI)], con agencias de todo el gobierno federal, y con oficinas estatales y locales de las fuerzas del orden público. Aquí en Arizona, tenemos la suerte de tener el fuerte liderazgo del Fiscal Federal Dennis Burke y el Secretario de Justicia Terry Goddard. Y también agradecemos el destacado trabajo del Secretario de Justicia Auxiliar Tony West, que encabeza la División Civil del Departamento de Justicia, y el Fiscal Federal para el Distrito Este de California, Ben Wagner, ambos copresidentes del Grupo de Trabajo de la Unidad Especial de Fraude Hipotecario.
A través de esta amplia coalición federal, estatal y local, estamos usando todas las herramientas a nuestra disposición – entre ellas, tecnologías avanzadas, nuevas plataformas de comunicación y el mejor talento que tenemos – para prevenir, enjuiciar y castigar los delitos de fraude hipotecario. Y estamos logrando un progreso significativo en nuestro trabajo para proteger a las familias y las comunidades, luchar contra la discriminación en nuestros mercados de préstamos, recuperar productos monetarios para las víctimas del fraude y restablecer la confianza en nuestros mercados de vivienda y financieros.
Ahora bien, en las últimas semanas, hemos observado algunos signos alentadores de mejora en nuestra economía. Pero también sabemos que millones de estadounidenses siguen luchando para sobrellevar la crisis en la vivienda que ha devastado tantos vecindarios y familias.
Esta mañana, escuchamos los testimonios de víctimas y expertos de la industria sobre cómo los delitos de fraude hipotecario están evolucionando y sobre el dolor provocado por estos ardides. Y esta tarde, la unidad especial escuchará los testimonios de representantes locales de las fuerzas del orden público que ofrecerán sus recomendaciones sobre cómo podemos responder con rapidez y defendernos con la mayor eficacia.
Este debate es crucial. Usaremos información obtenida aquí en Phoenix – y en otros epicentros del fraude hipotecario – para enfocar y fortalecer nuestras actividades de cumplimiento. Los ardides de fraude hipotecario deben ser frenados en seco. Y quienes buscan explotar la crisis financiera de nuestro país para provecho personal serán llevados a la justicia.
De hecho, en este momento, el FBI está investigando más de 2,800 casos de fraude hipotecario, o sea, casi un 400 por ciento más que hace cinco años. Y, con recursos adicionales, podremos mejorar y expandir las iniciativas actuales. Hoy me complace anunciar que nuevas inversiones incluidas en el presupuesto del año fiscal 2010 pronto serán distribuidas para combatir el fraude hipotecario. Esta primavera, esperamos que se asignen casi 8 millones de dólares para esta tarea, y casi 2 millones de dólares de estos fondos serán destinados a Arizona. Confío en que estas nuevas inversiones nos permitirán expandir el éxito reciente que hemos observado en todo el país y el progreso realizado aquí en Arizona.
La semana pasada, el Secretario de Justicia Goddard anunció un acuerdo conciliatorio de $120,000 dólares con distintos demandados por sus papeles en un ardid de bienes raíces en el Condado de Pima. Y dos años antes, Mario Bernadel – el líder de un ardid de fraude masivo aquí en Phoenix – fue sentenciado a 17 años en una prisión federal. Él y sus coconspiradores habían usado documentos fraudulentos para comprar casi 40 propiedades, lo que provocó más de $9 millones de dólares de pérdidas a los bancos de esta ciudad. Al igual que muchos otros, el Sr. Bernadel había visto el fraude hipotecario como un camino a la riqueza. Pero terminó siendo su boleto a prisión.
Espero que su caso sea una lección para quienes piensen participar en ardides de fraude hipotecario: Serán descubiertos. Serán enjuiciados. Y serán castigados.
También espero que este caso, y esta cumbre, envíen un mensaje a las víctimas del fraude hipotecario: Estamos trabajando sin descanso para restablecer lo que han perdido y reconstruir la confianza que será el motor de la recuperación económica de nuestro país.
Les agradezco a todos por su asociación en este trabajo y su compromiso histórico para proteger al pueblo estadounidense.
Attorney General Holder, Financial Fraud Enforcement Task Force Announce New Funding Distribution for Enforcement Efforts at Mortgage Fraud Summit in PhoenixRead the Press Release
WASHINGTON – Representatives of the Financial Fraud Enforcement Task Force, including Attorney General Eric Holder, met in Phoenix today for the second of a series of Mortgage Fraud Summits. The task force, established by President Barack Obama in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes, is comprised of representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement.
The Attorney General announced that new investments included in the FY 2010 budget will soon be distributed to combat mortgage fraud. This spring, nearly $8 million for mortgage fraud enforcement and related efforts, including task forces, will be allocated for this work, including $1.7 million to Arizona.
A recent study from the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) study indicated that the Phoenix metropolitan area is ranked fourth in the nation for the number of Suspicious Activity Reports (SARs) filed by depository institutions concerning suspected mortgage fraud. In addition, according to the U.S. Department of Housing and Urban Development, Arizona is ranked number one for homes that were funded by Federal Housing Administration loans and have been foreclosed upon.
"Today’s summit marks another important step in our nation’s most aggressive, comprehensive, and collaborative effort to combat mortgage fraud and protect American homeowners," said Attorney General Holder. "Here in Phoenix, and in cities across the country, mortgage fraud crimes have reached crisis proportions. But we are fighting back, and with the Financial Fraud Enforcement Task Force that President Obama created last November, we’re tackling the challenges and consequences of mortgage fraud in bold, innovative and coordinated ways. We have one message to those who would engage in mortgage fraud schemes: you will be found, you will be prosecuted, and you will be punished. "
"We welcome the opportunity to combine forces with federal agencies to attack the serious problem of mortgage fraud in Arizona," said Arizona Attorney General Terry Goddard. "Arizona is ground zero in the foreclosure crisis, which plays a large role in our state's economic downturn. This crisis has been exacerbated by the deceptive practices of lenders in originating and servicing loans and fraudulent mortgage rescue scams that prey on borrowers desperate to hang on to the American dream of owning a home. "
Task force members met today with Phoenix area community leaders, legal services providers, banking, mortgage and real estate industry representatives and law enforcement officials to discuss this problem of mortgage fraud from a national, state and local perspective. In the morning, attendees participated in panels on mortgage fraud trends in Phoenix and the community impact of mortgage fraud. In the afternoon, task force representatives are meeting privately with law enforcement officials involved in the investigation of mortgage fraud.
Also participating in the summit will be Assistant Attorney General for the Civil Division Tony West; U.S. Attorney for the District of Arizona Dennis Burke; U.S. Attorney for the Eastern District of California Ben Wagner; Deputy Inspector General at the Department of Housing and Urban Development Michael P. Stephens; FBI Chief of the Economic Crimes Unit Sharon Ormsby; Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) Deputy Director Charles Steele; Executive Director of the Financial Fraud Enforcement Task Force Robb Adkins; and representatives from U.S. Secret Service, U.S. Postal Inspection Service, Internal Revenue Service and local police agencies.
Mortgage fraud is a key focus of the Financial Fraud Enforcement Task Force’s efforts. 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.
24 March 2010
United States Transfers Two Uighur Detainees from Guantanamo Bay to SwitzerlandRead the Press Release
The Justice Department today announced that two detainees have been transferred from the detention facility at Guantanamo Bay to the control of the Government of Switzerland. The Swiss Government, with the support of the Canton of Jura, accepted the two Chinese nationals of Uighur ethnicity for resettlement in Switzerland.
These detainees, who were subject to release from Guantanamo Bay as a result of court orders, had been approved for release by the prior Administration, which determined that it would no longer treat them as enemy combatants. As directed by the President’s Jan. 22, 2009 Executive Order, the interagency Guantanamo Review Task Force subsequently conducted a comprehensive review of each of the detainees. As a result of that review, these detainees were approved for transfer or release from Guantanamo Bay.
In accordance with Congressionally-mandated reporting requirements, the Administration informed Congress of its intent to transfer each of these detainees at least 15 days in advance of their transfer.
The United States is grateful to the Government of Switzerland and the Canton of Jura for their willingness to support U.S. efforts to close the Guantanamo Bay detention facility. This transfer was carried out under an arrangement between the United States and the Government of Switzerland. The United States and the Government of Switzerland will continue consultations regarding these individuals.
Since 2002, more than 580 detainees have departed Guantanamo Bay for other destinations, including Albania, Algeria, Afghanistan, Australia, Bangladesh, Bahrain, Belgium, Bermuda, Chad, Denmark, Egypt, France, Georgia, Hungary, Iran, Iraq, Ireland, Italy, Jordan, Kuwait, Libya, Maldives, Mauritania, Morocco, Pakistan, Palau, Portugal, Russia, Saudi Arabia, Slovakia, Somalia, Spain, Sweden, Switzerland, Sudan, Tajikistan, Turkey, Uganda, United Kingdom and Yemen. Today, 183 detainees remain at Guantanamo Bay.
State Department Employee Sentenced<br /> for Illegally Accessing Confidential Passport FilesRead the Press Release
A State Department employee was sentenced today to 12 months of probation for illegally accessing more than 60 confidential passport application files, Assistant Attorney General Lanny A. Breuer of the Criminal Division announced. Debra Sue Brown, 47, of Oxon Hill, Md., was also ordered by U.S. Magistrate Judge John M. Facciola in the District of Columbia to perform 50 hours of community service. Brown pleaded guilty on Dec. 11, 2009, to a one-count criminal information charging her with unauthorized computer access.
According to court documents, Brown has worked full-time for the State Department since September 1995 as a file clerk and a file assistant in the Bureau of Consular Affairs. In pleading guilty, Brown admitted that she had access to official State Department computer databases in the regular course of her job, including the Passport Information Electronic Records System (PIERS), which contains all imaged passport applications dating back to 1994. The imaged passport applications on PIERS contain, among other things, a photograph of the passport applicant as well as certain personal information including the applicant’s full name, date and place of birth, current address, telephone numbers, parent information, spouse’s name and emergency contact information. These confidential files are protected by the Privacy Act of 1974, and access by State Department employees is strictly limited to official government duties.
Brown admitted that between March 25, 2005, and Feb. 7, 2008, she logged onto the PIERS database and repeatedly searched for and viewed the passport applications of more than 60 celebrities and their families, actors, comedians, professional athletes, musicians and other individuals identified in the press as well as personal friends and acquaintances. Brown admitted that she had no official government reason to access and view these passport applications, but that her sole purpose in accessing and viewing these passport applications was idle curiosity.
To date, nine current or former State Department employees or contractors , including Brown, have pleaded guilty in this continuing investigation. On Sept. 22, 2008, Lawrence C. Yontz, a former Foreign Service Officer and intelligence analyst, pleaded guilty to unlawfully accessing nearly 200 confidential passport files. Yontz was sentenced on Dec. 19, 2008, to 12 months of probation and ordered to perform 50 hours of community service. On Jan. 14, 2009, Dwayne F. Cross, a former administrative assistant and contract specialist, pleaded guilty to unlawfully accessing more than 150 confidential passport files. Cross was sentenced on March 23, 2009, to 12 months of probation and ordered to perform 100 hours of community service. On Jan. 27, 2009, Gerald R. Lueders, a former Foreign Service Officer, watch officer and recruitment coordinator, pleaded guilty to unlawfully accessing more than 50 confidential passport files. Lueders was sentenced on July 8, 2009, to 12 months of probation and ordered to pay a $5,000 fine. On July 10, 2009, William A. Celey, a file assistant, pleaded guilty to unlawfully accessing more than 75 confidential passport files. Celey was sentenced on Oct. 23, 2009, to 12 months of probation and ordered to perform 50 hours of community service.
On Aug. 17, 2009, Kevin M. Young, a contact representative, pleaded guilty to unlawfully accessing more than 125 confidential passport files. Young was sentenced on Dec. 9, 2009, to 12 months of probation and ordered to perform 100 hours of community service. On Aug. 26, 2009, Karal Busch, a former citizens services specialist, pleaded guilty to unlawfully accessing more than 65 confidential passport files. Busch was sentenced on Dec. 15, 2009, to 24 months of probation and ordered to perform 25 hours of community service. On Oct. 27, 2009, Yvette M. Burrison, a passport specialist, pleaded guilty to unlawfully accessing nearly 100 confidential passport files. Burrison is scheduled to be sentenced on April 7, 2010. On Nov. 9, 2009, Susan Holloman, a file assistant, pleaded guilty to unlawfully accessing 70 confidential passport files. Holloman was sentenced on Jan. 21, 2010, to 12 months of probation and ordered to perform 75 hours of community service.
These cases are being prosecuted by Trial Attorney Armando O. Bonilla of the Criminal Division’s Public Integrity Section. The cases are being investigated by the State Department Office of Inspector General.
Nigerian National Found Guilty for Role in “Advance-Fee” Fraud SchemeRead the Press Release
A federal jury in the Western District of North Carolina convicted Ugochukwu Enwerem yesterday on charges stemming from an advance-fee fraud scheme, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and Deputy Chief Postal Inspector Zane M. Hill.
Following six days of trial and four hours of deliberation, Enwerem was found guilty on one count of conspiracy to commit mail and wire fraud, and 14 counts of wire fraud charged in a July 2007 indictment stemming from an "advance-fee" scheme. Forfeiture of more than $9.5 million has also been ordered. In September 2009, co-defendant Kent Oserumen Okojie pleaded guilty to one count of conspiracy and two counts of wire fraud. He is awaiting sentencing. Okojie and Enwerem, Nigerian citizens who resided in the Netherlands, originally were charged in a June 2007 complaint and were subsequently extradited to the United States from The Netherlands, where they had been in custody on Dutch charges.
According to evidence presented at trial, between at least September 2002 and April 2007, Okojie, Enwerem and their co-conspirators solicited individuals by sending spam e-mails informing potential victims that they had either won a foreign lottery or inherited a large sum of money from a long lost relative. When individuals responded to the e-mails, the defendants or their co-conspirators, posing as lawyers, bankers and European government officials, solicited fees from victims ostensibly to pay for things such as "anti-terrorism certificates," "EU bank clearances" and legal fees in order to secure their lottery winnings or inheritance. Trial evidence established that Okojie and Enwerem instructed U.S. and international victims to wire funds through Western Union and other money transfer services to the defendants and their designees in The Netherlands, Spain and the United Kingdom. The Western Union servers are located in the Western District of North Carolina. According to trial testimony, at least 18 U.S. and international victims lost more than $9.5 million as a result of this scheme.
At sentencing, Enwerem faces a maximum sentence of five years in prison and a $250,000 fine for the conspiracy count and 20 years in prison and a $250,000 fine for each of the 14 wire fraud counts.
The case was investigated by a team of U.S. Postal Inspectors working with the Criminal Division’s Fraud Section and the Amsterdam Politie. The case was prosecuted by Trial Attorneys Laura Perkins and Nicole H. Sprinzen of the Fraud Section. Significant assistance was provided by the Criminal Division’s Office of International Affairs.
Maryland MS-13 Gang Leader Convicted of Racketeering Charges Related to Murder; Sentenced to Life in PrisonRead the Press Release
U.S. District Judge Deborah K. Chasanow today sentenced Roberto Antonio Argueta, aka "Alex Antonio Cruz," aka "Buda," 29, of Hyattsville, Md., to life in prison, plus an additional 35 years, for ordering the murder of Nancy Diaz and the attempted murder of another juvenile girl. A 12-person federal jury voted today to impose a sentence of life in prison without parole on Argueta.
The conviction and sentence were announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Theresa R. Stoop of the Bureau of Alcohol, Tobacco, Firearms and Explosives - Baltimore Field Division; Chief Roberto L. Hylton of the Prince George’s County Police Department; Special Agent in Charge Richard A. McFeely of the FBI; Special Agent in Charge William Winter of U.S. Immigration and Customs Enforcement; Chief J. Thomas Manger of the Montgomery County Police Department; and Chief Darien L. Manley of the Maryland National Capital Park Police.
On March 4, 2010, the jury found Argueta guilty of conspiracy to commit murder in aid of a racketeering enterprise known as MS-13; conspiracy to participate in racketeering; murder in aid of racketeering; murder resulting from the use of a gun in a violent crime; two counts of assault with a dangerous weapon in aid of racketeering; and two counts of using a gun during a violent crime.
According to testimony presented during the eight-week trial, Argueta was a leader of the Langley Park Salvatruchos (LPS) clique of La Mara Salvatrucha, also known as MS-13. The gang is composed primarily of immigrants or descendants of immigrants from El Salvador, with members operating throughout Prince George’s County and Montgomery County, Md., and elsewhere inside and outside of the United States.
Witnesses testified at trial that on Sept. 17, 2004, Argueta and other MS-13 gang members stabbed a rival gang member with broken bottles and knives outside a nightclub in Langley Park, Md. Trial evidence established that in October 2004 Argueta led a gang meeting in Prince George’s County in which he and other gang members discussed plans to kill Nancy Diaz. The jury found, based on the evidence presented at trial and during the penalty phase, that Argueta ordered the murder of Nancy Diaz. On Oct. 25, 2004, two other MS-13 members drove Diaz and another juvenile female to the George Washington Cemetery in Adelphi, Md. According to testimony, another MS-13 member shot and killed Nancy Diaz, and shot the other girl in the face and stabbed her twice in the chest to attempt to make sure she was dead. The victim survived and she later identified her assailants.
Israel Ernesto Palacios, aka "Homie," 32, of Silver Spring, Md., was sentenced on Nov. 10, 2008, to life in prison for his role in the murder and attempted murder. James Guillen, aka "Toro," 23, of Hyattsville, Md., who drove the MS-13 members and victims to the cemetery, pleaded guilty to racketeering conspiracy and was sentenced on Jan. 11, 2008, to 262 months in prison. Jeffrey Villatoro, one of the murderers of Nancy Diaz, was prosecuted in the Circuit Court of Prince George’s County and received a life sentence for his crimes. Another of the murderers, Jesus Canales, pleaded guilty in federal court to racketeering conspiracy, including the murder of Nancy Diaz. A sentencing date for Canales has not yet been set by the court.
To date, 51 MS-13 members have been charged in the District of Maryland with various federal offenses. Twenty-five MS-13 members have been convicted at trial or have pleaded guilty to racketeering charges and 19 have pleaded guilty to other charges, primarily immigration or gun violations. Four of these defendants have been sentenced to life in prison for their crimes. One remaining defendant faces a capital trial scheduled to begin in June 2010.
The case was prosecuted by Deputy Chief James M. Trusty and Trial Attorney Laura J. Gwinn of the Criminal Division’s Gang Unit, and Assistant U.S. Attorney Robert K. Hur of the District of Maryland.
The case was investigated by members of the Regional Anti-Gang Enforcement (RAGE) Task Force. The Prince George’s County State’s Attorney Office and the Montgomery County State’s Attorney Office also provided assistance in the case.
Justice Department Resolves Americans with Disabilities Act Lawsuit with Jackson, Mississippi, Public Transportation SystemRead the Press Release
WASHINGTON – The United States has reached a comprehensive settlement agreement with the city of Jackson, Miss., to improve access to public transportation for individuals with disabilities, the Justice Department announced.
The settlement, in the form of a consent decree, was approved by the city last night and is subject to approval by the U.S. District Court in Jackson. Under the terms of the decree, the city will maintain the wheelchair lifts of Jackson Public Transportation System (JATRAN), Jackson's fixed route bus system; adequately train personnel to properly assist passengers with disabilities; and meet its required level of service to passengers of Handilift, the ADA complementary paratransit service. The decree will be in effect for five years.
"Equal access to public transportation is a critical right that is guaranteed for people with disabilities, ensuring their ability to live independently in the community," said Thomas E. Perez, Assistant Attorney General in charge of the Justice Department's Civil Rights Division. "The department appreciates the city of Jackson's cooperation in resolving this matter and their commitment to moving forward with full accessibility of it transportation system."
In July 2009, the department intervened in an ongoing class action filed in September 2008, by 11 Jackson residents and two non-profit organizations on behalf of individuals with disabilities against the city and JATRAN. The department's complaint alleged that the city had violated Title II of the ADA, Section 504 of the Rehabilitation Act, and their implementing regulations by failing to provide a level of public transportation services to users with disabilities that is comparable to those provided to individuals without disabilities.
The agreement requires that the city:
- Implement procedures for removing buses with inoperative lifts from service.
- Provide alternative transportation whenever an inaccessible bus lift significantly delays transportation for a rider with a disability.
- Ensure that no riders are stranded without transportation to their destination before shutting down operations for the day.
- Design, fund, implement and operate Handilift service to satisfy all requests for next-day service.
- Meet agreed upon performance standards for Handilift service.
- Designate an ADA Coordinator in the City Department of Planning and Development.
- Train all vehicle operators, mechanics, and office staff, including managers, reservationists and dispatchers.
- Implement a process for rider complaints.
- Conduct public outreach according to the settlement, including updating of user manuals and JATRAN websites.
- Obtain approval from the United States before implementing certain changes or revisions to services or policies.
- Record and report data on compliance with these provisions.
- Fund an independent monitor to assess the city's compliance with these provisions.
- Pay penalties for violation of these provisions, in the form of free vouchers to individual riders affected.
The ADA, the Rehabilitation Act of 1973 and their implementing regulations detail the requirements with which fixed route and complementary paratransit public transportation systems must comply.
"The department's intervention in this lawsuit will help to insure that Jackson residents with disabilities have greater access to employment, shopping, medical care, and other services which is possible only when public transportation is made more accessible," said Don Burkhalter, U.S. Attorney for the Southern District of Mississippi.
The full decree will be available on the department's Web site after it is approved by the court. Those interested in finding out more about this settlement agreement or a public transportation's obligations under the ADA can call the Justice Department's toll-free ADA Information Line at (800) 514-0301 (voice) or (800) 514-0383 (TDD), access its ADA Web site at www.ada.gov, or access the Federal Transit Administration's ADA Web site at www.fta.dot.gov/ada.
Detroit-area Physical Therapist Sentenced to 62 Months in Prison <br /> for Role in Medicare Fraud SchemeRead the Press Release
WASHINGTON – Sterling Heights, Mich., resident Solomon Nathaniel was sentenced today to 62 months in prison for his role in a wide-ranging conspiracy to defraud the Medicare program, announced Assistant Attorney General Lanny 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 U.S. Department of Health and Human Services, Office of Inspector General’s (HHS-OIG) Chicago Regional Office. U.S. District Judge Sean F. Cox also ordered Nathaniel to pay $2,875,000 in restitution and to serve a three-year term of supervised release following his incarceration.
Nathaniel pleaded guilty on Oct. 19, 2009, in the Eastern District of Michigan to conspiracy to commit health care fraud. According to information contained in plea documents, Nathaniel, a licensed physical therapist, admitted that he began working in approximately December 2003 as a contract therapist for co-conspirator Suresh Chand, who also pleaded guilty in connection with this case. Chand owned and controlled several companies operating in the Detroit area that purported to provide physical and occupational therapy services to Medicare beneficiaries. According to his plea documents, Nathaniel admitted that he, Chand and others created fictitious therapy files appearing to document physical and occupational therapy services provided to Medicare beneficiaries, when in fact no such services had been provided. According to court documents, the fictitious services reflected in the files were billed to Medicare through sham Medicare providers controlled by co-conspirators.
Nathaniel also admitted that during the course of the scheme he signed approximately 1,250 fictitious physical therapy files, indicating that he had provided physical therapy services to Medicare beneficiaries, when in fact he had not. Nathaniel admitted that he was paid between $90 and $110 for each file he falsified. Nathaniel also admitted that between approximately December 2003 and July 2006, he falsified physical therapy files that supported claims to the Medicare program totaling approximately $6,250,000. Medicare paid approximately $2,875,000 on those claims. Nathaniel admitted that throughout the conspiracy he was fully aware that Medicare was being billed for physical therapy services that he falsely indicated he had performed.
Chand pleaded guilty on Sept. 28, 2009, before U.S. District Judge Sean F. Cox to one count of conspiracy to commit health care fraud and one count of conspiracy to launder money.
This case was prosecuted by Senior Trial Attorney John K. Neal of the Criminal Division’s Fraud Section and by Special Assistant U.S. Attorney Thomas W. Beimers of the Eastern District of Michigan. The FBI and HHS-OIG conducted the investigation. The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.
Since their inception in March 2007, 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
Detroit-Area Physical Therapist Sentenced to 62 Months in Prison <br /> for Role in Medicare Fraud SchemeRead the Press Release
Sterling Heights, Mich., resident Solomon Nathaniel was sentenced today to 62 months in prison for his role in a wide-ranging conspiracy to defraud the Medicare program, announced Assistant Attorney General Lanny 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 U.S. Department of Health and Human Services, Office of Inspector General’s (HHS-OIG) Chicago Regional Office. U.S. District Judge Sean F. Cox also ordered Nathaniel to pay $2,875,000 in restitution and to serve a three-year term of supervised release following his incarceration.
Nathaniel pleaded guilty on Oct. 19, 2009, in the Eastern District of Michigan to conspiracy to commit health care fraud. According to information contained in plea documents, Nathaniel, a licensed physical therapist, admitted that he began working in approximately December 2003 as a contract therapist for co-conspirator Suresh Chand, who also pleaded guilty in connection with this case. Chand owned and controlled several companies operating in the Detroit area that purported to provide physical and occupational therapy services to Medicare beneficiaries. According to his plea documents, Nathaniel admitted that he, Chand and others created fictitious therapy files appearing to document physical and occupational therapy services provided to Medicare beneficiaries, when in fact no such services had been provided. According to court documents, the fictitious services reflected in the files were billed to Medicare through sham Medicare providers controlled by co-conspirators.
Nathaniel also admitted that during the course of the scheme he signed approximately 1,250 fictitious physical therapy files, indicating that he had provided physical therapy services to Medicare beneficiaries, when in fact he had not. Nathaniel admitted that he was paid between $90 and $110 for each file he falsified. Nathaniel also admitted that between approximately December 2003 and July 2006, he falsified physical therapy files that supported claims to the Medicare program totaling approximately $6,250,000. Medicare paid approximately $2,875,000 on those claims. Nathaniel admitted that throughout the conspiracy he was fully aware that Medicare was being billed for physical therapy services that he falsely indicated he had performed.
Chand pleaded guilty on Sept. 28, 2009, before U.S. District Judge Sean F. Cox to one count of conspiracy to commit health care fraud and one count of conspiracy to launder money.
This case was prosecuted by Senior Trial Attorney John K. Neal of the Criminal Division’s Fraud Section and by Special Assistant U.S. Attorney Thomas W. Beimers of the Eastern District of Michigan. The FBI and HHS-OIG conducted the investigation. The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.Since their inception in March 2007, 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
California Man Convicted of Federal Hate Crime for Race-Motivated AssaultRead the Press Release
WASHINGTON – A federal jury in Sacramento, Calif., today convicted, Eric Clawson, 28, of San Francisco, of a federal hate crime for assaulting an African-American man in a Chico, Calif. bar, announced Thomas E. Perez, Assistant Attorney General for the Civil Rights Division, and Benjamin B. Wagner, U.S. Attorney for the Eastern District of California.
Clawson was convicted following a 3-day trial. The evidence at trial showed that on the evening of July 6, 2008, Clawson entered Riley’s Bar & Grill in Chico while the victim was sitting inside with a friend. Shortly after entering the bar, Clawson used a racially-derogatory term to object to the victim’s presence. Clawson repeated this slur several times and, a short while later, without any verbal or physical provocation, approached and punched the victim in the face. The assault rendered the victim unconscious and inflicted injuries to his face and mouth.
A second defendant and associate of Clawson who was with Clawson when the assault took place, Joe Grivette, previously pleaded guilty on March 15, 2010, to a related charge of misprision of a felony.
"Bias-motivated acts of violence are offensive to our nation's fundamental values of equal rights and equal justice. Such acts of violence have no place in our country," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "The Justice Department is committed to vigorously prosecuting the federal laws prohibiting violent acts motivated by hate."
"There is no place for the reprehensible, violent conduct of the defendant in our community," said Benjamin B. Wagner, U.S. Attorney for the Eastern District of California. "We will continue working together with state and local authorities to bring to justice those who intimidate and assault people because of race or national origin."
Clawson faces a maximum of 10 years in prison and a fine of $250,000. Sentencing is scheduled for June 10, 2010.
Agents from the Sacramento Division of the Federal Bureau of Investigation and investigators from the Butte County District Attorney’s Office investigated this matter. The case is being jointly prosecuted by Assistant U.S. Attorney Russell Carlberg of the U.S. Attorney’s Office for the Eastern District of California and Trial Attorney Edward Chung of the Justice Department’s Civil Rights Division.
23 March 2010
United States Transfers Three Guantanamo Bay Detainees to GeorgiaRead the Press Release
The Department of Justice today announced that three detainees have been transferred from the detention facility at Guantanamo Bay to the custody and control of Georgia.
As directed by the President’s January 22, 2009 Executive Order, the interagency Guantanamo Review Task Force conducted a comprehensive review of these cases. As a result of that review, which examined a number of factors, including security issues, the detainees were approved for transfer by unanimous consent among all the agencies involved in the Task Force. In accordance with Congressionally-mandated reporting requirements, the Administration informed Congress of its intent to transfer these detainees at least 15 days before their transfer.
Earlier today, three detainees, whose identities are being withheld for security and privacy reasons, were transferred to Georgia. The United States is grateful to Georgia for its willingness to support U.S. efforts to close the Guantanamo Bay detention facility.
These transfers were carried out under an arrangement between the United States and Georgia. The United States coordinated with the Georgia to ensure the transfers took place under appropriate security measures and consultations regarding these individuals will continue.
Since 2002, more than 580 detainees have departed Guantanamo Bay for other destinations.
Houston Defendants Plead Guilty to “Arthritis Kit” Medicare Fraud SchemeRead the Press Release
Rolondae Mitchell-Straughter and Ana Quinteros each pleaded guilty yesterday in connection with their roles in an "arthritis kit" Medicare fraud scheme, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney José Angel Moreno of the Southern District of Texas; Richard C. Powers, Special Agent-in-Charge of the FBI’s Houston office; and Special Agent-in-Charge Mike Fields of the Dallas Regional Office of the Department of Health and Human Services (HHS), Office of Inspector General (OIG), Office of Investigations.
Mitchell-Straughter, 43, and Quinteros, 28, each pleaded guilty before U.S. District Court Judge Gray Miller in the Southern District of Texas to conspiracy to commit health care fraud. Mitchell-Straughter was an administrative assistant at two Houston-area durable medical equipment (DME) companies: Family Healthcare Services and its successor company, Family DME Inc . Quinteros was a patient recruiter.
In connection with the pleas, the defendants admitted that Family DME billed Medicare for expensive, rigid orthotics and braces that were packaged together and referred to as an "arthritis kit," at a cost of approximately $4,000 per kit, when in fact, the equipment supplied was not medically necessary and in many cases not even supplied. In total, Family DME submitted more than $1,505,000 in claims to Medicare.
Sentencing for Mitchell-Straughter and Quinteros is scheduled for June 18, 2010. The defendants each face a maximum penalty of 10 years in prison and a $250,000 fine. Four other defendants are scheduled for trial beginning on March 29, 2010.
The case was prosecuted by Trial Attorneys Charles D. Reed and Sam Sheldon of the Criminal Division’s Fraud Section, and was investigated by the FBI, HHS-OIG and the Office of the Texas Attorney General, Medicaid Fraud Control Unit.
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
Former West Point Employee Sentenced to 46 Months in Prison <br /> for Role in $3 Million Embezzlement SchemeRead the Press Release
A Highland Falls, N.Y., woman was sentenced today to 46 months in prison for her role in a scheme to defraud and embezzle funds from the U.S. government by authorizing nearly $3 million in payments from the U.S. Military Academy in West Point, N.Y., to a bogus corporation she controlled. The guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division and Brig. Gen. Colleen McGuire, the Provost Marshal General of the Army and Commanding General of the U.S. Army Criminal Investigation Command (CID).
Bobbie Cyana Ryan, 51, was also sentenced by U.S. District Judge Colleen Kollar-Kotelly to three years of supervised release following the prison term and was ordered to pay $2,924,966 in restitution to the U.S. Military Academy. Ryan pleaded guilty on Oct. 28, 2009, to a three-count criminal information charging her with devising a scheme to defraud, and transmitting funds in interstate commerce for the purpose of executing the scheme; embezzlement and conversion by Ryan of government funds; and executing a financial transaction with criminally derived funds.
According to court documents filed in U.S. District Court in the District of Columbia, Ryan worked in the Information, Education and Technology division in the Office of the Dean at West Point. Ryan was responsible for coordinating information technology training programs for West Point staff. According to court documents, based on irregularities found during a routine audit, U.S. Army investigators discovered that Ryan, acting as the requesting and approving official, used her government purchase card and cards of her unknowing subordinates to authorize approximately $2.9 million in payments to CWG Enterprises. The payments were purportedly for either on-site training instructors or training reference materials when, in fact, no personnel were ever trained and no materials were ever provided.
U.S. Army investigators subsequently discovered that Ryan conducted financial transactions and identified herself as doing business as CWG Enterprises. Ryan used a rented mail box as the company address for CWG Enterprises. Based on false invoices created by Ryan, transfers of government funds were allegedly made from a bank in Washington to a bank account in the name of "Bobbie C. Ryan dba CWG Enterprises" at a bank in New Windsor, N.Y. Once the funds arrived in the purported CWG Enterprises bank account, Ryan withdrew the funds and paid personal and family expenses.
The case was prosecuted by Senior Trial Attorney Andrew Levchuk of the Criminal Division’s Public Integrity Section. The case was investigated by the U.S. Army CID, Hartford Fraud Resident Agency.
Florida Health Care Provider & Individual Physician to Pay $12 Million to Settle False Claims Act AllegationsRead the Press Release
WASHINGTON – Dr. Todd J. Scarbrough and Melbourne Internal Medicine Associates P.A. (MIMA) have agreed to pay the United States $12 million to settle claims that the health care providers violated the False Claims Act by submitting false claims to Medicare and the military’s health care program - TRICARE, the Justice Department announced today.
MIMA provides health care services through a network of facilities located in Brevard County, Fla. Dr. Scarbrough was the medical director and practicing radiation oncologist at one of those facilities, the MIMA Cancer Center in Melbourne, Fla. In the complaint filed on Oct. 16, 2009, the United States alleged that, from the time of its inception through 2008, the MIMA Cancer Center, led by Dr. Scarbrough, improperly billed for certain radiation oncology services and caused false and fraudulent claims to be submitted to Medicare and TRICARE.
The United States’ investigation revealed that the MIMA Cancer Center had defrauded the federal health care programs by improperly inflating claims through various schemes specifically designed to cloak the fraudulent practices. In particular, the MIMA Cancer Center billed for services not supervised, duplicate and unnecessary services, services not rendered and upcoded services - a practice in which provider services are billed for higher procedure codes than were actually performed. The United States’ investigation found that MIMA executives had knowledge of a substantial number of the fraudulent billing practices at the facility, but had failed to stop the fraudulent billing.
"The Justice Department is committed to vigorously pursuing those who defraud Medicare," said Tony West, Assistant Attorney General of the Civil Division of the Department of Justice. "Health care providers who improperly charge for care, whether they be corporations or individual practitioners, will be held accountable."
The allegations resolved by today’s settlement were initiated by a whistleblower lawsuit filed under the False Claims Act, which allows a private party to file suit on behalf of the United States for fraud and to receive a share of the recovery. The whistleblower, Fred Fangman, former director of radiation oncology at MIMA Cancer Center, will receive $2.64 million of the settlement.
"Health care providers must be held accountable for their billing practices," said A. Brian Albritton, U.S. Attorney for the Middle District of Florida. "Those who submit false claims will be sought out and in the end they will pay dearly for their fraudulent claims."
Assistant Attorney General West noted that this settlement was the result of a coordinated effort among the Justice Department’s Civil Division; the U.S. Attorney’s Office for the Middle District of Florida; the Office of Investigations for the Department of Health and Human Services’ Office of Inspector General and Office of Counsel to the Inspector General; and the TRICARE Management Activity Office of Program Integrity and Office of General Counsel.
The lawsuit was captioned as United States ex rel. Fred Fangman v. Melbourne Internal Medicine Associates, P.A. and Dr. Todd J. Scarbrough, Civil Action No. 6:08-cv-1095-Orl-31DAB (M.D. Fla.).
This settlement is part of the government’s emphasis on combating health care fraud. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover approximately $2.2 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 have topped $3 billion.
19 March 2010
New Jersey Hospital to Pay $6.35 Million to Resolve Allegations of Inflating Charges to Obtain Higher Medicare ReimbursementRead the Press Release
WASHINGTON – Robert Wood Johnson University Hospital Hamilton, a New Jersey-based hospital, has agreed to pay $6.35 million to settle allegations that the hospital defrauded Medicare, the Justice Department announced today. Two lawsuits filed against the Hamilton, N.J., facility alleged that the hospital fraudulently inflated its charges to Medicare patients to obtain larger reimbursements from the federal health care program.
In addition to its standard payment system, Medicare provides supplemental reimbursement, called "outlier payments," to hospitals and other health care providers in cases where the cost of care is unusually high. Congress enacted the supplemental outlier payments system to ensure that hospitals have the incentive to treat inpatients whose care requires unusually high costs. The two lawsuits filed against Robert Wood Johnson University Hospital Hamilton alleged that the hospital inflated its charges to obtain supplemental outlier payments for cases that were not extraordinarily costly and for which outlier payments should not have been paid. The United States intervened in both lawsuits in January 2008.
"Taxpayer dollars should go towards quality health care, not wasted on fraud and abuse," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "As the settlement announced today demonstrates, the Justice Department is committed to pursuing those who defraud Medicare and drive up the costs of health care."
The two lawsuits were brought under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private citizens with knowledge of fraud against the government to bring an action on behalf of the United States and to share in any recovery. Under the civil settlement announced today, the whistleblowers will receive $1,111,250 of the total recovery.
"This office is determined to protect the integrity of the Medicare system for the citizens of New Jersey and of the United States," said Paul J. Fishman, U.S. Attorney for the District of New Jersey.
Assistant Attorney General West noted that today’s settlements was the result of a coordinated effort by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the District of New Jersey, the Department of Health and Human Services Office of Inspector General and Centers for Medicare and Medicaid Services, and the Federal Bureau of Investigation.
The cases are entitled United States ex rel. Peter Salvatori and Sara C. Iveson v. Robert Wood Johnson University Hospital at Hamilton, Case No.: 08-1265 (JAG) (D.N.J.), and United States ex rel. James Monahan v. Robert Wood Johnson University Hospital at Hamilton, Case No. 02-5702 (JAG) (D.N.J.).
This settlement is part of the government’s emphasis on combating health care fraud. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover approximately $2.3 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 have topped $3 billion. Since 2006, the United States has recovered more than $1.1 billion from hospitals that it alleged engaged in outlier fraud.
18 March 2010
Texas Pipeline Company Agrees to Pay Civil Penalty to Resolve Clean Water Act ViolationsRead the Press Release
WASHINGTON—A Texas-based pipeline company has agreed to pay a $450,000 civil penalty to the United States to settle allegations that it failed to prepare and maintain proper facility response plans to deal with spills and environmental accidents at eight of its oil storage terminal facilities in Iowa, Kansas and Nebraska.
NuStar Pipeline Operating Partnership LP of San Antonio, Texas, has also agreed to spend an additional $768,000 on a supplemental environmental project to install and operate tank volume monitoring and alarm systems at several of its facilities, according to a consent decree filed today in U.S. District Court for the District of Nebraska in Omaha.
Nustar’s affected facilities include those in LeMars, Milford and Rock Rapids, Iowa; Hutchinson and Salina, Kan.; and Columbus, Geneva and Norfolk, Neb. The eight facilities have a combined storage capacity of more than 71 million gallons of oil.
The Clean Water Act requires facilities that store large quantities of oil to develop response plans that outline procedures for addressing "worst-case" discharges of oil. By being prepared and by conducting required response drills, facilities are better situated to prevent environmental harm from such releases.
EPA initially discovered several Nustar facilities did not have facility response plans during inspections in 2006. The company subsequently prepared plans for each of the facilities after EPA initiated an investigation.
"Oil storage and pipeline companies are required to have proper spill prevention and response plans in order to comply with the Clean Water Act," said Ignacia S. Moreno, Assistant Attorney General for the Justice Department's Environment and Natural Resources Division. "The penalty imposed reflects the serious nature of non-compliance with these important requirements. We are pleased that NuStar has come into compliance with the law and that it will be upgrading its emergency control equipment. We call upon other companies to do the same."
"Protecting Nebraska surface water is achieved by this settlement and a strong message is sent that we will not tolerate disregard for compliance with the Clean Water Act," said Deborah R. Gilg, U.S. Attorney for the District of Nebraska.
"These are some of the largest oil storage terminals not just in the region, but in the United States," Regional Administrator Karl Brooks said. "The importance of complying with requirements for spill responses and emergency preparedness cannot be overstated. Proper preparation for spills and emergencies can help avoid large-scale environmental disasters."
The consent decree is subject to a 30-day public comment period and final approval by the court. 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 Resolves Discrimination Lawsuit with Scranton, Pennsylvania, Apartment ComplexRead the Press Release
WASHINGTON – The United States has reached a settlement resolving a housing discrimination lawsuit in Pennsylvania concerning discrimination against families with children, the Justice Department announced.
Under the terms of the consent decree, filed today in federal court in Scranton, Pa., defendants Gerard Joyce, Katie Joyce, Daniel Joyce, Normandy Holdings LLC, Lofts at the Mill LP and Lofts GP LLC, are required to pay $35,000 in monetary relief to two victims of discrimination and to the United States.
The department’s complaint, which originated from an investigation by the U.S. Department of Housing and Urban Development (HUD), alleged that the owners, property managers and management company for "The Mill" luxury apartments violated the Fair Housing Act by refusing to rent apartments to persons with children and by advertising discriminatory, "21 years or older," tenant policies in multiple Scranton newspapers. On Nov. 16, 2009, the court granted the United States’ motion for summary judgment on liability.
"Families should not be barred from living in the home of their dreams because they have children. The Fair Housing Act ensures that families searching for a home are protected from this kind of discrimination," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "The Justice Department will continue to vigorously protect the civil rights of families in Pennsylvania and across the country."
"HUD brought this case because publishing ads that tell families with children they are not welcome is illegal," said John Trasvina, HUD's Assistant Secretary for Fair Housing and Equal Opportunity. "Families may not be systematically denied access to the educational and economic opportunities a neighborhood affords."
Under the consent decree, which must be approved by the federal court in Scranton, the defendants must pay $15,000 to a mother and father who were denied housing because they had a one-year old daughter. The defendants must also pay an additional $20,000 to the government as a civil penalty. The settlement calls for numerous corrective measures, including training, a nondiscrimination policy, record keeping and monitoring.
Fighting illegal housing discrimination is a top priority of the Justice Department. The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability.
More information about the Civil Rights Division and the laws it enforces is available at http://www.justice.gov/crt/. Persons who believe they have experienced or witnessed unlawful housing discrimination may call the Housing Discrimination Tip Line at 1-800-896-7743, e-mail the Justice Department at [email protected], or contact HUD at 1-800-669-9777. More information about the Fair Housing Act can also be found at http://www.justice.gov/crt/housing/ or http://www.hud.gov/fairhousing.
Justice Department Reaches Americans with Disabilities Act Settlement with Florida Income Tax Preparation ServiceRead the Press Release
WASHINGTON – The Justice Department today announced a comprehensive settlement agreement under the Americans with Disabilities Act (ADA) with HRB Businesses of Florida Inc., to ensure effective communication with individuals who are deaf or hard of hearing in the provision of tax preparation services and courses. HRB is an H&R Block Inc. franchisee with multiple offices.
The settlement agreement, which resolves a complaint filed under title III of the ADA by an individual who is deaf, requires, among other things, that HRB furnish appropriate auxiliary aids and services, including sign language interpreter services, when necessary to afford a person who is deaf or hard of hearing equal access to the goods, services and accommodations made available to others.
"Access to tax preparation services enables people with and without disabilities to prepare and pay taxes as contributing members of our society on an equal basis," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "We are glad that, at the height of tax season, HRB has affirmed its commitment to provide effective communication of its tax preparation services and classes for individuals who are deaf or hard of hearing,"
The agreement requires that HRB:
- Provide auxiliary aids and services, including qualified sign language interpreters, to persons who are deaf or hard of hearing when necessary to ensure effective communication of its accounting services, tax preparation services, and programs and courses;
- Adopt and enforce a policy on effective communication with individuals who are deaf or hard of hearing, and post the policy on its Web site, in the each reception area and in its employee manuals and other print materials;
- Distribute the policy to current and new staff;
- Compile and maintain a list of sign language interpreter providers;
- Provide staff training on the ADA and HRB’s obligations to provide effective communication to individuals with disabilities;
- Establish, implement, publicize and monitor a grievance procedure for ADA-related complaints from customers; and
- Pay $2,500 damages to an individual who filed an ADA complaint and a $5,000 civil penalty.
The ADA prohibits discrimination against customers with disabilities by businesses that serve the public. Among other things, the ADA requires tax preparation services, accountants, lawyers, doctors and other businesses to provide equal access to customers who are deaf or hard of hearing. When services such as tax preparation involve important, lengthy, or complex oral communications with customers, businesses are generally required to provide qualified sign language interpreters and other auxiliary aids, free of charge, to individuals who are deaf or hard of hearing. Other auxiliary aids may include the use of relay services for telephone communication, exchanging notes for brief and uncomplicated communications, and providing assistive listening systems and receivers in classes for attendees who are hard of hearing. The appropriate auxiliary aid to be provided depends on a variety of factors including the nature, length and importance of the communication; the communication skills and knowledge of the individual who is deaf or hard of hearing; and the individual’s stated need for a particular type of auxiliary aid.
Those interested in finding out more about this agreement or businesses’ effective communication obligations under the ADA can call the Justice Department's toll-free ADA Information Line at (800) 514-0301 or (800) 514-0383 (TDD), or access its ADA Web site at http://www.ada.gov.
Innospec Inc. Pleads Guilty to FCPA Charges and Defrauding the United Nations; Admits to Violating the U.S. Embargo Against CubaRead the Press Release
Innospec Inc., a Delaware corporation, pleaded guilty today to defrauding the United Nations (UN), to violating the Foreign Corrupt Practices Act (FCPA) and to violating the U.S. embargo against Cuba, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division; Director Adam Szubin of the Department of the Treasury’s Office of Foreign Assets Control (OFAC); Assistant Director in Charge Shawn Henry of the FBI’s Washington Field Office; and Robert Khuzami, Director of the U.S. Securities and Exchange Commission’s (SEC) Division of Enforcement
Innospec pleaded guilty before U.S. District Judge Ellen Segal Huvelle in the District of Columbia to a 12-count information charging wire fraud in connection with Innospec’s payment of kickbacks to the former Iraqi government under the UN Oil for Food Program (OFFP), as well as FCPA violations in connection with bribe payments it made to officials in the Iraqi Ministry of Oil. Innospec also admitted to selling chemicals to Cuban power plants, in violation of the U.S. embargo against Cuba. According to court documents, Innospec manufactures and sells specialty chemicals and is the world’s only manufacturer of the anti-knock compound tetraethyl lead, used in leaded gasoline.
As part of the plea agreement with the Department of Justice, Innospec agreed to pay a $14.1 million criminal fine and to retain an independent compliance monitor for a minimum of three years to oversee the implementation of a robust anti-corruption and export control compliance program and report periodically to the Department of Justice. Innospec also agreed to fully cooperate with the Department of Justice and other U.S. and foreign authorities in ongoing investigations of corrupt payments by Innospec employees and agents.
"Today’s case is a win for law-abiding companies trying to compete fairly in the marketplace. Fraud and corruption cannot be viewed simply as a cost of doing business," said Assistant Attorney General Lanny A. Breuer of the Criminal Division. "By continuing to work with our U.S. and foreign law enforcement partners to hold companies accountable for their criminal conduct, we level the playing field for everyone."
"Today’s settlement agreements are a product of close cooperation both within the U.S. government and with our counterparts in the United Kingdom, and demonstrate the importance of complying with national security and foreign policy sanctions," said OFAC Director Adam J. Szubin.
"Today’s action makes clear that law enforcement authorities within the United States and across the globe are working together to aggressively monitor violators of anti-corruption laws," said Robert Khuzami, Director of SEC’s Division of Enforcement.
"I’m proud of the amazing work done by FBI agents and analysts who, together with other agencies, fight this quiet corruption that attacks the underlying basis of the U.S. economy; that is fair business practices," said Assistant Director in Charge Shawn Henry of the FBI’s Washington Field Office.
According to court documents, from 2000 to 2003, Innospec’s Swiss subsidiary, Alcor, was awarded five contracts valued at more than €40 million to sell tetraethyl lead to refineries run by the Iraqi Ministry of Oil under the OFFP. To obtain these contracts, Innospec admitted that Alcor paid or promised to pay at least $4 million in kickbacks to the former Iraqi government. Court documents detail how Alcor inflated the price of the contracts by approximately 10 percent to cover the cost of the kickbacks before submitting them to the UN for approval, and then falsely characterized the payments on the company’s books and records as "commissions" paid to Ousama Naaman, its agent in Iraq.
According to court documents, Innospec also admitted to paying and promising to pay more than $1.5 million in bribes, in the form of cash and travel, to officials of the Iraqi Ministry of Oil to secure sales of tetraethyl lead in Iraq from 2004 to 2008, as well as to paying $150,000 in 2006 to officials in the Iraqi Ministry of Oil to ensure that a competing product to tetraethyl lead was not approved for use in Iraqi refineries. Innospec admitted that the illicit payments were recorded as "commissions" on the basis of false invoices, which were incorporated into the company’s books and records.
Naaman, Innospec’s agent in Iraq, was indicted in the District of Columbia on Aug. 8, 2008, and later arrested in Frankfurt, Germany, on July 30, 2009, based on a U.S. arrest warrant. The United States is currently seeking Naaman’s extradition from Germany. The charges contained in the indictment are merely accusations and the defendant is presumed innocent until proven guilty beyond a reasonable doubt.
According to the plea agreement, Innospec also admitted that a subsidiary sold nearly $20 million in oil soluble fuel additives from 2001 to 2004 to state-owned Cuban power plants without a license from OFAC, in violation of the Trading With the Enemy Act. In addition, Innospec acknowledged in court documents that it paid approximately $2.9 million in bribes to officials of the Indonesian government to secure sales.
In a related matter, Innospec today settled a civil complaint filed by the SEC, charging Innospec with violating the FCPA’s anti-bribery, internal controls, and books and records provisions in connection with the misconduct described in court documents. Innospec will disgorge $11.2 million in profits to the SEC. Also today, Innospec agreed to pay $2.2 million to resolve outstanding matters with the OFAC related to the U.S. embargo against Cuba.
In another related matter brought by the United Kingdom’s Serious Fraud Office (SFO), Innospec’s British subsidiary, Innospec Ltd., pleaded guilty today in the Southwark Crown Court in London in connection with the corrupt payments to Indonesian officials. In connection with those charges, Innospec Ltd will pay a criminal penalty of $12.7 million. The judge in this case has reserved his sentencing remarks to a date to be scheduled next week. The SFO’s case was developed as a result of a referral from the Department of Justice in October 2007.
This case is being prosecuted by Trial Attorney Kathleen M Hamann of the Criminal Division’s Fraud Section. The case is being investigated by the FBI Washington Field Office’s dedicated FCPA squad.
The Department of Justice, the SEC, the OFAC and the SFO worked together to reach this $40.2 million global settlement. The department acknowledges and expresses its appreciation for the significant assistance provided by the staff of the SEC’s Division of Enforcement, as well as the Enforcement Division at OFAC and the U.S. Department of Commerce, during the course of this investigation. The Department of Justice also acknowledges the extensive coordination and cooperation with the SFO.
Information
Chicago Resident David Coleman Headley Pleads Guilty<br /> to Role in India and Denmark Terrorism ConspiraciesRead the Press Release
David Coleman Headley, a U.S. citizen of partial Pakistani descent, pleaded guilty today to a dozen federal terrorism charges, admitting that he participated in planning the November 2008 terrorist attacks in Mumbai, India, as well as later planning to attack a Danish newspaper. In pleading guilty to all 12 counts that were brought against him in December and were repeated in a subsequent indictment in January, Headley admitted that he attended training camps in Pakistan operated by Lashkar e Tayyiba, a designated foreign terrorist organization, on five separate occasions between 2002 and 2005. In late 2005, Headley received instructions from three members of Lashkar to travel to India to conduct surveillance, which he did five times leading up to the Mumbai attacks three years later that killed six Americans among approximately 164 people and wounded hundreds more.
A written plea agreement containing a detailed recitation of Headley’s participation in the foreign terrorism conspiracies was presented when Headley, 49, of Chicago, changed his plea to guilty this afternoon before U.S. District Judge Harry Leinenweber in Federal Court in Chicago. Headley has cooperated with the Government since he was arrested on Oct. 3, 2009, and the plea agreement states that he "has provided substantial assistance to the criminal investigation, and also has provided information of significant intelligence value."
In light of Headley’s past cooperation and expected future cooperation, the Attorney General has authorized the U.S. Attorney in Chicago not to seek the death penalty against Headley. When directed by the U.S. Attorney’s office, Headley must fully and truthfully participate in any debriefings for the purpose of gathering intelligence or national security information, and Headley further agrees that, when directed by the United States Attorney’s Office, he will fully and truthfully testify in any foreign judicial proceedings held in the United States by way of deposition, video-conferencing or letters rogatory.
Regarding sentencing, which will be deferred until after the conclusion of Headley’s cooperation, the plea agreement calculates an anticipated advisory sentencing guideline of life in prison. Provided that Headley continues to provide full and truthful cooperation, the Government will ask the Court to grant an unspecified departure from the sentencing guidelines, which will be solely up to the Court to decide.
"Today’s guilty plea is a crucial step forward in our efforts to achieve justice for the more than 160 people who lost their lives in the Mumbai terrorist attacks. Working with our domestic and international partners, we will not rest until all those responsible for the Mumbai attacks and the terror plot in Denmark are held accountable," said Attorney General Eric Holder. "Not only has the criminal justice system achieved a guilty plea in this case, but David Headley is now providing us valuable intelligence about terrorist activities. As this case demonstrates, we must continue to use every tool available to defeat terrorism both at home and abroad."
Headley pleaded guilty to conspiracy to bomb public places in India; conspiracy to murder and maim persons in India; six counts of aiding and abetting the murder of U.S. citizens in India; conspiracy to provide material support to terrorism in India; conspiracy to murder and maim persons in Denmark; conspiracy to provide material support to terrorism in Denmark; and conspiracy to provide material support to Lashkar.
According to the plea agreement, Headley attended the following training camps operated by Lashkar: a three-week course starting in February 2002 that provided indoctrination on the merits of waging jihad; a three-week course starting in August 2002 that provided training in the use of weapons and grenades; a three-month course starting in April 2003 that taught close combat tactics, the use of weapons and grenades and survival skills; a three-week course starting in August 2003 that taught counter-surveillance skills; and a three-month course starting in December 2003 that provided combat and tactical training.
Mumbai Terror Attacks
After receiving instructions from three Lashkar members in late 2005 to travel to India to conduct surveillance, in February 2006, in Philadelphia, Headley changed his name from Daood Gilani to facilitate his activities on behalf of Lashkar by portraying himself in India as an American who was neither Muslim nor Pakistani. In the early summer of 2006, Headley and two Lashkar members discussed opening an immigration office in Mumbai as a cover for his surveillance activities.
Headley eventually made five extended trips to Mumbai — in September 2006, February and September 2007, and April and July 2008 — each time making videotapes of various potential targets, including those attacked in November 2008. Before each trip, Lashkar members and associates allegedly instructed Headley regarding specific locations where he was to conduct surveillance, and Headley traveled to Pakistan after each trip to meet with Lashkar members and associates, report on the results of his surveillance, and provide the surveillance videos.
Before the April 2008 surveillance trip, Headley met with co-conspirators in Pakistan and discussed potential landing sites in Mumbai for a team of attackers who would arrive by sea. Headley returned to Mumbai with a global positioning system device and took boat trips around the Mumbai harbor and entered various locations into the device, according to the plea agreement.
Starting Nov. 26, 2008, and continuing through Nov. 28, 2008, 10 attackers trained by Lashkar carried out multiple assaults with firearms, grenades and improvised explosive devices against multiple targets in Mumbai, including the Taj Mahal and Oberoi hotels, the Leopold Café, the Chabad House and the Chhatrapati Shivaji Terminus train station, each of which Headley had scouted in advance, killing approximately 164 victims and wounding hundreds more.
The six Americans killed during the three-day siege are identified in the charges as Ben Zion Chroman, Gavriel Holtzberg, Sandeep Jeswani, Alan Scherr, his daughter Naomi Scherr and Aryeh Leibish Teitelbaum.
In March 2009, Headley made a sixth trip to India to conduct additional surveillance, including of the National Defense College in Delhi, and of Chabad Houses in several cities.
Denmark Terror Plot
Regarding the Denmark terror plot, Headley admitted that in early November 2008, he met with a Lashkar member in Karachi, Pakistan, and was instructed to conduct surveillance of the Copenhagen and Aarhus offices of the Danish newspaper Morgenavisen Jyllands-Posten in preparation for an attack in retaliation for the newspaper’s publication of cartoons depicting the Prophet Mohammed. After this meeting, Headley informed co-defendant Abdur Rehman Hashim Syed (Abdur Rehman), also known as "Pasha," of his assignment. Abdur Rehman stated to Headley words to the effect that if Lashkar did not go through with the attack, Abdur Rehman knew someone who would. Although not identified by name at the time, Headley later learned this individual to be co-defendant Ilyas Kashmiri. Abdur Rehman previously had told Headley that he had been working with Kashmiri and that Kashmiri was in direct contact with a senior leader for al Qaeda, the plea agreement states.
In late December 2008 and early January 2009, while in Chicago, Headley exchanged emails with Abdur Rehman to continue planning for the attack and to coordinate his travel to Denmark to conduct surveillance. In January 2009, Headley traveled from Chicago to Copenhagen to conduct surveillance of the Jyllands-Posten newspaper offices in Copenhagen and Aarhus and scouted and videotaped the surrounding areas.
In late January 2009, Headley met separately with Abdur Rehman and a Lashkar member in Pakistan to discuss the planned attack on the newspaper and provided them with videos of his surveillance. About the same time, Abdur Rehman provided Headley a video produced by the media wing of al Qaeda in approximately August 2008, which claimed credit for the June 2008 attack on the Danish embassy in Islamabad, Pakistan, and called for further attacks against Danish interests to avenge the publication of the offending cartoons.
In February 2009, Headley and Abdur Rehman meet with Kashmiri in the Waziristan region of Pakistan, where they discussed the video surveillance and ways to carry out the attack. Kashmiri told Headley that he could provide manpower for the operation and that Lashkar’s participation was not necessary. In March 2009, a Lashkar member advised Headley that Lashkar put the newspaper attack on hold because of pressure resulting from the Mumbai attacks. In May 2009, Headley and Abdur Rehman again met with Kashmiri in Waziristan. Kashmiri told Headley to meet with a European contact who could provide Headley with money, weapons and manpower for the newspaper attack, and relate Kashmiri’s instructions that this should be a suicide attack and the attackers should prepare martyrdom videos beforehand. Kashmiri also stated that the attackers should behead captives and throw their heads out of the newspaper building to heighten the response from Danish authorities, and added that the "elders," whom Headley understood to be al Qaeda leadership, wanted the attack to happen as soon as possible.
In late July and early August 2009, Headley traveled from Chicago to various places in Europe, and met with and attempted to obtain assistance from Kashmiri’s contacts and, while in Copenhagen, he made approximately 13 additional surveillance videos. When he returned to the United States on Aug. 5, 2009, Headley falsely told a U.S. Customs and Border Protection inspector in Atlanta that he had visited Europe for business reasons.
After returning to Chicago, Headley spoke with Abdur Rehman by phone and, using code, described his surveillance activities and his meeting with Kashmiri’s European contact. On multiple occasions throughout August and September 2009, Headley communicated with Abdur Rehman about planning the attack and media reports that Kashmiri had been killed. On Oct. 3, 2009, Headley was arrested at O’Hare International Airport in Chicago, intending ultimately to travel to Pakistan to deliver the approximately 13 surveillance videos to Abdur Rehman and Kashmiri, the plea agreement states.
One of Headley’s co-defendants, Tahawwur Rana, 49, of Chicago, who was indicted in January on three counts — conspiracy to provide material support to the Mumbai attacks; conspiracy to provide material support to the Denmark plot; and providing material support to Lashkar — has pleaded not guilty and remains in federal custody in Chicago while awaiting trial. Abdur Rehman and Kashmiri, who were charged in the same indictment with conspiracy to murder and maim persons in Denmark and providing material support to the Denmark plot, are not in U.S. custody.
The government is being represented by Chicago Assistant U.S. Attorneys Daniel Collins and Victoria J. Peters and Patrick J. Fitzgerald, U.S. Attorney for the Northern District of Illinois, as well as Los Angeles Assistant U.S. Attorneys Christopher Grigg and Janet Hudson of the U.S. Attorney’s Office for the Central District of California, with assistance from the Counterterrorism Section of the Justice Department’s National Security Division. The investigation has been conducted by the Chicago Joint Terrorism Task Force, led by the Chicago Office of the FBI, with assistance from the FBI offices in Los Angeles and Washington, D.C., as well as both U.S. Customs and Border Protection and U.S. Immigration and Customs Enforcement, Department of Homeland Security.
17 March 2010
Two Alligator Guides Charged in Louisiana for Illegally Hunting AlligatorsRead the Press Release
WASHINGTON—Two individuals were charged today in a nine count indictment returned by a federal grand jury in Baton Rouge, La., for illegally hunting threatened species of alligators, the Justice Department announced.
The indictment charges Clint P. Martinez, 43, and Michael A. Martinez, 47, both of Plaquemine, La., with nine violations of the Lacey Act, the federal wildlife statute that makes it illegal to transport, sell, receive, acquire or purchase illegally taken wildlife.
According to the indictment, Clint Martinez, a licensed alligator hunter, and Michael Martinez, a licensed alligator helper, were paid guides who took clients of an outfitter on sport alligator hunts. The indictment alleges nine instances in 2005, 2006 and 2009, that both Clint and Michael Martinez, while engaged in conduct involving the sale and purchase of wildlife, transported, sold, received and acquired American alligators, knowing that the wildlife was taken, possessed, transported and sold in violation of the laws and regulations of the United States. The indictment alleges transactions that were worth nearly $44,000.
An indictment is merely an accusation, and the individuals charged are presumed innocent unless and until proven guilty in a court of law.
In addition to being listed as a threatened species on the United States’ list of Threatened and Endangered Species, the American alligator also is listed as a crocodilian species on Appendix II of the Convention on International Trade in Endangered Species (CITES). To better regulate trade in crocodilian species, the parties to CITES agreed to a program of requiring a uniquely numbered tag to be inserted into the skin of each animal immediately after it is killed. The tag is to remain with the skin as it travels in interstate or international commerce until it is manufactured into a final consumer product. The Secretary of the Interior issued special rules for American alligators that implement the CITES tagging program and regulate the harvest of alligators within the United States.
The maximum penalty for each count of the indictment is five years in prison and a $250,000 fine.
This case was investigated by the Louisiana Department of Wildlife and Fisheries and the U.S. Fish and Wildlife Service. It is being prosecuted by the Justice Department’s Environmental Crimes Section with assistance from the U.S. Attorney’s Office for the Middle District of Louisiana.
Salt Lake City Escort Service Operator <br /> Found Guilty of Income Tax EvasionRead the Press Release
WASHINGTON – Jodi Hoskins, the operator of an escort service in Salt Lake City, Utah, has been found guilty of one count of tax evasion, the Justice Department and Internal Revenue Service (IRS) announced. Judge Dee Benson issued his factual and legal determinations on Tuesday following a January 2010 non-jury trial.
According to the court’s findings, Hoskins was actively involved in the management and operation of Companions, an adult entertainment agency or call-out escort service doing business in Salt Lake City, from its inception in 2000. Additionally, Hoskins was aware of all financial matters associated with Companions. Furthermore, it was understood by phone girls and escorts that they ultimately answered to Hoskins as their boss.
According to the court’s findings, Hoskins lived a lavish lifestyle in 2002. She filed a joint income tax return with her husband, Roy Hoskins, in which she intentionally under reported the gross receipts of Companions by $1,204,354. The total tax due and owing resulting from the tax evasion for 2002 is $485,443.
Jodi Hoskins faces a maximum sentence of five years in prison and a maximum fine of $250,000. Judge Benson has not yet set a date for her sentencing. Roy Hoskins, the owner of Companions, previously pleaded guilty to two counts of tax evasion in May 2009. His sentencing is scheduled for April 15, 2010.
John A. DiCicco, Acting Assistant Attorney General of the Justice Department’s Tax Division, commended the special agents from IRS Criminal Investigation Division who investigated the case as well as Tax Division attorneys Monica Edelstein and Leigh Kessler who prosecuted the case. Acting Assistant Attorney General DiCicco also thanked the U.S. Attorney’s Office for the District of Utah for their assistance in this matter.
16 March 2010
Nexus Technologies Inc. and Three Employees<br /> Plead Guilty to Paying Bribes to Vietnamese OfficialsRead the Press Release
Nexus Technologies Inc., a Philadelphia-based export company, pleaded guilty today in connection with a conspiracy to bribe officials of the Vietnamese government in exchange for lucrative contracts to supply equipment and technology to Vietnamese government agencies, in violation of the Foreign Corrupt Practices Act (FCPA), announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Michael L. Levy for the Eastern District of Pennsylvania and Janice K. Fedarcyk, Special Agent in Charge of the FBI’s Philadelphia Field Office. The president and owner of the company, Nam Nguyen, and his siblings and fellow Nexus personnel, Kim Nguyen and An Nguyen, also pleaded guilty today before U.S. District Court Judge Timothy J. Savage in connection with the conspiracy.
Nexus; Nam Nguyen, 54, of Houston and Vietnam; Kim Nguyen, 41, of Philadelphia; and An Nguyen, 34, of Philadelphia, were charged in a superseding indictment on Oct. 30, 2009, with conspiracy, violations of the FCPA, violations of the Travel Act in connection with commercial bribes and money laundering. Nexus pleaded guilty today to all the charges filed against the company in the superseding indictment. Nam and An Nguyen each pleaded guilty to conspiracy, a substantive FCPA violation, a violation of the Travel Act and money laundering. Kim Nguyen pleaded guilty to conspiracy, a substantive FCPA violation and money laundering. Former Nexus partner Joseph T. Lukas pleaded guilty on June 29, 2009, to conspiracy and to violating the FCPA.
According to court documents, Nexus was a privately-owned export company that identified U.S. vendors for contracts opened for bid by the Vietnamese government and other companies operating in Vietnam. The contracts allowed for the purchase of a wide variety of equipment and technology, including underwater mapping equipment, bomb containment equipment, helicopter parts, chemical detectors, satellite communication parts and air tracking systems. According to court documents, Nam Nguyen negotiated the contracts and bribes with the Vietnamese government agencies and employees. Kim Nguyen, vice president of Nexus, oversaw the U.S. operations and handled company finances. An Nguyen identified U.S. vendors to supply the goods needed to fulfill the contracts.
In connection with the guilty pleas, Nexus and the Nguyens admitted that from 1999 to 2008 they agreed to pay, and knowingly paid, bribes in excess of $250,000 to Vietnamese government officials in exchange for contracts with the agencies and companies for which the bribe recipients worked. The defendants admitted that the bribes were falsely described as "commissions" in the company’s records. In pleading guilty, Nexus also acknowledged that, as a company, it operated primarily through criminal means and agreed to cease operations as a condition of the guilty plea.
At sentencing, scheduled for July 13, 2010, Nexus faces a maximum fine of $27 million. Nam and An Nguyen each face a maximum sentence of 35 years in prison. Kim Nguyen faces a maximum sentence of 30 years in prison.
The case was prosecuted by Trial Attorney Kathleen M Hamann of the Fraud Section and Assistant U.S. Attorney Jennifer Arbittier Williams for the Eastern District of Pennsylvania. The case was investigated by the Philadelphia and New Jersey field offices of the FBI and the U.S. Department of Commerce, Office of Export Enforcement.
Justice Department Sues to Block Alleged $15 Million Dollar<br /> Tax Fraud Scheme Operating in Southern CaliforniaRead the Press Release
WASHINGTON - The United States has sued a father and two sons, all of Huntington Beach, Calif., seeking to bar them and their business from preparing federal tax returns for others, the Justice Department announced today. According to the government complaint, Alexander Adams and his two sons, Garrett and Brandon Adams, operate Adams Beach Income Tax in Huntington Beach. The suit alleges that the Adamses have attempted to siphon over $15 million in fraudulent refunds from the U.S. Treasury for customers and for themselves.
The complaint says the defendants prepare federal income tax returns claiming massive fraudulent tax refunds based on fabricated income tax withholdings. According to the complaint, Alexander and Garrett Adams requested two fraudulent refunds for $2.5 million a piece – one for Garrett Adams himself, and the other for a customer. Alexander Adams also requested a bogus refund for himself in the amount of $361,147, the suit alleges.
According to the government complaint, Alexander and Garrett Adams falsify Internal Revenue Service (IRS) documents, including IRS 1099-OID Forms with fictitious tax withholdings to claim the bogus refunds. Brandon Adams allegedly seeks new business by promoting the tax fraud scheme through live seminars, Web sites, conference calls, CDs and one-on-one instruction. The complaint says the defendants’ scheme is part of a growing trend of filing frivolous federal tax returns and forms to steal from the U.S. Treasury.
Last week, a federal judge in Sacramento found that tax preparer Teresa Marty had been using the same scheme to seek bogus refunds for her customers, and permanently barred her from preparing tax returns for others.
"Taxpayers thinking of participating in the illegal scheme described in this lawsuit should consider that, in addition to risking criminal prosecution, they also risk incurring civil penalties of as much as 20% of the amount of their bogus refund claim," said John A. DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division. "For false claims on the scale described in this case, the 20% penalty could result in scheme customers losing their savings and their homes."
In the past decade, the Justice Department’s Tax Division has obtained more than 455 injunctions against tax fraud promoters and dishonest tax return preparers. Information about these cases is available on the Justice Department’s Web Site.
Georgia Man Pleads Guilty to Production of Child Pornography Using Hidden Videos in Store BathroomsRead the Press Release
Jeffrey Alan Wasley of Kennesaw, Ga., pleaded guilty today to production of child pornography related to surreptitiously videotaping young boys using public restrooms in Atlanta-area establishments, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney for the Northern District of Georgia Sally Quillian Yates.
Wasley, 38, pleaded guilty before U.S. District Judge Clarence Cooper to producing child pornography. According to court documents and information presented at today’s plea hearing, Wasley was a church youth counselor and former performing magician who stalked young boys in retail stores and children’s attractions. When Wasley observed young boys entering a restroom unaccompanied by an adult, he admitted he would also enter and secretly videotape the boys.
In July 2008, Wasley victimized five and seven year-old brothers in the men’s restroom of a store in Kennesaw, according to information filed with the court and discussed at the plea hearing. These boys reported Wasley’s conduct to their mother, who in turn notified store security. According to court documents, store security and Cobb County police were able to identify a likely suspect from store surveillance footage. When store security observed this same individual in the store several days later, they followed him to his car and noted his car’s tag number, which was linked to Wasley. A subsequent search of Wasley’s home yielded a computer containing six videos Wasley admitted he produced of boys in public restrooms, along with thousands of additional images of child pornography that Wasley had downloaded from the Internet.
Sentencing has been scheduled for June 10, 2010. At sentencing, Wasley faces a minimum mandatory prison term of 15 years, a maximum term of 30 years, a fine of up to $250,000 and the possibility of a lifetime period of supervised release.
This case was investigated by the U.S. Secret Service and the Cobb County Police Department. This case was prosecuted by Assistant U.S. Attorneys Robert McBurney and Francey Hakes of the U.S. Attorney’s Office for the Northern District of Georgia and Trial Attorney Andrew McCormack of the Criminal Division’s Child Exploitation and Obscenity Section.
Former Purchasing Official at a New York City Hospital Pleads Guilty to Bid Rigging and FraudRead the Press Release
WASHINGTON — A former New York Presbyterian Hospital (NYPH) purchasing official pleaded guilty today in U.S. District Court in Manhattan to conspiring to rig bids on re-insulation services contracts, the Department of Justice announced.
According to the charges, Salvatore Scotto-DiVetta, who held various supervisory positions at NYPH, participated in a conspiracy that took place from as early as 2000 until at least March 2005. The department said that Scotto-DiVetta conspired with others to create the appearance that contracts for re-insulation services at NYPH were awarded in accordance with NYPH’s competitive bidding policy, when, in fact, they were not. To create the illusion of a competitive bidding process, Scotto-DiVetta’s co-conspirators would submit high, noncompetitive bids. In exchange for awarding the contracts to the designated bidder, Scotto-DiVetta received approximately $25,000 in kickbacks in the form of cash and gift cards from his co-conspirators.
In addition, from at least as early as May 2001 until at least August 2005, Scotto-DiVetta conspired with others by creating a company with a co-conspirator in which he had an undisclosed interest in order to purchase equipment parts on behalf of NYPH at fraudulently inflated prices. Scotto-DiVetta, in his supervisory position, caused NYPH to purchase equipment parts at fraudulently inflated prices from his company, rather than directly from the wholesalers and manufacturers from which NYPH had previously purchased the parts. Scotto-DiVetta made approximately $74,000 in profits from this scheme.
Scotto-DiVetta is charged with bid rigging, a violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million fine. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victim of the crime, if either of those amounts is greater than the statutory maximum fine.
Scotto-DiVetta is also charged with fraud, which carries a maximum penalty of five years in prison and a $250,000 fine. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
These charges arose from an ongoing federal antitrust investigation of fraud, bribery, tax-related offenses and bidding irregularities relating to contracts administered by the Facilities Operations Department and Engineering Department at NYPH and the Engineering Department at Mount Sinai Medical Center. To date, eight individuals and three companies have pleaded guilty to charges arising out of the same investigation. The investigation is being conducted by the Antitrust Division’s New York Field Office, the FBI and the Internal Revenue Service Criminal Investigation’s New York Field Office.
Anyone with information concerning bid rigging, bribery, tax offenses or fraud related to contracts administered by the Facilities Operations Department at NYPH, the Engineering Department at NYPH or the Engineering Department at Mount Sinai Medical Center should contact the New York Field Office of the Antitrust Division at 212-264-9308 or visit http://www.justice.gov/atr/contact/newcase.htm, or the New York Division of the FBI at 212-384-1000.
Alpharma to Pay $42.5 Million to Resolve False Claims Act Allegations in Connection with Promotion of Drug KadianRead the Press Release
WASHINGTON – American pharmaceutical manufacturer Alpharma Inc. has agreed to pay $42.5 million to resolve False Claims Act allegations in connection with the marketing of the morphine-based drug, Kadian, the Justice Department announced today. The settlement resolves allegations that, between January 1, 2000 and December 29, 2008, Alpharma paid health care providers to induce them to promote or prescribe Kadian, and made misrepresentations about the safety and efficacy of the drug, which is used to treat chronic moderate to severe pain. Alpharma is now a wholly-owned subsidiary of Bristol, Tenn.-based King Pharmaceuticals Inc.
Under the agreement announced today, the proceeds from the settlement will be split between the federal government and various states, with the United States receiving roughly $33.6 million to resolve the federal claims and the states receiving approximately $8.9 million to settle their respective claims.
"Illegal marketing of pharmaceutical drugs jeopardizes the public’s confidence in our health care system," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "All consumers have the right to know that their health care provider’s judgment about drugs they should take has not been undermined by misinformation or kickbacks from pharmaceutical manufacturers."
The settlement resolves a lawsuit brought by a whistleblower, Debra Parks, in 2006 under the qui tam or whistleblower provisions of the False Claims Act, which permit private citizens with knowledge of fraud against the government to bring a lawsuit on behalf of the United States and to share in any recovery. Under the civil settlement announced today, Ms. Parks will receive $5.33 million out of the federal share of the recovery.
"Health care decisions must be based solely upon what is best for the individual patient and not on which pharmaceutical company is paying the doctor the biggest kickback," said Rod J. Rosenstein, U.S. Attorney for the District of Maryland.
Assistant Attorney General West and U.S. Attorney Rosenstein noted that today’s settlement is the result of collaboration between the Justice Department’s Civil Division and the U.S. Attorney’s Office for the District of Maryland, with assistance from the National Association of Medicaid Fraud Control Units; the Department of Health and Human Services, Office of Inspector General; the Defense Criminal Investigative Service; the Office of Personnel Management, Office of Inspector General; and the Federal Bureau of Investigation.
This settlement is part of the government’s emphasis on combating health care fraud. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover approximately $2.2 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 have topped $3 billion.
15 March 2010
Third Former Employee of Financial Products and Services Firm Pleads Guilty for Role in Bid-Rigging and Fraud Conspiracies Involving Proceeds of Municipal BondsRead the Press Release
WASHINGTON — A third former employee of Rubin/Chambers, Dunhill Insurance Services Inc., also known as CDR Financial Products (CDR), pleaded guilty today for his participation in bid-rigging and fraud conspiracies related to contracts for the investment of municipal bond proceeds and other related municipal finance contracts, the Department of Justice announced. CDR is a Beverly Hills, Calif.-based financial products and services firm.
According to the charges filed today in the U.S. District Court in Manhattan, Douglas Alan Goldberg of Chatsworth, Calif., engaged in separate bid-rigging and fraud conspiracies with companies that provide a type of contract, known as an investment agreement, to state, county and local governments and agencies throughout the United States. The public entities were seeking to invest money from a variety of sources, primarily the proceeds of municipal bonds that they had issued to raise money for, among other things, public projects. Goldberg also pleaded guilty to one count of wire fraud. According to the plea agreement, Goldberg has agreed to cooperate with the ongoing investigation.
The department said in court documents that CDR was hired by public entities that issue municipal bonds to act as their broker and conduct what was supposed to be a competitive bidding process primarily for contracts for the investment of municipal bonds proceeds. Competitive bidding for those contracts is the subject of regulations issued by the U.S. Department of the Treasury and is related to the tax-exempt status of the bonds.
Goldberg admitted that, as a part of the bid-rigging conspiracy, from at least as early as 1998 until at least November 2006, he and other co-conspirators designated in advance which co-conspirator providers would be the winning bidder for certain investment agreements and submitted or caused to be submitted to CDR intentionally losing bids. According to the court documents, kickbacks in the form of fees that were inflated or unearned were paid to CDR in exchange for assistance from Goldberg and other CDR co-conspirators in controlling the bidding process and ensuring that certain co-conspirator providers won the bids they were allocated.
As a part of the fraud conspiracy, from as early as August 2001 until at least November 2006, Goldberg and others gave a co-conspirator provider information about the prices, price levels or conditions in competitors’ bids, a practice known as a "last look," which is explicitly prohibited by U.S. Treasury regulations. As a result of the information, the co-conspirator provider won contracts at artificially determined price levels. In exchange for giving the provider information, CDR requested and received kickbacks from the provider and relied on the provider to submit intentionally losing bids when requested on other contracts.
This is the third guilty plea to arise from an ongoing investigation into the municipal bonds industry, which is being conducted by the Antitrust Division’s New York Field Office, the FBI and Internal Revenue Service Criminal Investigation. On Feb. 23, 2010, Daniel Moshe Naeh, also known as Dani Naeh, a former CDR employee, pleaded guilty to bid-rigging and fraud conspiracies and to one count of wire fraud. On March 11, 2010, Matthew Adam Rothman, also a former CDR employee, pleaded guilty to bid-rigging and fraud conspiracies and to one count of wire fraud. The department is coordinating its investigation with the Securities and Exchange Commission, the Office of the Comptroller of the Currency and the Federal Reserve Bank of New York.
On Oct. 29, 2009, CDR along with its owner and president, David Rubin; its former chief financial officer and managing director, Zevi Wolmark, also known as Stewart Wolmark; and its vice president Evan Andrew Zarefsky, were indicted and charged with participating in bid-rigging and fraud conspiracies. The trial for CDR, Rubin, Wolmark and Zarefsky is scheduled to begin on Feb. 7, 2011.
The bid-rigging conspiracy with which Goldberg is charged carries a maximum penalty of 10 years in prison and a $1 million fine. The fraud conspiracy with which Goldberg is charged carries a maximum penalty of five years in prison and a $250,000 fine. The wire fraud charge with which Goldberg is charged carries a maximum penalty of 20 years in prison and a $250,000 fine. The maximum fines for each of these offenses may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
Anyone with information concerning bid rigging and related offenses in any financial markets should contact the Antitrust Division’s New York Field Office at 212-264-0390 or visit http://www.justice.gov/atr/contact/newcase.htm, or the FBI at 212-384-5000.
Leader of Casino-Cheating Criminal Enterprise Sentenced to 70 Months in Prison for Targeting Casinos Across the United StatesRead the Press Release
Phuong Quoc Truong was sentenced today in San Diego for his role in a scheme by the "Tran Organization" to cheat casinos across the United States, Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Karen P. Hewitt for the Southern District of California announced. In his plea agreement, Truong admitted that he and his co-conspirators unlawfully obtained up to $7 million during card cheats.
Truong was sentenced to 70 months in prison and three years of supervised release by U.S. District Court Judge John A. Houston in San Diego. The court also ordered him to forfeit $2,791,146 and to pay $5,753,416 in restitution, payable to several casinos. The court ordered the forfeiture of Truong’s interests in various assets, including two houses in the San Diego area, two properties in Vietnam, a 2001 Porsche Carrera, a Rolex presidential watch and a diamond-encrusted pendant.
Truong pleaded guilty on April 2, 2008, to conspiracy to participate in the affairs of a racketeering enterprise. Truong was also sentenced on a separate indictment to which he pleaded guilty after agreeing to transfer the charges to San Diego from the Western District of Washington. The indictment related to card-cheating activity at Emerald Queen Casino, which is an Indian gaming establishment in Washington state.
In his plea agreement, Truong admitted that in approximately August 2002, he, with his co-conspirators, created a criminal enterprise defined in the indictment as the "Tran Organization," based in San Diego and elsewhere, for the purpose of participating in gambling cheats at casinos across the United States.
A three-count indictment was returned May 22, 2007, and unsealed in the Southern District of California on May 24, 2007, charging Truong and 13 others each with one count of conspiracy to participate in the affairs of a racketeering enterprise; one count of conspiracy to commit several offenses against the United States, including conspiracy to steal money and other property from Indian tribal casinos; and one count of conspiracy to commit money laundering. The indictment also charged five separate individuals each with one count of conspiracy to commit several offenses against the United States, including conspiracy to steal money and other property from Indian tribal casinos; and one count of conspiracy to commit money laundering.
There have been two subsequent indictments in connection with the Tran Organization’s alleged casino-cheating conspiracy, issued in 2008 and 2009, charging 19 additional defendants. The charges contained in the indictments are merely accusations and defendants are presumed innocent until proven guilty beyond a reasonable doubt.
According to the three indictments, the defendants and others executed a "false shuffle" cheating scheme at casinos in the United States and Canada during blackjack and mini-baccarat games. The indictments allege that members of the criminal organization bribed casino card dealers and supervisors to perform false shuffles during card games, thereby creating "slugs" or groups of unshuffled cards. The indictments also allege that after tracking the order of cards dealt in a card game, a member of the organization would signal to the card dealer to perform a "false shuffle," and members of the group would then bet on the known order of cards when the slug appeared on the table. By doing so, members of the conspiracy allegedly repeatedly won thousands of dollars during card games, including winning several hundred thousand dollars on one occasion.
The indictments also allege that the members of the organization used sophisticated mechanisms for tracking the order of cards during games, including hidden transmitter devices and specially created software that would predict the order in which cards would reappear during blackjack games.
To date, 37 defendants have pleaded guilty to charges relating to the casino-cheating conspiracy including: Phuong Quoc Truong, Tai Khiem Tran, Anh Phuong Tran, Phat Ngoc Tran, Martin Lee Aronson, Liem Thanh Lam, George Michael Lee, Tien Duc Vu, Son Hong Johnson, Barry Wellford, John Tran, Willy Tran, Tuan Mong Le, Duc Cong Nguyen, Han Truong Nguyen, Roderick Vang Thor, Sisouvanh Mounlasy, Navin Nith, Renee Cuc Quang, Ui Suk Weller, Phally Ly, Khunsela Prom, Hop Nguyen, Hogan Ho, Darrell Saicocie, Bryan Arce, Qua Le, Outtama Keovongsa, Leap Kong, Thang Viet Huynh, Don Man Duong, Dan Thich, Jimmy Ha, Eric Isbell, Brandon Pete Landry, James Root and Jesus Rodriguez. These defendants admitted to targeting, with the aid of co-conspirators, a combined total of approximately 27 casinos in the United States and Canada during the course of the conspiracy, including:
1) Beau Rivage Casino in Biloxi, Miss.;
2) Casino Rama, in Orillia, Ontario, Canada;
3) Foxwoods Resort Casino in Ledyard, Conn.;
4) Gold Strike Casino in Tunica, Miss.;
5) Horseshoe Casino in Bossier City, La.;
6) Horseshoe Casino and Hotel in Tunica, Miss.;
7) Isle of Capri Casino in Westlake, La.;
8) Majestic Star Casino in Gary, Ind.;
9) Mohegan Sun Resort Casino in Uncasville, Conn.;
10) Palace Station Casino in Las Vegas;
11) Resorts East Chicago Hotel and Casino in East Chicago, Ind.;
12) Sycuan Casino in El Cajon, Calif.
13) Cache Creek Indian Bingo and Casino in Brooks, Calif.;
14) Emerald Queen Casino in Tacoma, Wash.;
15) Imperial Palace Casino in Biloxi, Miss.;
16) Argosy Casino in Baton Rouge, La.;
17) Trump 29 Casino in Coachella, Calif.;
18) Isle of Capri Casino in Bossier City, La.;
19) Agua Caliente Casino in Rancho Mirage, Calif.;
20) Spa Resort Casino in Palm Springs, Calif.;
21) Pechanga Resort and Casino in Temecula, Calif.;
22) L'Auberge du Lac Casino in Lake Charles, La.;
23) Nooksack River Casino in Deming, Wash.;
24) Barona Valley Ranch Casino and Resort in Lakeside, Calif.;
25) Caesars Indiana Hotel and Casino in Elizabeth, Ind.;
26) Monte Carlo Resort and Casino in Las Vegas; and
27) Harrah’s Casino in Lake Charles, La.
Two other defendants, Ha Thuy Giang and Tammie Huynh, pleaded guilty to tax offenses stemming from the investigation, and Khai Hong Tran admitted to the offenses alleged in the 2007 U.S. indictment when he pleaded guilty to casino-cheating offenses in Canada.
The case is being investigated by the FBI’s San Diego Field Office, the Internal Revenue Service-Criminal Investigation, the San Diego Sheriff’s Department and the California Department of Justice’s Bureau of Gambling Control. The investigation has received assistance from federal, state, tribal and foreign authorities, including: the Ontario, Canada Provincial Police; the National Indian Gaming Commission; the U.S. Attorney’s Office for the Western District of Washington; FBI Resident Agencies in Gulfport, Miss., Tacoma, Wash., and Toledo, Ohio; the Indiana State Police; the Rumsey Rancheria Tribal Gaming Agency; the Sycuan Gaming Commission; the Barona Gaming Commission; the Mississippi Gaming Commission; and the Washington State Gambling Commission.
The prosecution of the case is led by the Criminal Division’s Organized Crime and Racketeering Section (OCRS). OCRS Trial Attorneys Joseph K. Wheatley and Robert S. Tully are prosecuting the case in San Diego. Assistant U.S. Attorney J. Tate London, of the U.S. Attorney’s Office for the Western District of Washington, is prosecuting the case in Seattle relating to alleged cheating at the Emerald Queen Casino.
12 March 2010
Virginia Man Sentenced to 40 Months in Prison<br /> for Participating in Scheme to Steal Fuel from U.S. Army in IraqRead the Press Release
Michel Jamil, 60, was sentenced today to 40 months in prison for his participation in a scheme to steal approximately 10 million gallons of fuel from the U.S. Army in Iraq, announced Assistant Attorney General of the Criminal Division Lanny A. Breuer and U.S. Attorney for the Eastern District of Virginia Neil H. MacBride.
Jamil, of Annandale, Va., was sentenced by U.S. District Court Judge Claude M. Hilton in the Eastern District of Virginia. He pleaded guilty on Aug. 11, 2009, to a one-count information charging him with conspiracy to steal government property.
In his guilty plea, Jamil admitted that in March 2007, he and two of his co-conspirators arranged for the creation of a false memorandum for record (MFR) authorizing individuals, purportedly on behalf of a company serving as a contractor to the U.S. government, to draw fuel from the Victory Bulk Fuel Point (VBFP), Camp Liberty, Iraq, which was owned and operated by the United States. The VBFP supplies aviation and diesel fuel to both military units and U.S. government contractors operating in and around the Victory Base Complex. Jamil admitted that he and his co-conspirators used this false MFR and others to steal large quantities of fuel from the U.S. Army for subsequent sale on the black market. Jamil admitted that he escorted the trucks to retrieve fuel from the VBFP using a false MFR on approximately 10 to 15 occasions. As a result of the scheme, Jamil received between $75,000 and $87,500 in personal profits.
In related cases, Robert Jeffery was convicted on Aug. 11, 2009, after a two-day jury trial of one count of conspiracy and one count of theft of government property for his role in the fuel theft. Evidence at trial established that Jeffery served as an escort for the fuel trucks and illegally retrieved hundreds of thousands of gallons of fuel from the VBFP. On Dec. 11, 2009, Jeffery was sentenced to four years in prison.
Robert Young pleaded guilty on July 24, 2009, to participating in the same scheme. In his plea, Young admitted that he and his co-conspirators employed several individuals to serve as drivers and escorts of the trucks containing the stolen fuel. Young admitted that he received approximately $1 million in personal profits from the scheme. On Nov. 6, 2009, Young was sentenced to 97 months in prison.
Lee William Dubois pleaded guilty on Oct. 7, 2008, to participating in the same scheme. In his plea, Dubois admitted that he obtained government-issued common access cards for the drivers and escorts of the trucks and also presented false documents to the VBFP authorizing his co-conspirators to draw fuel. Dubois admitted that he received at least $450,000 in personal profits from the scheme. On Aug. 25, 2009, Dubois was sentenced to three years in prison.
The case was prosecuted by Special Assistant U.S. Attorney Steve Linick, Deputy Chief of the Criminal Division’s Fraud Section, and Fraud Section Trial Attorneys Andrew Gentin and Brigham Cannon. The investigation of this case was conducted by the U.S. Army Criminal Investigation Command, the Defense Criminal Investigative Service, the FBI, and members of the National Procurement Fraud Task Force and the International Contract Corruption Task Force (ICCTF).
The National Procurement Fraud Task Force, created in October 2006 by the Department of Justice, was designed to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in government 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 in Afghanistan, Iraq and Kuwait.
Securities Attorney Sentenced to 33 Months in Prison <br /> for Role in Pump-and-Dump SchemesRead the Press Release
A securities attorney was sentenced today to 33 months in prison for defrauding investors in stock manipulation schemes involving 19 publicly traded companies, Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Neil H. MacBride for the Eastern District of Virginia announced today.
David B. Stocker, of Phoenix, pleaded guilty on March 11, 2009, in U.S. District Court in Alexandria, Va., for his participation in a stock manipulation conspiracy known as a "pump-and-dump" scheme. Along with the prison sentence, U.S. District Judge Liam O’Grady today ordered Stocker to pay jointly and severally $6,360,191 in restitution and to forfeit $2,175,993 in a money judgment as well as other property and assets.
"Mr. Stocker used his expertise to exploit unsuspecting investors," said Assistant Attorney General Lanny A. Breuer. "Our financial markets must be fair and open to all, and those who illegally manipulate those markets will be caught and prosecuted."
"David Stocker used his expertise as a securities lawyer to help others steal millions of dollars from thousands of innocent investors around the country," said U.S. Attorney MacBride. "Today’s sentence sends a strong message to securities professionals that schemes to defraud the public will not be tolerated."
Stocker admitted that he participated in a conspiracy to commit securities fraud involving 19 publicly traded companies including: eDollars Inc; Emerging Holdings Inc.; MassClick Inc.; China Score Inc.; American Television and Film Company Inc.; Auction Mills Inc.; Custom-Designed Compressor Systems Inc.; Ecogate Inc.; Media International Concepts Inc.; Vanquish Productions Inc.; AVL Global Inc.; Motion DNA Corp.; PokerBook Gaming Corp.; TKO Holding Ltd; Body Scan Inc.; Integrity Messenger Corp.; Beverly Hills Film Studios; IFINIX Inc.; and V3 Global Inc.
According to court records, the stock manipulation scheme employed by Stocker and his co-conspirators followed a common pattern. Stocker admitted that he acted as securities counsel for companies, and he and others fraudulently caused the companies to issue millions of "free-trading" shares to co-conspirators in transactions that had not been registered with the SEC. As Stocker acknowledged in his ple a, after the unregistered and free-trading shares had been issued, co-conspirators began to manipulate, or "pump," the trading value of the companies’ stock through a number of deceptive and manipulative means to entice members of the investing public to invest in the stock. For example, according to court documents, members of the conspiracy engaged in coordinated trades to manipulate the price of the stock.
Stocker also admitted that co-conspirators falsely manipulated the price and volume of some of the companies’ stock by making materially false and misleading statements in press releases and in spam e-mails distributed by co-conspirator Justin Medlin and other spammers to tens of millions of e-mail addresses throughout the United States in an effort to create artificial demand for the companies’ stock. After fraudulently "pumping" the market price and demand for the companies’ stock, co-conspirators "dumped" millions of shares by selling them for large profits to the general investing public in the over-the-counter market through listings on Pink Sheets, an inter-dealer electronic quotation and trading system. These shares were purchased by unsuspecting investors, including investors in the Eastern District of Virginia, and were often rendered virtually worthless.
Ten other defendants have pleaded guilty and eight of them have been sentenced in federal court in Alexandria, Va., for their roles in related stock manipulation schemes, including Michael R. Saquella who was sentenced to 10 years in prison; Justin Medlin who was sentenced to six years in prison; and Steven P. Luscko and Gregory A. Neu who were each sentenced to five years in prison.
Stocker’s sentence reflected his cooperation and testimony in the trial of Phillip Windom Offill Jr., of Dallas, a former SEC attorney who was convicted by a federal jury on Jan. 28, 2010, of one count of conspiracy to commit registration violations, securities fraud and nine counts of wire fraud. Offill is scheduled to be sentenced on April 23, 2010.
The case, which was referred by the Market Regulation Department of Financial Industry Regulatory Authority (FINRA), was investigated by the FBI and the U.S. Postal Inspection Service, with assistance from FINRA’s Criminal Prosecution Advisory Group. The case was prosecuted by Fraud Section Deputy Chief Patrick Stokes and Assistant U.S. Attorney Ed Power of the Eastern District of Virginia. The Department of Justice acknowledges the substantial assistance of FINRA and the SEC in its investigation. It would also like to thank the Virginia State Corporation Commission, Division of Securities and Retail Franchising, for its assistance.
Former Haitian Government Official Pleads Guilty to Conspiracy to Commit <br /> Money Laundering in Foreign Bribery SchemeRead the Press Release
A former official of the Republic of Haiti’s state-owned national telecommunications company pleaded guilty today to a money laundering conspiracy in connection with a foreign bribery scheme, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division; U. S. Attorney Jeffrey H. Sloman of the Southern District of Florida; and Daniel W. Auer, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation (IRS-CI) Miami Field Office.
"Today’s guilty plea represents another important milestone in our ongoing effort to tackle overseas corruption," said Assistant Attorney General Lanny A. Breuer of the Criminal Division. "The message here is simple: Whether you are located in the United States or elsewhere, we will not allow U.S. financial institutions to be used as a vehicle for laundering illicit proceeds."
"Today’s conviction should be a warning to corrupt government officials everywhere that neither they nor their money will find any safe haven in the United States," said U. S. Attorney Jeffrey H. Sloman.
"The IRS is committed to enforcing the anti-money laundering laws and will continue to work with our international partners to investigate violations worldwide," said Special Agent in Charge Daniel W. Auer. "Haitian law enforcement should be commended for their commitment and professionalism throughout this investigation."
According to the indictment filed on Dec. 4, 2009, Robert Antoine, 62, of Miami and Haiti, was the director of international affairs for Haiti’s state-owned national telecommunications company, Telecommunications D’Haiti (Haiti Teleco) from May 2001 to April 2003. In that position, Antoine had primary responsibility for the relationships between U.S. telecommunications companies and Haiti Teleco. Antoine admitted during his guilty plea that he accepted bribes from three U.S. telecommunications companies and thereby defrauded Haiti Teleco. To disguise the origin of these funds, Antoine admitted he laundered them through intermediary companies, including J.D. Locator Services. Juan Diaz, the president of J.D. Locator, pleaded guilty on May 15, 2009, to conspiracy to commit violations of the Foreign Corrupt Practices Act (FCPA) and money laundering. Antoine admitted that a portion of the J.D. Locator funds were also laundered by Jean Fourcand of Fourcand Enterprises, who pleaded guilty on Feb. 19, 2010, to money laundering.
Antoine admitted during his guilty plea that $800,000 of these bribes were intended to be given to him by a U.S. telecommunications company for which Joel Esquenazi was the president and director, Carlos Rodriguez was the executive vice president, and Antonio Perez was, at times, the controller. Perez pleaded guilty on Apr. 27, 2009, to conspiring to commit FCPA violations and money laundering.
Esquenazi and Rodriguez, as well as Jean Rene Duperval, who was director of international relations of Haiti Teleco from June 2003 to April 2004, and Duperval’s sister, Marguerite Grandison, were indicted along with Antoine on Dec. 4, 2009.
An indictment is merely an accusation, and defendants are presumed innocent until proven guilty beyond a reasonable doubt.
Antoine faces a maximum penalty of 20 years in prison and a fine of the greater of $250,000 or twice the value of the property involved in the transaction. Antoine also agreed to a forfeiture order of $1,580,771. Sentencing is scheduled for May 27, 2010.
The Department of Justice is grateful to the government of Haiti for providing substantial assistance in gathering evidence during this investigation. In particular, Haiti’s financial intelligence unit, the Unité Centrale de Renseignements Financiers (UCREF), the Bureau des Affaires Financières et Economiques (BAFE), which is a specialized component of the Haitian National Police, and the Ministry of Justice and Public Security provided significant cooperation and coordination in this ongoing investigation.
The case was prosecuted by Trial Attorney Nicola J. Mrazek of the Criminal Division’s Fraud Section, Trial Attorney Kevin Gerrity of the Criminal Division’s Asset Forfeiture and Money Laundering Section, and Assistant U.S. Attorney Aurora Fagan of the U.S. Attorney’s Office for the Southern District of Florida. The Criminal Division’s Office of International Affairs also provided assistance in this matter. The case was investigated by the IRS-CI Miami Field Office.
Father and Son Plead Guilty to Selling Counterfeit Software Worth $1 MillionRead the Press Release
A father and son have pleaded guilty to selling $1 million worth of counterfeit computer software through the Internet, in violation of criminal copyright infringement laws, Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Neil H. MacBride for the Eastern District of Virginia and John Morton, Assistant Secretary of Homeland Security for U.S. Immigration and Customs Enforcement announced today. The guilty pleas are part of the Department of Justice’s initiative to combat online piracy.
Robert D. Cook, 56, and his son, Todd A. Cook, 23, both of Wichita Falls, Texas, pleaded guilty late yesterday to criminal copyright infringement and conspiracy to commit criminal copyright infringement before U.S. District Court Judge T.S. Ellis III, in Alexandria, Va.
According to court documents, from July 2006 through May 2008, the Cooks operated several Web sites that sold large volumes of counterfeit software with a combined retail value of approximately $1 million.
The defendants admitted that they used these Web sites to sell downloadable counterfeit software without authorization from the copyright owners. The defendants also admitted that they promoted their illicit scheme by purchasing advertising for their Web sites from major Internet search engines.
Both defendants face up to five years in prison, a fine of $250,000 and three years of supervised release. Sentencing has been scheduled for June 18, 2010.
The convictions of Robert and Todd Cook are the latest in an investigation out of Wichita Falls, in which four other men have been convicted for operating Web sites engaged in the sale of pirated software. Thomas C. Rushing III, William Lance Partridge and Brian C. Rue all pleaded guilty to criminal copyright infringement in U.S. District Court in Austin, Texas, on Aug. 22, 2008. Timothy K. Dunaway pleaded guilty to criminal copyright infringement on Oct. 20, 2008, in U.S. District Court in Wichita Falls. Combined, the counterfeit software sold by these individuals had a retail value of more than $10 million.
This case is part of the Department of Justice’s ongoing initiative to combat online auction piracy.
Including the guilty pleas announced today, the Department has obtained 46 convictions involving online auction and commercial distribution of counterfeit software. The Department’s initiative to combat online auction piracy is just one of several steps being undertaken to address the losses caused by intellectual property theft and hold responsible those engaged in criminal copyright infringement.DOJ and USDA Hold First-ever Workshop on Competition Issues in AgricultureRead the Press Release
The Department of Justice (DOJ) and U.S. Department of Agriculture (USDA) today held the first-ever joint public workshop on competition and regulatory issues in the agriculture industry. The workshop, led by U.S. Agriculture Secretary Tom Vilsack and U.S. Attorney General Eric Holder, featured panel discussions on a variety of topics important to America’s farmers and ranchers, including competitive dynamics in the seed industry, trends in contracting, transparency and buyer power, and concluded with public testimony.
"Today’s workshop provided the Department with an important opportunity to hear from a variety of perspectives and individuals about competition in the agriculture sector," said Attorney General Eric Holder. "We appreciate the importance of this industry to our economy and are committed to enforcing the antitrust laws effectively to ensure fair and open competition that protects both consumers and farmers."
"In my travels across the country, I hear a consistent theme: producers are worried whether there is a future for them or their children in agriculture, and a viable market is an important factor in what that future looks like," said Vilsack. "These issues are difficult and complex, which is why this workshop today is so important and long overdue."
Today’s meeting was the first in a series of workshops that will be held over the next several months, the first joint DOJ/USDA workshops ever to be held to discuss competition and regulatory issues in the agriculture industry. The goals of the workshops are to promote dialogue and foster learning, as well as to listen to and learn from people involved in agriculture. Additional information about the workshops can be found at http://www.justice.gov/atr/public/workshops/ag2010/index.htm.
A six-person panel of farmers presented their views on competition and regulatory issues. Other workshop panels examined the competitive dynamics of the seed industry; trends in contracting issues, marketplace transparency and buyer power; and agriculture enforcement and cooperation at the federal and state levels. Following the panels, officials received public testimony.
The workshop was held at the FFA Enrichment Center at Des Moines Area Community College (DMACC) and was attended by several key federal and state leaders, including Iowa Senator Chuck Grassley, Congressmen Leonard Boswell, Assistant Attorney General for the Justice Department’s Antitrust Division Christine Varney, Iowa Lt. Gov. Patty Judge, Iowa Attorney General Tom Miller and Iowa Agriculture Secretary Bill Northey, Montana Attorney General Steve Bullock, Ohio Attorney General Richard Cordray and Missouri Attorney General Chris Koster.
Transcripts from today’s workshop will be available for review at a later date on the Antitrust Division’s Web site. Individuals seeking more information on the workshops should contact [email protected] .
DOJ and USDA Hold First-Ever Workshop on Competition Issues in AgricultureRead the Press Release
WASHINGTON — The Department of Justice (DOJ) and U.S. Department of Agriculture (USDA) today held the first-ever joint public workshop on competition and regulatory issues in the agriculture industry. The workshop, led by U.S. Agriculture Secretary Tom Vilsack and U.S. Attorney General Eric Holder, featured panel discussions on a variety of topics important to America's farmers and ranchers, including competitive dynamics in the seed industry, trends in contracting, transparency and buyer power, and concluded with public testimony.
"Today's workshop provided the Department with an important opportunity to hear from a variety of perspectives and individuals about competition in the agriculture sector," said Attorney General Eric Holder. "We appreciate the importance of this industry to our economy and are committed to enforcing the antitrust laws effectively to ensure fair and open competition that protects both consumers and farmers."
"In my travels across the country, I hear a consistent theme: producers are worried whether there is a future for them or their children in agriculture, and a viable market is an important factor in what that future looks like," said Vilsack. "These issues are difficult and complex, which is why this workshop today is so important and long overdue."
Today's meeting was the first in a series of workshops that will be held over the next several months, the first joint DOJ/USDA workshops ever to be held to discuss competition and regulatory issues in the agriculture industry. The goals of the workshops are to promote dialogue and foster learning, as well as to listen to and learn from people involved in agriculture. Additional information about the workshops can be found at http://www.justice.gov/atr/public/workshops/ag2010/index.htm.
A six-person panel of farmers presented their views on competition and regulatory issues. Other workshop panels examined the competitive dynamics of the seed industry; trends in contracting issues, marketplace transparency and buyer power; and agriculture enforcement and cooperation at the Federal and state levels. Following the panels officials received public testimony.
The workshop was held at the FFA Enrichment Center at Des Moines Area Community College (DMACC) and was attended by several key federal and state leaders, including Iowa Senator Chuck Grassley, Congressmen Leonard Boswell, Assistant Attorney General for the Justice Department's Antitrust Division Christine Varney, Iowa Lt. Gov. Patty Judge, Iowa Attorney General Tom Miller and Iowa Agriculture Secretary Bill Northey, Montana Attorney General Steve Bullock, Ohio Attorney General Richard Cordray and Missouri Attorney General Chris Koster.
Transcripts from today's workshop will be available for review at a later date on the Antitrust Division's Web site. Individuals seeking more information on the workshops should contact [email protected].
11 March 2010
Taiwanese Couple Pleads Guilty to Illegally Trading Protected Black CoralRead the Press Release
Two Taiwanese nationals pleaded guilty today in federal court in the U.S. Virgin Islands for conspiracy to ship internationally protected black coral into the United States in violation of federal wildlife statutes, the Department of Justice announced.
Gloria Chu and Ivan Chu of Taipei, Taiwan, each pleaded guilty to nine counts including conspiracy, false statements, and violations of both the Endangered Species Act and the Lacey Act. The Lacey Act makes it a felony to falsely label wildlife that is intended for international commerce. The Endangered Species Act is the U.S. domestic law that implements the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). Each of the species of black coral is listed in Appendix II of CITES and is subject to strict trade regulations.
Black coral is one of the several types of precious corals that can be polished to a high sheen, worked into artistic sculptures and used in inlaid jewelry. Use of black coral in artistry has existed for centuries in the Indo-Pacific and Mediterranean. Black coral is typically found in deep waters, and many species have long life spans and are slow-growing. One specimen was reported by scientists to be more than 4,200 years old with a growth rate of only 5 micrometers (one millionth of meter) per year. Additionally, using deep sea submersibles, scientists have observed that fish and invertebrates tend to accumulate around the black coral colonies. In the last few decades, pressures from overharvesting, due in part to the wider availability of scuba gear and invasive species, have threatened this group of coral.
According to plea agreements filed with the court, the Chus ran a business named Peng Chia Enterprise Co. Ltd. that supplied materials including black coral to customers outside of Taiwan for jewelry design and manufacture. At times prior to 2007, the Chus were issued CITES export permits by the Taiwanese government in order to ship black coral overseas. Since 2007, however, they have been unable to obtain permits because they are unable to produce a legitimate certificate of origin.
Both Chus admitted that in order to supply a company based in the Virgin Islands with black coral, they would falsely label shipments in order to conceal the coral from U.S. Customs and Border Protection officers. The conspiracy included travel to a warehouse in mainland China to choose coral from a Chinese supplier and the use of an intermediary to ship the black coral from Hong Kong to Company X in St. Thomas. The scheme took place for at least two years prior to the customs seizure of an August 2009 shipment destined for Company X.
On Aug. 19, 2009, Peng Chia sent a shipment comprised of 10 boxes of black coral that were labeled "plastic of craft work." A U.S. Customs’ Contraband Enforcement Team flagged the shipment as suspicious and contacted U.S. Fish and Wildlife (USFWS) from San Juan, Puerto Rico. As a result, USFWS, National Oceanic and Atmospheric Administration and Immigration and Customs Enforcement opened a joint investigation, "Operation Black Gold," that led to the arrest of the Chus in January 2010. Analysis by the U.S. Fish and Wildlife Service’s National Forensics Laboratory in Ashland, Ore., revealed that shipment from the Chus contained internationally- protected black coral. Today, the Chus admitted that from 2007 to 2009, they sent more than $194,000 worth of black coral to Company X.
"Trafficking in protected species like black coral violates international and domestic law and threatens the existence of that important resource," said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. "We will continue to enforce environmental and natural resource laws so that future generations can continue to enjoy these important marine resources."
"This should send a strong and clear message to those individuals foreign and domestic, who deliberately break our environmental laws, that their conduct will not be tolerated. Those who illegally plunder nature’s resources in favor of profits will be brought to justice," said James Gale, Special Agent in Charge of the Fish and Wildlife Services’s Southeast Region. "The cooperative efforts show the commitment of all agencies involved to protect coral and the natural resources against the illegal international trade, we are all stewards."
"Stopping the illicit trade and depletion of protected species such as black coral is critical to preserving a healthy and viable marine environment," said U.S. Attorney Ronald W. Sharpe for the District of the U.S. Virgin Islands. "The U.S. Attorney’s Office will continue to work closely with its domestic and international law enforcement partners to detect, investigate and prosecute those who plunder and traffic in endangered species for their selfish gain."
According to the plea agreements, Ivan Chu has agreed to serve 30 months in prison and pay a $12,500 fine. Gloria Chu has agreed to serve 20 months in prison and pay a $12,500 fine. Both defendants would also be prohibited from shipping coral and other wildlife products to the United States for a three-year period after their release from prison. A sentencing date has been set for June 23, 2010.
The case was investigated by agents of the U.S. Fish and Wildlife Service and the National Oceanic and Atmospheric Administration with support from Immigration and Customs Enforcement and U.S. Customs and Border Protection. The case is being prosecuted by the Justice Department’s Environmental Crimes Section and the U.S. Attorney’s Office for the District of the Virgin Islands.
Second Former Employee of Financial Products and Services Firm Pleads Guilty <br /> for Role in Bid-rigging and Fraud Conspiracies Involving Proceeds of Municipal BondsRead the Press Release
A second former employee of Rubin/Chambers, Dunhill Insurance Services Inc., also known as CDR Financial Products (CDR), pleaded guilty today for his participation in bid-rigging and fraud conspiracies related to contracts for the investment of municipal bond proceeds and other related municipal finance contracts, the Department of Justice announced. CDR is a Beverly Hills, Calif.-based financial products and services firm.
According to the charges filed today in the U.S. District Court in Manhattan, Matthew Adam Rothman of Los Angeles engaged in separate bid-rigging and fraud conspiracies with companies that provide a type of contract, known as an investment agreement, to state, county and local governments and agencies throughout the United States. The public entities were seeking to invest money from a variety of sources, primarily the proceeds of municipal bonds that they had issued to raise money for, among other things, public projects. Rothman also pleaded guilty to one count of wire fraud. According to the plea agreement, Rothman has agreed to cooperate with the ongoing investigation.
The department said in court documents that CDR was hired by public entities that issue municipal bonds to act as their broker and conduct what was supposed to be a competitive bidding process primarily for contracts for the investment of municipal bonds proceeds. Competitive bidding for those contracts is the subject of regulations issued by the U.S. Department of the Treasury and is related to the tax-exempt status of the bonds.
Rothman admitted that, as a part of the bid-rigging conspiracy, from at least as early 2001 until at least November 2006, he and other co-conspirators designated in advance which co-conspirator providers would be the winning bidder for certain investment agreements and submitted or caused to be submitted to CDR intentionally losing bids. According to the court documents, kickbacks in the form of fees that were inflated or unearned were paid to CDR in exchange for assistance from Rothman and other CDR co-conspirators in controlling the bidding process and ensuring that certain co-conspirator providers won the bids they were allocated.
As a part of the fraud conspiracy, from as early as August 2001 until at least November 2006, Rothman and others gave a co-conspirator provider information about the prices, price levels or conditions in competitors’ bids, a practice known as a "last look," which is explicitly prohibited by U.S. Treasury regulations. As a result of the information, the co-conspirator provider won contracts at artificially determined price levels. In exchange for giving the provider information, CDR requested and received kickbacks from the provider and relied on the provider to submit intentionally losing bids when requested on other contracts.
The bid-rigging conspiracy with which Rothman is charged carries a maximum penalty of 10 years in prison and a $1 million fine. The fraud conspiracy with which Rothman is charged carries a maximum penalty of five years in prison and a $250,000 fine. The wire fraud charge carries a maximum penalty of 20 years in prison and a $250,000 fine. The maximum fines for each of these offenses may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
This is the second guilty plea to arise from an ongoing investigation into the municipal bonds industry, which is being conducted by the Antitrust Division’s New York Field Office, the FBI and IRS Criminal Investigation. On Feb. 23, 2010, Daniel Moshe Naeh, also known as Dani Naeh, a former CDR employee, pleaded guilty for his role in the same bid-rigging and fraud conspiracies as Rothman and to one count of wire fraud. The department is coordinating its investigation with the Securities and Exchange Commission, the Office of the Comptroller of the Currency and the Federal Reserve Bank of New York.
On Oct. 29, 2009, CDR, along with its owner and president, David Rubin; its former chief financial officer and managing director, Zevi Wolmark, also known as Stewart Wolmark; and its vice president Evan Andrew Zarefsky, were indicted and charged with participating in bid-rigging and fraud conspiracies. The trial for CDR, Rubin, Wolmark and Zarefsky is scheduled to begin on Feb. 7, 2011.
Anyone with information concerning bid rigging and related offenses in any financial markets should contact the Antitrust Division’s New York Field Office at 212-264-0390 or visit http://www.justice.gov/atr/contact/newcase.htm, or the FBI at 212-384-5000.