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11 March 2010
Former New Orleans Police Detective Pleads Guilty; Confirms Danziger Cover-upRead the Press Release
A second former New Orleans Police Department (NOPD) officer has pleaded guilty to covering up a deadly police shooting in the days after Hurricane Katrina, the Justice Department today announced.
Jeffrey Lehrmann, a former NOPD detective who currently works as a special agent for Immigration and Customs Enforcement, pleaded guilty to misprision of a felony (a charge for concealing a known felony), for failing to report a conspiracy to obstruct justice in the investigation of a police-involved shooting on the Danziger Bridge in New Orleans. The Sept. 4, 2005, shooting left two civilians dead and four others seriously injured.
On Sept. 4, 2005, days after Hurricane Katrina, two police-involved shootings occurred on the Danziger Bridge. The east side shooting resulted in the death of one civilian and the wounding of four others. A second shooting on the west side resulted in the death of Ronald Madison, a 40-year-old severely disabled man. Madison’s brother, Lance, was arrested on eight counts of attempting to kill police officers, only to be later released without indictment. The police maintained that they fired at the civilians in self-defense, after the civilians fired at police. However, last month, former NOPD Lieutenant Michael Lohman pleaded guilty in federal court to conspiring with other officers to cover up what he had determined was a “bad shoot” on the bridge. Today, defendant Lehrmann admitted that he also knew of and participated in a conspiracy to obstruct justice in the investigation of the shooting.
Lehrmann, of Anthem, Ariz., entered his plea in federal court in New Orleans today before U. S. District Court Judge Lance M. Africk. The defendant faces a possible maximum sentence of three years in prison and a fine of $250,000. Sentencing is scheduled for June 10, 2010.
“We should all be able to trust that our law enforcement officers will protect us from harm in times of crisis. But amid the devastation that followed in the wake of Hurricane Katrina, officers involved in covering up this deadly police shooting committed a disgraceful violation of the public trust,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We will continue to aggressively investigate the events that occurred on the Danziger Bridge.”
U. S. Attorney Jim Letten added, “This morning in court, a former New Orleans police officer pleaded guilty, admitting to concealing a conspiracy among a group of officers to obstruct justice in the investigation of the police shooting on the Danziger Bridge in New Orleans which left two civilians dead and four other seriously injured. Although today’s guilty plea marks the second conviction in this important, ongoing investigation, it is important to note that this officer was the first to enter into an agreement with the United States and provide cooperation. The citizens we serve must know that as this investigation continues, our U. S. Attorney’s Office, along with the FBI and the Department of Justice Civil Rights Division, will do everything in our power to bring to justice all of the individuals responsible for the injustices which occurred on the bridge on Sept. 4, 2005.”
FBI Special Agent in Charge David Welker stated, “The FBI is uniquely tasked to investigate potential violations of the civil rights of the citizens of the United States. Today’s guilty plea is a clear message that the intensity of the investigation is increasing. The FBI, U.S. Attorney’s Office and DOJ’s Civil Rights Division will continue to aggressively pursue the evidence wherever it leads.”
According to court documents, Lehrmann learned from an NOPD supervisor (referred to in court documents as “the investigator”) that an officer on the bridge had “shot an innocent man.” Upon hearing that comment, Lehrmann concluded that the shooting on the bridge was a “bad shoot,” meaning that it was legally unjustified. Lehrmann admitted that he participated with his supervisors in the creation of a report that included false statements by the officers involved in the shooting; false claims about a gun that had in fact been planted by the investigator; and fabricated statements from witnesses who did not really exist. Lehrmann also admitted that the report of the Danziger Bridge investigation included false statements alleged to have been given by two of the victims of the police shooting.
According to the factual basis produced at the time of the plea, Lehrmann admitted that the report of the incident contained a false claim that the investigator had returned to the bridge the day after the shooting and had found a gun in the grass below where a family had been shot. In fact, according to Lehrmann, that story was “a lie.” According to Lehrmann, sometime after the shooting, he and two sergeants drove with the investigator to the investigator’s home, where the investigator retrieved a bag from his garage. When the investigator was asked what was in the bag, he responded, “a ham sandwich.” Lehrmann then looked in the bag and saw a gun that would be used in the Danziger Bridge investigation. Once the investigator assured Lehrmann and the sergeants that the gun was “clean,” meaning that it could not be traced to another crime, they all went along with the plan to plant the gun.
This case, which is ongoing, is being investigated by the New Orleans Field Office of the FBI, and is being prosecuted by Deputy Chief Bobbi Bernstein and Trial Attorney Forrest Christian of the Justice Department’s Civil Rights Division, along with Assistant U.S. Attorney Julia K. Evans of the Eastern District of Louisiana.
Former Acting Executive Director of Nonprofit Organization <br /> in American Samoa Pleads Guilty to Theft of Federal Grant FundsRead the Press Release
The former acting executive director of U’una’i Legal Services Corporation (ULSC) pleaded guilty today to stealing $31,292 from the federally-funded organization in American Samoa, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division; Jeffrey Schanz, Inspector General of the Legal Services Corporation, Office of Inspector General (LSC OIG); and Elise Chawaga, Special Agent in Charge of the Fraud Detection Office at the Department of Justice Office of the Inspector General (DOJ OIG).
David Wagner, 47, of Maryland Heights, Mo., pleaded guilty before U.S. District Judge Carol E. Jackson in the Eastern District of Missouri to a one-count criminal information charging him with theft of federal grant funds.
According to court documents, from approximately 1998 through 2007, ULSC was a nonprofit organization operating in American Samoa. During this period, ULSC was the only nonprofit organization in American Samoa dedicated to providing free legal services to victims of domestic violence, dating violence, stalking and sexual abuse. ULSC relied on various sources of federal grant funding, including funding from the Legal Services Corporation and the Department of Justice’s Office of Violence Against Women (OVW).
In pleading guilty, Wagner admitted that from approximately November 2005 through December 2006, he stole $31,292 in federal grant funds from ULSC and OVW.
"Sadly, there are still far too many incidents of violence against women today. Victims in American Samoa were victimized yet again when funds intended to help provide free legal services to them were stolen by this defendant," said Assistant Attorney General Lanny A. Breuer. "The Department of Justice is committed to working toward a future where domestic abuse, sexual assault, stalking and teen dating violence are eradicated – and to prosecuting those who defraud programs meant to help achieve this goal."
"Today’s event represents a joint effort by the Criminal Division, the LSC OIG and the DOJ OIG in protecting funds that serve the legal needs of the poor," said Jeffrey Schanz, Inspector General of the LSC OIG.
"The Department of Justice Office of the Inspector General is committed to holding grantees accountable who betray the trust placed in them by using federal grant funds for personal gain rather than to assist victims of crime," said Elise Chawaga, Special Agent in Charge of the Fraud Detection Office at the DOJ OIG.
Wagner faces a maximum sentence of 10 years in prison, a $250,000 fine and payment of $31,292 in restitution. Sentencing is scheduled for July 12, 2010.
The case is being prosecuted by Trial Attorney Edward J. Loya Jr., of the Criminal Division’s Public Integrity Section. The case is being investigated by special agents of LSC OIG and DOJ OIG.
Federal Court Permanently Shuts Down Northern California Tax PreparerRead the Press Release
A federal judge in Sacramento, Calif., has permanently barred Teresa Marty, of Pollock Pines, Calif, and her Placerville, Calif.-based business, Advanced Financial Services LLC, from acting as federal tax return preparers, the Justice Department announced today. U.S. District Court Judge Frank C. Damrell, Jr. of the Eastern District of California entered the permanent injunction order, which adopted a 25-page recommendation of U.S. Magistrate Judge Edmund F. Brennan. The permanent injunction follows a preliminary injunction that was entered in September 2009. Marty claims to be a Certified Wealth Preservation Planner and Certified Asset Protection Planner, as well as an Enrolled Agent licensed with the State of California.
The court found that in 2008 and 2009 Marty prepared and filed fraudulent tax returns falsely reporting large fabricated amounts of federal taxes withheld. This false reporting of tax withheld led to fraudulent refund claims in amounts as large as $2.7 million per customer. The court also found that to support those fraudulent refund claims, Marty prepared and submitted false IRS 1099-OID forms on behalf of customers, showing the fabricated withholding.
The court stated that the Internal Revenue Service (IRS) had identified approximately 110 returns that Marty prepared and filed that use false 1099 forms to make fraudulent refund claims. The court noted that Marty’s "scheme lacks any support under the Internal Revenue Code, case law, or any other authority."
In addition to barring Marty from preparing federal tax returns, the court ordered her to give the Justice Department her complete customer list and to notify her customers of the injunction. More information about the case is available in an earlier Justice Department press release .
John DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division, thanked Tax Division trial attorney John Monroe, who handled the case, and Shauna Henline, of the IRS’ Small Business/Self Employed Division, who conducted the investigation.
In the past decade the Justice Department has obtained injunctions against more than 455 tax preparers and tax-fraud promoters. Information about these cases is available on the Justice Department Web site.
Detroit-Area Doctor Convicted in Medicare Fraud SchemeRead the Press Release
Farmington Hills, Mich., physician Jose Castro-Ramirez was convicted today by a Detroit federal jury on all 13 charged counts in connection with his role in an $18.3 million Medicare fraud scheme, 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.
After a three-week trial, the jury convicted Castro-Ramirez of one count of conspiracy to commit health care fraud, 11 substantive counts of health care fraud, and one count of conspiracy to launder the proceeds of the fraudulent scheme.
Evidence at trial established that beginning in late 2003, the defendant, a physician licensed in the state of Michigan, entered into an agreement with co-conspirator Suresh Chand to defraud the Medicare program. Chand owned and controlled several companies operating in Warren, Mich., including Continental Rehab Services Inc. (CRS) and Pacific Management Services Inc. (PM), which purported to provide physical and occupational therapy services to Medicare beneficiaries. In reality, as the evidence showed, Chand and his associates at CRS and PM created fictitious therapy files, appearing to document physical and occupational therapy services provided to Medicare beneficiaries, when in fact no such services had taken place. The fictitious services reflected in the files were billed to Medicare through sham Medicare providers controlled by Chand and his co-conspirators.
Evidence introduced at trial established that in order to create the fictitious files, Chand and his co-conspirators paid cash kickbacks and other inducements to Medicare beneficiaries, in exchange for the beneficiaries’ Medicare numbers and signatures on documents falsely indicating that they had received therapy services. Evidence also showed that Chand paid licensed physical and occupational therapists to sign fictitious "progress notes" and other documents that appeared to reflect that physical and occupational therapy services had been provided to the beneficiaries, when in fact they had not. Castro-Ramirez signed therapy prescriptions and other documents in the files falsely indicating that he had evaluated the Medicare beneficiaries and certified the need for physical and occupational therapy services. In fact, the evidence at trial established that Castro-Ramirez had not overseen any treatment provided to the patients and was fully aware that his signatures were part of a fraudulent scheme. According to evidence presented at trial, in many instances Castro-Ramirez had never seen the beneficiaries.
One of the inducements that Chand and his co-conspirators used to recruit Medicare beneficiaries into the scheme was the provision of prescriptions for controlled substances and other drugs, including Vicodin and Xanax. Evidence presented at trial showed that Chand provided Castro-Ramirez with lists of the controlled substances or drugs the beneficiaries preferred, and that Castro-Ramirez wrote prescriptions for the substances without ever seeing the patients. The evidence established that between January 2003 and March 2007, Castro-Ramirez wrote thousands of prescriptions for a variety of drugs for patients that he had never seen. The evidence also showed that Castro-Ramirez was fully aware that the purpose of the prescriptions was to induce beneficiaries into the scheme.
Evidence introduced at trial demonstrated that Castro-Ramirez profited from his participation in the scheme in several ways. Castro-Ramirez’s largest source of fraudulent proceeds came from his own billings to Medicare for "home visits" that he purportedly made to Medicare beneficiaries whom Chand recruited into the scheme. In fact, Castro-Ramirez never conducted "home visits" with the vast majority of these patients, and never discussed or ordered therapy services for the few he did see. The evidence showed that Chand and other co-conspirators also distributed proceeds of the fraud directly to Castro-Ramirez on occasion, and did so through transactions designed to disguise the nature, source, ownership, control and location of the tainted funds. The evidence showed that Castro-Ramirez knew that the cash and checks he received from Chand were structured so as to conceal the fact that they were proceeds of Medicare fraud.
Between approximately January 2003 and June 2007, Chand and his co-conspirators submitted claims to the Medicare program totaling $18,379,300 for physical and occupational therapy services that were supposedly ordered and supervised by Castro-Ramirez, but were in fact never rendered. Medicare paid $8,562,688 on those claims. In addition, Castro-Ramirez submitted approximately $1.4 million in claims to the Medicare program for "home visits" supposedly provided to beneficiaries recruited into the scheme by Chand and his co-conspirators. Medicare paid approximately $929,000 on those claims.
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.
At sentencing, scheduled for June 29, 2010, Castro-Ramirez faces a maximum penalty of 10 years in prison and a $250,000 fine on the health care fraud conspiracy and substantive health care fraud counts. He faces a maximum penalty of 20 years in prison and a $250,000 fine on the money laundering conspiracy count.
The case was prosecuted by Senior Trial Attorney John K. Neal of the Criminal Division’s Fraud Section and Special Assistant U.S. Attorney Thomas W. Beimers of the U.S. Attorney’s Office for the Eastern District of Michigan.
The case was investigated by the FBI 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 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 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
10 March 2010
Three South Florida Men Charged <br /> in Obstruction of Justice and Money Laundering OperationRead the Press Release
Three Florida men were arrested today on charges including obstruction of justice and money laundering as part of a joint U.S. and Italian law enforcement action, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Jeffrey H. Sloman for the Southern District of Florida and John V. Gillies, Special Agent in Charge of the FBI’s Miami Field Office.
Roberto Settineri, 41, of Miami Beach, Fla., and Daniel Dromerhauser, 39, of Miami were arrested this morning on charges contained in a superseding indictment unsealed today. Enrique Ros, 33, of Pembroke Pines, Fla., was also charged in the superseding indictment, but remains at large. The defendants are charged with one count of conspiracy to obstruct, two counts of obstruction and attempting to obstruct federal proceedings, one count of conspiracy to launder money and five counts of substantive money laundering. If convicted, the defendants face up to 20 years in prison on each of the nine charged counts.
The charges filed in the Southern District of Florida against Settineri, Ros and Dromerhauser stem from an undercover operation in which, according to the indictment, the men allegedly agreed to destroy documents represented to be subject to a grand jury investigation. The indictment also alleges the three defendants agreed to launder funds and conceal assets represented to be the proceeds of a large-scale mail and wire fraud.
Antonio Tricamo, 37, of Miami, was arrested today on charges contained in a separate indictment, including four counts of money laundering, six counts of trafficking in contraband cigarettes and one count of marriage fraud. If convicted, Tricamo faces up to 20 years in prison on each of the money laundering charges and five years in prison on each the cigarette smuggling charges and the marriage fraud charge.
The charges filed against Tricamo stem from a separate undercover operation in which Tricamo allegedly assisted in laundering nearly $1 million in funds represented to be drug proceeds. Additionally, the indictment alleges Tricamo purchased more than 250,000 cigarettes, none of which contained tax stamps showing payment of applicable state cigarette taxes. Tricamo also allegedly entered into a false marriage in an attempt to gain lawful status into the United States.
The defendants made their initial appearances today before U.S. Magistrate Judge Robin Rosenbaum in U.S. District Court in Fort Lauderdale, Fla.
In a coordinated arrest action, Gaetano Napoli Sr., Thomas Napoli and Gaetano Napoli Jr., were arrested today on charges filed in the Eastern District of New York, including obstruction of justice, extortion and concealment of assets in bankruptcy. According to documents filed in federal district court in Brooklyn, Gaetano Napoli Sr., is a member of the Gambino organized crime family and a close associate of Settineri.
As part of this coordinated enforcement action, prosecutors in Palermo, Italy, today charged Settineri and 20 co-defendants in Sicily with extortion, drug trafficking, attempted homicide and other crimes arising from their alleged affiliation with Santa Maria di Gesù, a Sicilian mafia family. Italian authorities executed arrests on those charges in and around Palermo earlier this morning.
"Today’s arrests and the charging of more than 20 individuals on two continents is a tribute to what can be achieved in cooperation with our international partners," said Assistant Attorney General Lanny A. Breuer of the Criminal Division. "In a world where crime knows no boundaries, robust law enforcement cooperation is essential to detecting and prosecuting alleged criminal activity."
"This case demonstrates the success of national and international law enforcement cooperation to transcend parochial boundaries and jurisdictional limits," said U.S. Attorney U.S. Jeffrey H. Sloman for the Southern District of Florida. "Together, we can fight crime from different perspectives and hold accountable those accused of trying to pervert and obstruct our system of justice."
"The age of global threats has propelled the FBI into an age of global partnerships," said John V. Gillies, Special Agent in Charge of the FBI’s Miami Office. "These charges prove that our criminal investigative efforts remain unchanged and undeterred. The cooperation between the FBI, the U.S. Attorney’s Office, the Italian National Police, the Miami-Dade Police Department and the Broward Sheriff’s Office were instrumental to the successful outcome of this case."
These cases are being investigated by the FBI; the Broward County, Fla., Sheriff’s Office; the Miami-Dade Police Department; the Italian Ministries of the Interior and Justice; and the Italian National Police. The Miami cases are being prosecuted by Assistant U.S. Attorney Cynthia Stone of the Southern District of Florida and Trial Attorney Margaret Honrath of the Organized Crime and Racketeering Section. The Brooklyn case is being prosecuted by the U.S. Attorney’s Office for the Eastern District of New York. The Criminal Division’s Office of International Affairs and the FBI Legal Attaché Office in Rome provided assistance in these cases.
An indictment is merely an accusation and the defendants are presumed innocent until proven guilty.
Justice Department Sues to Shut Down Kansas Tax PreparerRead the Press Release
The United States has sued a Garden City, Kan., tax preparer, Jose Lares, seeking to permanently bar him from the tax-preparation business, the Justice Department announced today. The civil injunction suit, filed with the U.S. District Court for the District of Kansas, alleges that Lares prepares returns through Dinero Rapido Tax Service, formerly known as Income Tax Dinero Rapido, in Garden City.
According to the government’s complaint, Lares claims false dependent exemptions and false filing statuses on customers’ returns. The complaint alleges that Internal Revenue Service (IRS) audits of customers of Lares’s former company resulted in clients owing over $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.
Department of Justice and USDA Announce Updated Schedule forAgriculture Workshop on March 12 in IowaRead the Press Release
The Department of Justice and the U.S. Department of Agriculture (USDA) announced today an updated schedule and panelists for the first joint public workshop, which will be held on March 12, 2010, in Ankeny, Iowa, to explore competition and regulatory issues in the agriculture industry. The workshop will be held at the FFA Enrichment Center at Des Moines Area Community College (DMACC).
The workshops, which were first announced by Attorney General Eric Holder and Agriculture Secretary Tom Vilsack on Aug. 5, 2009, are the first joint Department of Justice/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 among interested parties and foster learning with respect to the appropriate legal and economic analyses of these issues, as well as to listen to and learn from parties with experience in the agriculture sector. Attendance at the workshops is free and open to the public. The general public and media interested in attending the initial workshop should register at https://go.dmacc.edu/ffa/agworkshop .
U.S. Attorney General Eric Holder, U.S. Agriculture Secretary Tom Vilsack and Assistant Attorney General for the Justice Department’s Antitrust Division Christine Varney will participate in the workshop and will be joined by Iowa Lt. Gov. Patty Judge, Iowa Attorney General Tom Miller and Iowa Agriculture Secretary Bill Northey. They will participate in a roundtable discussion with presentations on current issues affecting farmers. Testimony and roundtable discussion by a panel of farmers will follow. The workshop will also feature two panels focusing on the competitive dynamics in the seed industry and trends in contracting, transparency and buyer power. The first day of the workshops will end with an enforcer roundtable and public testimony.
The workshop schedule follows:
Opening Remarks (9:30 a.m. CST - 9:45 a.m. CST)
Tom Vilsack, Secretary of Agriculture, U.S. Department of Agriculture
Eric Holder, Attorney General, U.S. Department of Justice
Roundtable Discussion and Presentation of Issues (9:45 a.m. CST - 10:45 a.m. CST)
Tom Vilsack, Secretary of Agriculture, U.S. Department of Agriculture
Eric Holder, Attorney General, U.S. Department of Justice
Christine Varney, Assistant Attorney General for Antitrust, U.S. Department of Justice
Patty Judge, Lt. Governor, State of Iowa
Tom Miller, Attorney General, State of Iowa
Bill Northey, Secretary of Agriculture, State of Iowa
Tom Harkin, Senator, U.S. Senate (tentative)
Chuck Grassley, Senator, U.S. Senate (tentative)
Leonard Boswell, Congressman, U.S. House of Representatives (tentative)
Invited:
Bruce Braley, Congressman, U.S. House of Representatives
Steve King, Congressman, U.S. House of Representatives
Tom Latham, Congressman, U.S. House of Representatives
Dave Loebsack, Congressman, U.S. House of Representatives
Coffee Break (10:45 a.m. CST - 11:15 a.m. CST)
Farmer Testimony and Roundtable Discussion (11:15 a.m. CST - 12:15 p.m. CST)
Tom Vilsack, Secretary of Agriculture, U.S. Department of Agriculture
Christine Varney, Assistant Attorney General for Antitrust, U.S. Department of Justice
Ken Fawcett, independent crop farmer, Eastern Iowa
Jim Foster, hog producer, Montgomery City, Missouri
Pam Johnson, farmer, Floyd, Iowa
Eric Nelson, grain and cattle farmer, Moville, Iowa
Todd Wiley, hog producer, Walker, Iowa
Eddie Wise, hog and produce farmer, Whitakers, North Carolina
Lunch (12:15 p.m. CST - 1:15 p.m. CST)
Seed Competitive Dynamics Panel (1:15 p.m. CST - 2:15 p.m. CST)
Moderator:
James MacDonald, Chief, Agricultural Structure and Productivity Branch, Economic Research Service, U.S. Department of Agriculture
Panelists:
Ray Gaesser, Soybean and Corn Farmer, Corning, Iowa; Vice President, American Soybean Association; Former President, Iowa Soybean Association
Neil E. Harl, Charles F. Curtiss Distinguished Professor in Agriculture and Emeritus Professor of Economics, Iowa State University; Member of the Iowa Bar
Dermot Hayes, Professor of Economics and Finance, Pioneer Chair in Agribusiness, Iowa State University
Diana Moss, Vice President & Senior Fellow, American Antitrust Institute
Jim Tobin, Vice President, Industry Affairs, Monsanto Company
Agricultural Trends Panel (2:15 p.m. CST - 3:15 p.m. CST)
Moderator:
Phil Weiser, Deputy Assistant Attorney General, U.S. Department of Justice
Panelists:
Brian Buhr, Professor and Head of Department, Applied Economics, University of Minnesota
Rachael Goodhue, Associate Professor, Department of Agriculture and Resource Economics, University of California, Davis
Mary Hendrickson, Extension Associate Professor of Rural Sociology, University of Missouri
John Lawrence, Professor of Economics, Iowa State University
Chuck Wirtz, pork producer, Whittemore, Iowa
Patrick Woodall, Research Director, Food & Water Watch
Coffee Break (3:15 p.m. CST - 3:30 p.m. CST)
Enforcer Roundtable Discussion Panel (3:30 p.m. CST - 4:30 p.m. CST)
Moderator:
Mark Tobey, Special Counsel for State Relations and Agriculture, U.S. Department of Justice
Panelists:
Steve Bullock, Attorney General, State of Montana
Richard Cordray, Attorney General, State of Ohio
Chris Koster, Attorney General, State of Missouri
John Ferrell, Deputy Under Secretary for Marketing and Regulatory Programs, U.S. Department of Agriculture
Stephen Obie, Director, Division of Enforcement, Commodity Futures Trading Commission
William Stallings, Assistant Section Chief, Transportation, Energy and Agriculture Section, Antitrust Division, U.S. Department of Justice
Public Testimony (4:30 p.m. CST - 5:30 p.m. CST)
This is an opportunity for those in the audience to make comments in an open forum.
Closing Remarks (5:30 p.m. CST)
Phil Weiser, Deputy Assistant Attorney General, U.S. Department of Justice
John Ferrell, Deputy Under Secretary for Marketing and Regulatory Programs, U.S. Department of Agriculture
Additional updates and information will be posted on the Antitrust Division’s agriculture workshop Web site at http://www.justice.gov/atr/public/workshops/ag2010/index.htm . While no streaming Web cast will be available, transcripts 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] .
9 March 2010
Three Former Owners and Employees of Two Video Relay Service Companies Plead Guilty to Defrauding FCC ProgramRead the Press Release
Three former owners and employees of two different video relay service companies pleaded guilty today to conspiring to defraud the Federal Communications Commission’s (FCC) Video Relay Service (VRS) program of more than $2.5 million, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division.
The following defendants each pleaded guilty before U.S. District Court Judge Joel A. Pisano in Trenton, N.J., to one count of conspiracy to commit mail fraud:
- Yosbel Buscaron, 25, a co-owner of Florida-based Innovative Communication Services for the Deaf (ICSD);
- Lazaro Fernandez, 35, a co-owner of ICSD; and
- Natan Zfati, 32, a former video interpreter (VI) for New York and New Jersey-based Deaf and Hard of Hearing Interpreting Services, Inc. (DHIS).
Buscaron, Fernandez and Zfati were charged with engaging in schemes to steal millions of dollars from the FCC’s VRS program, along with 23 other people and one company, in six indictments unsealed on Nov. 19, 2009. According to the indictments, VRS is an online video translation service that allows people with hearing disabilities to communicate with hearing individuals through the use of interpreters and web cameras. A person with a hearing disability who wants to communicate with a hearing person can do so by contacting a VRS provider through an audio and video Internet connection. The VRS provider, in turn, employs a video interpreter to view and interpret the hearing disabled person’s signed conversation and relay the signed conversation orally to a hearing person.
VRS is funded by fees assessed by telecommunications providers to telephone customers, and is provided at no cost to VRS users. The FCC reimburses VRS providers at a rate of approximately $6.50 per minute, which amounts to approximately $390 per hour.
In pleading guilty, the three defendants admitted that they conspired with others to pay individuals to make fraudulent VRS phone calls and to process fraudulent VRS phone calls that were billed to the FCC through VRS provider Viable Communications Inc. Each defendant admitted to generating or processing thousands of illegitimate VRS hours that were billed to the FCC. According to information contained in the plea documents, Buscaron, Fernandez and Zfati each admitted that their role in defrauding the FCC’s VRS program led to a total loss of between $2.5 and $7 million.
At sentencing, the defendants each face a maximum sentence of 20 years in prison, a fine of $250,000, as well as mandatory restitution and forfeiture. Sentencing is scheduled for June 29, 2010.
To date, 11 individuals have pleaded guilty to their roles in defrauding the FCC. Co-defendants Joshua Finkle and Irma Azrelyant, co-owners of DHIS, pleaded guilty on Feb. 18, 2010, for their roles in the scheme and are scheduled to be sentenced on June 29, 2010. Co-defendant Alfia Iskandarova, a DHIS VI, pleaded guilty on March 4, 2010, and is scheduled to be sentenced on June 28, 2010.
The indictments charge owners and employees of the following six companies with engaging in a scheme to defraud the FCC’s VRS program:
- Viable Communications Inc., of Rockville, Md.;
- Master Communications LLC of Las Vegas;
- KL Communications LLC of Phoenix;
- Mascom LLC of Austin, Texas;
- Innovative Communication Services for the Deaf Corp. (ICSD) of Miami Lakes, Fla.; and
- Deaf Studio 29 of Huntington Beach, Calif.
An indictment is merely an accusation, and defendants are presumed innocent until and unless proven guilty at trial beyond a reasonable doubt.
These cases are being prosecuted by Assistant Chief Hank Bond Walther and Trial Attorney Brigham Cannon of the Criminal Division’s Fraud Section. The cases are being investigated by FBI’s Washington Field Office, the U.S. Postal Inspection Service and the FCC Office of Inspector General.
Pennsylvania Woman Indicted in Plot to Recruit Violent Jihadist Fighters and <br /> to Commit Murder OverseasRead the Press Release
David Kris, Assistant Attorney General for National Security, and Michael L. Levy, U.S. Attorney for the Eastern District of Pennsylvania, together with Janice K. Fedarcyk, Special Agent-in-Charge of the FBI in Philadelphia, today announced the unsealing of an indictment charging Colleen R. LaRose, aka "Fatima LaRose," aka "Jihad Jane," with conspiracy to provide material support to terrorists, conspiracy to kill in a foreign country, making false statements to a government official and attempted identity theft.
The indictment charges that LaRose (an American citizen born in 1963 who resides in Montgomery County, Pa.) and five unindicted co-conspirators (located in South Asia, Eastern Europe, Western Europe and the United States) recruited men on the Internet to wage violent jihad in South Asia and Europe, and recruited women on the Internet who had passports and the ability to travel to and around Europe in support of violent jihad.
The indictment further charges that LaRose and her unindicted co-conspirators used the Internet to establish relationships with one another and to communicate regarding their plans, which included martyring themselves, soliciting funds for terrorists, soliciting passports and avoiding travel restrictions (through the collection of passports and through marriage) in order to wage violent jihad. The indictment further charges that LaRose stole another individual’s U.S. passport and transferred or attempted to transfer it in an effort to facilitate an act of international terrorism.
In addition, according to the indictment, LaRose received a direct order to kill a citizen and resident of Sweden, and to do so in a way that would frighten "the whole Kufar [non-believer] world." The indictment further charges that LaRose agreed to carry out her murder assignment, and that she and her co-conspirators discussed that her appearance and American citizenship would help her blend in while carrying out her plans. According to the indictment, LaRose traveled to Europe and tracked the intended target online in an effort to complete her task.
"Today’s indictment, which alleges that a woman from suburban America agreed to carry out murder overseas and to provide material support to terrorists, underscores the evolving nature of the threat we face," said David Kris, Assistant Attorney General for the National Security Division. "I applaud the many agents, analysts and prosecutors who worked on this important investigation."
"This case shows the use terrorists can and do make of the Internet," said U.S. Attorney Michael L. Levy. "Colleen LaRose and five other individuals scattered across the globe are alleged to have used the Internet to form a conspiracy to provide material support to terrorism, culminating in a direct order to LaRose to commit murder overseas. LaRose – an American citizen whose appearance was considered to be an asset because it allowed her to blend in – is charged with using the Internet to recruit violent jihadist fighters and supporters, and to solicit passports and funding. It demonstrates yet another very real danger lurking on the Internet. This case also demonstrates that terrorists are looking for Americans to join them in their cause, and it shatters any lingering thought that we can spot a terrorist based on appearance."
"This case demonstrates that the FBI and our partners in the law enforcement and intelligence communities must continue to remain vigilant in the face of the threats that America faces, in whatever form those threats may present themselves or no matter how creative those who threaten us try to be," said Special Agent-in-Charge Janice K. Fedarcyk of the Philadelphia Division of the FBI. "We must use all available technologies and techniques to root out potential threats and stop those who intend to harm us."
If convicted of the charges against her, LaRose faces a potential sentence of life in prison and a $1 million fine.
This case was investigated by the FBI’s Joint Terrorism Task Force. It is being prosecuted by Jennifer Arbittier Williams, Assistant U.S. Attorney from the Eastern District of Pennsylvania, and Matthew F. Blue, Trial Attorney from the Counterterrorism Section in the Justice Department’s National Security Division.
The public is reminded that an indictment is an accusation and a defendant is presumed innocent unless and until proven guilty.
Justice Department Files for Immediate Relief Regarding Conditions <br /> at Conway Human Development Center, in Conway, ArkansasRead the Press Release
The Justice Department today asked the Federal District Court for the Eastern District of Arkansas to take immediate action to prevent children from being admitted to the Conway Human Development Center (CHDC) in Conway, Ark. The department’s motion for preliminary injunction aims to prevent the segregation of children with developmental disabilities in dangerous conditions and to address accusations of imminent and serious threats to the safety of the facility’s more than 500 current residents.
In January 2009, the Justice Department filed a complaint against the State of Arkansas to enforce the federal requirement that individuals with disabilities be served in the most integrated settings appropriate, and to remedy unconstitutional conditions at CHDC. Information collected through discovery since the filing of the complaint has led the department to conclude that residents face increasing and grave risk of harm with each day that deficiencies are ignored, and that Arkansas fails to serve individuals in the most integrated setting appropriate to the residents’ needs.
The United States has concluded that children at the facility are particularly vulnerable given allegations that CHDC residents are subjected to dangerous medication mismanagement and harmful, unnecessary restraints. In recent years, at least three CHDC residents have died, suffered possible permanent organ damage or been at risk of hemorrhaging to death because of psychotropic medication mismanagement. CHDC also continues to utilize 41 different forms of mechanical restraints on both children and adults, including straitjackets, restraint chairs and papoose boards - practices that have been largely barred from other facilities for years.
"The State has a responsibility to ensure the safety of individuals who reside in state-run facilities, and we must act swiftly when the state does not live up to that responsibility," said Thomas E. Perez, Assistant Attorney General in charge of the Civil Rights Division. "Individuals with developmental disabilities have the right to live in the most integrated setting appropriate to their needs, and states must take swift action to ensure that all individuals are accorded these basic rights."
In addition to barring inappropriate restraints and requiring safeguards to prevent dangerous medication practices, the motion seeks to require that the state remove barriers to the provision of supports and services in the community, so that individuals with disabilities, including the approximately 50 children at CHDC, are not forced to choose between an unsafe institution and the denial of necessary services in a more integrated setting.
Between June 1, 2007, and Oct. 1, 2009, a CHDC resident was more likely to die than be discharged to a more integrated setting. On average, CHDC residents die at the age of 46.5 years, compared with the average age of 72 years for other individuals with developmental disabilities living in institutional settings. The number of individuals with developmental disabilities who are waiting to receive community-based services is on the rise in Arkansas, with over 1,300 currently waiting to receive services through the Centers for Medicaid and Medicare Services Alternative Community Services waiver program, with an average wait time of approximately two and a half years.
The Civil Rights Division is authorized to conduct investigations under the Civil Rights of Institutionalized Persons Act (CRIPA) and the Americans with Disabilities Act of 1990 (ADA). CRIPA authorizes the Attorney General to investigate conditions of confinement in certain institutions owned or operated by, or on behalf of, state and local governments. In addition to residential facilities serving persons with developmental disabilities, these institutions include psychiatric hospitals, nursing homes, jails, prisons and juvenile correctional facilities. The ADA authorizes the Attorney General to investigate whether a state is serving individuals in the most integrated settings appropriate to their needs. Please visit http://www.justice.gov/crt to learn more about CRIPA, the ADA and other laws enforced by the Justice Department’s Civil Rights Division.
Federal Court in Los Angeles Shuts Down Tax Firm<br /> for Requesting $23 Million in Bogus Tax RefundsRead the Press Release
A federal court in Los Angeles has permanently barred Nyla McIntyre of Covina, Calif. and her business, Approved Financial Services, Inc., from preparing tax returns for others, the Justice Department announced today. U.S. District Judge George H. King found that McIntyre requested more than $23 million in fraudulent income tax refunds for customers using "a tax fraud scheme that involves filing fraudulent federal income tax returns and other documents, including Forms 1099-OID and Forms Schedule B, with the IRS...." McIntyre "advised a number of clients that they could file fraudulent IRS Forms 1099-OID in order to secure refunds that would help pay off mortgage and/or credit card debts," according to the court.
The court found that McIntyre requested at least 62 fraudulent refunds using her tax scheme, which "is based in part on McIntyre’s apparent belief that secret accounts exist that can be accessed to pay these bogus refund claims." For example, court papers filed in the case showed that McIntyre requested a $2.7 million dollar fraudulent refund for a married couple residing in La Quinta, California, and a $1.1 million dollar bogus refund for a couple from Pine Grove, California. The court permanently barred McIntyre from preparing returns because "her continued work as a professional tax preparer will permit her to perpetuate this fraudulent scheme and succeed with respect to a fraction of the submissions."
On January 4, 2010, an Idaho court shut down tax preparer Penny Lea Jones for using the same OID scheme to claim $93 million in bogus refunds for customers. On September 9, 2009, a Sacramento court found that preparer Teresa Marty had been using the same scheme to generate bogus refunds for her customers, and permanently barred her from preparing tax returns for others.
John A. DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division, thanked Grayson Hoffman, the Justice Department trial attorney who handled the case, and Shauna Henline, the IRS senior technical advisor who conducted the investigation.
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.
Chicago Hospital to Pay More Than $1.5 Million<br /> to Resolve Medicare False Claims Act AllegationsRead the Press Release
Rush University Medical Center has agreed to pay $1,547,200 plus interest to resolve allegations that the facility violated the False Claims Act, the Justice Department announced today. Rush is alleged to have submitted false claims to Medicare during the period 2000 through 2007 by entering into certain leasing arrangements for office space with two individual physicians and three physician practice groups that violated the Stark Law.
The Stark Law prohibits a hospital from profiting from patient referrals made by a physician with whom the hospital has an improper financial arrangement. A leasing arrangement is improper under the Stark Law absent a written lease, signed by the parties, that specifies the premises covered by the lease. Leasing arrangements must also be commercially reasonable and consistent with "fair market value" for the premises. The Stark Law is intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives and are based solely on the best interests of the patient.
"The Justice Department is committed to investigating cases that threaten the integrity of the Medicare program," said Tony West, Assistant Attorney General for the Justice Department’s Civil Division." The department will continue to protect patients by pursuing hospitals that have improper financial relationships with physicians."
Rush is one of several defendants in a suit brought in 2004 by two individuals under the 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. The lawsuit, in part, involves allegations that Rush entered into prohibited financial relationships with certain physicians. Under the civil settlement announced today, the whistleblowers, Dr. Robert Goldberg and June Beecham, will receive $270,760.
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.
The settlement announced today was the result of a coordinated effort among the Commercial Litigation Branch of the Justice Department’s Civil Division; the Department of Health and Human Services, Office of Inspector General; and the Illinois Attorney General’s Office.
8 March 2010
Railroad Company to Pay $4 Million Penalty for 2005 Chlorine Spill That Resulted in Nine Deaths in Graniteville, South CarolinaRead the Press Release
WASHINGTON—Norfolk Southern Railway Company has agreed to pay a $4 million penalty to resolve alleged violations of the Clean Water Act (CWA) and hazardous materials laws for a 2005 chlorine spill in Graniteville, S.C., the Justice Department and U.S. Environmental Protection Agency (EPA) announced today.
Under the settlement filed in federal court in Columbia, S.C., Norfolk Southern will be required to pay a civil penalty of $3,967,500 for the alleged CWA violations, to be deposited in the federal Oil Spill Liability Trust Fund. The alleged CWA violations, included in an amended complaint filed in March 2009, are for the discharge of tons of chlorine, a hazardous substance, from a derailed train tank car and thousands of gallons of diesel fuel from ruptured locomotive engine fuel tanks. For the alleged Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) violation for failure to immediately notify the National Response Center of the chlorine release, Norfolk Southern will also pay a penalty of $32,500, to be deposited in the Hazardous Substance Superfund.
The settlement addresses the Jan. 6, 2005, Norfolk Southern train derailment in Graniteville, S.C. During the derailment, one of the train’s tank cars was punctured and released chlorine gas. Nine people died as a result of chlorine exposure and hundreds of people sought medical care due to respiratory distress. The incident resulted in the evacuation of more than 5,000 people living and working within a 1-mile radius of the release area. A cloud of the gas settled over nearby Horse Creek and its tributaries and was absorbed into the water in sufficient quantity to kill hundreds of fish. Two of the engines involved in the crash leaked diesel fuel, a portion of which reached Horse Creek.
"This agreement includes a significant civil penalty for the catastrophic chlorine spill, which resulted in loss of human life and damage to the environment, and ensures that those responsible are held accountable under the law," said Bob Dreher, Principal Deputy Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division.
"This settlement reflects the agency’s commitment to ensure compliance with our nation’s environmental laws," said Stan Meiburg, EPA Acting Regional Administrator in Atlanta. "Companies have a responsibility to workers, emergency responders and the community to make sure a serious accident doesn’t become a senseless tragedy."
Under the terms of the agreement, Norfolk Southern will provide incident command system training to environmental and transportation personnel; stock nearby Langley Pond with at least 3,000 fish to replace fish killed by the chlorine spill; and post the telephone number for the National Response Center to facilitate spill reporting. Further, the settlement includes a supplemental environmental project valued at $100,000 to plant vegetation along the banks of Horse Creek to decrease erosion and sedimentation, thereby improving water quality in Horse Creek.
Chlorine is defined as a "hazardous substance" under CERCLA and CWA, and can cause significant harm to human health and the environment. In humans, chlorine corrodes the respiratory tract and can cause severe eye and skin burns, lung collapse and death. Chlorine is also toxic to marine life and vegetation. Chlorine reacts with water to form a strongly oxidizing solution that can damage the gills of fish and other organisms, inhibiting their ability to absorb oxygen.
The consent decree was filed today in the U.S. District Court for the District of South Carolina and is subject to a 30-day public comment period and court review and approval. A copy of the consent decree will be available on the Department of Justice Web site at http://www.justice.gov/enrd/Consent_Decrees.html.
New Justice Department Outreach Effort to Victims<br /> of Radiation Exposure AnnouncedRead the Press Release
WASHINGTON – The Justice Department today announced a new internship program that will employ students part-time to conduct intensive outreach efforts with Native Americans and their families whose work in the uranium industry during the Cold War benefitted the United States but exposed them to radiation and may entitle them to compensation under the Radiation Exposure Compensation Act (RECA). The internship will be based in the Four Corners region (Utah, Colorado, New Mexico and Arizona) and include a two-week training program in Washington, D.C., where college and graduate students will learn about the RECA Program, a compensation system established by Congress in 1990 and administered by the Civil Division of the Department of Justice.
RECA seeks to compensate individuals who contracted certain cancers or other serious diseases after being exposed to radiation through nuclear weapons tests or work in the uranium mining industry between 1942 and 1971. Although the program has awarded compensation to individuals residing in every state, most applications are filed by people living in the Four Corners region. Culture, tradition and custom sometimes present special concerns for Native American claimants that may make successful claims more difficult when compared with the general population of RECA claimants. Students will be recruited from tribal communities in the Four Corners region and will receive instruction in federal law, government service and community outreach.
"The RECA program is an important part of the Attorney General’s commitment to this administration’s work in strengthening the nation-to-nation relationship with tribal governments," said Tony West, Assistant Attorney General for the Justice Department’s Civil Division. "We want to ensure that all eligible applicants have access to the RECA program, which is why we’re continually seeking to improve our outreach efforts. In addition to helping us reach those Cold War Patriots who are suffering and are entitled to compensation, this internship program will provide much needed summer jobs to bright students looking for an opportunity to serve."
Under RECA, people in the following claimant categories may receive payments: uranium miners, millers and ore transporters; people who were present at nuclear weapons tests; and people who lived in certain areas "downwind" of the Nevada Nuclear Test Site. The law also requires sensitivity toward "established law, tradition and custom of the particular affected
Indian tribe." The outreach efforts are intended to inform people about the program and help eligible claimants apply for payments.
Assistant Attorney General West will speak to students at Northern Arizona University in Flagstaff, Ariz., about the RECA Internship on March 29, 2010. He will also speak to students at the University of New Mexico in Gallup, N.M., on March 30 and at Diné College in Shiprock, N.M., on March 31.
The RECA Internship will cover all travel costs as well as room and board for interns and pay a small stipend to cover incidental expenses. While the RECA program will sponsor the internships, a contractor, not the U.S. government, will employ the selected students.
In order to be eligible for the RECA Internship, applicants must be students in good standing. Two Washington, D.C., training sessions will be offered: June 7 to 18, 2010, and July 26 to August 6, 2010. The deadline for applicants for the June training session is April 15, 2010. The deadline for the July training session is May 1, 2010. Applications will be available online at www.justice.gov/civil/Employment.htm on March 10, 2010, or interested students may contact RECA staff at (202) 616-4304 or [email protected] to have an application mailed to them.
Today's announcement is part of the Justice Department's ongoing initiative to increase engagement, coordination and action on public safety in tribal communities.
Justice Department Requires Key Divestiture in Election Systems & Software/Premier Election Solutions MergerRead the Press Release
WASHINGTON — The Department of Justice announced today that it will require Election Systems & Software (ES&S) to divest voting equipment systems assets it purchased in September 2009 from Premier Election Solutions Inc. in order to restore competition. The assets to be divested include the means to produce all versions of Premier’s hardware, software and firmware used to record, tabulate, transmit or report votes, including the Assure 1.2 system, and a license to better serve disabled voters. The department said that today’s settlement will restore competition in voting equipment systems in the United States and that, without the divestiture, the acquisition would result in higher prices, lower quality and a reduced incentive to innovate.
The Department of Justice’s Antitrust Division, along with nine state attorneys general, filed a civil antitrust lawsuit today in U.S. District Court in Washington, D.C., alleging that the transaction harmed competition. At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the department’s competitive concerns. The state attorney general offices are: Arizona, Colorado, Florida, Maine, Maryland, Massachusetts, New Mexico, Tennessee and Washington.
"The proposed settlement will restore competition, provide a greater range of choices and create incentives to provide secure, accurate and reliable voting equipment systems now and in the future," said Molly S. Boast, Deputy Assistant Attorney General for the Department of Justice’s Antitrust Division.
According to the complaint, the acquisition substantially reduced competition as it combined the two largest providers of systems used to tally votes in federal, state and local elections in the United States. ES&S’s acquisition of Premier made ES&S the provider of more than 70 percent of the voting equipment systems in the United States. The department said that because the cash value of the deal between ES&S and Premier was $5 million, far below the mandatory reporting threshold for mergers under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, the department’s investigation of the transaction did not begin until the companies had combined their assets and dismantled many of Premier’s operating divisions. The department said that today’s settlement provides quick, effective relief that resolves the department’s competitive concerns, and enables local and state jurisdictions to obtain competitive bids for their immediate voting equipment systems needs.
Under the terms of the settlement, ES&S must divest all of the intellectual property associated with all versions –past, present and in development –of the Premier voting equipment systems to another company. ES&S also must divest all Premier tooling and fixed assets, as well as inventory of parts and components. In order to allow the divestiture buyer to better serve disabled voters, ES&S must also grant a fully paid-up, irrevocable, perpetual license to use the AutoMARK, ES&S’s ballot marking device for which Premier had a limited license prior to the acquisition. The buyer of the divestiture assets will have the right to modify and improve both Premier products and the AutoMARK.
ES&S must sell the divestiture assets to a buyer approved by the department. The settlement prohibits ES&S from bidding on new voting equipment system contracts using the Premier equipment. The department also required that ES&S grant the divestiture buyer an opportunity to compete to provide services to Premier customers currently under contract with ES&S, giving customers the option to switch to the divestiture buyer or to remain with ES&S. The department said that this option addresses customer concerns that an outright divestiture of service contracts would disrupt the administration of upcoming primaries and general elections. ES&S also must provide access to knowledgeable Premier employees and agree to offer a supply agreement to allow the divestiture buyer time to establish its own manufacturing of voting equipment systems.
The proposed settlement, if approved by the court, would be in effect for 10 years. The proposed settlement requires ES&S to complete the divestiture within 60 days, or five days after the entry of the proposed settlement by the court, whichever is later. The department may agree to the extension of this time period by no more than 60 days. If ES&S does not complete the divestiture within this time period, a trustee selected by the department and approved by the court will be appointed by the court to complete the divestiture.
ES&S is a Delaware corporation with its headquarters in Omaha, Neb. Prior to its acquisition of Premier, ES&S was already the largest provider of voting equipment systems in the United States, had systems installed in at least 41 states, and collected revenue of $149.4 million in 2008.
Premier, prior to its acquisition, was a subsidiary of Diebold Inc. and was incorporated in Delaware with its headquarters in Allen, Texas. Premier was the second largest provider of voting equipment systems in the United States, had equipment installed in 33 states, and collected revenue of approximately $88.3 million in 2008.
As required by the Tunney Act, the proposed settlement, along with the department’s competitive impact statement, will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement during the 60-day comment period to Maribeth Petrizzi, 450 Fifth Street, N.W., Suite 8700, Washington, D.C., 20530. At the conclusion of the 60-day comment period, the U.S. District Court for the District of Columbia may enter the proposed settlement upon finding that it is in the public interest.
Houston Independent School District Agrees to Settle<br /> False Claims Allegations Involving the E-rate ProgramRead the Press Release
WASHINGTON – The Houston Independent School District has agreed to relinquish millions of dollars in requests for federal funds and to pay a total of $850,000 as part of a civil settlement relating to allegations that the school district violated the False Claims Act in connection with the Federal Communications Commission’s (FCC) E-Rate program, the Justice Department announced today.
The E-Rate program, which Congress created in the Telecommunications Act of 1996, provides funding for needy schools and libraries to connect to and utilize the Internet. Under the program, which is funded by fees collected from telephone users, schools apply for funds to pay for hardware and monthly connectivity service fees. The FCC oversees the E-Rate program.
The United States contended that the Houston Independent School District provided false information to the E-Rate program and otherwise violated the program’s requirements by engaging in non-competitive bidding practices for E-Rate contracts. The United States further alleged that school district officials received gratuities from technology vendors, including trips, meals and loans.
"The E-Rate Program provides critical support for Internet access and wiring to the most under-served schools in the country," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "We are committed to protecting the integrity of this important program that benefits our neediest children."
Assistant Attorney General West noted that the resolution announced today resulted from an ongoing federal investigation of possible fraud and anti-competitive conduct in the E-Rate program in Texas. The investigation is a collaborative effort involving the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Northern District of Texas, and the FCC Office of the Inspector General.
This settlement with the Houston Independent School District is part of the government’s aggressive efforts to combat fraud through the use of powerful enforcement tools such as the False Claims Act. Since January 2009, the Justice Department’s total recoveries in False Claims Act cases have topped $3 billion.
Blue Cross Blue Shield of Michigan and Physicians Health Plan of Mid-Michigan Abandon Merger PlansRead the Press Release
WASHINGTON — Blue Cross Blue Shield of Michigan’s (Blue Cross-Michigan) subsidiary, Blue Care Networks of Michigan, abandoned its attempt to purchase Physicians Health Plan of Mid-Michigan (PHP) after the Department of Justice informed the companies that it would file an antitrust lawsuit to block the acquisition. The department said that, had the acquisition gone forward, it would have given Blue Cross-Michigan control of nearly 90 percent of the commercial health insurance market in the Lansing, Mich., area, which would have resulted in higher prices, fewer choices, and a reduction in the quality of commercial health insurance plans purchased by Lansing area residents and their employers. The acquisition also would have given Blue Cross-Michigan the ability to control physician reimbursement rates in a manner that could harm the quality of health care delivered to consumers.
Blue Cross-Michigan and PHP are the two largest providers of commercial health insurance in the Lansing area. Blue Cross-Michigan has almost a 70 percent market share in Lansing, and PHP is its largest competitor with approximately a 20 percent market share. PHP is owned by Sparrow Health Systems Inc., the largest hospital system in Lansing. Competition between the two companies has led them to offer lower prices, better service, and more innovative products to employers and their employees.
"We welcome the decision by Blue Cross-Michigan and Physicians Health Plan of Mid-Michigan to abandon their deal, which will preserve competition among health insurance companies in Lansing," said Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. "The merger would have likely led to higher prices, lower levels of service and decreased quality of health care for consumers."
The Justice Department worked closely with the Michigan Attorney General’s office in its investigation of the proposed Blue Cross-Michigan-PHP merger.
Blue Cross Blue Shield of Michigan Inc., is a Michigan nonprofit corporation headquartered in Detroit, and is the largest health insurer in Michigan. In 2008, Blue Cross-Michigan reported revenues of approximately $21 billion.
Physicians Health Plan of Mid-Michigan is a nonprofit corporation headquartered in Lansing and is owned by Sparrow Health Systems Inc., the largest hospital system in Lansing. PHP is the second largest health insurer in Lansing and in 2008, reported revenues of approximately $250 million.
Sparrow Health System is a Michigan nonprofit corporation headquartered in Lansing. Sparrow owns and operates PHP, as well as Edward W. Sparrow Hospital, the largest hospital in the Lansing area.
5 March 2010
Four Former Owners and Employees of Three Video Relay Service Companies Plead Guilty to Defrauding FCC ProgramRead the Press Release
Four former owners and employees of three different video relay service companies pleaded guilty today and yesterday to engaging in conspiracies to defraud the Federal Communications Commission’s (FCC) Video Relay Service (VRS) program of more than $2.5 million, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division.
The following defendants each pleaded guilty before U.S. District Court Judge Joel A. Pisano in Trenton, N.J., to one count of conspiracy to commit mail fraud:
- Kim E. Hawkins, 46, an owner of Nevada-based Master Communications, Arizona-based KL Communications and Texas-based Mascom LLC;
- Larry Berke, 62, Hawkins’s partner in KL Communications and employee of Master Communications;
- Alfia Iskandarova, 29, a former video interpreter (VI) for New York and New Jersey-based Deaf and Hard of Hearing Interpreting Services, Inc. (DHIS); and
- Robert Z. Rubeck, 34, of Surprise, Ariz.
Hawkins, Berke, Iskandarova and Rubeck were charged with engaging in schemes to steal millions of dollars from the FCC’s VRS program, along with 22 other people and one company, in six indictments unsealed on Nov. 19, 2009. According to the indictments, VRS is an online video translation service that allows people with hearing disabilities to communicate with hearing individuals through the use of interpreters and web cameras. A person with a hearing disability who wants to communicate with a hearing person can do so by contacting a VRS provider through an audio and video Internet connection. The VRS provider, in turn, employs a video interpreter to view and interpret the hearing disabled person’s signed conversation and relay the signed conversation orally to a hearing person.
VRS is funded by fees assessed by telecommunications providers to telephone customers, and is provided at no cost to VRS users. The FCC reimburses VRS providers at a rate of approximately $6.50 per minute, which amounts to approximately $390 per hour.
In pleading guilty, the four defendants admitted that they conspired with others to pay individuals to make fraudulent VRS phone calls and to process fraudulent VRS phone calls that were billed to the FCC through VRS provider Viable Communications Inc. Each defendant admitted to generating or processing thousands of illegitimate VRS minutes that were billed to the FCC. According to information contained in the plea documents, Hawkins, Berke and Iskandarova admitted that their role in defrauding the FCC’s VRS program led to a total loss of between $2.5 and $7 million. Rubeck admitted that his role in defrauding the FCC’s VRS program led to a total loss of between $1 and $2.5 million.
At sentencing, the defendants each face a maximum sentence of 20 years in prison, a fine of $250,000, as well as mandatory restitution and forfeiture. Sentencing is scheduled for June 28, 2010.
Hawkins and Berke were indicted along with Lisa Goetz and Dary Berke, employees of KL Communications; and David Simmons, an employee of Mascom LLC. Iskandarova was indicted along with Joshua Finkle and Irma Azrelyant, co-owners of DHIS; Oksana Strusa, DHIS bookkeeper and VI; and Natan Zfati and Hennadii Holovkin, both DHIS VIs. Rubeck was indicted along with Benjamin Pena, a consultant for Maryland-based Viable Communications Inc.; and Tamara Frankel, an employee of Pena. Finkle and Azrelyant pleaded guilty on Feb. 18, 2010, for their roles in the scheme and are scheduled to be sentenced on June 29, 2010.
The indictments charge owners and employees of the following six companies with engaging in a scheme to defraud the FCC’s VRS program:
- Viable Communications Inc., of Rockville, Md.;
- Master Communications LLC, of Las Vegas;
- KL Communications LLC, of Phoenix;
- Mascom LLC of Austin, Texas;
- Innovative Communication Services for the Deaf Corp. (ICSD), of Miami Lakes, Fla.; and
- Deaf Studio 29 of Huntington Beach, Calif.
An indictment is merely an accusation, and defendants are presumed innocent until proven guilty at trial beyond a reasonable doubt.
These cases are being prosecuted by Assistant Chief Hank Bond Walther and Trial Attorney Brigham Cannon of the Criminal Division’s Fraud Section. The cases are being investigated by FBI’s Washington Field Office, the U.S. Postal Inspection Service and the FCC Office of Inspector General.
Assistant Attorney General Ignacia S. Moreno Announces Environment and Natural Resources Division’s Senior LeadershipRead the Press Release
WASHINGTON—Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division (ENRD), today announced the members of the division’s senior leadership. The announcement came on the same day that Assistant Attorney General Moreno was officially installed by Attorney General Eric Holder as the division’s head.
"I am pleased to welcome this team of outstanding and committed professionals who will join the hard working and talented civil servants who make up the Environment and Natural Resources Division. They hail from environmental groups, academia, government and private practice, and will put this experience to good use in vigorously enforcing our nation’s environmental laws and defending agency actions and environmental statutes," said Assistant Attorney General Moreno.
The leadership team includes:
Natalia Sorgente, Chief of Staff and Counsel
Sorgente returns to ENRD to serve as counsel and chief of staff after a brief departure from the division. Sorgente served in the Environmental Defense Section as a trial attorney where she defended the United States’ environmental regulations, determinations and past practices in federal district and appellate courts. She has broad environmental law experience, including representing the United States in cases brought under all the major pollution control statutes. In her five years with the division, she received multiple awards in recognition of her outstanding work. Preceding her return to ENRD, she was a senior legal fellow at Alliance for Justice working with the Judicial Selection Project. After clerking for U.S. Judge Norma L. Shapiro, she began her career at Paul, Weiss, Rifkind, Wharton and Garrison in New York litigating high-profile civil and criminal matters. Sorgente holds degrees from New York University School of Law and Harvard College with honors.
Robert Dreher, Principal Deputy Assistant Attorney General
As a seasoned environmental lawyer, Dreher has extensive experience in conservation policy, environmental law and natural resources management. He has represented environmental organizations, federal agencies, tribes and businesses in a variety of environmental matters. Dreher previously served as senior vice president for Climate Change and Conservation Law and General Counsel of Defenders of Wildlife. Prior to this, he served as Deputy Executive Director of the Georgetown Environmental Law & Policy Institute at Georgetown University Law Center, and as deputy general counsel of the U.S. Environmental Protection Agency (EPA). Earlier in his career, he was a staff and co-managing attorney of the Washington, D.C. office of the Sierra Club Legal Defense Fund (now Earthjustice). Representing tribes, government agencies, businesses and environmental groups in solo private practice, he served as counsel to the law firm Troutman Sanders LLC and as an associate at the Boston firm Hill & Barlow. He has taught federal natural resources law at The George Washington University Law School and at Georgetown University Law Center. Dreher received his J.D. from Yale Law School, a Masters in American Civilization from Brown University, and his undergraduate degree from Harvard College.
Dreher will oversee the Natural Resources and Wildlife and Marine Resources sections.
John Cruden, Deputy Assistant Attorney General
Cruden has served as a career Deputy Assistant Attorney General for ENRD since 1995. Prior to his role as deputy, he served as chief of the division’s environmental enforcement section and as special counsel to the Assistant Attorney General for the Civil Division. Cruden has extensive personal experience litigating complex environmental cases and has served as Acting Assistant Attorney General on multiple occasions. Before attending law school, he served in airborne, ranger and special forces units in Germany and Vietnam. After receiving his law degree, he clerked for the California Supreme Court and then attended the Army’s Judge Advocate General’s Graduate Course where he was named the outstanding graduate. Subsequent military assignments included criminal prosecutor in Germany; chief of litigation branch, Europe; general counsel, Defense Nuclear Agency; and chief of administrative and civil law, Judge Advocate General’s School. His last assignment in the Pentagon was chief legislative counsel for the Army. Cruden is a graduate of the U.S. Military Academy, University of Santa Clara summa cum laude and University of Virginia with honors.
Cruden will oversee the Environmental Enforcement and Environmental Crimes sections.
Ethan G. Shenkman, Deputy Assistant Attorney General
Shenkman returns to the Justice Department where he had previously served for nine years. Most recently, Shenkman was a partner at the WilmerHale law firm, which he joined in 2004. He was a member of the Government and Regulatory Litigation Practice Group and worked closely with the Appellate and International Arbitration Practice Groups. His practice focused on a wide range of complex litigation, including international disputes, investment treaty arbitration, appellate advocacy, environmental law and Indian law. He began with the Justice Department as a Bristow Fellow in the Office of the Solicitor General in 1995. He then joined the ENRD Appellate Section through the Attorney General’s Honor Graduate program and served as counsel to then-Assistant Attorney General Lois Schiffer. From 2001 to 2004 he was a member of ENRD’s Law and Policy Section. Prior to joining the Justice Department, he clerked for U.S. Judge Paul V. Niemeyer in the U.S. Court of Appeals for the Fourth Circuit. Ethan earned his J.D. from the University of Virginia, School of Law, where he was Order of the Coif and Editor-in-Chief of the Virginia Law Review, and his B.A. from Yale University, summa cum laude.
Shenkman will oversee the Appellate and Indian Resources sections.
Patrice Simms, Deputy Assistant Attorney General
Simms joins ENRD as an accomplished environmental attorney most recently serving on the law faculty at Howard University School of Law in Washington, D.C. Prior to this, Mr. Simms served as a government attorney and as an environmental advocate in many high-profile environmental cases, and other matters involving important legal, technical and policy issues. His experience includes more than five years as a staff attorney in EPA’s Office of General Counsel, and stints as a legal counsel to the EPA’s Environmental Appeals Board and as a senior attorney with the Natural Resources Defense Council. His career has focused on issues regarding the implementation and enforcement of the Clean Air Act and issues related to clean water, solid waste, public health, climate change and environmental justice. Mr. Simms has received many professional awards, including the EPA Office of General Counsel Award for Excellence. In 2009, he was elected to serve on the Steering Committee for the D.C. Bar’s Energy, Environment and Natural Resources Section. Mr. Simms is a graduate of Howard University School of Law.
Simms will oversee the Land Acquisition and Environmental Defense Sections.
Crystal Brown, Counsel to the Assistant Attorney General
Brown comes to ENRD after recently serving at the White House as deputy associate counsel for presidential personnel. Prior to this, she served as an associate at the law firm of Bryan Cave LLP where her practice focused on a range of commercial litigation and white collar defense and investigation matters. Earlier in her career, she served as a judicial law clerk to U.S. Judge Clifford Scott Green in the U.S. District Court for the Eastern District of Pennsylvania. In 2008, Brown was inducted into Temple University’s Gallery of Success as an alumna of the Beasley School of Law. She received her J.D. from Temple University Beasley School of Law, where she was symposium editor of its Political and Civil Rights Law Review. Brown received a Bachelor of Arts degree from Duke University.
Jeffrey Prieto, Counsel to the Assistant Attorney General
For ten years, Mr. Prieto has served as a trial attorney with ENRD’s Environmental Enforcement Section, prosecuting civil actions on behalf of federal agencies under all major federal environmental laws. He has served as co-counsel on major Clean Air Act civil enforcement cases including coal-fired power plant litigation. He also has served as lead attorney of a litigation team in Superfund enforcement cases, representing multiple federal agencies. Prieto’s positions have included attorney-advisor for the Environmental Protection Agency, White House Fellow and environmental planner. Mr. Prieto received his J.D. from the University of California, Los Angeles and a Master’s of Public Affairs/Urban and Regional Planning from the Woodrow Wilson School of Public and International Affairs at Princeton University.
Paulo Palugod, Special Assistant to the Assistant Attorney General
Palugod joins the department from American University, Washington College of Law, where he will receive his J.D. in May. He received a B.A. in Economics from Bucknell University, cum laude.
4 March 2010
John P. Fitzgerald Appointed Acting U.S. Trustee for Massachusetts, New Hampshire, Maine, Rhode IslandRead the Press Release
WASHINGTON – John P. Fitzgerald has been appointed Acting U.S. Trustee for Massachusetts, New Hampshire, Maine and Rhode Island (Region 1), the Executive Office for United States Trustees announced today. Mr.Fitzgerald replaces Phoebe Morse, who resigned after serving as U.S. Trustee for Region 1 since April 2004.
Mr. Fitzgerald joined the U.S. Trustee Program (USTP) in 1990, serving first as a trial attorney and then as the Assistant U.S. Trustee in the Portland, Maine, office. In 1992, he was appointed as the Assistant U.S. Trustee in the Boston office. Prior to joining the USTP, Mr.Fitzgerald was a trial attorney in the Department of Justice’s Tax Division, Criminal Section, for 10 years. Mr.Fitzgerald currently serves as the chair of the USTP’s Creditor Abuse Working Group, which assists USTP field offices in the investigation and litigation of cases involving abusive conduct by creditors.
The U.S. Trustee Program is the component of the Justice Department that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws. The USTP has 21 regions and 95 field offices. Region1 is headquartered in Boston, with additional offices in Worcester, Mass.; Manchester, N.H.; Portland, Maine; and Providence, R.I.
Contact:Jane Limprecht, Public Information Officer
Monday, July 15, 2013 3:10 PM
Executive Office for U.S. Trustees
(202) 305-7411Government Sues to Close South Carolina Tax Return PreparerRead the Press Release
WASHINGTON – The United States has asked a federal court in Columbia, S.C., to permanently bar Dorothy Anderson, d/b/a DL Anderson Tax Service, from preparing federal income tax returns for others, the Justice Department announced today. According to the government complaint, Dorothy Anderson of Hopkins, S.C., has operated a business called "DL Anderson Tax Service," which prepares federal income tax returns for taxpayers that unlawfully understate income tax liabilities.
The government complaint alleges that Anderson fraudulently prepared and electronically filed tax returns using individuals’ names and social security numbers without their knowledge or authorization. Anderson’s preparation of false and fraudulent tax returns caused the United States to issue to the taxpayers substantial tax refunds to which they were not legally entitled. According to the complaint, the Internal Revenue Service has determined that Anderson filed tax returns that generated over $290,000 in refunds that were directly deposited into bank accounts she controlled.
Over the past decade, the Justice Department’s Tax Division has obtained more than 435 injunctions to stop tax fraud promoters and dishonest tax return preparers. Information about these cases is available on the Justice Department Web site.
Financial Fraud Enforcement Task Force Announces Settlement with AIG Subsidiaries to Resolve Allegations of Lending DiscriminationRead the Press Release
WASHINGTON – Two subsidiaries of American International Group Inc. have agreed to pay a minimum of $6.1 million to resolve allegations that they engaged in a pattern or practice of discrimination against African American borrowers, representatives of President Obama’s Financial Fraud Enforcement Task Force (FFETF) announced today.
The settlement was filed today in conjunction with a complaint made by the Justice Department in U.S. District Court in Delaware. Brought under the federal Fair Housing and Equal Credit Opportunity Acts, the complaint alleges African American borrowers nationwide were charged higher fees on wholesale loans made by AIG Federal Savings Bank (FSB) and Wilmington Finance Inc. (WFI), an affiliated mortgage lending company.
"Discriminatory practices by lenders, brokers, and other players in the mortgage market contributed to our nation’s housing crisis and economic meltdown. Lenders who looked the other way and ignored the discriminatory practices of brokers must be held accountable," said Thomas E. Perez, Assistant Attorney General in charge of the Justice Department’s Civil Rights Division. "We will continue to pursue cases attacking a wide range of abuses that have destroyed communities and transformed the American dream of home ownership into a nightmare."
AIG FSB and WFI contracted with mortgage brokers to obtain mortgage applications that were underwritten and funded by the defendants. The complaint alleges that AIG FSB and WFI failed to supervise or monitor brokers in setting broker fees. This practice had a disparate impact on African American borrowers, who were charged higher broker fees than white, non-Hispanic borrowers on thousands of such loans from July 2003 until May 2006, a period of time before the federal government obtained an ownership interest in American International Group Inc.
"Today’s settlement is significant because it marks the first time the Justice Department has held a lender responsible for failing to monitor its brokers to ensure that borrowers are not charged higher fees because of their race. If necessary, it will not be the last time," Perez said.
According to the settlement, which is subject to court approval, AIG FSB and WFI will pay up to $6.1 million to African American customers who were charged higher broker fees than similarly-situated, non-Hispanic white customers, and will invest at least $1 million in consumer financial education efforts. AIG FSB and WFI will also be prohibited from discriminating on the basis of race or color in any aspect of wholesale home mortgage lending.
"Today’s settlement serves as a reminder for why President Obama established the Financial Fraud Enforcement Task Force and as an example of what you can expect to see in the future," said Executive Director of the FFETF Robb Adkins. "The type of interagency communication that spurred this case and the subsequent hard work of dedicated law enforcement professionals will be the foundation for the task force’s achievements on behalf of the American people. Moving forward, the American people should expect to see more cases, public outreach and concrete results as an outcome of our new cooperation."
This case resulted from a referral by the Treasury Department’s Office of Thrift Supervision to the Justice Department’s Civil Rights Division in 2007, when this type of communication between agencies was too often the exception to the rule, said Adkins. In November 2009, President Barack Obama established the FFETF to make such cross-agency coordination the standard.
The task force is waging an aggressive, coordinated and proactive effort to investigate and prosecute financial crimesand remedy other abuses in the financial markets. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
"Today’s settlement should serve as a warning shot to potential fraudsters and those who would discriminate against borrowers – we are redoubling our fight, we are strengthening cooperation and we are using all our resources to combat these crimes," said Executive Director Adkins.
AIG FSB and WFI are not currently engaged in the business of wholesale home mortgage lending, but the settlement provides that if either defendant re-enters that business, the lender will implement specific, nonracial standards for broker fees and monitor all fees charged on the mortgage loans they fund to ensure that all customers are treated equally.
A copy of the complaint, as well as additional information about fair-lending enforcement by the Justice Department, can be obtained from the Justice Department Web site at http://www.justice.gov/fairhousing. On March 4, 2009, American International Group Inc. issued stock to a trust established in favor of the United States Treasury.
The enforcement of federal fair-lending laws is a priority of the Justice Department's Civil Rights Division.
3 March 2010
Oregon Man Charged with Operating Illegal Money Transmitting Business That Moved More Than $172 Million Through Shell Corporations in the United StatesRead the Press Release
Victor Kaganov, who emigrated from Russia and set up numerous shell corporations in Oregon on behalf of Russian clients, was arrested today on charges of operating an unlicensed money transmitting business, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Dwight C. Holton for the District of Oregon. The shell corporations allegedly were used to move more than $172 million into the United States and out to more than 50 countries.
Kaganov, a naturalized U.S. citizen living in Tigard, Ore., was indicted by a federal grand jury on one count of operating an unlicensed money transmitting business after more than 4,200 wire transactions had been made. The defendant appeared today before U.S. Magistrate Judge Donald C. Ashmankas in the District of Oregon.
The indictment alleges that Kaganov emigrated from Russia to the United States in 1998. In order to move money in and out of the United States, Kaganov allegedly created various shell corporations under Oregon law, and then opened bank accounts, including accounts at Wells Fargo, Key Bank, Bank of America and Bank of the West, which he used to deposit money he received from his Russian clients. Kaganov allegedly would then wire the money out of the accounts based on wire instructions he received from his clients.
The indictment also alleges that Kaganov did not comply with Oregon laws requiring him to obtain a license to operate the money transmitting business and that Kaganov failed to register his money transmitting operation with the U.S. Department of Treasury, as required by federal statutes and regulations.
The charged count carries a maximum penalty of five years in prison, a $250,000 fine and three years of supervised release following the prison term.
In January 2009, a federal grand jury indicted Marina Chernova, Vadim Piskunov and Maria Ivanov on charges of mail and wire fraud. Chernova and Piskunov were also charged with aggravated identity theft. Each of these indictments alleges that the defendants established Oregon shell corporations to facilitate and disguise illegal activities. These cases are being prosecuted by the U.S. Attorney’s Office for the District of Oregon.
The charges contained in the indictment are merely accusations and the defendant is presumed innocent until proven guilty at trial beyond a reasonable doubt.
The case was investigated by the FBI and the U.S. Postal Inspection Service. It is being prosecuted by Assistant U. S. Attorney and Senior Litigation Counsel Allan M. Garten for the District of Oregon and Trial Attorney Robert Livermore of the Criminal Division’s Organized Crime and Racketeering Section.
Justice Department Files Lawsuit Alleging Racial Discrimination at Ann Arbor, Michigan, Apartment ComplexRead the Press Release
WASHINGTON – The Justice Department today filed a lawsuit against the owner and property manager of a 48-unit apartment complex in Ann Arbor, Mich., alleging that the defendants discriminated on the basis of race or color in the rental of apartments, the Justice Department’s Civil Rights Division and the U.S. Attorney’s Office for the Eastern District of Michigan announced.
"Housing is a basic human need, and no individual should be subjected to indignity of discrimination as they look for a home for their family," said Thomas E. Perez, Assistant Attorney General of the Civil Rights Division. "This lawsuit demonstrates that the Justice Department will not tolerate violations of our nation’s fair housing laws."
"Discrimination in housing goes to the very core of American values," said Barbara L. McQuade, U.S. Attorney for the Eastern District of Michigan. "The ability to choose where to live affects every other aspect of life – access to schools, jobs and transportation – and we will not ignore violations of this fundamental right."
The lawsuit, filed in federal court in Detroit, alleges that Acme Investments Inc., d/b/a Ivanhoe House Apartments and Laurie Courtney, the apartment complex’s property manager, engaged in a pattern or practice of discriminating against African American prospective renters. The allegations in the lawsuit are based on evidence generated by a series of fair housing tests conducted at Ivanhoe House Apartments by the Fair Housing Center of Southeastern Michigan, a private non-profit organization located in Ann Arbor. Testers are individuals who pose as applicants for housing and report on their interactions with housing providers to determine the providers’ compliance with fair housing laws.
The Fair Housing Center of Southeastern Michigan filed a lawsuit against the defendants on July 16, 2009, based on the results of the fair housing tests. That lawsuit is currently pending in federal court before the Honorable Sean F. Cox.
The United States’ complaint seeks a court order prohibiting future discrimination by the defendants, monetary damages for those harmed by the defendants’ actions and a civil penalty.
Individuals who may have information related to this lawsuit should contact the Justice Department toll-free at 1-800-896-7743, mail box number 91, the U.S. Attorney’s Office for the Eastern District of Michigan at 313-226-9727, or email the Justice Department at [email protected].
Fighting illegal housing discrimination is a top priority of the Justice Department. The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status. More information about the Civil Rights Division and the laws it enforces is available at http://www.justice.gov/crt. Individuals who believe that they may have been victims of housing discrimination can call the Housing Discrimination Tip Line at 1-800-896-7743, e-mail the Justice Department at [email protected], or contact HUD at 1-800-669-9777.
The complaint is an allegation of unlawful conduct. The allegations must be proven in federal court.
2 March 2010
U.S. Files Complaint Against Virginia Medicaid ProvidersRead the Press Release
WASHINGTON – The United States and the Commonwealth of Virginia have filed a False Claims Act complaint in the Western District of Virginia against Medicaid providers Universal Health Services Inc., Keystone Marion LLC and Keystone Education and Youth Services LLC, the Justice Department announced today These entities did business as the Keystone Marion Youth Center, a residential facility in Marion, Va., which receives Medicaid funds to provide psychiatric counseling and treatment for boys ages 11-17. The United States’ and the Commonwealth of Virginia’s complaint alleges that the defendants billed Medicaid for inpatient psychiatric care that was not provided, in violation of federal and state Medicaid requirements, and falsified records to cover up their serious violations.
According to the complaint, the defendants’ actions violated the False Claims Act. Under the act, a health care provider that submits false or fraudulent claims to a federal health care program is liable for three times the government’s damages, plus a civil penalty for each false claim. The United States and the Commonwealth of Virginia earlier intervened in this whistleblower suit filed by several former therapists who worked at the Marion residential facility.
"The Justice Department is committed to ensuring that scarce Medicaid resources are devoted to their intended use – the appropriate care and treatment of some of our nation’s neediest and most vulnerable patients," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "We must protect Medicaid from fraudulent practices that deprive beneficiaries of the quality health care they deserve."
Assistant Attorney General West acknowledged the collaborative efforts made by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Western District of Virginia, the Virginia Attorney General’s Office, the Department of Health and Human Services’ Office of Inspector General and the Commonwealth of Virginia’s Medicaid Fraud Control Unit.
"We intend to prove that these defendants billed Medicaid for providing troubled children with much needed psychiatric medical care when, in fact, they provided no such service," said Timothy J. Heaphy, United States Attorney for the Western District of Virginia. "We will not sit idly by and allow healthcare providers to take advantage of troubled children in order to feed their own desire for wealth. The Medicaid system was designed to help the most vulnerable among us, not to line the pockets of fraudsters."
"The Office of Inspector General has an obligation not only to protect Medicaid from fraudulent billing but also to protect mentally ill children from substandard care," said Nick DiGiulio, Special Agent in Charge for the Philadelphia Region of the Office of Inspector General of the Department of Health of Human Services said,
The United States’ and the Commonwealth of Virginia’s complaint 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.
Ohio Business Owner Pleads Guilty to Mail and Wire FraudRead the Press Release
WASHINGTON - Robert E. Alick, the operator of used medical equipment sales business and resident of Chagrin Falls, Ohio, pleaded guilty today to five counts of mail fraud, one count of wire fraud, and one count of corruptly endeavoring to obstruct the administration of the Internal Revenue laws, the Department of Justice and Internal Revenue Service (IRS) announced.
According to the indictment and the plea agreement, Alick operated his used medical equipment sales business in Beachwood, Ohio, through the following entities: Healthcare Imaging Solutions Corporation, ECT Medical Systems Inc., ECT Corporation, Second Source Medical Equipment Corporation and Computer Remarketing Credit Corporation d/b/a DECT Imaging. Alick also admitted that he used this series of corporations both as part of his fraudulent scheme (described below) and to avoid paying taxes.
According to the indictment and the plea agreement, Alick admitted that in connection to the mail and wire fraud counts, from July 2002 through April 2006, he engaged in a scheme to defraud the hospitals that were his customers through various means, including by taking substantial deposits that were supposed to be used to purchase medical equipment and failing to use such funds for the purchase of the equipment and failing to deliver the equipment, instead using the money on other things. Alick further admitted that he defrauded the following six hospitals: Toledo Hospital (Toledo, Ohio), Greene County Medical Center (Jefferson, Iowa), Canyon Surgery Center (Phoenix), North Suburban Surgery Center (Thorton, Colo.), Clarion Hospital (Clarion, Penn.) and Hugh Chatham Hospital (Elkin, N.C.).
According to the indictment and the plea agreement, Alick admitted that in connection with the tax crime, in addition to operating his business through a series of corporations, he engaged in an array of other activities to obstruct and impede the IRS. For instance, he admitted that although he caused his corporations to file quarterly employment tax returns from 2000 through part of 2003, he failed to cause them to file such returns from the end of 2003 through 2006. In addition, he admitted that during both periods, he caused these corporations not to pay over the employment taxes that they owed. Alick also admitted that he collected employment taxes from some employees, but not others.
According to the indictment and the plea agreement, Alick further admitted that he took various actions to deceive the IRS and to impede its efforts to collect these and other taxes from 2000 through 2006. He also admitted that he caused his corporations to fail to file corporate income tax returns from 2001 through 2006. Finally, Alick admitted that he made extensive use of cash to avoid making accurate records of his income, used nominee bank accounts to conceal his and his corporations’ income and assets from the IRS, and cashed checks from his business accounts in various ways to hide his financial activity from the IRS.
The sentencing has been scheduled for June 3, 2010. Alick faces a maximum potential sentence of 20 years in prison followed by up to three years of supervised release, and a fine of $250,000, for each of the mail and wire fraud counts. In addition, Alick faces a maximum potential sentence of three years in prison followed by one year of supervised release and a fine of $250,000, for the tax crime.
Acting Assistant Attorney General John A. DiCicco and United States Attorney for the Northen District of Ohio Steven M. Dettelbach thanked Assistant United States Attorneys Michael L. Collyer and Christian Stickan and Tax Division trial attorney Patrick J. Murray, who are prosecuting the case. They also thanked the agents of the FBI and the IRS whose assistance was essential to the successful investigation and prosecution of the case.
Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at http://www.usdoj.gov/tax.
KV Pharmaceutical Subsidiary Pleads Guilty to Two Felonies Regarding Oversized DrugsRead the Press Release
WASHINGTON – Ethex Corporation, a wholly owned subsidiary of St. Louis-based drug manufacturer, KV Pharmaceutical Company, pleaded guilty to two felonies and was sentenced today in connection with the manufacturing of oversized prescription drug tablets, the Justice Department announced today. The government had charged that, despite having knowledge that the two drugs did not meet required specifications, Ethex violated the law by intentionally withholding this information from the Food and Drug Administration (FDA). Given the seriousness of Ethex’s conduct and the risk it posed to consumers of its drugs, the Justice Department pursued felony charges.
According to charges presented in U.S. District Court in St. Louis today, Ethex failed to submit required "field alert reports" to the FDA in 2008 concerning two drugs, propafenone and dextroamphetamine sulfate. Following the recommendations of a plea agreement that was filed today, Judge E. Richard Webber sentenced Ethex to pay a fine of more than $23.4 million, pay approximately $2.3 million in restitution to Medicare and Medicaid for their approximate losses, and forfeit nearly $1.8 million to the United States.
Under the Food, Drug and Cosmetic Act, a drug manufacturer must thoroughly investigate why a drug fails to meet specifications, whether or not the drug has been distributed into interstate commerce. Moreover, when a manufacturer receives information concerning a significant chemical change in a distributed drug or a failure of a distributed drug batch to meet specifications, it is required to promptly file a field alert report with the FDA. A manufacturer’s failure to file such a report, if done with the intent to defraud or mislead, is punishable by a term of up to five years’ probation and a fine of $500,000 or twice the gross amount gained from the offense.
The government had alleged that in May 2008, KV and Ethex received complaints from a pharmacy in California and a distributor in Canada of oversized morphine sulfate pills, a pain-relief medication which had been manufactured by KV and distributed by Ethex. In response to the complaints, KV recalled specific lots of morphine sulfate in June 2008 and filed a field alert report regarding the oversized tablets with the FDA.
According to the charges, a KV internal investigation that began in May 2008 discovered sporadic instances of various oversized KV-manufactured drugs, including morphine sulfate, propafenone and dextroamphetamine sulfate. Propafenone is an anti-arrhythmia drug that is used to treat some kinds of heart disease. Dextroamphetamine sulfate is used to treat attention deficit disorder in children. The charges alleged that despite the fact that KV’s internal investigation uncovered evidence of various oversized propafenone and dextroamphetamine sulfate tablets, Ethex did not file the required field alert reports with the FDA.
"Even though they were aware of serious manufacturing problems concerning their oversized drugs, Ethex failed to notify the FDA as required by law," said Assistant Attorney General Tony West, who heads the Justice Department’s Civil Division. "The Justice Department will vigorously prosecute those who pursue profits at the expense of consumer safety."The case was investigated by the FDA’s Office of Criminal Investigations and is being prosecuted by the U.S. Attorney’s Office for the Eastern District of Missouri and the Civil Division’s Office of Consumer Litigation at the Justice Department. Additional assistance is being provided by the FDA’s Office of Chief Counsel.
Justice Department Settlement with Goodyear Tire & Rubber Co. Secures $40,000 for Oklahoma Army ReservistRead the Press Release
WASHINGTON - The Justice Department today announced that it has reached a settlement, in the form of a consent decree, with the Goodyear Tire & Rubber Company that, if approved by the U.S. District Court in Oklahoma City, will resolve its lawsuit filed on behalf of Michael J. Ellis, a major in the U.S. Army Reserve.
The Justice Department’s lawsuit, filed in May 2009, alleged that Goodyear violated the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) by failing to promptly reemploy Ellis following his military service. Subject to certain limitations, USERRA requires employers to reemploy a returning service member in the position the employee would have held had his or her employment not been interrupted by military service.
Ellis was on leave from Goodyear due to a previous service-related injury and awaiting reassignment to a new position with Goodyear consistent with his physical abilities when he was called to active duty in September 2005. According to the complaint, when Ellis sought reemployment with Goodyear after his discharge in 2007, the company took no steps to identify the position Ellis would have received had he not been activated, and it failed to reemploy him for nearly a year. Under the terms of the consent decree, Goodyear must pay Ellis $40,000 in back wages and other damages. Goodyear also must supplement its policies at its Lawton, Okla., plant to ensure that returning service members are promptly reemployed in accordance with USERRA, and must submit to a period of monitoring by the Justice Department to ensure Goodyear’s compliance with USERRA.
"Every day, our men and women in uniform risk their lives to protect our rights," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "The Department of Justice will work diligently to ensure that service members’ rights are protected, too."
The Civil Rights Division of the Department of Justice remains committed to the vigorous enforcement of USERRA. Additional information about USERRA can be found on the Department of Justice Web site at www.servicemembers.gov and www.justice.gov/crt/emp and on the Department of Labor Web site at www.dol.gov/vets/programs/userra/main.htm.
Florida Man Sentenced to 20 Years in Prison for Traveling to the Philippines in Sex Tourism CaseRead the Press Release
WASHINGTON - Donald Mathias of Davie, Fla., was sentenced today to 20 years in prison for engaging in sex tourism in the Philippines, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney for the Southern District of Florida Jeffrey H. Sloman and U.S. Immigration and Customs Enforcement (ICE) Assistant Secretary John Morton
Mathias, 64, was also sentenced by U.S. District Court Judge William Peter Dimitrouleas to serve five years of supervised release following his prison term and to pay $200,000 in restitution to his victims. The funds will be transferred to a trust fund established for their benefit. The court also ordered Mathias to forfeit real property in order to satisfy the restitution amount. Mathias pleaded guilty in U.S. District Court in Ft. Lauderdale, Fla., on Dec. 22, 2009, to four counts of traveling in foreign commerce and engaging in illicit sexual conduct. He was indicted on those charges on Oct. 27, 2009.
As part of his plea agreement, Mathias admitted that from 2005 until December 2008, he communicated and arranged with the mother of two minor females to travel to the Philippines, where they were located, and engage in sexual conduct with the minors. During this time, Mathias and the mother exchanged hundreds of e-mails regarding sexual activity between Mathias and the minors.
Mathias admitted that he traveled to the Philippines in April 2007 and again in December 2007, engaged in sexual conduct with the minors on those trips and recorded those acts with a video camera. Mathias also admitted that he made the minors sign a contract in December 2007, requiring the minors to be his sex slaves. According to court documents, money transfer and e-mail records showed that Mathias sent thousands of dollars to the mother between 2005 and December 2008. Mathias also admitted that he traveled to the Philippines in December 2008 to engage in sexual conduct with the minors again. However, Filipino law enforcement officials detained Mathias and he was not successful in meeting the minors. On Oct. 14, 2009, Mathias was arrested by U.S. law enforcement officers in Miami.
The mother of the minors is in custody in the Philippines and is being prosecuted by Filipino authorities.
This case was prosecuted by Trial Attorney Anitha Ibrahim of the Criminal Division’s Child Exploitation and Obscenity Section and Assistant U.S. Attorney Marlene Rodriguez of the U.S. Attorney’s Office for the Southern District of Florida. The Criminal Division’s Office of International Affairs provided assistance in the case. This case was investigated by ICE’s Office of Investigations in Miami and the U.S. Postal Inspection Service, with assistance from the Philippines Department of Justice.
Cincinnati Packaged-Ice Manufacturer Sentenced to Pay $9 Million<br /> for Its Role in a Customer and Territory Allocation ConspiracyRead the Press Release
WASHINGTON — A Cincinnati packaged-ice manufacturer was sentenced today to pay a $9 million criminal fine for its participation in a conspiracy to allocate packaged-ice customers and territories, the Department of Justice announced today.
The Home City Ice Company pleaded guilty on June 17, 2008, to a one-count charge of conspiring to suppress and eliminate competition by allocating packaged-ice customers and territories in the Detroit metropolitan area and southeastern Michigan. The conspiracy began at least as early as Jan. 1, 2001, and continued until on or about July 17, 2007.
Packaged ice is marketed as high-grade ice for consumption and is sold in varying size bags and blocks. Home City Ice is a manufacturer of packaged ice with multiple locations throughout the United States.
Today’s sentencing is a result of an ongoing investigation by the Antitrust Division’s Cleveland Field Office and FBI offices in Ann Arbor, Mich.; Indianapolis; Toledo, Ohio; and Cincinnati. As a part of the same investigation, Arctic Glacier International Inc., a packaged-ice company headquartered in St. Paul, Minn., and three of its former executives pleaded guilty in October 2009 to allocating customers in the Detroit metropolitan area and southeastern Michigan. On Feb. 11, 2010, Arctic Glacier was sentenced to pay a $9 million criminal fine.
Anyone with information concerning customer or territorial allocation agreements, or other anticompetitive conduct in the packaged-ice industry, should contact the Antitrust Division’s Cleveland Field Office at 216-687-8400 or visit http://www.justice.gov/atr/contact/newcase.htm.
1 March 2010
Two Former Executives of Medical Manager Found Guilty in Securities Fraud SchemeRead the Press Release
Two former executives of Medical Manager Health Systems Inc., (Medical Manager), a subsidiary of WebMD Corporation from 2000 to 2005, were convicted today by a federal jury in Charleston, S.C., with participating in a conspiracy to fraudulently inflate the reported earnings of Medical Manager by more than $16.8 million between 1997 and 2003, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division ; Kevin F. McDonald, Acting U.S. Attorney for the District of South Carolina; David A. Thomas, Special Agent in Charge of the FBI’s Columbia Division; and Jeannine Hammett, Special Agent in Charge of the Charlotte, N.C., Field Office of the Internal Revenue Service (IRS) Criminal Investigation.
Former Medical Manager president John H. Kang, 46, of Trabuco Canyon, Calif., and former vice president and chief operating officer John P. Sessions, 67, of Myrtle Beach, S.C., were convicted of conspiracy to commit mail, wire and securities fraud. Kang and Sessions were charged in a second superseding indictment on Feb. 27, 2007, along with other executives of Medical Manager, for their roles in the fraudulent scheme.
"As the president and vice-president of their company, these defendants were supposed to lead their company with honor and integrity – instead, they orchestrated an elaborate accounting scheme meant to defraud investors about the financial success of their company," said Assistant Attorney General Lanny A. Breuer of the Criminal Division. "Corporate executives cannot decide to play by their own set of rules. The message is simple – obey the laws or face prosecution for your crimes."
"This case will serve as a wake-up call to corporate executives who scheme to profit at the expense of shareholders and the investing public," said Acting U.S. Attorney Kevin F. McDonald. "I am extremely proud of the dedication of the agents and attorneys who investigated and prosecuted this case."
"The FBI is committed to rooting out securities fraud," said FBI Special Agent in Charge David A. Thomas. "We will continue working with our partners to identify and stop those who line their own pockets at the expense of others."
"Corporate fraud has crippling consequences for the American economy," said IRS Special Agent in Charge Jeannine A. Hammett. "This verdict reflects the commitment of the law enforcement community to investigate and pursue allegations of wrongdoing, wherever they may occur, whether it be on our city streets or in our corporate suites."
Kang and Sessions were convicted of conspiring to engage in fraudulent accounting practices intended to artificially inflate the quarterly revenues of Medical Manager in order to meet and exceed the expectations of financial analysts, and thus to fraudulently inflate the market price of Medical Manager stock and, after its acquisition by WebMD, that company’s stock. According to evidence presented during the nearly two-month trial, the conspiracy involved a number of fraudulent practices, including inflating the company’s revenue by engaging in "round-trip" sales with software dealers that Medical Manager was acquiring. Evidence at trial proved that the defendants participated in a scheme to inflate the purchase price for the companies that Medical Manager was acquiring in order to compensate these companies for the simultaneous purchase of Medical Manager software that Medical Manager compelled them to purchase as part of their acquisition.
Evidence presented at trial proved that the defendants also inflated Medical Manager’s revenue by causing companies acquired by Medical Manager to reclassify revenue they had already recognized - and thus already included in their earnings - as "deferred revenue," which was not included in earnings. Once the books of the acquired companies were combined with those of Medical Manager, the conspirators recognized the deferred revenue again, thereby fraudulently increasing Medical Manager’s revenue and earnings. Kang and Sessions were also found guilty of causing companies Medical Manager was acquiring to fraudulently inflate their accrued liability accounts and reserves for various expenses before the financial statements of the target companies were combined with those of Medical Manager. Once the financial statements were combined, the conspirators caused Medical Manager to reverse those accrued liability accounts and reserves into earnings for Medical Manager.
Chief U.S. District Judge David C. Norton presided over the trial and will sentence the defendants at a later date. The maximum penalty for the conspiracy charge is five years in prison and a fine of $250,000, or twice the amount of pecuniary gain or loss resulting from the conduct.
Previously, in related cases, former Medical Manager executives Robert Davids, Kevin M. Kennedy, Glenn S. Moss, Patrick Sedlacek, William Kottage and Henry Holbrook each pleaded guilty for their roles in the scheme. Kennedy and Kottage also pleaded guilty to tax evasion. Also, on Jan. 11, 2010, Michael A. Singer, the former chief executive officer of Medical Manager, entered into a deferred prosecution agreement and agreed to forfeit $2.5 million.
Former corporate controller Charles L. Hutchinson, a/k/a Charlie Hutchinson, 41, of Tampa, Fla., and former associate general counsel Franklyn M. Krieger, a/k/a Frank Krieger, 46, of Tampa are both awaiting trial in this case. Hutchinson is scheduled for trial on May 17, 2010, and Krieger is scheduled to stand trial on Aug. 2, 2010. These cases were transferred from Charleston to Tampa by order of the court.
The case was prosecuted by Assistant U.S. Attorney Eric J. Klumb of the U.S. Attorney’s Office for the District of South Carolina, Assistant U.S. Attorney Jason H. Cowley of the U.S. Attorney’s Office for the Eastern District of North Carolina and Trial Attorney Jennifer R. Taylor of the Criminal Division’s Fraud Section. The case was investigated by agents of the FBI and the IRS.
Three Houston Defendants Plead Guilty<br /> in Connection with “Arthritis Kit” Fraud SchemeRead the Press Release
Bassey Monday Idiong, Linda Eteimo Ere Kendabie and Modupe Babanumi each pleaded guilty today 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.
Idiong, 30, was the owner of B.I. Medical Supply LLC, a Houston-area durable medical equipment (DME) company. Kendabie, 27, was an administrative assistant at B.I. Medical and Babanumi, 42, was a patient recruiter. Kendabie and Babnumi each pleaded guilty to conspiracy to commit health care fraud. Idiong pleaded guilty to conspiracy to commit health care fraud and to five counts of health care fraud.
The defendants admitted that B.I. Medical 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, they were supplied with different, less expensive products. The defendants also admitted that the equipment supplied was not medically necessary. In one instance, according to the plea agreements, B.I. Medical billed Medicare for an arthritis kit that included two knee braces for a beneficiary who had only one leg. In total, B.I. Medical submitted approximately $846,000 in fraudulent claims to Medicare.
U.S. District Court Judge Vanessa Gilmore of the Southern District of Texas accepted the defendants’ guilty pleas and scheduled sentencing for June 14, 2010. The defendants each face a maximum penalty of 10 years in prison and a $250,000 fine, per count.
The case was prosecuted by Assistant Chief John S. (Jay) Darden and Trial Attorneys Jennifer L. Saulino, John Cunningham and Katherine Houston of the Criminal Division’s Fraud Section, and was investigated by the FBI, HHS-OIG and the Railroad Retirement Board, OIG.
The case was brought as part of the Medicare Fraud Strike Force, supervised by the U.S. Attorney’s Office for the Southern District of 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
San Diego Tax Return Preparer Sentenced to Prison for Tax FraudRead the Press Release
WASHINGTON – Fe S. Garrett, a resident of National City, Calif., was sentenced today to 65 months in prison and ordered to pay $377,468 in restitution by U.S. Judge M. James Lorenz in San Diego, the Justice Department and Internal Revenue Service (IRS) announced. In August 2009, Garrett was convicted of filing false individual tax returns, failure to pay taxes, and multiple counts of aiding and assisting in the preparation of false tax returns following a nine-day trial.
According to the evidence presented at trial, for tax years 2001 and 2002, Garrett prepared at least 18 federal income tax returns for her clients that were false as to material matters in that the tax returns claimed fraudulent itemized deductions, child care expenses and Schedule E real estate rental expenses in amounts that she knew her clients were not entitled to claim.
Additionally, according to the documents filed in the case and evidence presented at trial, Garrett was a licensed tax return preparer and licensed real estate broker who operated a tax return preparation and bookkeeping business and a real estate financing business. These businesses operated under multiple names, including Fe's Tax Service, Garrett's Tax Service and Garrett's Realty and Mortgage. Garrett failed to report over $300,000 of her business gross receipts from those businesses on her federal income tax returns for tax years 2001, 2002, 2004 and 2005.
Additionally, the evidence at trial showed that Garrett willfully failed to pay approximately $279,000 in federal income taxes that she owed for tax years 2001 through 2006. Despite filing tax returns for 2001 and 2006 on which she admitted owing tax each year, Garrett spent hundreds of thousands of dollars at local casinos, wired over $100,000 to the Philippines, and did not respond to numerous attempts by the IRS to contact her.
According to the evidence presented at trial, Garrett prepared a false tax return for an undercover IRS agent that included false items similar to those on her client’s returns. In a recording presented at trial, Garrett was heard describing her "style" of preparing tax returns using "loopholes" for claiming deductions on income tax returns.
"During tax filing season, return preparers and taxpayers should be aware of the serious consequences facing those who aid or assist in the filing of fraudulent tax returns," said John A. DiCicco, Acting Assistant Attorney General of the Justice Department's Tax Division. "Those who fly in the face of the tax laws face investigation, prosecution, and if convicted, significant prison sentences and substantial fines."
"Today's sentence sends a strong message to unscrupulous return preparers who think they can get away with tampering with our nation's tax system," said Victor S. O.Song, Chief, Criminal Investigation, Internal Revenue Service. "Return preparer fraud is a crime that can and does result in jail time."
Acting Assistant Attorney General DiCicco commended the IRS-Criminal Investigation special agents who investigated the case, as well as Tax Division trial attorneys Christopher S. Strauss and Elizabeth C. Hadden, who prosecuted the case. Acting Assistant Attorney General DiCicco also thanked the U.S. Attorney’s Office in San Diego for their assistance in successfully prosecuting this matter.
Orange City Landlord and Manager to Pay $100,000 in Civil Penalties as Part of Settlement of Justice Department Housing Discrimination LawsuitRead the Press Release
WASHINGTON – The Justice Department today announced that landlord James Stevens, his company Fountain View Apartments Inc., and his former rental manager, Mildred Chastain, have agreed to pay $415,000 in monetary damages and civil penalties to settle a Fair Housing Act lawsuit alleging that they discriminated against African Americans and families with children at Fountain View Apartments, a 42-unit apartment complex in Orange City, Fla.
Under the consent decree, which must still be approved by the U.S. District Court for the Middle District of Florida, the defendants must pay $175,000 to nine individuals identified by the United States as victims of defendants’ discriminatory conduct, $140,000 to three plaintiff-intervenors, and $100,000 to the United States as a civil penalty. In addition, the consent decree prohibits the defendants from engaging in discrimination and requires Fountain View Apartments Inc. to retain an independent manager to manage the property.
"Equal access to housing is a basic necessity and a civil right, and the Fair Housing Act guarantees that all individuals can access that right free from discrimination," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "This settlement will ensure that the equal housing opportunities required by law are provided at Fountain View Apartments and send a message to all housing providers that we have no tolerance for discrimination based on race or color or familial status."
"It is immensely important that the Department of Justice is working so hard to stop this unfair treatment and penalize those who engage in housing discrimination in our District and nationwide," stated A. Brian Albritton, U.S. Attorney for the Middle District of Florida.
The case began when Lewarna Williams, an African American woman, visited Fountain View with her grandson and a friend and inquired about the availability of apartments. Defendant Chastain told her that there were no vacancies. Ms. Williams requested an application and was given one, but Defendant Chastain refused to allow her to submit it. The application contained the notation "ADULTS ONLY" in the space designated for the number of children. Later the same day, Ms. Williams’ friend telephoned Fountain View to request information about apartment availability, and the female agent informed her that apartments were available. A local television station subsequently conducted a series of fair housing tests – simulated transactions to compare responses given by housing providers to different types of apartment-seekers to determine whether illegal discrimination is occurring – and found that the defendants were providing more information and better treatment to white persons than to African American persons.
Ms. Williams filed a fair housing complaint with the U.S. Department of Housing and Urban Development (HUD). After investigating, HUD referred the matter to the Justice Department, which filed the lawsuit in June 2008. Ms. Williams and others intervened in the lawsuit as plaintiffs.
"This case underscores the importance of fair housing testing in uncovering differences in the way people or different racial backgrounds are treated when they visit some apartment complexes," said John Trasviña, HUD Assistant Secretary for Fair Housing and Equal Opportunity. "HUD will continue to use fair housing testing to bring to light the discriminatory practices that still deny too many Americans equal housing opportunities."
In December 2009, the court, ruling on a motion filed by the United States, found that the defendants had violated the Fair Housing Act by engaging in a pattern or practice of discrimination against families with children. Had the remainder of the case gone to trial, the United States was prepared to show that the defendants also discriminated against African Americans by, among other things, telling white persons that a selling point of the apartment complex is that Fountain View does not have any black residents; denying the availability of apartments to African American persons while at the same time telling white persons about available apartments; refusing to show apartments to African American persons while at the same time showing apartments to white persons; discouraging African American persons from applying for an apartment while encouraging white persons to apply; refusing to negotiate with African American prospective tenants for rental; threatening to evict one or more tenants who were known or believed to have African American friends and associates; and making statements with respect to the rental of apartments at Fountain View indicating a preference, a limitation, or discrimination because of race or color. Today’s settlement resolves these claims.
The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status. Individuals who believe that they may have been victims of housing discrimination should call the Housing Discrimination Tip Line (1-800-896-7743) or e-mail the Justice Department at [email protected]. Such persons may also contact the U.S. Department of Housing and Urban Development at 1-800-669-9777.
Fair housing enforcement is a priority of the Civil Rights Division. More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt.
Justice Department to Monitor Elections in TexasRead the Press Release
WASHINGTON – The Justice Department today announced that it will monitor primary elections on March 2, 2010, in Fort Bend, Galveston, Gonzales, Williamson and Wilson Counties in Texas, to ensure compliance with the minority language requirements of the Voting Rights Act of 1965 and other federal voting rights statutes. The Voting Rights Act requires these covered jurisdictions to provide language assistance in Spanish during the election process. In addition, jurisdictions must comply with the requirements of the Help America Vote Act during this election for federal office, including requirements regarding provisional ballots, accessible voting equipment and information provided to voters.
Under the Voting Rights Act, the Justice Department is authorized to ask the U.S. Office of Personnel Management (OPM) to send federal observers to jurisdictions that are certified by the Attorney General or by a federal court order. Federal observers will be assigned to monitor polling place activities in Fort Bend, Galveston, Williamson and Wilson Counties based on the attorney general’s certification. The observers will watch and record activities during voting hours at polling locations in these jurisdictions, and Civil Rights Division attorneys will coordinate the federal activities and maintain contact with local election officials.
In addition, Fort Bend is subject to a court order entered in 2009, which requires the jurisdiction to comply with the minority language and assistor of choice requirements of the Voting Rights Act, as well as the requirements of the Help America Vote Act. Galveston County is subject to a court order entered in 2007 that requires the jurisdiction to comply with the minority language requirements of the Voting Rights Act and the requirements of the Help America Vote Act.
Finally, Justice Department personnel will monitor polling place activities in Gonzales County, Texas. A Civil Rights Division attorney will coordinate federal activities and maintain contact with local election officials.
Each year, the Justice Department deploys hundreds of federal observers from OPM, as well as departmental staff, to monitor elections across the country. To file complaints about discriminatory voting practices, including acts of harassment or intimidation, voters may call the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.
Visit www.usdoj.gov/crt/voting/index.htm for more information about the Voting Rights Act and other federal voting laws.
Jury Convicts Fresno, Calif., Patient Recruiter of<br /> Medicare Fraud in Power Wheelchair ScamRead the Press Release
A federal jury in Los Angeles convicted a Fresno woman late Friday after it found that she committed Medicare fraud by recruiting patients for the purpose of receiving unnecessary power wheelchairs, Assistant Attorney General Lanny A. Breuer of the Criminal Division; George S. Cardona, Acting U.S. Attorney for the Central District of California; Steven Martinez, Assistant Director In Charge of the FBI’s Los Angeles Field Office; and 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) announced today.
After a one-week trial in federal court in Los Angeles, the jury found Maria Nela Moreno, 57, guilty on Feb. 26, 2010, of conspiracy to commit health care fraud and six counts of health care fraud. The evidence introduced at trial showed that Moreno solicited Medicare beneficiaries by meeting with groups of seniors and going door-to-door at low-income, senior living communities in Sanger and Parlier, Calif., near Fresno. Moreno recruited beneficiaries to receive expensive, high-end power wheelchairs that the beneficiaries did not need. Several beneficiaries testified that Moreno wore a badge with her picture on it that appeared to resemble a hospital identification badge.
According to the beneficiaries who testified at trial, Moreno tricked them into giving her their identification cards and Medicare insurance numbers by telling the beneficiaries that they should take a power wheelchair because Medicare would soon run out of money, and the beneficiaries would not be able to get a chair if the beneficiaries were to need them in the future. Moreno copied the beneficiaries’ identification cards and Medicare insurance numbers with the portable scanner she carried with her. Each of the power wheelchairs, which the evidence at trial showed could be purchased for less than $1,000 wholesale, resulted in approximately $6,000 in false claims to Medicare. Witnesses testified that at the Elderberry Apartments in Sanger, one of the locations where Moreno and her co-conspirators illegally recruited beneficiaries to receive power wheelchairs, many residents left the wheelchairs unused.
Witnesses testified at trial that they took the beneficiary information they received from Moreno to a fraudulent medical clinic in Los Angeles, which then used the information to create bogus prescriptions. Witnesses testified that they purchased the fraudulent power wheelchair prescriptions and medical documents from the clinic, and then sold them for more than $1,000 per prescription to durable medical equipment (DME) supply companies in and around Los Angeles. Moreno was in turn paid a kickback for each power wheelchair that the DME companies were able to fraudulently bill Medicare, using the beneficiary information Moreno obtained.
One of the DME supply companies that billed Medicare using the identities of Moreno’s recruits was Cooper Medical Supply of Canoga Park, Calif. Trial evidence established that between January 2006 and September 2009, Cooper Medical Supply submitted approximately $828,835 in false and fraudulent claims to Medicare, almost all of which were for power wheelchairs. Trial evidence established that additional DME companies across southern California also purchased prescriptions that were from the beneficiaries recruited by Mareno. Cooper Medical Supply’s owner, Ajibola Sadiqr, previously pleaded guilty to Medicare fraud. Sadiqr’s sentencing is scheduled for April 12, 2010.
U.S. District Court Judge John F. Walter of the Central District of Los Angeles scheduled sentencing for May 10, 2010. Moreno faces a maximum penalty of 10 years in prison and a $250,000 fine for each count of conspiracy and health care fraud for which she was convicted.
The case was prosecuted by Trial Attorney Jonathan Baum and Senior Trial Attorney Jerrob Duffy of the Criminal Division’s Fraud Section, and was investigated by the California Department of Justice 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.gov
BAE Systems PLC Pleads Guilty and Ordered to Pay $400 Million Criminal FineRead the Press Release
BAE Systems plc (BAES) pleaded guilty today in U.S. District Court in the District of Columbia to conspiring to defraud the United States by impairing and impeding its lawful functions, to make false statements about its Foreign Corrupt Practices Act (FCPA) compliance program, and to violate the Arms Export Control Act (AECA) and International Traffic in Arms Regulations (ITAR), announced Acting Deputy Attorney General Gary G. Grindler. BAES was sentenced today by U.S. District Court Judge John D. Bates to pay a $400 million criminal fine, one of the largest criminal fines in the history of DOJ’s ongoing effort to combat overseas corruption in international business and enforce U.S. export control laws.
"Today, BAE Systems pleaded guilty to knowingly and willfully making false statements to U.S. government agencies. The actions of BAE Systems impeded U.S. efforts to ensure international trade is free of corruption and to maintain control over sensitive U.S. technology," said Acting Deputy Attorney General Gary G. Grindler. "BAE Systems will pay a $400 million fine for its criminal conduct – one of the largest criminal fines ever levied in the United States against a company for business related violations. The remediation measures BAE Systems has undertaken, in conjunction with its agreement to retain an independent compliance monitor, are evidence supporting BAE Systems’ stated commitment to ensure that it operates in a transparent, honest and responsible manner going forward. The Department of Justice will continue to hold accountable companies that impair the operations of the U.S. government by lying about their conduct and operations."
"Competition is one of the foundations of our economic system," said Shawn Henry, Assistant Director in Charge of the FBI’s Washington Field Office. "Corporations and individuals who conspire to defeat this basic economic principle not only cause harm but ultimately shake the public’s confidence in the entire system."
"Providing false statements to circumvent U.S. export laws and to defraud the U.S. Government must be vigorously prosecuted," said John Morton, assistant secretary of Homeland Security for U.S. Immigration and Customs Enforcement (ICE). "ICE is committed to working with our federal and international partners to investigate violations of U.S. export controls to assure sensitive technologies are not fraudulently and unlawfully acquired."
BAES is a multinational defense contractor with headquarters in the United Kingdom and with a U.S. subsidiary - BAE Systems Inc. - headquartered in Rockville, Md. None of the criminal conduct described in the plea involved the actions of BAE Systems Inc.
According to court documents, from approximately 2000 to 2002, BAES represented to various U.S. government agencies, including the Departments of Defense and Justice, that it would create and implement policies and procedures to ensure its compliance with the anti-bribery provisions of the FCPA, as well as similar, foreign laws implementing the Organization for Economic Cooperation and Development (OECD) Anti-bribery Convention. According to court documents, BAES knowingly and willfully failed to create mechanisms to ensure compliance with these legal prohibitions on foreign bribery. According to court documents, the gain to BAES from the various false statements and failures to make required disclosures to the U.S. government was more than $200 million.
The FCPA makes it illegal for certain businesses and individuals, or anyone taking action within U.S. territorial jurisdiction, corruptly to make payments to foreign government officials for the purpose of obtaining or retaining business. In addition, the FCPA prohibits corruptly making payments to a third party, while knowing that all or a portion of the payments will go directly or indirectly to a foreign government official for the purpose of obtaining or retaining business. Despite BAES’s representations to the U.S. government to the contrary, BAES knowingly and willfully failed to create sufficient compliance mechanisms to prevent and detect violations of the anti-bribery provisions of the FCPA.
According to court documents, BAES made a series of substantial payments to shell companies and third party intermediaries that were not subjected to the degree of scrutiny and review to which BAES told the U.S. government the payments would be subjected. BAES admitted it regularly retained what it referred to as "marketing advisors" to assist in securing sales of defense items without scrutinizing those relationships. In fact, BAES took steps to conceal from the U.S. government and others its relationships with some of these advisors and its undisclosed payments to them. For example, after May 2001, BAES contracted with and paid certain advisors through various offshore shell companies beneficially owned by BAES. BAES also encouraged certain advisors to establish their own offshore shell companies to receive payments from BAES while disguising the origins and recipients of these payments. BAES admitted that it established one company in the British Virgin Islands (BVI) to conceal its marketing advisor relationships, including who the advisor was and how much it was paid; to create obstacles for investigating authorities to penetrate the arrangements; to circumvent laws in countries that did not allow such relationships; and to assist advisors in avoiding tax liability for payments from BAES.
Through this BVI entity, from May 2001 onward, BAES made payments totaling more than £135 million plus more than $14 million, even though in certain situations BAES was aware there was a high probability that part of the payments would be used to ensure that BAES was favored in foreign government decisions regarding the purchase of defense articles. According to court documents, in many instances, BAES possessed no adequate evidence that its advisors performed any legitimate activities in justification of the substantial payments.
In addition, according to court documents, BAES began serving as the prime contractor to the U.K. government in the mid-1980s, after the U.K. and the Kingdom of Saudi Arabia (KSA) entered into a formal understanding. According to court documents, the "support services" that BAES provided according to the formal understanding resulted, in part, in BAES providing substantial benefits to a foreign public official of KSA, who was in a position of influence regarding sales of fighter jets, other defense materials and related support services. BAES admitted it undertook no adequate review or verification of benefits provided to the KSA official, including no adequate review or verification of more than $5 million in invoices submitted by a BAES employee from May 2001 to early 2002 to determine whether the listed expenses were in compliance with previous statements made by BAES to the U.S. government regarding its anti-corruption compliance procedures. In addition, in connection with these same defense deals, BAES agreed to transfer more than £10 million plus more than $9 million to a bank account in Switzerland controlled by an intermediary, being aware that there was a high probability that the intermediary would transfer part of these payments to the same KSA official.
Also as part of its guilty plea, BAES admitted to making and causing to be made certain false, inaccurate and incomplete statements, and failing to make required disclosures to the U.S. government in connection with the administration of certain regulatory functions, including statements and disclosures related to applications for arms export licenses, as required by the AECA and ITAR. The AECA and ITAR prohibit the export of defense-related materials to a foreign national or a foreign nation without the required U.S. government license, and the Department of State has the power to approve or deny such applications. As part of the licensing scheme, applicants are required to identify associated commissions to the State Department- whether they are legitimate commissions or bribes - paid to anyone who helps secure the sales of defense materials.
BAES admitted that, as part of the conspiracy, it knowingly and willfully failed to identify commissions paid to third parties for assistance in soliciting, promoting or otherwise securing sales of defense items in violation of the AECA and ITAR. BAES failed to identify the commission payments paid through the BVI entity described above, in order to keep the fact and scope of its external advisors from public scrutiny. In one specific instance, BAES caused the filing of false applications for export licenses for Gripen fighter jets to the Czech Republic and Hungary by failing to tell the export license applicant or the State Department of £19 million BAES paid to an intermediary with the high probability that it would be used to influence that tender process to favor BAES.
As part of its guilty plea, BAES has agreed to maintain a compliance program that is designed to detect and deter violations of the FCPA, other foreign bribery laws implementing the OECD Anti-bribery Convention, and any other applicable anti-corruption laws, and that is designed to detect and deter violations of the AECA and ITAR, as well as similar export control laws. Under the terms of the plea agreement, BAES has agreed to retain an independent compliance monitor for three years to assess BAES’s compliance program and to make a series of reports to the company and the Justice Department.
The criminal case is being prosecuted by Senior Litigation Counsel Nathaniel B. Edmonds and Deputy Chief Mark F. Mendelsohn of the Criminal Division’s Fraud Section and Trial Attorney Patrick T. Murphy of the National Security Division’s Counterespionage Section. The Fraud Section is responsible for all investigations and prosecutions of the Foreign Corrupt Practices Act, and conducts other investigations into sophisticated economic crimes. The Counterespionage Section supervises the investigation and prosecution of cases involving the export of military and strategic commodities and technology, including cases under the AECA and ITAR.
The criminal case was investigated by FBI special agents who are part of the Washington Field Office’s dedicated FCPA squad and special agents of the U.S. Immigration and Customs Enforcement’s Counter Proliferation Unit. Investigative assistance also was provided by the Defense Criminal Investigative Services and the General Services Administration, Office of Inspector General. The Criminal Division’s Office of International Affairs provided substantial assistance in support of the investigation.
The Department of Justice acknowledges and expresses its appreciation of the significant assistance provided by the U.K.’s Serious Fraud Office, and further expresses its gratitude to that office for its ongoing partnership in the fight against overseas corruption.
Criminal Information
Sentencing Memo
Plea Agreement
26 February 2010
Two Atlanta-Based Nursing Home Chains and Their Principals<br /> Pay $14 Million to Settle False Claims Act CaseRead the Press Release
WASHINGTON – Atlanta-based Mariner Health Care Inc. and SavaSeniorCare Administrative Services LLC, as well as their principals, Leonard Grunstein, Murray Forman and Rubin Schron, have agreed to pay the United States and several states $14 million, the Justice Department announced today.This settlement arises from allegations of the United States that the defendants solicited kickback payments from Omnicare, the nation’s largest pharmacy that specializes in dispensing drugs to nursing home patients, in exchange for agreements by Mariner and Sava to continue using Omnicare’s pharmacy services for 15 years.
In a complaint filed in March 2009 and unsealed in November 2009, the United States alleged that Omnicare, Mariner, Sava, Grunstein, Forman and Schron conspired to arrange for Omnicare to pay Mariner and Sava $50 million in exchange for the right to continue providing pharmacy services to the nursing homes, which together constituted one of Omnicare’s largest customers. The parties allegedly attempted to disguise the $50 million kickback as a payment to acquire a small Mariner business unit that had only two employees and was worth far less than $50 million. According to the complaint, Omnicare paid $40 million of this amount prior to actually acquiring the Mariner business unit and, at the same time, Omnicare obtained new 15-year pharmacy contracts from Mariner and from Sava, a new nursing home chain that Grunstein and Forman created from the Mariner chain. The complaint alleged that Grunstein and Forman illegally tied the new pharmacy contracts to Omnicare’s agreement to purchase the small Mariner business unit, and that the total $50 million purchase price for the business unit actually was a kickback by Omnicare to keep the future business of Mariner and Sava.
Approximately $7.84 million of the settlement proceeds will go to the United States, while $6.16 million has been allocated to certain state Medicaid programs. In November 2009, the United States, numerous states and Omnicare entered into a $98 million settlement agreement that, among other things, resolved Omnicare’s civil liability under the False Claims Act for allegedly paying a kickback to Mariner and Sava.
The government’s complaint further alleged that, in 2006, after the government issued subpoenas concerning the transaction, the individual defendants created backdated documents in a further attempt to hide the kickback.
"Nursing home residents and their families are entitled to make health care decisions free from the distortions caused by illegal kickback schemes," said Tony West, Assistant Attorney General for the Justice Department’s Civil Division.
"This case reflects the government’s continuing efforts to pursue those who scheme to hide illegal payments that can affect the way drugs and other services are delivered to nursing home residents, an especially vulnerable patient population," said Carmen M. Ortiz, U.S. Attorney for the District of Massachusetts.
"Kickbacks in all forms are insidious because they distort medical decisions affecting Medicare and Medicaid beneficiaries," said Daniel R. Levinson, Inspector General of the Department of Health and Human Services Office of Inspector General. "We will vigilantly scrutinize attempts to disguise kickbacks as legitimate business transactions and work to hold payers and recipients of kickbacks accountable."
As part of the settlement, Mariner has entered into a corporate integrity agreement with the Office of Inspector General of the Department of Health and Human Services (OIG-HHS). This agreement provides for Mariner to put in place procedures and reviews to avoid and promptly detect conduct similar to that which gave rise to this matter. At the same time, OIG-HHS has reserved its rights to seek exclusions of Sava, Grunstein, Forman and/or Schron from participation in Medicare, Medicaid and all other federal health care programs.
The settlement resolves a whistleblower action, United States ex rel. Resnick v. Omnicare, Inc., et al., No. 06-10149-RGS (D. Mass.), filed under the qui tam provisions of the False Claims Act.
The case was handled by the Justice Department’s Civil Division, the U.S. Attorney for the District of Massachusetts, the Office of Inspector General of the Department of Health and Human Services, 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.
Justice Department Settles Lawsuit Against Mort’s Concrete Inc., and Owner to Enforce Employment Rights of Wisconsin Army National GuardsmanRead the Press Release
WASHINGTON – The Department of Justice announced today that it has reached a settlement in its lawsuit filed on behalf of Wisconsin Army National Guardsman Rocco Sylvester Jr., against Mort’s Concrete Inc. and Kevin Mortimer. The department’s complaint in this case, filed in October 2009, alleged that Mort’s Concrete and Mortimer violated the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) by not reemploying Sylvester in his previous position as a full-time construction foreman after he returned from active military duty in Iraq. Instead, Mort’s and Mortimer employed Sylvester only sporadically as a regular, non-supervisory laborer with significantly fewer hours than before.
The parties’ settlement, embodied in a consent decree that has been submitted for approval to the federal court in Madison requires that Mortimer pay Sylvester $4,000 to compensate him for lost wages that he would have received had he been properly reemployed as a full-time foreman, and enjoins Mort’s and Mortimer from violating USERRA in the future.
"The brave men and women who risk their lives to defend our country deserve to know that they are not sacrificing their civilian employment to do so," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "This settlement demonstrates the Civil Rights Division’s strong commitment to ensuring that service members’ rights are upheld."
Subject to certain limitations, USERRA requires employers to promptly reemploy individuals who serve in the military in the same position, or in a comparable position, to the position the service member would have held had he or she not left civilian employment for military duty. Sylvester filed a complaint with the Labor Department’s Veterans’ Employment and Training Service, which investigated and attempted to resolve his USERRA complaint before referring it to the Justice Department for litigation.
The Justice Department’s Civil Rights Division has given a high priority to the enforcement of service members’ rights under USERRA. Additional information about USERRA can be found on the Department of Justice Web site at www.servicemembers.gov and www.usdoj.gov/crt/emp, and on the Labor Department Web site at www.dol.gov/vets/programs/userra/main.htm.
Justice Department Settles Lawsuit Against Fresno County, California to Protect Employment Rights of Navy ReservistRead the Press Release
WASHINGTON - The Justice Department announced today that it has reached a settlement with the county of Fresno, Calif., on behalf of Navy Reservist Porotesano Faapouli. The complaint in this case, filed in the U.S. District Court for the Eastern District of California, alleged that the county violated the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) by failing to promptly and properly reemploy Mr. Faapouli when he returned from active military duty with a service-related disability. The parties’ settlement is embodied in a consent decree which, if approved and entered by the court, will require Fresno County to pay Mr. Faapouli $57,000 in monetary relief, and will enjoin the county from committing future violations of USERRA.
USERRA, enacted to minimize disruption in the lives of returning service members by providing for their prompt reemployment following military service, recognizes the additional burdens faced by returning service members who suffer injuries in the line of duty. The law requires employers to make reasonable efforts to accommodate service members who return with a service-related disability by locating a position for which the service member is qualified that is the nearest in seniority, status, and pay to the service member’s pre-service position.
Mr. Faapouli was a Senior Juvenile Correctional Officer in Fresno County’s Probation Department when he was called to active duty with the Navy in June 2004. During a training exercise, Mr. Faapouli suffered severe injuries requiring multiple surgeries and a long period of recuperation. Following his honorable discharge, Mr. Faapouli reported back to work for the County in September 2007. It took Fresno County over nine months to re-employ Mr. Faapouli, and the position in which the county re-employed him had a substantially lower status and pay than Mr. Faapouli’s pre-service position.
"The men and women who put themselves in harm’s way to serve our country deserve to know that they are not also risking losing their jobs when they return home," said Thomas Perez, Assistant Attorney General for the Civil Rights Division. "The department is committed to safeguarding the employment rights of our men and women in uniform."
The Department of Labor’s Veterans’ Employment and Training Service investigated and attempted to resolve Mr. Faapouli’s USERRA complaint before referring it to the Department of Justice for litigation. Additional information about USERRA can be found on the Justice Department’s Web site at www.servicemembers.gov and www.usdoj.gov/crt/emp.
25 February 2010
Two Iowa Men Indicted for Clean Air Act ViolationsRead the Press Release
WASHINGTON—A federal grand jury in Des Moines, Iowa, has returned an indictment charging Robert Joe Knapp, the owner of Equitable L.P.; and Russell William Coco, the supervisor for Knapp, with committing violations of the Clean Air Act while they were overseeing the demolition and renovation of The Equitable Building, the Justice Department announced.
The indictment describes a more than two-year-long operation in which several floors of The Equitable Building, located in downtown Des Moines, were illegally demolished while still containing large amounts of asbestos. The indictment goes on to allege that asbestos that was removed from the building during the demolition and renovation project was removed illegally, placed into open dumpsters and improperly disposed of in a landfill.
The eleven-count indictment charges the defendants with conspiracy to defraud the United States and to violate the Clean Air Act. The defendants are also charged with violating the Clean Air Act’s "work-practice standards" intended to prevent releases of asbestos and failing to give notice prior to renovation and demolition.
The conspiracy and substantive Clean Air Act counts of the indictment each carry a maximum possible term of five years in prison and a fine of $250,000.
Congress and U.S. Environmental Protection Agency have determined that asbestos is a hazardous air pollutant. Congress has found that medical science has established no minimum level of exposure to asbestos fibers which is considered safe to exposed persons.
The allegations in the indictment are mere accusations and all persons are presumed innocent until and unless proven guilty beyond a reasonable doubt in a court of law.
This case was investigated by special agents of the EPA and inspectors for the Iowa Department of Natural Resources. The case is being prosecuted by the U.S. Attorney’s Office for the District of Iowa and the Justice Department’s Environmental Crimes Section.
Two Charged with Terror Violations in Connection with New York Subway PlotRead the Press Release
The Justice Department announced that a federal grand jury in the Eastern District of New York has returned a superseding indictment charging Zarein Ahmedzay and Adis Medunjanin with terrorism violations stemming from, among other activities, their alleged roles in the plot involving Najibullah Zazi to attack the New York subway system in mid-September 2009. Ahmedzay and Medunjanin are scheduled to appear in federal court today in Brooklyn at 11:00 a.m.
Ahmedzay, 25, a U.S. citizen and resident of Queens, N.Y., was previously indicted on Jan. 8, 2010 in the Eastern District of New York on charges of making material false statements to the FBI about his travels to Pakistan and Afghanistan and about his conversations with a fellow traveler. Medunjanin, 25, a U.S. citizen and resident of Queens, N.Y., was previously indicted on Jan. 8, 2010 in the Eastern District of New York on charges of conspiracy to commit murder in a foreign country and receiving military-type training from a foreign terrorist organization, namely al-Qaeda.
The five-count superseding indictment unsealed this morning charges both Ahmedzay and Medunjanin with conspiracy to use weapons of mass destruction (explosive bombs) against persons or property in the United States. Specifically, they are charged with conspiring with Zazi to conduct an attack on Manhattan subway lines that would take place on Sept. 14, Sept. 15, or Sept. 16, 2009. The maximum statutory penalty for this offense is life in prison.
"The facts alleged in this indictment shed further light on the scope of this attempted attack and underscore the importance of using every tool we have available to both disrupt plots against our nation and hold suspected terrorists accountable for their actions," said Attorney General Holder. "This attack would have been deadly, and the many agents, prosecutors and intelligence professionals who worked together seamlessly to thwart it deserve our thanks."
Both defendants are also charged with conspiracy to commit murder in a foreign country. Specifically, the superseding indictment alleges that on or about Aug. 28, 2008, both Ahmedzay and Medunjanin accompanied Zazi on a flight from Newark Liberty International Airport in Newark, N.J., to Peshawar, Pakistan, in furtherance of the conspiracy. The maximum statutory penalty for this offense is life in prison.
The superseding indictment also charges both defendants with providing material support, including currency, training, communications equipment and personnel, to a foreign terrorist organization, namely al-Qaeda. The maximum statutory penalty for this offense is 15 years in prison.
In addition, Ahmedzay and Medunjanin are charged with receiving military-type training from al-Qaeda. The maximum statutory penalty for this offense is ten years in prison.
Finally, Ahmedzay is further charged with making false statements to the FBI in a terrorism investigation. According to the indictment, Ahmedzay falsely told the FBI he had disclosed all the locations he visited during his trip to Pakistan and Afghanistan, when he had failed to disclose all these locations. The maximum statutory penalty for this offense is eight years in prison.
This case is being prosecuted by the U.S. Attorney’s Office for the Eastern District of New York, with assistance from the U.S. Attorney’s Office for the District of Colorado and the Counterterrorism Section of the Justice Department’s National Security Division. The investigation is being conducted by the New York and Denver FBI Joint Terrorism Task Forces, which combined have investigators from more than fifty federal, state and local law enforcement agencies .
The public is reminded that an indictment is merely an accusation of a crime, and the defendants are presumed innocent until proven guilty.
New York Man Pleads Guilty to Criminal Copyright Infringement for Selling Pirated Computer Software Using the InternetRead the Press Release
A New York man pleaded guilty today in U.S. District Court in Alexandria, Va., to criminal copyright infringement for selling more than $250,000 worth of pirated copies of popular business, engineering and graphic design software programs, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Neil H. MacBride of the Eastern District of Virginia.
According to court documents, Robert Cimino, 59, of Syracuse, N.Y., advertised the sale of discounted popular software programs on a variety of Internet-based advertising forums, operating under the business name "SoftwareSuite." Customers would contact Cimino by e-mail and would typically pay for the products by PayPal. Cimino would then mail infringing copies of Adobe, Autodesk, Intuit and Quark programs that he had burned to CD or DVD to the customers, including customers in the Eastern District of Virginia. Cimino admitted that from February 2006 to September 2009, he received at least $270,035 from his sales of infringing software products.
Cimino is scheduled to be sentenced by U.S. District Judge Anthony J. Trenga on May 28, 2010. Cimino faces a maximum sentence of five years in prison, three years of supervised release, a $250,000 fine, restitution and forfeiture.
The case is being prosecuted by Trial Attorney Tyler G. Newby of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Jay V. Prabhu of the Eastern District of Virginia. The case was investigated by the FBI’s Washington Field Office.
Medical Device Manufacturer Guidant Charged in Failure<br /> to Report Defibrillator Safety Problems to FDARead the Press Release
WASHINGTON – Medical device manufacturer Guidant LLC, a wholly-owned subsidiary of Boston Scientific Corporation, was charged today with criminal violations of the Federal Food, Drug, and Cosmetic Act related to safety problems with some of its implantable defibrillators. Guidant LLC formerly did business as Guidant Corporation. The Justice Department filed the criminal information today in connection with an agreement with Guidant to resolve the charges. A formal guilty plea agreement is expected to be filed with the court at a later date. Boston Scientific previously announced in a November 2009 press release that the company would pay $296 million on behalf of Guidant in connection with these charges.
According to the information filed today in federal district court in St. Paul, Minn., Guidant concealed information from the U.S. Food and Drug Administration (FDA) regarding catastrophic failures in some of its lifesaving devices. The charges were filed following a four-year investigation into Guidant’s handling of short-circuiting failures of three models of implantable cardioverter defibrillators (ICDs): the Ventak Prizm 2 DR (Model 1861) and the Contak Renewal (Models H135 and H155). Guidant issued safety advisories regarding the failures in June 2005.
ICDs are lifesaving devices used to detect and treat abnormal heart rhythms that can result in sudden cardiac death, one of the leading causes of mortality in the United States. The devices, once surgically implanted, constantly monitor the electrical activity in a patient’s heart for deadly electrical rhythms and deliver an electrical shock to the heart in an effort to return the heartbeat to normal. If they fail to operate properly when needed, a person can die within minutes.
The information alleges that beginning in 2002, Guidant became aware that one of its ICDs, the Ventak Prizm 2 DR, was prone to electrical arcing, rendering the device inoperative and unable to deliver life-saving therapy to the patient in whom it was implanted. Guidant changed the design of the Prizm 2 in November 2002 to correct the problem. The information charges that in August 2003, Guidant falsely told the FDA that the design changes did not affect the device’s safety or effectiveness. In fact, the device changes were made to correct this flaw, according to the information.
In early 2004, Guidant allegedly discovered a similar short-circuiting problem with its Renewal 1 and Renewal 2 devices. Following the July 2004 death of a patient associated with a shorted Renewal in Spain, the information charges that Guidant knew that the physician operating instructions for responding to a short-circuit within the device were false and misleading. In an effort to remedy this, Guidant sent a communication by overnight delivery to physicians which the company dubbed a "Product Update." The information alleges that this communication was actually a correction to the device which attempted to mitigate the safety risk posed by the short-circuiting. Guidant was required by law to alert FDA of this action within ten days. The information charges that Guidant failed to make that notification.
Guidant issued safety advisories on the Prizm 2 and Renewal devices in June 2005. FDA classified those advisories as "Class I" recalls, the most serious classification of recall, concluding that there was a reasonable probability that the affected devices could cause serious adverse health consequences or death.
"The government charges that Guidant committed serious crimes by undermining the FDA’s role to guard the American public against potentially dangerous medical devices," said Assistant Attorney General Tony West, who heads the Justice Department’s Civil Division. "Our message is clear: We will vigorously prosecute individuals and organizations who put profit over public health and safety by violating the law."
"The community has the right to expect that companies that violate federal law by submitting false or misleading information to the FDA will be held accountable, particularly when that information relates to lifesaving devices, such as defibrillators," said Frank J. Magill, Acting U.S. Attorney for the District of Minnesota on this case. "I want to thank the prosecutors and investigators responsible for this challenging investigation that resulted in these charges being filed. For that, we all can be very thankful."
"This investigation highlights the commitment by FDA’s Office of Criminal Investigations to pursue those who seek to circumvent FDA's regulatory authority," said Thomas P. Doyle, Special Agent in Charge of the FDA/OCI Washington Field Office. "The FDA relies on information submitted by regulated entities to fulfill our mission of protecting the public health. Device manufacturers are required to be honest and forthright in all dealings with the FDA, including the submission of post-approval reports and notification of corrective actions. Guidant put patients at risk by modifying flawed devices without communicating candidly with the FDA and doctors."
The public is reminded that the charges contained in a criminal information are not evidence of guilt. A defendant is presumed innocent unless and until proven guilty. Members of the public, including those individuals who were implanted with one of these devices, may view case-related information including notice of court events and hearings at http://www.justice.gov/civil/ocl/cases/Cases/Guidant/index.htm
The case was investigated by the FDA’s Office of Criminal Investigations and is being prosecuted by AUSA Robert M. Lewis of the U.S. Attorney’s Office for the District of Minnesota and Trial Attorneys Ross S. Goldstein and Matthew S. Ebert of the Department of Justice’s Office of Consumer Litigation. Additional assistance is being provided by Steven Tave of FDA’s Office of Chief Counsel.
Brookhaven Memorial Hospital Medical Center in New York<br /> to Pay U.S. $2.92 Million to Resolve Fraud AllegationsRead the Press Release
WASHINGTON – Brookhaven Memorial Hospital Medical Center, a Long Island, N.Y.-based hospital, has agreed to pay $2.92 million, plus interest, to settle allegations that the hospital defrauded Medicare, the Justice Department announced today.
The government alleged that the hospital fraudulently inflated its charges to Medicare patients to obtain enhanced reimbursement 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 possess the incentive to treat inpatients whose care requires unusually high costs. The lawsuit 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.
"Conduct like that alleged here drives up the costs of health care for all of us," said Tony West, Assistant Attorney General for the Justice Department’s Civil Division. "The resolution announced today is the most recent in a series of settlements that illustrates the Justice Department's continued commitment to protecting the Medicare Trust Fund from hospitals that knowingly charge more than the law allows."
The suit was originally filed in the U.S. District Court for the District of New Jersey by a whistleblower, Tony Kite, in 2005. The United States intervened in the suit in November 2009. Mr. Kite brought his suit under the 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, Mr. Kite will receive roughly $613,000, plus interest, out of the settlement proceeds.
"This office is determined to root out any conduct that threatens to undermine the integrity of the federal health care programs," said Paul J. Fishman, U.S. Attorney for the District of New Jersey.
The settlement is the result of a coordinated effort by the Commercial Litigation Branch of the Justice Department’s Civil Division; the U.S. Attorney’s Office for the District of New Jersey, Affirmative Civil Enforcement Unit; the Department of Health and Human Services, Office of Inspector General, and the Centers for Medicare and Medicaid Services; 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 $2.3 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 over $1.2 billion from hospitals that it alleged engaged in outlier fraud.
24 February 2010
United States Transfers Three Guantanamo Bay Detainees to AlbaniaRead 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 the Government of Albania.
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 the detainees at least 15 days before their transfer.
Earlier today, Saleh Bin Hadi Asasi, a native of Tunisia, Sharif Fati Ali al Mishad, a native of Egypt, and Abdul Rauf Omar Mohammad Abu al Qusin, a native of Libya, were transferred to the Government of Albania. The United States is grateful to the Government of Albania for its willingness to support U.S. efforts to close the Guantanamo Bay detention facility.
These transfers were carried out under an individual arrangement between the United States and the Government of Albania. The United States coordinated with the Government of Albania 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, including Albania, Algeria, Afghanistan, Australia, Bangladesh, Bahrain, Belgium, Bermuda, Chad, Denmark, Egypt, France, 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, 189 detainees remain at Guantanamo Bay.
United States Transfers Guantanamo Bay Detainee <br /> to SpainRead the Press Release
The Department of Justice today announced that a detainee from the Palestinian territories has been transferred from the detention facility at Guantanamo Bay to Spain.
As directed by the President’s January 22, 2009 Executive Order, the interagency Guantanamo Review Task Force conducted a comprehensive review of this case. As a result of that review, which examined a number of factors, including security issues, the detainee was 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 the detainee at least 15 days before his transfer.
The identity of the individual is being withheld for security and privacy reasons at the request of the Government of Spain. The United States is grateful to the Government of Spain for its willingness to support U.S. efforts to close the Guantanamo Bay detention facility. This transfer was carried out under an individual arrangement between the United States and the Government of Spain. The United States coordinated with the Government of Spain to ensure the transfer took place under appropriate security measures and consultations regarding this individual will continue.
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, 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, 188 detainees remain at Guantanamo Bay.
Texas Gang Members Found Guilty of Multiple Murder,<br /> Narcotics and Firearms ChargesRead the Press Release
The leader of the Almighty Latin King and Queen Nation (ALKQN) in Texas and one of his enforcers were found guilty this afternoon on multiple charges related to their participation in a large scale narcotics and firearms trafficking conspiracy, announced Assistant Attorney General of the Criminal Division Lanny A. Breuer and U.S. Attorney James T. Jacks of the U.S. Attorney’s Office for the Northern District of Texas. Specifically, the two men were found guilty for their roles in the May 4, 2008, murders of a pregnant female and another bystander.
"Gunning down people in our streets and distributing illegal drugs throughout our communities, these gangs spread violence and addiction wherever they go," said Assistant Attorney General Breuer. "We will not allow their repugnant acts to go unpunished. Today, a jury of Texas citizens sent a message loud and clear to would-be gang members – we can and we will hold you accountable for your crimes."
"For more than a week, this jury listened to testimony concerning the movement of a large amount of drugs and guns throughout the state of Texas by members of the Latin Kings criminal organization," said James T. Jacks, U.S. Attorney for the Northern District of Texas. "Not only did this gang pollute the streets of Texas with dangerous drugs, as a result of their heinous actions, two adults, one of whom was pregnant, were brutally murdered with an assault rifle. We are proud that we, along with the hard-working members of the agencies that contributed to this investigation, have brought civilized justice to otherwise uncivilized gang wars. This office is proud to have assisted the Department of Justice’s Gang Unit in the successful prosecution of these criminals."
Jose Robledo Nava, aka "Chino," 31, of Lubbock, Texas, and James Johnathan Cole, aka "Blitz," 19, of Lamesa, Texas, were each found guilty by a federal jury in Lubbock on two counts of using a firearm to commit murder during and in relation to a drug trafficking crime, and one count of a conspiracy to distribute and possess with intent to distribute five kilograms or more of cocaine and 100 kilograms or more of marijuana. The jury also found Nava guilty on one count of possession with intent to distribute 500 grams or more of cocaine, one count of conspiracy to engage in the business of dealing in firearms and one count of possession of stolen firearms.
Nava and Cole were found guilty for their involvement in a drive-by shooting in Big Spring, Texas, on May 4, 2008, in which six people were shot with an AK-47 type rifle. According to the evidence presented at trial, the victims included Michael Cardona and Valeria Garcia, who was 26 weeks pregnant at the time of the shooting. Cardona and Garcia ultimately died as a result of their wounds. Evidence presented at trial proved that after the shootings, Nava ordered two of his co-conspirators to destroy the murder weapon.
According to evidence presented at trial, Nava was the Texas state enforcer and representative for the ALKQN. The jury found that Nava and Cole were members of a conspiracy that included Luis Nava, aka "Flaco;" Reynaldo Nava, aka "Rat;" Robert Allen Ramirez, aka "Nesyo;" Marie Chavez, aka "Shorty;" Carol Ann Rivas Nava; Cecily Dominique Juarez; Jesus Martinez, aka "Solid;" David Hellums, aka "Cutthroat;" Eduardo Daniel Mares, aka "Pitt;" Gabriel Lee Gonzales; Michael Conde, aka "Psycho;" John Guzman; Guerrero Olivas, aka "Screech;" Eliseo Perez, aka "Wicked;" Joe Canales, aka "Slick;" and others. The jury found that from 2001 until Dec. 13, 2008, Nava and Cole directly or indirectly agreed to distribute, and possessed with intent to distribute, cocaine and marijuana.
The defendants face a maximum statutory sentence of life in prison. A sentencing date has not yet been set by the court.
The case was investigated by the National Gang Targeting, Enforcement and Coordination Center; the Organized Crime Drug Enforcement Task Force; the U.S. Drug Enforcement Administration; the FBI; U.S. Immigration and Customs Enforcement; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the El Paso Intelligence Center; U.S. Customs and Border Protection; the U.S. Marshals Service; the Texas Department of Public Safety; the Police Departments of Lubbock, Midland, Houston, San Antonio and Big Spring, Texas; the Lubbock County, Texas, Sheriff’s Office; and the Howard County, Texas, District Attorney’s Office.
Trial Attorneys Cody L. Skipper and Joseph A. Cooley of the Criminal Division’s Gang Unit and Assistant U.S. Attorney Denise Williams of the U.S. Attorney’s Office for the Northern District of Texas prosecuted the case.
Ringleader of International Drug Trafficking Ring <br /> Pleads Guilty for Role in Smuggling Illegal Drugs from Canada to the United States <br />Read the Press Release
Phuong Thi Tran, 39, of Mississauga, Ontario, Canada, pleaded guilty today for her role in two drug trafficking conspiracies, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division; Michael L. Levy, U.S. Attorney for the Eastern District of Pennsylvania; Barbara L. McQuade, U.S. Attorney for the Eastern District of Michigan; and Assistant Secretary John Morton of U.S. Immigration and Customs Enforcement (ICE).
According to court documents, Tran was the ringleader of an international drug trafficking organization that smuggled millions of ecstasy pills and other drugs from Canada into the United States from 2002 until Tran’s arrest in April 2008. The drugs were manufactured in Canada by various Asian organized crime groups and were distributed to drug dealers across the United States. According to court documents, Tran and her associates often smuggled 100,000 ecstasy pills per week into the United States.
According to court papers, Tran’s role in this drug smuggling conspiracy was discovered during the course of an investigation by ICE special agents in Detroit after they had seized several drug shipments that Tran had arranged to smuggle into the United States. In October 2006, a grand jury in the Eastern District of Michigan indicted Tran for conspiring to distribute ecstasy pills.
At the same time, ICE special agents in Philadelphia were conducting a separate but related investigation. As uncovered during that investigation, in September 2007, Tran and her associates sent two couriers to deliver 100,000 ecstasy pills to customers in Philadelphia and Boston. Unbeknownst to Tran and her associates, ICE special agents learned of this shipment and, with the assistance of the Philadelphia Police Department, stopped the couriers’ vehicle and seized the drugs. In December 2009, Tran was charged by the U.S. Attorney’s Office in the Eastern District of Pennsylvania with conspiracy to distribute ecstasy pills. The charges from Detroit were then transferred to Philadelphia.
Tran pleaded guilty today before U.S. District Court Judge Petrese B. Tucker to one count of conspiracy to distribute ecstasy and methamphetamine and one count of conspiracy to possess with the intent to distribute ecstasy. At sentencing, Tran faces a maximum punishment of life in prison, a 10-year mandatory minimum prison term and a $5 million fine. Sentencing is scheduled for June 2, 2010.
For the past several years, the Criminal Division’s Organized Crime & Racketeering Section (OCRS), in conjunction with U.S. Attorneys’ Offices, have been working closely with ICE, the U.S. Drug Enforcement Administration (DEA), and various Canadian law enforcement agencies, to crack down on Asian organized crime groups that law enforcement officials estimate smuggle billions of dollars worth of drugs into the United States from Canada each year.
The case was prosecuted in Detroit by Assistant U.S. Attorney Kathryn McCarthy. The case was prosecuted in Philadelphia by OCRS Trial Attorney Robert Livermore. The case was investigated by ICE, with the assistance of the DEA; the Philadelphia Police Department; Pennsylvania State Police; U.S. Customs and Border Protection; the Royal Canadian Mounted Police; the Ontario Provincial Police Department; and the Toronto Metropolitan Police Department.
Justice Department Resolves Lawsuit AllegingDisability-Based Housing Discrimination at21 Multifamily Housing Complexes in TennesseeRead the Press Release
WASHINGTON– The Justice Department today announced a settlement of its lawsuit alleging that the owners and developers involved in the design and construction of 21 multifamily housing complexes in Tennessee discriminated on the basis of disability. The complexes, which were built with the assistance of federal low-income housing tax credits, contain more than 800 units covered by the Fair Housing Act’s accessibility provisions along with areas of public accommodation covered by the Americans with Disabilities Act.
Under the settlement, which must still be approved by the U.S. District Court for the Middle District of Tennessee, Murphy Development LLC and 22 defendants will pay all costs related to making the complexes for which they were responsible accessible to persons with disabilities, pay up to $350,000 to compensate individuals harmed by the inaccessible housing, and pay $75,000 to the United States. The settlement requires all the defendants to be trained about the requirements of the Fair Housing Act and to provide periodic reports to the government that they are following the law.
"Equal access to housing for persons with disabilities is an important right protected by both the Fair Housing Act and the Americans with Disabilities Act," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "This comprehensive settlement will ensure that equal housing opportunities required by law are provided in these 21 housing complexes. This will give persons with physical disabilities an equal opportunity to live in and visit these complexes, and provide compensation to those who have been harmed by the builders’ failure to provide accessible housing."
"The United States will work aggressively to guarantee that persons with disabilities have the accessible rental housing to which they are entitled," said Ed Yarbrough, United States Attorney for the Middle District of Tennessee. "The scope of this settlement and the many apartment complexes that it covers will benefit many Tennesseans with disabilities."
The case began when the Tennessee Fair Housing Council, a private, nonprofit advocacy organization whose mission is to eliminate housing discrimination throughout Tennessee, provided the department with information several apartment complexes that were inaccessible to people with disabilities. The department conducted an independent investigation and filed this lawsuit in September 2008.
The defendants responsible for the payments and retrofits are Murphy Development LLC, Westland Development LLC, Meadow Creek LP, Miller Town LP, Swiss Ridge LP, 17th Street LP, Alta Vista LP, Forest View LP, Stonebridge LP, Spring Branch LLC, Delrose Court LP, River View Park LP, Sutherland View Apartments LP, Lyon’s Den LP, Dunhill LLC, Ashton View LLC, West Vista Ridge LLC, Cassell Ridge LP, Cassell View LP, Sutherland Park LP, Azalea Development LLC, The Highlands Apartments LP, and Beason Well LP. The defendants will retrofit the following complexes in Tennessee
- 17th Street Apartments, 2565 East 17th Avenue, Springfield
- Ashton View Apartments, 169 Barkley Landing Drive, Morristown
- Beason Well Apartments, 893 New Beason Well Road, Kingsport
- Cassell Ridge Apartments, 1230 Cassell Valley Way, Knoxville
- Cassell View Apartments, 1111 Elk Hill Way, Knoxville
- Dunhill Apartments, 1036 Dunhill Way, Knoxville
- Forest View Apartments, 119 Belinda Parkway, Mt. Juliet
- The Highlands Apartments, 2001 South Lyerly Street, Chattanooga
- Lake Side Apartments, 3940 Bell Road, Hermitage
- Lyon’s Den Apartments, 3610 Lyon’s Way, Knoxville
- Meadowcreek Apartments, 919 South Dickerson Road, Goodlettsville
- Miller Town Apartments, 395 Jack Miller Boulevard, Clarksville
- River View Park Apartments, 3300 Holston Hills Road, Knoxville
- Spring Branch Apartments, 1830 Spring Branch Drive, Madison
- Stonebridge Apartments, 100 Stonebridge Way, Columbia
- Sutherland Park Apartments, 510 Vista Glen Way, Knoxville
- Sutherland View Apartments, 3220 Atchley Ridge Way, Knoxville
- Swiss Ridge Apartments, 455 Swiss Avenue, Nashville
- Swiss View Apartments, 499 Swiss Avenue, Nashville
- West Vista Ridge Apartments, 1201 Vista Ridge Way, Knoxville
- White Oak Apartments, 114 Holt Spur Drive, Jamestown
The retrofitting includes modifying walkways to eliminate steps, excess slopes and level changes, providing accessible curb ramps, and providing accessible parking and routes to site amenities, such as clubhouses, pools, mailboxes and trash facilities. The settlement also provides for the replacement of inaccessible knob hardware on doors, the widening of inaccessible narrow doorways, and the reconfiguration of bathrooms and kitchens to accommodate persons who use wheelchairs.
Persons who believe they may have been harmed by the lack of accessible housing at one of the complexes involved in this matter should contact the Justice Department at 1-800-896-7743, and select menu option 2.
The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status. Individuals who believe that they may have been victims of housing discrimination should call the Housing Discrimination Tip Line (1-800-896-7743) or e-mail the Justice Department at [email protected]. Such persons may also contact the U.S. Department of Housing and Urban Development at 1-800-669-9777.
Fair housing enforcement is a priority of the Civil Rights Division. More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt.