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24 February 2010
Justice Department Requires Divestitures in Order for Bemis Company Inc. to Proceed with Its Acquisition of the Alcan Packaging Food Americas BusinessRead the Press Release
WASHINGTON — The Department of Justice announced today that it has reached a settlement that will require Bemis Company Inc. to divest certain assets used in the production and sale of flexible packaging for natural cheese and fresh meat in order to proceed with its acquisition of the Alcan Packaging Food Americas business from Rio Tinto plc, the parent company of Alcan Corporation. The acquisition is valued at approximately $1.2 billion. The department said that the acquisition as originally proposed would combine Bemis and Alcan, two of the leading U.S. manufacturers of flexible-packaging rollstock for chunk, sliced and shredded natural cheese packaged for retail sale and flexible-packaging shrink bags for fresh meat. Without the divestitures, the department said the acquisition would lead to higher prices, lower quality, less favorable supply-chain options, reduced technical support and less innovation.
The Department of Justice’s Antitrust Division filed a civil antitrust lawsuit today in the U.S. District Court for the District of Columbia to block the proposed acquisition. At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the competitive concerns alleged in the lawsuit.
Flexible packaging is any package the shape of which can be readily changed. Although flexible packaging is used for a variety of products, flexible packaging products for natural cheese and fresh meat are unique. They must meet rigorous performance standards to prevent spoilage, maintain product appearance, run properly on customers’ packaging equipment and meet unique requirements specific to the particular products. As a result, these types of flexible packaging are difficult to manufacture and commercialize successfully.
"The acquisition as originally proposed would have lessened the vigorous competition that currently exists among suppliers of flexible packaging for natural cheese and fresh meat," said Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. "These divestitures will preserve competition in the markets for flexible-packaging for these products, which allows for lower prices, higher quality and more innovation, benefiting consumers."
The department’s complaint alleges that the proposed acquisition would eliminate the significant competition between Bemis and Alcan that currently exists in the markets for flexible packaging for chunk, sliced and shredded natural cheese packaged for retail sale and make Bemis the dominant supplier of these products. The complaint also alleges that the proposed acquisition would reduce competition substantially in the already highly concentrated market for shrink bags for fresh meat.
The proposed settlement requires the companies to divest all of Alcan’s contracts and intellectual property as well as plants located in Catoosa, Okla., and Menasha, Wis., along with certain other assets necessary to the manufacture of flexible packaging for natural cheese and fresh meat.
Bemis is a Missouri corporation with its principal place of business in Neenah, Wis. Bemis and its subsidiaries —including Curwood Inc., which is Bemis’s subsidiary that produces flexible packaging for cheese and meat —made approximately $3.8 billion in sales in 2008, of which $2.1 billion was attributable to the sale of flexible packaging in the United States.
Rio Tinto plc, the parent of Alcan Corporation, is a United Kingdom-based global mining corporation. It made approximately $58 billion in sales in 2008. The sales of the Alcan Packaging Food Americas business amounted to approximately $1.5 billion in 2008.
As required by the Tunney Act, the proposed settlement, along with a competitive impact statement, will be published in the Federal Register. Any person may submit written comments concerning this proposed settlement during a 60-day comment period to Maribeth Petrizzi, Chief, Litigation II Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 8700, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the U.S. District Court for the District of Columbia may enter the proposed settlement upon a finding that it is in the public interest.
Georgia Man Sentenced for Transporting a Minor for Illegal Sexual ActivityRead the Press Release
Mack Gordon Harris Sr., 67, was sentenced today to 121 months in prison for transporting a minor for illegal sexual activity, announced Assistant Attorney General of the Criminal Division Lanny A. Breuer and U.S. Attorney for the Eastern District of Virginia Neil H. MacBride.
Harris, formerly of Social Circle, Ga., was also ordered today by U.S. District Court Judge James R. Spencer to serve 10 years of supervised release following his prison term, and to register as a sex offender.
Harris pleaded guilty on Nov. 30, 2009, to one count of transporting a minor for illegal sexual activity. According to court documents, in June 2005, Harris began communicating with a girl in Maryland, then 15 years old, through a Christian online chat room. Harris admitted that as he continued chatting with the victim during the next few months, he suggested they engage in sexual intercourse. He exposed himself on a computer webcam, urged her to send naked pictures, and engaged in "phone sex. " Harris eventually visited the victim around the time that she turned 16, which is the age of sexual consent in Maryland. Harris admitted that several times during his visit and after the victim’s 16th birthday, the two engaged in sexual intercourse.
Shortly afterward, Harris decided that he would take the victim to live with him in Georgia. Harris admitted that he instructed the victim to pack her belongings and leave farewell notes for her family. According to court documents, Harris picked up the victim in Maryland in December 2005 and began driving her to his home in Georgia. Harris admitted he told the victim that while traveling, she was not to speak with anybody, but if asked her age, she should respond that she was 25. During the journey, they stopped overnight at a hotel in Skippers, Va., where the age of consent is 18, and engaged in sexual intercourse.
The case was prosecuted by Assistant U.S. Attorney Elizabeth C. Wu of the Eastern District of Virginia and Trial Attorney Barak Cohen of the Criminal Division’s Child Exploitation and Obscenity Section. The case was investigated by U.S. Postal Inspection Service and U.S. Immigration and Customs Enforcement.
Former New Orleans Police Officer Pleads Guilty to Conspiring to Cover up the Danziger Bridge ShootingsRead the Press Release
WASHINGTON – Michael Lohman, a former Lieutenant of the New Orleans Police Department (NOPD), has pleaded guilty to conspiring with fellow NOPD officers to obstruct justice by covering up a police-involved shooting that occurred in the aftermath of Hurricane Katrina, the Justice Department announced.
The Sept. 4, 2005, shooting on the Danziger Bridge left two civilians dead and four others seriously injured. Lohman, 41, of Terrytown, La., entered his plea in federal court in New Orleans today before U. S. District Court Judge Ivan L. R. Lemelle.
According to court documents unsealed today, the incident involved at least seven NOPD officers who drove to the Danziger Bridge in a rental truck in response to a call for police assistance. On the east side of the bridge, the officers encountered six civilians (five members of the B Family, and J. B., a friend of the B Family), who were walking across the bridge to get food and supplies from a supermarket. The officers fired at the group of civilians, killing J. B. and seriously wounding four members of the B Family. Officers then traveled to the west side of the bridge, where they encountered Lance and Ronald Madison, who were crossing the bridge to visit the dentistry office of one of their other brothers. An officer shot and killed Ronald Madison, a 40-year-old severely disabled man.
When Lohman arrived on the scene shortly after the shootings, he noticed that there were no guns on or near the dead and wounded civilians. After determining that the involved officers could not come up with any evidence to justify the shooting, he concluded that they had been involved in a "bad shoot." Lohman admitted today that, in the wake of the shooting, he participated in a conspiracy that involved, among other things, writing false reports about the incident, planting a gun and making up false witness statements. Lohman also admitted that he intended for the officers involved in the shooting to come up with a plausible story that would allow Lohman and other supervisors to conclude that the shooting was justified. According to his testimony, the officers then provided "false stories," which "evolved" over time.
According to the factual basis produced at the time of the plea , Lohman personally drafted a 17-page report, which he knew to be false, and provided that report to an investigator to submit as the official incident report. That same investigator had previously informed Lohman that he had a gun that he planned to "put under the bridge," and that the gun was "clean," meaning that it could not be linked to any other crime. Lohman understood that the investigator was going to use the gun as evidence to justify the shooting of the civilians, and he went along with that plan to plant evidence. Lohman admitted in court today that he knew that the civilians on the bridge had not actually possessed guns, and he knew that the investigator had also falsified statements by the civilians. Lohman also admitted that in May 2009, he provided false information to an FBI agent investigating this case.
"We rely on our law enforcement officers to protect us, particularly in times of disaster and devastation such as what followed in the wake of Hurricane Katrina. What this defendant did was a shameful violation of that public trust," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "We will continue to aggressively investigate the incidents that occurred on the Danziger Bridge and we will continue to prosecute any officer who violates federal law."
"After closely monitoring the state prosecution which ended, we embarked on an intensive effort to reconstruct the tragic events on the Danziger Bridge. Our investigation has yielded the conviction of one of a group of NOPD officers responsible for a cover-up of the true circumstances of a deadly police shooting," said U.S. Attorney Jim Letten of the Eastern District of Louisiana . "As we forge ahead, the public we serve must know that we will leave no stone unturned to aggressively investigate and bring to justice any officer who tarnishes the badge through criminal conduct. We extend our appreciation to the majority of the NOPD officers who serve their department and their profession with honor and integrity."
"It is never acceptable to break the law in order to enforce it. The law must be respected by those entrusted to uphold it while protecting the rights of those they serve," said FBI Special Agent in Charge David Welker of the New Orleans Field Office . "It is the responsibility of the FBI to weed out the few who dishonor the police profession. There are many hardworking officers who sacrifice daily to bring honor to the NOPD badge, and the FBI will continue to work hand-in-hand with them in endeavors to ensure the safety of the citizens of New Orleans."
The one-count Bill of Information to which Lohman pleaded guilty charged him with violating the federal conspiracy statute by agreeing with other officers to write false reports about the shooting; to engage in misleading conduct; and to lie to agents with the FBI. The defendant faces a possible maximum sentence of five years in prison and a fine of $250,000. Sentencing has been scheduled for May 26, 2010.
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 Employee of Financial Products and Services Firm Pleads Guilty for Role in Bid-Rigging and Fraud Conspiracies Involving Proceeds of Municipal BondsRead the Press Release
WASHINGTON — A former employee of Rubin/Chambers, Dunhill Insurance Services Inc., also known as CDR Financial Products (CDR), a Beverly Hills, Calif.-based financial products and services firm, pleaded guilty yesterday for his participation in bid-rigging and fraud conspiracies related to contracts for the investment of municipal bond proceeds and other related municipal finance contracts, the Department of Justice announced.
According to the charges filed yesterday in the U.S. District Court in Manhattan, Daniel Moshe Naeh, also known as Dani Naeh, of Israel, engaged in separate bid-rigging and fraud conspiracies with companies that provide a type of contract, known as an investment agreement, to state, county and local governments and agencies throughout the United States. The public entities were seeking to invest money from a variety of sources, primarily the proceeds of municipal bonds that they had issued to raise money for, among other things, public projects. Naeh also pleaded guilty to one count of wire fraud. According to the plea agreement, Naeh has agreed to cooperate with the ongoing investigation.
The department said in court documents that CDR was hired by public entities that issue municipal bonds to act as their broker and conduct what was supposed to be a competitive bidding process primarily for contracts for the investment of municipal bonds proceeds. Competitive bidding for those contracts is the subject of regulations issued by the U.S. Department of the Treasury and is related to the tax-exempt status of the bonds.
Naeh admitted that, as a part of the bid-rigging conspiracy, from as early as 1998 until at least November 2006, he and other co-conspirators designated in advance which co-conspirator providers would be the winning bidder for certain investment agreements and submitted or caused to be submitted to CDR intentionally losing bids. According to the court documents, kickbacks in the form of fees that were inflated or unearned were paid to CDR in exchange for assistance from Naeh and other CDR co-conspirators in controlling the bidding process and ensuring that certain co-conspirator providers won the bids they were allocated.
As a part of the fraud conspiracy, from as early as August 2001 until at least November 2006, Naeh and others gave a co-conspirator provider information about the prices, price levels or conditions in competitors’ bids, a practice known as a "last look," which is explicitly prohibited by U.S. Treasury regulations. As a result of the information, the co-conspirator provider won contracts at artificially determined price levels. In exchange for giving the provider information, CDR requested and received kickbacks from the provider and relied on the provider to submit intentionally losing bids when requested on other contracts.
On Oct. 29, 2009, CDR, along with its owner and president, David Rubin; former chief financial officer and managing director, Zevi Wolmark, also known as Stewart Wolmark; and vice president Evan Andrew Zarefsky, were indicted and charged with participating in bid-rigging and fraud conspiracies. The trial for CDR, Rubin, Wolmark and Zarefsky is scheduled to begin on Feb. 7, 2011.
The bid-rigging conspiracy with which Naeh is charged carries a maximum penalty of 10 years in prison and a $1 million fine. The fraud conspiracy with which Naeh is charged carries a maximum penalty of five years in prison and a $250,000 fine. The wire fraud charge with which Naeh is charged carries a maximum penalty of 20 years in prison and a $250,000 fine. The maximum fines for each of these offenses may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
The charges announced today resulted from an ongoing investigation into the municipal bonds industry, which is being conducted by the Antitrust Division’s New York Field Office, the FBI and IRS Criminal Investigation. The department is coordinating its investigation with the Securities and Exchange Commission, the Office of the Comptroller of the Currency and the Federal Reserve Bank of New York.
Anyone with information concerning bid rigging and related offenses in any financial markets should contact the Antitrust Division’s New York Field Office at 212-264-0390 or visit http://www.justice.gov/atr/contact/newcase.htm, or the FBI at 212-384-5000.
Financial Fraud Enforcement Task Force Hosts <br /> Mortgage Fraud Summit in MiamiRead the Press Release
WASHINGTON – Representatives of the Financial Fraud Enforcement Task Force met in Miami today for the first of a series of Mortgage Fraud Summits. The task force, established by President Barack Obama in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes, is composed of representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement.
The first summit was held in Miami because of the high rate of mortgage fraud in the region. The Miami-Fort Lauderdale-Pompano Beach metropolitan area is ranked first in the nation for the number of local subjects named in Suspicious Activity Reports (SARs) filed by depository institutions concerning suspected mortgage fraud, according to a recent Financial Crimes Enforcement Network (FinCEN) study. And according to FinCEN data, Florida has consistently ranked second in the nation for mortgage fraud SARs, only behind California.
Today, the task force members met with Miami community members, banking, mortgage and real estate industry representatives and law enforcement officials to discuss the problem of mortgage fraud from a national, state and local perspective. In the morning, attendees participated in panels on the community impact of mortgage fraud and the evolution of the crisis. In the afternoon, task force representatives will meet privately with law enforcement officials involved in the investigation of mortgage fraud.
"This task force has a straightforward mission: To protect families against financial fraud and restore the confidence of consumers in our markets," said Assistant Attorney General for the Civil Division Tony West. "We will hold accountable not just those responsible for the corporate fraud that created our current financial crisis, but those responsible for the financial fraud that affects too many working families, like mortgage fraud and lending discrimination. And by holding these people accountable, we will seek to prevent another meltdown from happening again."
"The mortgage fraud crisis cannot be ignored. Mortgage fraud puts lenders at risk, and forces homeowners to confront the real possibility of foreclosures, or worse, the loss of their homes," said U.S. Attorney for the Southern District of Florida Jeffrey H. Sloman . "Nowhere is the problem more serious than here in Florida. Since September 2007, our mortgage fraud initiative has resulted in the prosecution of 282 individuals at all levels of the mortgage process, resulting in more than $343,669,434 in fraudulent mortgage loans. We will continue to do our part to investigate and prosecute these fraudsters, in the hopes of stemming the tide of fraud that has swept the mortgage industry."
"Different parts of the country experience mortgage fraud in different ways. We are here in Miami, in part, to learn about the nature of the problem and the enforcement efforts to date in this region, so that we can determine how best to facilitate enforcement efforts nationally," said U.S. Attorney for the Eastern District of California Benjamin B. Wagner. "This summit is the first of at least three similar summits that the Mortgage Fraud Working Group will be holding around the country. We hope to gather more information about the nature of the problem in different regions and help coordinate an effective law enforcement response."
"The HUD OIG helped craft into legislation last year a penalty of up to 30 years in prison and $1 million in fines for committing FHA fraud," said Inspector General of the Department of Housing and Urban Development Kenneth M. Donohue. "The OIG, working with U.S. Attorneys across the country, will endeavor to use these new penalties to prevent and confront fraudulent activities. We will use any means at our disposal, whether criminal, civil or administrative, to stop those who are impacting the soundness of HUD’s FHA program at such a critical time."
"The mortgage fraud crisis in Florida is similar to a state of emergency, and Florida Attorney General Bill McCollum knows we have to take an all-hands-on-deck approach to effectively address our citizens' concerns. The Florida Attorney General's Office will continue working with its federal, state and local partners to protect homeowners from mortgage fraud and foreclosure rescue and loan modification scams. Everyone must work together if we are going to make a difference," said Regional Deputy Attorney General Cynthia Guerra.
"As long as criminals are out to make a quick buck by preying on homeowners and lenders, we will continue to work side-by-side with our partners to protect the American dream for years to come and ensure that criminals who try to enrich themselves through mortgage fraud schemes are brought to justice," said FBI Deputy Assistant Director for the Criminal Investigative Division Karen Spangenberg.
Also participating in the summit were the Executive Director of the Financial Fraud Enforcement Task Force Robb Adkins, FinCEN Director James H. Freis, Jr. and representatives from the U.S. Secret Service, Federal Deposit Insurance Corporation and the Miami-Dade Police Department. The Miami summit is the first in a series of meetings to occur in the coming months, with additional dates and locations to be announced.
Mortgage fraud is a key focus of the Financial Fraud Enforcement Task Force’s efforts. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
Department of Justice Will Not Challenge Proposed Online Subscription News ServiceRead the Press Release
WASHINGTON – The Department of Justice announced today that it will not challenge a proposal by MyWire Inc. to form the Global News Service, an online subscription news aggregation service. The service would provide interconnections among different publishers’ online content, such as news articles and video and audio clips, that relate to the same topic. Based on representations made by MyWire, the department said that the formation and operation of the news service is not likely to reduce competition among Internet publishers and could provide procompetitive benefits to both publishers and consumers. The Department of Justice’s position was stated in a business review letter to counsel for MyWire from Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.
The service would provide Internet publishers with a "related-item" content block that a publisher would add to its Web page. The block would contain hyperlinked abstracts of content from other participating publishers’ Web sites. By clicking these hyperlinks, consumers would be able to browse among related material from different publishers’ websites.
"Global News Service has the potential to benefit consumers by allowing them to access a broad network of related content without having to conduct their own online searches," said Assistant Attorney General Varney. "The service may also reduce publishers’ content distribution costs."
MyWire intends to enter into non-exclusive bilateral content licensing agreements with numerous Internet publishers. The agreements would not prevent the publishers from joining competing online news aggregation services. MyWire would operate independently of Internet publishers and would set its own consumer subscription rates for access to all publishers’ fee-based content within the MyWire network. Consumers would also be able to use the service for free to access publishers’ free content.
Under the Department of Justice’s business review procedure, an organization may submit a proposed action to the Antitrust Division and receive a statement as to whether the division currently intends to challenge the action under the antitrust laws.
A file containing the business review request and the department’s response may be examined in the Antitrust Documents Group of the Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 1010, Washington, D.C. 20530. After a 30-day waiting period, the documents supporting the business review will be added to the file, unless a basis for their exclusion for reasons of confidentiality has been established under the business review procedure.
Court in Texas Bars 12 Sub-Promoters of Alleged $30 Million Scam Involving Tax Credits Based on Fictitious Methane Production<br /> at LandfillsRead the Press Release
WASHINGTON - A federal judge in Beaumont, Texas, has permanently barred 12 people from promoting an alleged tax fraud scheme involving bogus income tax credits, the Justice Department announced today. The twelve are among 32 defendants named in a civil injunction lawsuit who allegedly helped customers claim more than $30 million in bogus federal income tax credits designed for producers of fuel from non-conventional sources. The court order was signed by Judge Marcia A. Crone of the U.S. District Court for the Eastern District of Texas.
According to the government complaint in the case, originally filed in Florida, the scheme involved claiming tax credits based on the purported recovery and sale of methane from landfills in Puerto Rico, Illinois, New York, Ohio and Connecticut. In fact, the complaint states, no methane was produced or sold, although some of the defendants allegedly created fictitious business records to falsely document the purported production and sales.
The twelve people barred are Silas Anderson of San Antonio, Texas; Ursa Bookman of Camden, Texas.; Joann Spooner of Port Author, Texas.; Carlos Metoyer, of Lake Charles, La.; Cleven Harper, Gloria Toren and Edward Trotty of Lufkin, Texas.; Jacqueline Levias and Jackie E. Mayfield of Orange, Texas; and Yusef A. Muhammed, Denise White and Craig D. Johnson of Beaumont, Texas. All consented to be enjoined without admitting wrongdoing.
The government suit alleges that George Calvert and Gregory Guido of Florida, who have been previously enjoined, concocted the scheme and promoted it through tax preparers who acted as subpromoters. The tax preparers allegedly sold interests in the fictitious methane production facilities to thousands of customers in at least 14 states across the country and prepared income tax returns for customers claiming tax credits based on the fictitious methane sales.
A total of 23 of the 32 defendants have now been barred, including, in addition to those named above, David Berger of Studio City, Calif. and Elizabeth and Louis Powell of Carthage, Texas., as well as Robert Anderson of Bloomington, Ill. Anderson also pleaded guilty to conspiracy to defraud the United States and mail fraud in a related federal criminal case in June 2009. The injunction case is still pending against the remaining nine defendants.
John DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division, thanked Shana Starnes, the Justice Department trial attorney who is handling the case, and Jean Lane, a revenue agent with the Internal Revenue Service’s Small Business/Self-Employed Division, who conducted the investigation.
In the past decade, the Justice Department has obtained injunctions against more than 445 tax return preparers and tax fraud promoters. Information about the Justice Department’s Tax Division and its efforts to enjoin unscrupulous tax return preparers and tax fraud promoters is available on the Justice Department Web site.
23 February 2010
New Jersey Man Pleads Guilty to Unauthorized Recording <br /> of Newly Released Motion Pictures in Movie TheaterRead the Press Release
Keshawn Deron Wilson of Asbury Park, N.J., pleaded guilty today in Tampa, Fla., to federal charges of using a video camera to record then newly-released motion pictures in a New Jersey theater, announced Assistant Attorney General of the Criminal Division Lanny A. Breuer and U.S. Attorney for the Middle District of Florida A. Brian Albritton.
Keshawn Wilson, 25, pleaded guilty before U.S. Magistrate Judge Thomas B. McCoun III to two counts of unauthorized recording of motion pictures in a motion picture exhibition facility. According to information presented in court, Wilson was arrested on Sept. 13, 2008, by Ocean Township, N.J., police officers, while he was in the process of recording Picturehouse Entertainment’s then newly-released motion picture "The Women" at the Middlebrook Galleria 10 Clearview Cinemas in Ocean, N.J. At the time he was arrested, officers seized a high definition video camera with a 30 gigabyte hard drive from Wilson. A subsequent search of the camera’s hard drive revealed a copy of the then newly-released movie "The Women" and a copy of Universal Studios’ then newly-released movie "Burn After Reading," which Wilson admitted he recorded the previous day at the same theater.
Wilson faces a maximum sentence of six years in prison, a $500,000 fine, two years of supervised release following the prison term and an order of restitution. A sentencing date has not yet been set by the court.
The case is being prosecuted by Assistant U.S. Attorneys Donald Hansen of the Middle District of Florida and Seth Kosto of the District of New Jersey, as well as Assistant Deputy Chief for Litigation Clement McGovern of the Computer Crime and Intellectual Property Section. This case was investigated by the FBI. The Motion Picture Association of America, an industry trade group that represents major producers and distributors of entertainment, including motion picture studios, provided assistance in this case.
Justice Department Seeks to Stop South Florida Tax Preparers Who Allegedly Claim False Home Buyer CreditsRead the Press Release
WASHINGTON – The United States has asked a federal court to stop two Miami-based tax return preparers from improperly claiming the First-Time Home Buyer Credit, the Justice Department announced today. The government complaints filed in separate lawsuits in U.S. District Court in Miami allege that Paula Olivette Patrice and her business, To the Max Tax Professionals Inc.; and Henry Ernesto Medina Jr. and his business, Medina Group Inc., prepare returns for customers that falsely claim the credit.
Congress enacted the First-Time Home Buyer Credit in 2008 to strengthen the real estate market and help the economy. It allowed persons who have not owned a home in the previous three years to claim a credit of up to $8,000 against their federal income taxes if they bought a home after April 8, 2008. The credit has since been expanded to allow, under certain conditions, current homeowners to claim the credit for a purchase of a new home. But in order for a taxpayer to claim the credit a home must have actually been purchased.
The government complaints allege that Patrice and Medina claimed the credit on customers’ returns even though the customers had not purchased new homes. Patrice allegedly listed nonexistent addresses for property purportedly purchased, and in one instance, listed the same address on separate customers’ returns as the property purchased. Medina allegedly filed returns in March 2009 that falsely reported property as having been purchased months later.
"The Internal Revenue Service and Justice Department are committed to stopping abuse of the First-Time Home Buyer Credit," said John A. DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division.
Last October a federal court in Texas permanently barred a woman from preparing returns for others in a case where the Justice Department alleged abuse of the Home Buyer credit and other tax law provisions.
Over the past decade, the Justice Department’s Tax Division has obtained more than 435 injunctions to stop tax fraud promoters and dishonest tax preparers. Information about these cases is available on the Justice Department Web site.
Former Representative of Backfill Subcontractor Sentenced to 33 Months in Jail for Kickback and Fraud SchemeRead the Press Release
WASHINGTON — A former subcontractor representative was sentenced today to serve 33 months in jail and to pay a $30,000 criminal fine for his role in a kickback and fraud conspiracy at a U.S. Environmental Protection Agency (EPA) Superfund site in New Jersey, the Department of Justice announced.
James E. Haas Jr., a former representative of a New Jersey subcontractor that provides common backfill, a type of soil material used to refill an excavation, was also ordered to pay $53,049 in restitution to the EPA. Haas pleaded guilty on Oct. 28, 2009, in the U.S. District Court of New Jersey, to an indictment filed on Aug. 31, 2009, charging that he engaged in a kickback and fraud conspiracy at the Federal Creosote Superfund site, located in Manville, N.J. Haas admitted to paying kickbacks to former employees of a prime contractor at Federal Creosote in exchange for the award of a subcontract to the company he represented. He also admitted to inflating bid prices for the subcontract to include the amount of the kickbacks paid to his co-conspirators. Haas also pleaded guilty to committing fraud against the United States.
The clean-up at the Federal Creosote site is partly funded by the EPA. Under an interagency agreement between the EPA and the Army Corps of Engineers, prime contractors oversaw the removal, treatment and disposal of contaminated soil, as well as other operations at the Federal Creosote site.
The charges are the result of an ongoing investigation being conducted by the Antitrust Division’s New York Field Office, the EPA Office of Inspector General and the Internal Revenue Service Criminal Investigation. To date, a total of three companies and eight individuals have pleaded guilty as part of the investigation. Bennett Environmental Inc. was sentenced on Dec. 15, 2008, to pay criminal fines and restitution totaling more than $2.66 million. On July 13, 2009, Christopher Tranchina was sentenced to serve 20 months in jail and to pay restitution totaling $154,597. Frederick Landgraber was sentenced on Oct. 28, 2009, to five months in jail and five months in home confinement, and to pay restitution of $35,000. The other individuals and companies are awaiting sentencing.
Today’s sentencing reflects the department’s commitment to protecting U.S. taxpayers from procurement fraud through its creation of the National Procurement Fraud Task Force. The National Procurement Fraud Initiative, announced in October 2006, is designed to promote the early detection, prosecution and prevention of procurement fraud associated with the increase in contracting activity for national security and other government programs.
Anyone with information concerning bid rigging, kickbacks, tax offenses or fraud relating to subcontracts awarded at the Federal Creosote site or Diamond Alkali Superfund Site in Newark, N.J., should contact the Antitrust Division’s New York Field Office at 212-264-9308 or visit http://www.justice.gov/atr/contact/newcase.htm.
Federal Inmate Pleads Guilty to Obstructing<br /> DOJ Office of the Inspector GeneralRead the Press Release
A federal inmate pleaded guilty today in Kansas City, Mo., to obstruction of justice by making false statements and creating false evidence related to identity theft in an attempt to lessen penalties for charges in an underlying case, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division.
Margie P. Shephard, 45, pleaded guilty in the Western District of Missouri to one count of endeavoring to obstruct the administration of justice. Shephard also pleaded guilty to one count of conspiracy to commit identity theft and one count of aggravated identity theft related to the underlying case against her. Shephard has been in federal custody on the identity theft charges, which were brought by the U.S. Attorney’s Office for the Western District of Missouri.
According to court documents, from June 29, 2007, to Aug. 7, 2007, Shephard admitted she operated a scheme to manufacture counterfeit payroll checks in the names of identity theft victims and pass the checks in order to obtain money. When she was arrested on Aug. 7, 2007, Shephard was in possession of 71 counterfeit checks drawn upon various financial institutions, as well as four drivers’ licenses, credit cards and other items in the names of identity theft victims. According to the plea agreement, Shephard admitted that from approximately April 2009 to January 2010, she gave false statements and provided physical evidence to the Department of Justice Office of the Inspector General (DOJ-OIG), falsely alleging an ongoing identity theft scheme instigated by a federal government employee. Shephard admitted she provided this false evidence in an attempt to persuade the U.S. Attorney’s Office to request a reduction in her prison sentence in the pending conspiracy and identity theft case.
Shephard’s actions caused the recusal of the U.S. Attorney’s Office from the investigation of her false allegations, the continuance of the underlying criminal case against her while the allegations were investigated, and the use of substantial OIG resources in investigating her claims. Shephard admitted she continued to provide false statements and physical evidence that she knew was being provided to a grand jury and to the court, as well as attempted to convince others to manufacture false evidence to support her allegations. Ultimately, the government determined that the alleged ongoing scheme involving a federal government employee did not exist.
At sentencing, Shephard faces up to 10 years in prison on the obstruction charge, five years in prison on the conspiracy charge and two years in prison on the identity theft charge. The two-year sentence for aggravated identity theft is a mandatory consecutive prison term to the remaining charged counts . A sentencing date has not yet been scheduled by the court.
The obstruction case is being prosecuted by Senior Trial Attorney Richard C. Pilger of the Criminal Division’s Public Integrity Section, and was investigated by the DOJ-OIG. The underlying conspiracy and identity theft case is being prosecuted by Assistant U.S. Attorney Daniel M. Nelson of the Western District of Missouri, and was investigated by the Independence, Mo., Police Department; the Kansas City, Mo., Police Department; and the Overland Park, Kan., Police Department.
Department of Justice and USDA Workshops to Explore Competition and Regulatory Issues in the Agriculture Industry to Begin March 12 in IowaRead the Press Release
WASHINGTON — The Department of Justice and the U.S. Department of Agriculture (USDA) announced today the agenda 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 Des Moines Area Community College’s FFA Enrichment Center.
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.
The Department of Justice’s Assistant Attorney General for the Antitrust Division Christine Varney and Agriculture Secretary Tom Vilsack will participate in the workshop and will be joined by Iowa Agriculture Secretary Bill Northey and Iowa Attorney General Tom Miller. They will participate in a roundtable discussion with presentations on current issues affecting farmers. Two panels focusing on the competitive dynamics in the seed industry and trends in contracting, transparency and buyer power will follow. The first day of the workshops will end with an enforcer roundtable and public testimony.
The workshop schedule follows:
Opening Remarks (9:00 a.m. CST - 9:15 a.m. CST)
Tom Vilsack, Secretary of Agriculture, U.S. Department of Agriculture
Christine Varney, Assistant Attorney General for Antitrust, U.S. Department of JusticeRoundtable Discussion and Presentation of Issues (9:15 a.m. CST - 11:30 a.m. CST)
Tom Vilsack, Secretary of Agriculture, U.S. Department of Agriculture
Christine Varney, Assistant Attorney General for Antitrust, U.S. Department of Justice
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:
Chet Culver, Governor, State of Iowa
A farmer roundtable discussion and testimony will also be given at this time. Farmer panelists will be posted on the Web site at a later date.
Seed Competitive Dynamics Panel (1:00 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 CompanyAgricultural 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 WatchEnforcer Roundtable Discussion Panel (3:30 p.m. CST - 4:15 p.m. CST)
Moderator: Mark Tobey, Special Counsel for State Relations and Agriculture, U.S. Department of
JusticePanelists: Steve Bullock, Attorney General, State of Montana
Richard Cordray, Attorney General, State of Ohio
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 JusticePublic Testimony (4:15 p.m. CST - 5:15 p.m. CST)
This is an opportunity for those in the audience to make comments in an open forum.
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].
Press Contacts:
U.S. Department of Justice
Office of Public Affairs
Gina Talamona
202-514-2007
U.S. Department of Agriculture
Office of Communications
Jim Brownlee
202-720-4623
22 February 2010
Najibullah Zazi Pleads Guilty to Conspiracy to Use Explosives Against Persons or Property in U.S., Conspiracy to Murder Abroad and Providing Material Support to Al-QaedaRead the Press Release
The Justice Department announced that Najibullah Zazi pleaded guilty today in the Eastern District of New York to a three-count superseding information charging him with conspiracy to use weapons of mass destruction (explosive bombs) against persons or property in the United States, conspiracy to commit murder in a foreign country and providing material support to al-Qaeda. Among other things, Zazi admitted that he brought TATP [Triacetone Triperoxide] explosives to New York on Sept. 10, 2009, as part of plan to attack the New York subway system.
Zazi, 25, a resident of Aurora, Colo., and legal permanent resident of the United States from Afghanistan, entered his guilty plea today before Chief U.S. District Judge Raymond J. Dearie. Zazi faces a maximum statutory sentence of life in prison for the first two counts of the superseding information and an additional 15 years in prison for the third count of the superseding information.
FBI agents in Colorado first arrested Zazi on Sept. 19, 2009, on a criminal complaint charging him with knowingly and willfully making false statements to the FBI in a matter involving international and domestic terrorism. On Sept. 23, 2009, a federal grand jury in the Eastern District of New York returned a one-count indictment alleging that Zazi knowingly and intentionally conspired with others to use one or more weapons of mass destruction, specifically explosive bombs and other similar explosive devices, against persons or property within the United States.
As Zazi admitted during today’s guilty plea allocution and as reflected in previous government filings, he and others agreed to travel to Afghanistan to join the Taliban and fight against United States and allied forces. In furtherance of their plans, they flew from Newark Liberty International Airport in Newark, N.J., to Peshawar, Pakistan at the end of August 2008. Although Zazi and others initially intended to fight on behalf of the Taliban, they were recruited by al-Qaeda shortly after arriving in Peshawar. Al-Qaeda personnel transported Zazi and others to the Waziristan region of Pakistan and trained them on several different kinds of weapons. During the training, al-Qaeda leaders asked Zazi and others to return to the United States and conduct suicide operations. They agreed.
Zazi later received additional training from al-Qaeda on constructing the explosives for the planned attacks in the United States. Zazi had discussions with al-Qaeda leaders about target locations, including subway trains in New York City. Zazi took detailed notes during the training, and later emailed a summary of the notes to himself so that he could access them when he returned to the United States. Zazi also provided money and computers to al-Qaeda before he left Pakistan.
Zazi returned to the United States in January 2009 and moved to Denver. Beginning in June 2009, he began reviewing the bomb-making notes from his training and conducting research on where to buy the ingredients for the explosives. Zazi then traveled to New York and met with others to discuss the plan, including the timing of the attack and where to make the explosives.
Zazi returned to Denver and used the bomb-making notes to construct the explosives for the detonator components of the bombs. As set forth in the government’s detention memorandum filed earlier in the case, in July and August 2009, Zazi purchased large quantities of components necessary to produce TATP and twice checked into a hotel room near Denver, where bomb making residue was later found.
On Sept. 8, 2009, Zazi rented a car and drove from Denver to New York, taking with him the explosives and other materials necessary to build the bombs. Zazi arrived in New York City on Thursday, Sept.10, 2009. Zazi and others intended to obtain and assemble the remaining components of the bombs over the weekend and conduct the attack on Manhattan subway lines on Sept. 14, Sept. 15, or Sept. 16, 2009. However, shortly after arriving in New York, Zazi realized that law enforcement was investigating his activities. Zazi and others discarded the explosives and other bomb-making materials, and Zazi traveled back to Denver. He was arrested on Sept. 19, 2009.
"This was one of the most serious terrorist threats to our nation since September 11th, 2001, and were it not for the combined efforts of the law enforcement and intelligence communities, it could have been devastating," said Attorney General Eric Holder. "This attempted attack on our homeland was real, it was in motion, and it would have been deadly. We were able to thwart this plot because of careful analysis by our intelligence agents and prompt actions by law enforcement. They deserve our thanks and praise."
"Today’s plea is an important development in this complex and ongoing criminal investigation and intelligence operation that in many ways illustrates the evolving nature of the terrorist threat today," said FBI Deputy Director John S. Pistole. "The plea is the result of the dedication and hard work by agents and officers assigned to Joint Terrorism Task Forces in both New York and Colorado working closely with federal prosecutors."
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.
Justice Department Requires KeySpan to Disgorge $12 Million<br /> in Profits from Anticompetitive AgreementRead the Press Release
WASHINGTON — The Department of Justice today announced a settlement with KeySpan Corporation that requires KeySpan to pay $12 million for violating the antitrust laws by entering into an agreement restraining competition in the New York City electricity capacity market. The department said the financial derivative agreement likely resulted in a price increase for retail electricity suppliers and, in turn, an increase in electricity prices for consumers.
The department’s Antitrust Division today filed a civil antitrust complaint in U.S. District Court for the Southern District of New York, along with the proposed settlement that, if approved by the court, would resolve the lawsuit. The settlement provides for disgorgement of profits for a violation of the antitrust laws and requires KeySpan to pay $12 million to the United States.
According to the complaint, KeySpan and a financial services company entered into an agreement in January 2006 that gave KeySpan a financial interest in the electricity capacity sales of its largest competitor, Astoria. At the time of the agreement, KeySpan was the largest seller of electricity capacity in the New York City market. By providing KeySpan revenues from its competitor’s capacity sales, as well as its own, the agreement with the financial services company had the anticompetitive effect of eliminating KeySpan’s incentive to sell its electricity capacity at lower prices. As a result, retail electricity prices in New York City were likely higher than they would have been without this anticompetitive agreement. The anticompetitive effects of the agreement lasted until March 2008, when regulatory conditions eliminated KeySpan’s ability to affect the market price of electricity capacity.
New York City’s electricity generating capacity market was created to ensure that sufficient generation capacity exists to meet expected electricity needs. Electricity retailers serving consumers in the city are required to purchase capacity from generators in amounts related to their expected peak energy demand. Electricity generators offer to sell their capacity to electricity retailers in regularly held auctions.
KeySpan is a New York corporation and has its headquarters in New York City. Until 2008, KeySpan owned approximately 2400 megawatts of electric generating capacity at its Ravenswood electrical generation facility located in New York City. KeySpan was purchased by National Grid in August 2007.
The proposed settlement, along with the department’s competitive impact statement, will be published in The Federal Register, as required by the Antitrust Procedures and Penalties Act. Any person may submit written comments concerning the proposed settlement within 60 days of its publication to Donna N. Kooperstein, Chief, Transportation, Energy and Agriculture Section, Antitrust Division, U.S. Department of Justice, 450 5th St. NW, Suite 8000, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the court may enter the Final Judgment upon a finding that it serves the public interest.
Eon Labs Pays U.S. $3.5 Million to Settle Allegations<br /> of Submitting False Claims to MedicaidRead the Press Release
WASHINGTON – Eon Labs Inc. has agreed to pay the United States $3.5 million to resolve False Claims Act allegations relating to the company's drug Nitroglycerin Sustained Release (SR) capsules, the Justice Department announced today. Eon Labs is a subsidiary of Sandoz Inc., which is in turn a subsidiary of Novartis AG.
In April 1999, the Food & Drug Administration (FDA) determined that Nitroglycerin SR lacked substantial evidence of effectiveness and published a notice proposing to withdraw approval of the product. The government contends that, after the FDA notice, Nitroglycerin SR no longer was legally eligible for reimbursement by government health care programs such as Medicaid.
The government further alleges that, from April 1999, and continuing through September 2008, Eon submitted false quarterly reports to the government that misrepresented Nitroglycerin SR's regulatory status and failed to advise that Nitroglycerin SR no longer qualified for Medicaid coverage. As a result, the government contends, Eon knowingly caused false Medicaid claims to be submitted for Nitroglycerin SR.
"We expect manufacturers to be truthful about the regulatory status of their drugs, and we will pursue those companies that submit false information to obtain payment for unapproved drugs that are less than effective or on the market illegally," said Tony West, Assistant Attorney General for the Civil Division.
The settlement resolves allegations against Eon in a multi-defendant whistleblower action entitled United States ex rel. Conrad v. Eon Labs, Inc., et al. The False Claims Act allows for private persons to file a qui tam or whistleblower suit on behalf of the government. If the government is successful in resolving or litigating its claims, the whistleblower may receive a share of the recovery. Under this settlement, the whistleblower will receive approximately $525,000.
"This is the first False Claims Act agreement with a drug company that sought to charge the government for less than effective drugs, and it shows that the Department of Justice will pursue those who market such drugs and expect the government to pay for them," said Carmen Ortiz, U.S. Attorney for the District of Massachusetts.
This settlement is part of the government's emphasis on combating health care fraud. One of the 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.
This case was investigated by the Justice Department’s Civil Division, the U.S. Attorney's Office of the District of Massachusetts and the Office of Inspector General of the Department of Health and Human Services.
Cummins Inc. Agrees to Pay $2.1 Million Penalty for Diesel Engine Clean Air Act ViolationsRead the Press Release
WASHINGTON—Cummins Inc., a major motor vehicle engine company based in Columbus, Ind., will pay a $2.1 million penalty and recall 405 engines under a settlement agreement resolving alleged violations of the Clean Air Act, the Justice Department and U.S. Environmental Protection Agency (EPA) announced today.
According to a complaint filed simultaneously with the settlement in federal court in the District of Columbia, between 1998 and 2006 Cummins shipped more than 570,000 heavy duty diesel engines to vehicle equipment manufacturers nationwide without pollution control equipment included, in violation of the Clean Air Act. This equipment, known as exhaust after-treatment devices (ATDs), controls engine exhaust emissions once the emissions have exited the engine and entered the exhaust system. Typical ATDs include catalytic converters and diesel particulate filters.
Engine manufacturers must prove through testing that their engine designs meet EPA's emissions standards and seek certificates of conformity. According to the complaint, Cummins tested the engines with the ATDs to meet the standards, but failed to include the ATDs with the engines when Cummins shipped the engines to the vehicle manufacturers. Instead, Cummins relied upon the vehicle manufacturers to purchase and install the correct ATDs. The United States alleges that the shipment of engines to vehicle manufacturers without the ATDs violates the Clean Air Act's prohibition on the sale of engines not covered by certificates of conformity.
The settlement requires Cummins to recall approximately 405 engines that were found to have reached the ultimate consumers without the correct ATDs in order to install the correct ATDs.
"This settlement assures that the environment suffers no ill effects because it requires that Cummins not only install the proper pollution control devices but also mitigate the effects of the harmful emissions released as a result of its actions," said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division.
"Reliable and effective pollution control systems are essential to protect human health and the environment from harmful engine emissions," said Cynthia Giles, Assistant Administrator for EPA’s Office of Enforcement and Compliance Assurance. "These requirements are a critical part of EPA's program to reduce air pollution and secure clean air so that all Americans can breathe easier."
EPA estimates that Cummins actions resulted in approximately 167 excess tons of nitrogen oxides and hydrocarbon emissions, and 30 excess tons of particulate matter emissions over the lifetime of the non-conforming engines. Cummins will mitigate the effects of excess emissions from its non-conforming engines through permanent retirement of emission credits equal to the excess tons of pollution.
Over half the air pollutants in America come from "mobile sources" of air pollution, such as cars, trucks, buses, motorcycles, construction, agricultural and lawn and garden equipment, marine vessels, outboard motors, jet skis and snowmobiles. Mobile source pollutants include smog-forming volatile organic compounds and nitrogen oxides, toxic air pollutants such as cancer-causing benzene, and particulate matter or "soot." These pollutants are responsible for asthma and other respiratory illnesses.
The state of California Air Resources Board will receive $420,000 of the civil penalty under a separate settlement agreement with Cummins, continuing a federal government practice of sharing civil penalties with states that participate in clean air enforcement actions.
The Cummins settlement was lodged today in the U.S. District Court for the District of Columbia, and is subject to a 30-day public comment period. A copy of the consent decree is available on the Justice Department Web site at http://www.justice.gov/enrd/Consent_Decrees.html.
19 February 2010
Shipping Firm Sentenced to Pay $10 Million for Causing Cosco Busan Oil Spill and CoverupRead the Press Release
Fleet Management Ltd. was ordered to pay $10 million today for its role in causing the Cosco Busan oil discharge and a subsequent cover-up after the ship struck the San Francisco Bay Bridge in November 2007, the Justice Department announced.
Judge Susan Illston of the U.S. District Court in San Francisco, pursuant to the plea agreement, ordered $2 million of the total $10 million monetary assessment to be devoted to fund marine environmental projects in San Francisco Bay.
Fleet Management, a Hong Kong-based ship management firm, pleaded guilty to a criminal violation of the Oil Pollution Act of 1990 as well as felony obstruction of justice and false statement charges for creating false and forged documents after the crash at the direction of shore-based supervisors with an intent to deceive the U.S. Coast Guard.
Fleet was also ordered to implement a comprehensive compliance plan that would include heightened training and voyage planning for ships engaged in trade in the United States. The training will focus on better preparing masters for command of Fleet’s vessels, providing classroom and shipboard navigation training to those who navigate Fleet’s vessels, and ensuring that all Fleet vessels calling in U.S. ports create a thorough plan for how they will navigate in those ports. The new training and voyage planning requirements will be subject to auditing and the court’s supervision.
"Fleet’s systemic management failures played a significant role in causing the Cosco Busan disaster and they compounded the problem by attempting to cover-up their conduct," said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division.
"The sentence today not only includes a significant monetary penalty but also will ensure that Fleet Management develops a culture that puts safety and the environment first."
"Fleet failed to meet its obligation under international law to ensure the crew was adequately trained on navigation procedures and equipment and then tried to cover it up," said U.S. Attorney Russoniello. "Today’s sentencing should serve as a warning to everyone in the maritime industry – you will be held accountable for violations of federal and international laws."
"The U.S. Coast Guard is pleased to see an increased emphasis on crew training," said Rear Admiral Joseph Castillo, Commander of the 11th Coast Guard District. "The safety of mariners, the health of our economy, and the protection of our environment all require the safest possible operation of merchant ships sailing in our ports, waterways and coastal areas, and proper training is key to safe operations."
"Shipping companies that move goods through the San Francisco Bay must operate their vessels in a safe and legal manner. The Cosco Busan oil spill should not have occurred in the first place, and the company’s attempt to cover-up its illegal acts only compounded the initial crime," said Nick Torres, Special Agent in Charge of EPA’s Criminal Investigation Division in San Francisco. "The laws are there to protect our precious natural resources. Today's sentence sends a clear message that those who violate the law and pollute our waters will be vigorously prosecuted."
Fleet Management admitted "that it was a cause of a discharge of a harmful quantity of oil into the navigable waters of the United States, that it acted negligently, and that its negligence was a proximate cause of the discharge of oil into San Francisco Bay on Nov. 7, 2007."
In pleading guilty on Aug. 13, 2009, Fleet admitted that after the ship hit the Bay Bridge, it concealed ship records and created materially false, fictitious and forged documents with an intent to influence the Coast Guard’s investigation.
In particular, a false berth-to-berth passage plan for the day of the crash was created after the incident at the direction of shore-side supervisors known as superintendents and with the knowledge of the ship’s master. Additionally, a ship officer falsified the ship’s official navigational chart to show fixes that were not actually recorded during the voyage. Other records including false passage planning checklists were also created after the fact.
The collision caused a gash measuring approximately 150 feet long by 12 feet high on the port side of the ship, puncturing two of the ship’s fuel tanks and damaging the fendering system on the Delta tower of the bridge, and resulting in a significant environmental clean-up. At least 2,000 migratory birds died, including Brown Pelicans, Marbled Murrelets and Western Grebes. The Brown Pelican is a federally endangered species and the Marbled Murrelet is a federally threatened species and an endangered species under California law.
The pilot of the Cosco Busan, Captain John Cota, pleaded guilty on March 6, 2009, and was later sentenced to 10 months in prison, one year of supervised release and 200 hours of community service for his role in causing the Cosco Busan collision and discharge of oil and deaths of migratory birds.
The criminal investigation was conducted by the Coast Guard Investigative Service; the EPA Criminal Investigation Division; the Federal Bureau of Investigation; the U.S. Fish and Wildlife Service; Silicon Valley Regional Computer Forensics Laboratory; and the California Department of Fish and Game, Office of Spill Prevention and Response. The investigation also received technical assistance from other Coast Guard offices including District 11 Legal Office, Sector San Francisco, Office of Investigations and Analysis, Office of Maritime and International Law, Office of Vessel Activities, Electronics Support Unit, Alameda and the Marine Safety Laboratory. In announcing the sentencing, the U.S. Attorney and Assistant Attorney General thanked federal and state investigators and offices for their assistance in the prosecution.
The criminal case was prosecuted by the U.S. Attorney’s Office for the Northern District of California and the Justice Department’s Environmental Crimes Section.
Massachusetts Hospital Agrees to Pay U.S. $2.79 Million<br /> to Resolve False Claims Act AllegationsRead the Press Release
WASHINGTON – Mercy Hospital Inc. (d/b/a Mercy Medical Center) of Springfield, Mass., has agreed to pay the United States $2,799,462 to settle claims that it violated the False Claims Act between 2005 and 2006 by failing to provide, or failing to document that it provided, the minimum number of hours of rehabilitation therapy required under Medicare guidelines, the Justice Department announced today.
Under Medicare, inpatient rehabilitation hospitals must provide a minimum amount of rehabilitative therapy to their patients. In June 2007, Mercy disclosed to the Department of Health and Human Services Office of Inspector General that it could not demonstrate that it had provided the required level of therapy. The settlement announced today resulted from the company’s disclosure.
"This settlement demonstrates the Justice Department’s commitment to ensuring that Medicare patients get all of the care that Medicare pays for," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "As this settlement shows, those who come forward to disclose their violations and cooperate with the government will be dealt with fairly."
The case was handled by the Justice Department’s Civil Division and the Office of Inspector General of the Department of Health and Human Services.
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 and FBI Announce Formal Conclusion <br /> of Investigation into 2001 Anthrax AttacksRead the Press Release
The Justice Department, FBI and U.S. Postal Inspection Service today announced that the investigation into the 2001 anthrax attacks, which killed five individuals and sickened 17 others, has formally concluded.
Earlier today, representatives of the FBI and Justice Department provided a 92-page investigative summary along with attachments to victims of the attacks, relatives of the victims and appropriate committees of Congress. This document sets forth a summary of the evidence developed in the "Amerithrax" investigation, the largest investigation into a bio-weapons attack in U.S. history. As disclosed previously, the Amerithrax investigation found that the late Dr. Bruce Ivins acted alone in planning and executing these attacks.
The investigative summary and the attachments are now accessible to the public and have been posted to the Justice Department Web site at www.usdoj.gov/amerithrax under the Freedom of Information Act. In addition, roughly 2,700 pages of FBI documents related to the Amerithrax case are now accessible to the public and have been posted to the FBI website at http://foia.fbi.gov/foiaindex/amerithrax.htm under the Freedom of Information Act.
The Amerithrax Task Force, which was comprised of roughly 25 to 30 full-time investigators from the FBI, U.S. Postal Inspection Service and other law enforcement agencies, as well as federal prosecutors from the District of Columbia and the Justice Department’s Counterterrorism Section, expended hundreds of thousands of investigator work hours on this case. Their investigative efforts involved more than 10,000 witness interviews on six different continents, the execution of 80 searches and the recovery of more than 6,000 items of potential evidence during the course of the investigation. The case involved the issuance of more than 5,750 grand jury subpoenas and the collection of 5,730 environmental samples from 60 site locations.
Justice Department Obtains More Than $2 Million to Settle Claims of Housing Discrimination Against Former Owners and Managers of Kansas City Apartment ComplexRead the Press Release
The Justice Department today announced the settlement of a case alleging housing discrimination in the rental of apartments in Kansas City, Kan. The combined $2.13 million settlement represents the second largest monetary payment ever obtained by the department in a fair housing case alleging housing discrimination in the rental of apartments.
The department brought a lawsuit in federal district court in Kansas alleging that Stacy Sturdevant, the community manager of the Central Park Towers Apartments (CPT), her employer, NHP Management Co., as well as the Apartment Investment and Management Company (AIMCO) and the former owners of CPT, engaged in a pattern or practice of discrimination on the basis of race in violation of the Fair Housing Act. The lawsuit also alleged that the defendants retaliated against an employee, Melissa Kothe, for cooperating with Department of Housing and Urban Development (HUD) investigators.
In its amended complaint, filed on Sept. 18, 2008, the department alleged that for two-and-a-half years between 2003-2005, Sturdevant engaged in discriminatory rental practices on the basis of race. The United States presented evidence in litigation that Sturdevant openly displayed racially hostile materials at CPT, such as hangman’s nooses, frequently referred to African Americans with racial epithets and generally treated white residents more favorably than African American residents. The government also alleged that the defendants improperly retaliated against Kothe, a resident services coordinator at CPT, by firing her when she cooperated with HUD investigators and advised a resident to contact HUD.
"The right to live peacefully in one’s own home without being victimized, harassed and treated unfairly because of race is a fundamental right in our nation," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "This settlement is designed to send a message to housing providers across the country that we have a zero-tolerance policy for this type of egregious behavior."
"Individuals who step forward to assist victims of housing discrimination should know that HUD and the Justice Department will protect them from retaliation," said John Trasviña, HUD Assistant Secretary for Fair Housing and Equal Opportunity. "This settlement vindicates that interest."
Sturdevant was an employee of NHP Management Company, a subsidiary of AIMCO, one of the nation’s largest owners and operators of multifamily dwellings. Central Park Towers II L.P. owned the building where Sturdevant was employed — a Section 8 property with 195 units designated for persons with disabilities and/or elderly. This settlement will resolve the United States’ claims on behalf of over 40 current and former tenants of Central Park Towers, as well as the claim on behalf of Melissa Kothe.
The department settled its claim against the former owners, Central Park Towers II L.P. last summer, for $145,000. That settlement, together with the agreement announced today, amount to a total settlement of $2.13 million. The settlements are in the form of consent orders that the parties have submitted to the court for approval. Last summer’s settlement with the former owners has already been approved by the court. Today’s agreement must still be approved by U.S. District Court Judge Kathryn Vratil.
The agreement filed today would require the defendants to pay $95,500 in civil penalties to the United States, and a total of approximately $1.89 million into a fund that would be used to compensate persons who were harmed by the defendants’ discriminatory practices. The terms of the distribution of the monetary damages will be determined in a separate disbursement order to be submitted by the United States for approval by the court.
The federal Fair Housing Act prohibits discrimination in housing on the basis of 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 email 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 to report discrimination.
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 http://www.justice.gov/crt.
Indictment Charging Four Individuals Unsealed in Condominium Asbestos CaseRead the Press Release
WASHINGTON—An 11-count indictment was unsealed today charging four individuals with conspiracy, violations of the Clean Air Act, and making false statements for their roles in a scheme to improperly remove and dispose of asbestos from multiple condominiums in Florida, the Justice Department announced.
John Loder, 43, of Redington Beach, Fla.; Stephen J. Spencer, 48, of Clearwater, Fla.; Guy Gannaway, 53, of Safety Harbor, Fla.; and Keith McConnell, a/k/a "Animal," 54, of Largo, Fla., were charged in the indictment.
According to the indictment, John Loder and Stephen J. Spencer were members of an entity called Sun Vista Development Group LLC, which was created to carry out the day-to-day operations and administrative work associated with the purchase, renovation and resale of large-scale condominium developments. Two of these developments were Barefoot Beach Resort, formerly known as Indian Pass Apartments, in Indian Shores, Fla., and Shore Club Pasadena, formerly known as Pasadena Apartments, in Pasadena, Fla. Guy Gannaway was the owner of Gannaway Builders Inc., a construction company hired as the general contractor for both Barefoot Beach Resort and Shore Club Pasadena. Keith McConnell was a supervisory employee of Gannaway Builders Inc. Units at these developments had ceilings coated with a "popcorn"-texture that contained greater than 1 percent asbestos.
According to the indictment, from November 2004 to Dec. 10, 2004, the defendants directed renovation work to begin at Barefoot Beach Resort without first conducting an asbestos survey for the building. From Dec. 10, 2004 until April 2005, the defendants discussed the asbestos at Barefoot Beach Resort and rejected at least one bid for complete removal of the asbestos-containing ceiling material from Barefoot Beach Resort. They decided, instead, to cover the existing ceilings with a new layer of drywall using Gannaway Builders employees and subcontractors to install the new drywall. The indictment alleges that the work practice standards for asbestos, developed as part of the National Emission Standards for Hazardous Air Pollutants, were not followed while the renovation was performed at Barefoot Beach Resort between Nov. 15, 2004, and Sept. 15, 2005. In some units, the asbestos-containing popcorn ceiling material was completely removed following a roof leak on or about June 24, 2005, also without following the asbestos work practice standards. Additionally, the indictment alleges that the defendants made and caused others to make false statements to the Pinellas County Air Quality Division in response to a notice of violation issued to Sun Vista Development Group and Gannaway Builders on Nov. 18, 2005.
Further, according to the indictment, from May 25, 2005 to Nov. 30, 2006, the defendants directed renovation work at Shore Club Pasadena without removing the asbestos-containing ceiling material prior to activity that disturbed the material. The renovation work that caused improper disturbances to the asbestos-containing material occurred without the presence of a properly trained on-site representative.
All four defendants are charged with conspiracy to violate the Clean Air Act and to make false statements. The indictment additionally charges Loder and Spencer with five counts of violating the Clean Air Act and one count of making a false statement. The indictment charges Guy Gannaway with eight counts of violating the Clean Air Act and two counts of making a false statement. The indictment further charges Keith McConnell with eight counts of violating the Clean Air Act and one count of making a false statement.
An indictment is merely an accusation, and a defendant is presumed innocent unless and until proven guilty in a court of law.
The maximum penalty for each count of the indictment includes five years in prison and a $250,000 fine.
This case was investigated by the Environmental Protection Agency Criminal Investigation Division with assistance from the Florida Department of Law Enforcement. It is being prosecuted by the U.S. Attorney’s Office for the Middle District of Florida and the Justice Department’s Environmental Crimes Section.
Florida Businessman Pleads Guilty to Money Laundering <br /> in Foreign Bribery SchemeRead the Press Release
The president of a Miami-Dade County, Fla.,-based company pleaded guilty today to engaging in monetary transactions involving property derived from a scheme to bribe former Haitian government officials, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Jeffrey H. Sloman of the Southern District of Florida; and Daniel W. Auer, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation (IRS-CI) Miami Field Office.
According to the criminal information filed on Feb. 1, 2010, Jean Fourcand, 62, of Miami, was the president and director of Fourcand Enterprises Inc. In pleading guilty, Fourcand admitted that he received funds between November 2001 and August 2002 originating from U.S. telecommunications companies for the benefit of an official of the Republic of Haiti’s state-owned national telecommunications company, Telecommunications D’Haiti (Haiti Teleco). Fourcand admitted during his guilty plea that some of these funds were received from an intermediary company, J.D. Locator Services Inc. Juan Diaz, the president of J.D. Locator, pleaded guilty on May 15, 2009, to conspiracy to commit violations of the Foreign Corrupt Practices Act (FCPA) and money laundering. Fourcand also admitted that Robert Antoine, the former director of international relations at Haiti Teleco, was the recipient of the bribes.
According to court documents, various U.S. telecommunications companies sent money to Diaz who would then disperse the funds by issuing J.D. Locator checks made payable to Fourcand Enterprises. For example, Fourcand admitted that he received a check for $18,500 on Feb. 20, 2002, drawn on J.D. Locator Service’s bank account, which he deposited into an account in the name of Fourcand Enterprises. This check contained a false invoice number to make the payment appear to be for legitimate services when in fact the money was intended for Antoine. Fourcand admitted that he used these funds to engage in a real estate transaction that benefited Antoine.
The charged crime carries a maximum penalty of 10 years in prison and a fine of the greater of $250,000 or twice the value of the property involved in the transaction. Fourcand also agreed to forfeit $18,500 as part of his guilty plea.
Antoine was indicted on Dec. 4, 2009, for money laundering conspiracy and later arrested and expelled from Haiti to face the U.S. charges. Also charged on Dec. 4, 2009, for their alleged roles in the scheme were Joel Esquenazi, the former president, and Carlos Rodriguez, the former executive vice president of a U.S. telecommunications company, as well as Jean Rene Duperval, a former official at Haiti Teleco, and Duperval’s sister, Marguerite Grandison.
An indictment is merely an accusation, and defendants are presumed innocent until proven guilty beyond a reasonable doubt.
On April 27, 2009, Antonio Perez, the former controller of a U.S. telecommunications company, pleaded guilty to conspiring to commit FCPA violations and money laundering for his role in the payment of bribes to former officials of Haiti Teleco.
The Department of Justice is grateful to the government of Haiti for providing substantial assistance in gathering evidence during this investigation. In particular, Haiti’s financial intelligence unit, the Unité Centrale de Renseignements Financiers (UCREF), the Bureau des Affaires Financières et Economiques (BAFE), which is a specialized component of the Haitian National Police, and the Ministry of Justice and Public Security provided significant cooperation and coordination in this ongoing investigation.
The case was prosecuted by Trial Attorney Kevin Gerrity of the Criminal Division’s Asset Forfeiture and Money Laundering Section, Trial Attorney Nicola J. Mrazek of the Criminal Division’s Fraud Section, and Assistant U.S. Attorney Aurora Fagan of the U.S. Attorney’s Office for the Southern District of Florida. The Criminal Division’s Office of International Affairs also provided assistance in this matter. The case was investigated by the IRS-CI Miami Field Office.
Attorney General Holder Announces Creation of Tribal Nations Leadership CouncilRead the Press Release
Attorney General Eric Holder today announced the creation of the Justice Department’s Tribal Nations Leadership Council (TNLC), a group of tribal leaders from around the country that will advise him on issues critical to tribal communities. The TNLC marks the first time a council composed of tribal leaders selected by tribal governments will advise Justice Department leadership on an ongoing basis. The creation of the TNLC fulfills a pledge made by Attorney General Holder at the department’s Tribal Nations Listening Session in October 2009.
"The Tribal Nations Leadership Council will play an important role in continuing the critical dialogue between the department and tribal governments on matters including public safety," said Attorney General Holder. "The creation of the council has been a priority for me since my visit with tribal leaders last year and I believe it is a critical step in our work to improve coordination and collaboration with tribal communities."
The TNLC, which will meet twice a year, will be composed of one tribal leader from each of the twelve regions of the Bureau of Indian Affairs. The TNLC member for each region will be chosen by the tribes of that region. Solicitations are being distributed to all federally-recognized tribes seeking their region’s delegate.
Today’s announcement is another step in the Justice Department’s ongoing initiative to increase engagement, coordination and action on public safety in tribal communities. This effort is driven largely by input gathered from the department’s own 2009 Tribal Nations Listening Session, the department’s annual tribal consultation on violence against women, and from written comments submitted by tribal governments, groups and organizations to the Justice Department.
Tribal Nations Leadership Council Charter
18 February 2010
U.S. Army Contracting Official Charged with Bribery and Related Crimes in Off-Post Housing SchemeRead the Press Release
A U.S. Army contracting official was charged today with bribery and unlawful salary supplementation in connection with two schemes to solicit more than $30,000 in bribes from an Egyptian businessman in Kuwait, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Neil H. MacBride of the Eastern District of Virginia.
William Rondell Collins, 46, of Bartlett, Tenn., was charged today in a four-count indictment, returned by a federal grand jury in the Eastern District of Virginia, with two counts of soliciting and accepting bribes as a public official and two counts of unlawful salary supplementation from a source other than the U.S. government.
According to the indictment, the U.S. Army Area Support Group-Kuwait (ASG-KU) is responsible for maintaining Camp Arifjan, a U.S. military installation providing support for operations in Afghanistan, Iraq and other locations in the Southwest Asian Theater. As part of those responsibilities, the ASG-KU maintains an off-post housing office in downtown Kuwait City, which procures, leases and supervises off-post housing for government employees and military service members stationed at Camp Arifjan. According to the indictment, Collins was employed in the ASG-KU’s off-post housing office as a housing specialist responsible for supervising private contractors and procuring off-post apartment rentals.
The indictment alleges that, in January 2009, a company owned by an Egyptian businessman was awarded a fixed-price U.S. government contract to provide maintenance services for off-post housing managed by Collins and the ASG-KU off-post housing office.
According to the indictment, in July 2009, Collins allegedly solicited a monthly fee of approximately $1,400 from the Egyptian businessman in return for Collins’s agreement to provide favorable and preferential treatment and advice to the Egyptian businessman’s company on the performance and renewal of the contract. Collins also allegedly agreed to conceal from his supervisors the existence and nature of the monthly fee arrangement. According to the indictment, Collins allegedly accepted five $1,400 payments from the Egyptian businessman between July and December 2009.
The indictment also alleges that, between July and December 2009, Collins solicited a monthly payment of approximately $962 from the Egyptian businessman in exchange for drafting and submitting an inflated off-post apartment lease to the United States for approval. According to the indictment, Collins allegedly received approximately $5,775 from the Egyptian businessman on Dec. 13, 2009, representing a six-month advance on the scheme.
The bribery counts each carry a maximum penalty of 15 years in prison and a fine of the greater of $250,000 or twice the value gained or lost. The unlawful salary supplementation counts each carry a maximum penalty of five years in prison and a fine of the greater of $250,000 or twice the value gained or lost.
The case is being prosecuted by Special Assistant U.S. Attorney Steve A. Linick, Deputy Chief of the Criminal Division’s Fraud Section; and Fraud Section Trial Attorneys James J. Graham and Ryan S. Faulconer. The investigation is being conducted by the FBI, the U.S. Army Criminal Investigative Division, the Defense Criminal Investigative Service and members of the National Procurement Fraud Task Force and the International Contract Corruption Task Force (ICCTF).
The National Procurement Fraud Task Force, created in October 2006 by the Department of Justice, was designed to promote the early detection, identification, prevention, and prosecution of procurement fraud associated with the increase in government contracting activity for national security and other government programs. The ICCTF is a joint law enforcement agency task force that seeks to detect, investigate, and dismantle corruption and contract fraud resulting from U.S. Overseas Contingency Operations, including in Kuwait, Afghanistan, and Iraq.
The charges contained in the indictment are merely accusations and the defendant is presumed innocent until proven guilty at trial beyond a reasonable doubt.
Two Former Executives of Video Relay Services Company Plead Guilty to Defrauding FCC ProgramRead the Press Release
Irma Azrelyant and Joshua Finkle, the former co-owners of New York and New Jersey-based Deaf and Hard of Hearing Interpreting Services Inc. (DHIS), pleaded guilty today to engaging in a conspiracy to defraud the Federal Communications Commission’s (FCC) Video Relay Service (VRS) program of more than $7 million, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division.
Today, Azrelyant, 47, and Finkle, 41, pleaded guilty before U.S. District Court Judge Joel A. Pisano in Trenton, N.J., to conspiracy to commit mail fraud. Azrelyant and Finkle were indicted on Oct. 29, 2009, along with DHIS assistant bookkeeper and video interpreter coordinator Oksana Strusa, as well as video interpreters Natan Zfati, Alfia Iskandarova and Hennadii Holovkin.
In pleading guilty, Azrelyant and Finkle admitted that beginning in approximately October 2007 and continuing through approximately July 2009, they conspired with others to pay individuals to make fraudulent VRS phone calls that were processed through DHIS, and that were billed to the FCC through VRS provider Viable Communications Inc. (Viable). According to the guilty pleas, Azrelyant and Finkle made VRS calls to prerecorded messages and other numbers for the sole purpose of generating VRS minutes and also coordinated with others to generate illegitimate VRS minutes that would be billed to the FCC. Azrelyant and Finkle also admitted to processing illegitimate VRS calls that were routed to DHIS by Viable.
According to the indictment, 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 the VRS user.
According to information contained in the plea documents, Azrelyant and Finkle admitted that their role in defrauding the FCC’s VRS program led to a total of between $7 million and $20 million in fraudulent billing to the program. At sentencing, Azrelyant and Finkle each face a maximum sentence of 20 years in prison, a fine of $250,000, as well as mandatory restitution and forfeiture. Sentencing is set for June 29, 2010 at 10 a.m.
Co-defendants Strusa, Zfati, Iskandarova and Holovkin are scheduled to stand trial on May 24, 2010, on the charges in the indictment. An indictment is merely an accusation, and defendants are presumed innocent until proven guilty at trial beyond a reasonable doubt.
In addition to the indictment charging Azrelyant, Finkle, Strusa, Zfati, Iskandarova and Holovkin, five indictments were unsealed on Nov. 19, 2009, charging an additional 20 people with engaging in a scheme to steal millions of dollars from the FCC’s VRS program. In all, 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.
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’s Department of Justice Fraud Team and the FCC Office of Inspector General.
Statement of the Department of Justice Antitrust Division on Its Decision to Close Its Investigation of the Internet Search and Paid Search Advertising Agreement Between Microsoft Corporation and Yahoo! Inc.Read the Press Release
WASHINGTON — The Department of Justice’s Antitrust Division issued the following statement today after announcing the closing of its investigation into the proposed Internet search and paid search advertising agreement between Microsoft Corporation and Yahoo! Inc.:
"The Antitrust Division obtained extensive information from Microsoft, Yahoo! and a wide range of market participants. Experience and expertise developed during our 2008 investigation of the proposed Google/Yahoo! search advertising agreement also informed our analysis. After a thorough review of the evidence, the division has determined that the proposed transaction is not likely to substantially lessen competition in the United States, and therefore is not likely to harm the users of Internet search, paid search advertisers, Internet publishers, or distributors of search and paid search advertising technology. In addition, the proposed agreement likely will enable more rapid improvements in the performance of Microsoft’s search and paid search advertising technology than would occur if Microsoft and Yahoo! were to remain separate.
"The proposed transaction will combine the back-end search and paid search advertising technology of both parties. U.S. market participants express support for the transaction and believe that combining the parties’ technology would be likely to increase competition by creating a more viable competitive alternative to Google, the firm that now dominates these markets. Most customers view Google as posing the most significant competitive constraint on both Microsoft and Yahoo!, and the competitive focus of both Microsoft and Yahoo! is predominately on Google and not on each other.
"The search and paid search advertising industry is characterized by an unusual relationship between scale and competitive performance. The transaction will enhance Microsoft’s competitive performance because it will have access to a larger set of queries, which should accelerate the automated learning of Microsoft’s search and paid search algorithms and enhance Microsoft’s ability to serve more relevant search results and paid search listings, particularly with respect to rare or "tail" queries. The increased queries received by the combined operation will further provide Microsoft with a much larger pool of data than it currently has or is likely to obtain without this transaction. This larger data pool may enable more effective testing and thus more rapid innovation of potential new search-related products, changes in the presentation of search results and paid search listings, other changes in the user interface, and changes in the search or paid search algorithms. This enhanced performance, if realized, should exert correspondingly greater competitive pressure in the marketplace.
"Although this particular transaction is not likely to cause harm, the department will continue to be vigilant in our enforcement of the antitrust laws in the search and paid search advertising industry.
"The offices of the attorneys general from California and Washington actively participated in the division’s investigation of the proposed transaction."
The division provides this statement under its policy of issuing statements concerning the closing of investigations in appropriate cases. This statement is limited by the division’s obligation to protect the confidentiality of certain information obtained in its investigations. As in most of its investigations, the division’s evaluation has been highly fact-specific, and many of the relevant underlying facts are not public. Consequently, readers should not draw overly broad conclusions regarding how the division is likely in the future to analyze other collaborations or activities, or transactions involving particular firms. Enforcement decisions are made on a case-by-case basis, and the analysis and conclusions discussed in this statement do not bind the division in any future enforcement actions. Guidance on the division’s policy regarding closing statements is available at: http://www.usdoj.gov/atr/public/guidelines/201888.htm.
Justice Department Signs a Settlement Agreement with North Carolina Company to Ensure Fair Treatment in the WorkplaceRead the Press Release
WASHINGTON – The Justice Department today announced a settlement agreement with Sunlight Inc., doing business as Beauty Smart, of Durham, N.C., to resolve allegations of a pattern or practice of discrimination in recruitment and hiring on the basis of national origin. The agreement was reached under the anti-discrimination provision of the Immigration and Nationality Act (INA), which prohibits workplace discrimination on the basis of citizenship status and national origin.
Under the agreement, the employer must eliminate preferences for workers of Korean origin, ensure equal treatment regardless of national origin in its recruitment and hiring practices, and maintain applicant and other records that will permit the Justice Department to monitor the employer’s compliance with the agreement. In addition, the employer will pay $2,000 in lost wages to an applicant who was allegedly denied the opportunity to apply for a job because of her national origin, as well as a $500 civil penalty to the United States.
"Earning a living is key to achieving the American dream, and all individuals deserve to know they will be free of national origin discrimination as they pursue employment," said Thomas E. Perez, Assistant Attorney General for Civil Rights. "The Division is committed to educating employers about how to comply with the anti-discrimination provision but, when the law is broken, we will take decisive action to enforce it."
The anti-discrimination provision of the INA prohibits citizenship status and national origin discrimination in recruitment, hiring and firing; discriminatory documentary practices during the employment eligibility verification (Form I-9) process; and retaliation for filing a charge, assisting in an investigation, or asserting rights under the anti-discrimination provision. The Office of Special Counsel for Immigration Related Unfair Employment Practices (OSC) in the Department’s Civil Rights Division enforces the anti-discrimination provision. Workers who believe they have been the victim of citizenship status or national origin discrimination should contact OSC on its worker hotline at 1-800-255-7688. Employers seeking guidance on how to avoid discriminatory policies and practices may contact OSC at 1-800-255-8155.
Justice Department Settles with Ohio Child Care Centerto End Discrimination Against Children with AsthmaRead the Press Release
WASHINGTON – The Justice Department today announced a settlement agreement with The Children’s House Inc. of Broadview Heights, Ohio, a suburb of Cleveland, to provide services for children with asthma as required by the Americans with Disabilities Act (ADA).
The Children’s House has agreed to provide required medical assistance to children with asthma whose families seek child care and wish to enroll their children at the center. Previously, the center’s policies required the parents to go to the center to provide asthma treatment to their children, miss routine medication treatments, or forego enrolling their children there.
Parents of a child with asthma complained to the department about a refusal to provide a reasonable modification to The Children’s House’s medication policy that prohibited staff from assisting with asthma medication. The failure to assist with providing the asthma medication at the times instructed by the child’s doctor prevented the child’s attendance and participation in the program.
"Respiratory disabilities should not keep young children from the opportunity to share in the invaluable early childhood learning opportunities offered at quality child care centers," said Assistant Attorney General Thomas E. Perez. "The ADA makes it illegal to discriminate against children with disabilities and their families. This agreement ensures that parents and children will not be denied quality child care based upon their disability."
Under this agreement, The Children’s House Inc. will:
- Ensure that all children with disabilities have an equal opportunity to attend The Children’s House Inc., and to participate in all programs, services or activities provided by The Children’s House Inc.;
- Evaluate, on a case by case basis, the individual needs of children with disabilities wishing to attend The Children’s House Inc. and make reasonable modifications to its policies in order to accommodate children with disabilities;
- Adopt a new medication policy for the administration of asthma medication;
- Provide training about the ADA to the staff at The Children’s House Inc. within sixty days of the effective date of this agreement.
People interested in finding out more about the ADA or the agreement can call the Justice Department's toll-free ADA Information Line at (800) 514-0301 or (800) 514-0383 (TDD), or access its ADA Web site at www.ada.gov.
Federal Grand Jury Indicts New Jersey Resident for Violating the Endangered Species Act and Making False StatementsRead the Press Release
WASHINGTON – James R. Durr, 55, of Wrightstown, N.J., was indicted by a federal grand jury in Camden, N.J., for violating the Endangered Species Act by taking the federally protected bog turtle and for making false statements to authorities, the Justice Department announced today.
Bog turtles, scientific name Clemmys muhlenbergii, are native to New Jersey and have been designated a threatened species under the Endangered Species Act since 1997, due in large part to habitat loss. Bog turtles reside in part in holes in the ground.
The two count indictment returned yesterday alleges that Durr, who owned and operated at least three properties in New Jersey, was engaged in the business of growing plants and flowers for sale to the florist trade. Specifically, the indictment alleges that in December 2005, Durr acquired a property in North Hanover Township in Burlington County, N.J., that he called Turtle Creek Farm.
The property allegedly included a free flowing perennial stream called Turtle Creek that ran into and out of a wetland area on the property that was documented as occupied habitat for threatened bog turtles. The indictment further alleges that when Durr bought the land, he was informed of the presence and location of the bog turtles and knew that work had been done to enhance the habitat for the bog turtles using funds from a federal Wildlife Habitat Incentives Program. The program provides money to farmers to undertake wildlife habitat improvements on their farms.
Shortly after buying the farm, Durr allegedly began to clear a buffer of trees that framed each side of one portion of Turtle Creek. Durr allegedly was advised while clearing was ongoing that there was concern that the tree removal was going to effect the listed bog turtles down stream due to ensuing deposits of silt and sediment. As a result of Durr’s activities, by November 2006, approximately eight to 12 inches of silt allegedly had eroded from the cleared stream banks and adjoining farm fields and were deposited in core bog turtle habitat. By the following June, approximately two feet of coarse sand and fine gravel had been deposited in places in the stream channel allegedly as a result of Durr’s activities.
Consequently, the indictment alleges that between late December 2005 and the present, Durr knowingly and unlawfully took at least one bog turtle in violation of the Endangered Species Act.
The Endangered Species Act and implementing federal regulations prohibit the taking, without a permit, of any threatened species. "Take" means to harass or harm, among other things. "Harass" means to intentionally or negligently act or fail to act in a way that creates the likelihood of injury to wildlife by significantly disrupting normal behavioral patterns which include breeding, feeding or sheltering. "Harm" means an act which actually kills or injures wildlife including through significant habitat modification or degradation where it actually kills or injures wildlife.
An indictment is merely an accusation, and a defendant is presumed innocent unless and until proven guilty in a court of law.
The maximum penalty for a violation of the Endangered Species Act is up to six months in prison and a $25,000 fine. The maximum penalty for making a false statement is up to five years in prison and a $250,000 fine.
The case was investigated by the U.S. Fish and Wildlife Service and is being prosecuted by the Justice Department’s Environmental Crimes Section.
Department of Justice and USDA Announce Historic Settlement in Lawsuit by Black Farmers Claiming Discrimination by USDARead the Press Release
Attorney General Eric Holder and Agriculture Secretary Tom Vilsack today announced the successful resolution of the longstanding litigation known as Pigford II. The settlement agreement reached today, which is contingent on appropriation by Congress, will provide a total of $1.25 billion to African American farmers who alleged that they suffered racial discrimination in USDA farm loan programs. The settlement sets up a non-judicial claims process through which individual farmers may demonstrate their entitlement to cash damages awards and debt relief.
Below is a statement from Attorney General Eric Holder:
"Bringing this litigation to a close has been a priority for this Administration. With the settlement announced today, USDA and the African American farmers who brought this litigation can move on to focus on their future. The plaintiffs can move forward and have their claims heard - with the federal government standing not as an adversary, but as a partner."Below is a statement from Agriculture Secretary Tom Vilsack:
"USDA has made it a top priority to ensure all farmers are treated fairly and equally. We have worked hard to address USDA’s checkered past so we can get to the business of helping farmers succeed. The agreement reached today is an important milestone in putting these discriminatory claims behind us for good and in achieving finality for this group of farmers with longstanding grievances.
"Because this Administration firmly believed that a full and final class-wide settlement was possible, the Administration requested $1.15 billion in the 2010 budget, on top of the $100 million already provided by Congress, to facilitate a settlement. I now urge Congress to provide the funding necessary to ensure that that these farmers and USDA can close this sad chapter and move on.
"As I testified before Congress during my confirmation hearings last year, the USDA under the Obama Administration has made civil rights a top priority, which is why we are working to implement a comprehensive program to take definitive action to move USDA into a new era as a model employer and premier service provider."
In 1999, the USDA entered into a consent agreement with black farmers in which the agency agreed to pay farmers for past discrimination in lending and other USDA programs. Thousands of claims have been adjudicated, but thousands of other claims were not considered on their merits because the affected farmers submitted their claims after the settlement claims deadline.
To address the remaining claims, Congress provided these farmers another avenue for restitution in the 2008 Farm Bill by providing a right to file a claim in federal court. The total amount offered by the federal government in the agreement announced today, $1.25 billion, includes the $100 million appropriated by Congress in Section 14012 of the Farm Bill.
Last May, President Obama announced his plans to include settlement funds for black farmers in the FY 2010 budget to bring closure to their long-standing litigation against the U.S. Department of Agriculture.
The settlement is contingent on Congress appropriating the $1.15 billion that the President requested. Following the appropriation, class members may pursue their individual claims through a non-judicial claims process in front of a neutral arbitrator. Claimants who establish their credit-related claims will be entitled to receive up to $50,000 and debt relief. A separate track may provide actual damages of up to $250,000 through a more rigorous process. The actual value of awards may be reduced based on the total amount of funds made available and the number of successful claims.
A moratorium on foreclosures of most claimants’ farms will be in place until after claimants have gone through the claims process or the Secretary is notified that a claim has been denied. The claims process agreed to by the parties may provide payments to successful claimants beginning in the middle of 2011.
Ensuring equitable treatment of all USDA employees and clients is a top priority for Secretary Vilsack. He has issued a clear policy and a comprehensive plan to improve USDA’s record on Civil Rights and made it clear to all employees that discrimination of any form will not be tolerated at USDA.
Some of the actions taken to transform USDA into a new era as a model employer and premier service provider include:
- USDA revamped the program civil rights complaints system to improve the complaint process. For the first time since 1997, USDA now has investigators on staff to do the field work needed to investigate complaints.
- After a competitive bidding process, USDA has hired outside, private firm to do an independent external analysis of the department’s service delivery programs to identify problem areas and fixes. The firm will consider programs at USDA to identify barriers to equal and fair access for all USDA customers.
- In April, USDA suspended all foreclosures in the Farm Service Agency’s loan program for 90 days to provide an opportunity to review loans that could have been related to discriminatory conduct.
- USDA’s Office of the Assistant Secretary for Civil Rights has initiated a series of unprecedented civil rights trainings for USDA field leadership teams and required trainings for all political appointees and senior departmental leadership.
To try and resolve internal disputes and conflicts early and to enhance the use of alternative dispute resolution at USDA, the department is also establishing a congressionally mandated Ombudsman office to improve dispute resolution efforts.
Alleged Mexican Drug Cartel Leader Extradited from Mexico to United States to Face Federal Drug-trafficking ChargesRead the Press Release
An allegedly high-ranking leader of one of Mexico’s largest drug cartels, whose father allegedly heads a faction of the Sinaloa Cartel and is among Mexico’s most powerful drug kingpins, was extradited today from Mexico to face federal narcotics trafficking conspiracy charges in the United States. Jesus Vicente Zambada-Niebla is believed to be one of the most significant Mexican drug defendants extradited from Mexico to the United States since Osiel Cardenas Guillen, the accused leader of the notorious Gulf Cartel, was extradited in 2007. Today’s development is a result of the continuing close cooperation between the United States and Mexico to investigate and prosecute the leaders of international drug-trafficking cartels.
Zambada-Niebla, 34, who spent approximately 11 months in custody in Mexico, arrived in Chicago after Mexican authorities surrendered him earlier today to U.S. law enforcement agents. He is scheduled to be arraigned Tuesday, February 23 at 11:00 a.m. CST before U.S. District Judge Ruben Castillo in U.S. District Court in Chicago.
Zambada-Niebla was among three dozen defendants who were indicted in Chicago in August 2009 as part of the largest international narcotics conspiracy case ever prosecuted in the Northern District of Illinois. He is also under indictment in a separate case pending in U.S. District Court for the District of Columbia, which is being prosecuted by the Criminal Division’s Narcotic and Dangerous Drug Section. Zambada-Niebla will first face the charges against him in Chicago and then he will face charges in the District of Columbia.
"Through close and sustained cooperation with our partners in Mexico, we are bringing alleged cartel leaders to justice - on both sides of the border," said Assistant Attorney General Lanny A. Breuer of the Criminal Division. "In 2009, Mexico extradited the most defendants ever to the United States in one year, representing our shared commitment and responsibility for disrupting and dismantling these violent and corrosive drug-trafficking organizations."
"We praise Mexico for continuing to extradite Mexican cartel leaders to the United States," said Michele M. Leonhart, Acting Administrator of the Drug Enforcement Administration. "The Sinaloa Cartel has smuggled multi-ton quantities of cocaine and heroin into our country for decades, using intimidation and murder to build and protect their criminal empire. This extradition clearly illustrates the will of the Mexican Government to continue a strong partnership with DEA to target, disrupt and dismantle the powerful Mexican cartels."
"This is an extremely significant development in the United States’ effort to prosecute international drug importation conspiracies wherever the defendants may be operating," said Patrick J. Fitzgerald, U.S. Attorney for the Northern District of Illinois. "The indictment alleges that this organization imported many tons of cocaine and quantities of heroin into the United States, and that this defendant played a central role as a high-ranking member of the alleged conspiracy."
Zambada-Niebla was indicted in Chicago together with Joaquin "el Chapo" Guzman-Loera and Zambada-Niebla’s father, Ismael "el Mayo" Zambada-Garcia, both of whom allegedly directed factions of the Sinaloa Cartel. These factions allegedly coordinated narcotics trafficking with each other, with other Sinaloa Cartel factions, and with other affiliated cartels in an alliance commonly known as "the Federation." The Chicago indictment charges crimes that allegedly occurred between 2005 and 2008, while Guzman-Loera, Zambada-Garcia and Arturo Beltran-Leyva were indicted separately in Brooklyn, N.Y., for alleged drug-trafficking activities between 1990 and 2005. Beltran-Leyva was killed in a stand-off with Mexican authorities in December 2009 in Mexico.
The Chicago indictment charges that Zambada-Garcia and Guzman-Loera, together with seven other high-ranking associates, including their respective sons, Zambada-Niebla and Alfredo Guzman-Salazar, coordinated their narcotics trafficking activities to import multi-ton quantities of cocaine from Central and South American countries, including Colombia and Panama, to the interior of Mexico, using various means of transportation. Then, they allegedly smuggled hundreds of kilograms of cocaine at a time, as well as multi-kilograms of heroin, across the U.S. border to Chicago and throughout the United States.
According to the indictment, Guzman-Loera, Zambada-Garcia, and Zambada-Niebla sought to obtain weapons in the United States and discussed using violence against American and/or Mexican government buildings in retaliation for each country’s enforcement of its narcotics laws and to perpetuate their narcotics trafficking activities.
The District of Columbia indictment charges Zambada-Niebla and his co-defendants with conspiracy to import and distribute cocaine from 1992 until Jan. 28, 2003. According to the indictment, the Zambada-Garcia organization received multi-ton quantities of Colombian cocaine through maritime shipping vessels and then used various means, including planes, trucks and cars, to transport the cocaine across the U.S.-Mexico border. The indictment specifically alleges that the Zambada-Garcia organization distributed cocaine to Los Angeles, Chicago and New York, including 1,003 kilograms of cocaine to the New York/New Jersey area, 1,770 kilograms of cocaine to the Chicago area, and 2-3 kilograms of cocaine to the Los Angeles area. The total estimated value of this cocaine, all of which was allegedly distributed between August 2001 and June 2002, is $47.5 million. In all, the District of Columbia indictment alleges that Zambada-Niebla and his co-defendants transported approximately 12,500 kilograms of cocaine from Colombia through Mexico and into the United States.
The DEA led the investigation in Chicago, together with the Internal Revenue Service Criminal Investigation Division and the Chicago Police Department. Also assisting in the overall investigation were the National Drug Intelligence Center (NDIC); the High-Intensity Drug Trafficking Area (HIDTA) task force; the U.S. Attorney’s Office in Milwaukee and the Milwaukee Police Department; the U.S. Attorney’s Office for the Central District of Illinois; the Chicago and Peoria offices of the FBI; the Chicago offices of the Bureau of Alcohol, Tobacco, Firearms and Explosives, U.S. Immigration and Customs Enforcement, the U.S. Marshals Service, the Cook County Sheriff’s Department and other state and local law enforcement agencies. The investigation was coordinated by the U.S. Attorney’s Office in Chicago, and with the assistance of agents and analysts of the Special Operations Division (SOD), and attorneys from the Criminal Division’s Narcotic and Dangerous Drug Section (NDDS), which is prosecuting related cases. The Chicago case is being prosecuted by Assistant U.S. Attorneys Thomas Shakeshaft and Michael Ferrara.
The investigation in the District of Columbia was led by SOD. The District of Columbia case was originally handled by former NDDS Trial Attorney Patrick Hearn and is now being prosecuted by NDDS Trial Attorneys Mary Mogavero and Glenn Alexander.
The Criminal Division’s Office of International Affairs provided significant assistance with Zambada-Niebla’s extradition.
The department recognizes and appreciates the significant assistance provided by the Government of Mexico and Mexican law enforcement partners in this extradition.
The charges contained in the indictment are merely accusations and the defendant is presumed innocent until proven guilty.
17 February 2010
West Palm Beach, Florida, Resident Charged in Multi-Million Dollar Cramming SchemeRead the Press Release
Willoughby Farr, 46, of West Palm Beach, Fla., has been charged with perpetrating what is known as a cramming scheme, which was designed to place charges on consumers’ telephone bills for collect calls that were not made, the Justice Department and the U.S. Postal Inspector’s Miami Field Office announced today.
According to the just unsealed indictment, from April 2003 to December 2005, Farr used three West Palm Beach companies – Nationwide Connections Inc., Access One Communications Inc. and Connect One Communications Inc.– to defraud consumers. Through these companies, Farr allegedly arranged for local telephone companies to falsely bill consumers for collect calls. Because the charges typically appeared on the last page of consumers’ telephone bills, many paid the charges. The indictment charges Farr with six counts of mail fraud and two counts of wire fraud. Each count carries a maximum statutory term of 20 years in prison, a possible fine and restitution.
Farr was in prison at the time he is alleged to have committed the scheme charged in the indictment. According to the indictment, he therefore hid his ownership of the firms. He also hid his ownership because other firms had cut off his ability to bill for calls due to consumer complaints and state regulators had sued him for illegitimate billing.
“This type of scheme steals from hundreds of thousands of consumers who inadvertently pay toll charges that appear on their phone bills without authorization,” said Assistant Attorney General Tony West. “We will not hesitate to prosecute financial crimes of this nature, but this case stresses the need for consumers to carefully review their telephone bills to make sure fraudulent charges are not included.”
In February 2006, the Federal Trade Commission (FTC) brought a cramming suit against several firms and individuals, including Farr. That suit resulted in a $34,547,140 judgment against Farr.
“We wish to thank the FTC for the civil investigation it conducted, and we commended the efforts of the Postal Inspection Service for its work on the criminal investigation,” said Jeffrey H. Sloman, U.S. Attorney for the Southern District of Florida. “This case demonstrates the effectiveness of cooperative law enforcement efforts which can put an end to fraudulent schemes, and then bring wrongdoers to justice.”
“This investigation demonstrates the collective tenacity of our U. S. Attorney, the Federal Trade Commission and the Postal Inspection Service to protect the American consumer,” said Inspector in Charge Henry Gutierrez. “The Postal Inspection Service is committed to ensuring that the U. S. Mails are never used to defraud.”
An indictment is only an accusation, and the defendants are presumed innocent unless and until proven guilty.
Home Health Agency Owner Pleads Guilty in Connection with Detroit Fraud SchemeRead the Press Release
Detroit-area resident Muhammad Shahab pleaded guilty today for his role in organizing a Detroit-area home health care 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.
Shahab, 50, pleaded guilty today to one count of conspiracy to commit health care fraud before U.S. District Judge Denise Page Hood of the Eastern District of Michigan. At sentencing, scheduled for June 17, 2010, Shahab faces a maximum penalty of 10 years in prison and a $250,000 fine.
According to information contained in plea documents, Shahab helped finance and establish two Detroit-area home health agencies, Patient Choice Home Healthcare Inc. (Patient Choice), and All American Home Care Inc. (All American). Shahab admitted that while operating or being associated with both home health agencies, he and his co-conspirators billed Medicare for home health visits that never occurred.
Shahab admitted that he and his co-conspirators recruited and 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 visited Patient Choice and All American for the purpose of receiving physical or occupational therapy. Shahab admitted that a large number of the beneficiaries were not homebound nor did they need any physical therapy services.
Shahab also admitted to securing physician referrals for medically unnecessary home health services through the payment of kickbacks to physicians or individuals associated with physicians. Shahab employed several physical therapists and physical therapy assistants to sign medical documentation necessary to begin billing for home health care services, including initial payments and payments for each visit to a Medicare beneficiary. Shahab admitted that he knew the physical therapists and physical therapy assistants were not actually conducting a large majority of the visits or treating a large majority of the patients. Shahab admitted to billing and receiving payment from Medicare for the services not rendered or medically unnecessary services.
Between approximately August 2007 and October 2009, Shahab and his co-conspirators at Patient Choice and All American submitted approximately $10,856,130 in claims to the Medicare program for physical and occupational therapy services that were never rendered or were medically unnecessary.
This case was prosecuted by Senior Trial Attorney John K. Neal and Trial Attorney Gejaa T. Gobena of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG. 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
Former U.S. Military Contractor Pleads Guilty to Bribery and Money Laundering Scheme Related to Defense Department Contracts in Support of Iraqi WarRead the Press Release
Former military contractor Terry Hall, 43, of Snellville, Ga., pleaded guilty today to conspiracy to pay more than $3 million in bribes to U.S. Army contracting officials stationed at Camp Arifjan, an Army base in Kuwait, and to money laundering conspiracy, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division.
Terry Hall was indicted on May 6, 2009, along with U.S. Army Major Eddie Pressley, 39, and his wife, Eurica Pressley, 37, both of Harvest, Ala. According to court documents filed in U.S. District Court for the Northern District of Alabama, Hall’s companies received approximately $21 million between 2005 and 2007 in connection with contracts his companies received. To obtain the contracting business and facilitate unlawful payments by other contractors, Hall admitted he made more than $3 million in unlawful payments and provided other valuable items and services to U.S. Army contracting officials stationed at Camp Arifjan, including U.S. Army Major Eddie Pressley, and former Majors John Cockerham, James Momon and Christopher Murray, among others.
According to court documents, Hall owned and operated several companies, including Freedom Consulting and Catering Co., (FCC) and Total Government Allegiance (TGA), which provided goods and services to the U.S. Department of Defense (DoD) in connection with Operation Iraqi Freedom. Hall’s companies received a Blanket Purchase Agreement (BPA) to deliver bottled water in Iraq and a contract to construct a security fence in Kuwait.
A BPA is an indefinite delivery, indefinite quantity contract by which the DoD agrees to pay a contractor a specified price for a particular good or service. Based on a BPA, the DoD is permitted to order the supplies on an as-needed basis, and the contractor is bound by the price agreed upon in the BPA. The term for this type of order by the DoD is a "call."
The case against Hall arose out of a wide-ranging investigation of corruption at the Camp Arifjan contracting office. To date, eight individuals including Hall have pleaded guilty for their roles in the bribery scheme. On Dec. 2, 2009, former Cockerham was sentenced to 210 months in prison and ordered to pay $9.6 million in restitution. According to court documents, Cockerham arranged for Hall’s companies to receive bottled water calls worth more than $2.6 million, as a result of which Hall paid Cockerham approximately $800,000.
According to court documents, Momon arranged for Hall’s companies to receive bottled water calls worth approximately $6.4 million, as a result of which Hall paid Momon more than $300,000. Momon pleaded guilty on Aug. 13, 2008, to receiving bribes from various contractors at Camp Arifjan, including Hall, and is awaiting sentencing.
Also according to court documents, Murray arranged for Hall to receive contracts to construct security fences at Camp Arifjan, as a result of which Hall paid Murray approximately $30,000. Murray pleaded guilty to receiving bribes from various contractors at Camp Arifjan, including Hall, and making a false statement. He was sentenced on Jan. 8, 2009, to 57 months in prison and ordered to pay $245,000 in restitution.
The case against Eddie Pressley and his wife, Eurica Pressley, is scheduled for trial on April 5, 2010. The indictment alleges that the Pressleys received more than $2.8 million in money and other valuable items from Hall, in exchange for Eddie Pressley’s agreement to take official actions to benefit Hall. Eurica Pressley, at her husband’s request, allegedly arranged for an entity named EGP Business Solutions Inc., (EGP) to be incorporated, opened a bank account in the name of EGP, and opened bank accounts in her name in the United States, Dubai, United Arab Emirates and the Cayman Islands, all in order to receive the bribe payments.
The charge of bribery conspiracy carries a maximum prison sentence of five years and a $250,000 fine. The money laundering conspiracy carries a maximum prison sentence of 20 years and a $250,000 fine. According to the court documents, Hall will forfeit $15,757,000 to the U.S. government.
The case is being prosecuted by Trial Attorneys Peter C. Sprung and Edward J. Loya Jr. of the Criminal Division’s Public Integrity Section. The case is being investigated by special agents of the Special Inspector General for Iraq Reconstruction, the Army Criminal Investigation Command, Defense Criminal Investigative Service, the U.S. Immigration and Customs Enforcement, the Internal Revenue Service and the FBI.
The National Procurement Fraud Task Force, created in October 2006 by the Department of Justice, was designed to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in government contracting activity for national security and other government programs.
16 February 2010
Virginia Doctor Pleads Guilty to Conspiracy<br /> Involving Undeclared Swiss Bank AccountRead the Press Release
Dr. Andrew Silva of Sterling, Va., pleaded guilty today to conspiracy to impede the United States and to making a false statement, the Justice Department, Immigration and Customs Enforcement (ICE), U.S. Postal Inspection Service (USPIS) and the Internal Revenue Service (IRS) announced.
Sentencing has been set for May 7, 2010, before U.S. District Judge Liam O’Grady. The defendant was released on his own recognizance. He faces a maximum sentence of ten years in prison and a maximum fine of $500,000.
According to court documents, in 1997, Silva inherited an undeclared bank account from his mother at the Zurich, Switzerland, branch of one of the world’s largest international banks. The bank is headquartered in England and also has offices in Zurich, Geneva, and the Eastern District of Virginia . The account was held in the name of a sham Liechtenstein trust. In 1999, Silva met with an attorney who managed the account in Zurich, Switzerland. The Zurich attorney instructed Silva to keep the account “hush,” to not keep any records relating to the account, and to send coded letters if he wished to meet with the attorney. Further, the Zurich attorney advised Silva that if he transported or mailed less than $10,000 in U.S. currency back to the United States, he would not have to declare the funds to the U.S. government upon re-entry to the United States.
According to court documents, in September 2009, Silva was informed that the international bank was closing his undeclared Swiss account and that he had until the end of the year to travel to Switzerland to withdraw all funds. He made two trips to Zurich in October and November 2009 and met with the Zurich attorney at his office and a Swiss banker at the private wealth office of the international bank. The Zurich attorney and the Swiss banker refused to wire the money to the United States as it would leave a trail for U.S. law enforcement. Instead, they provided him with $235,000 in U.S. currency. Of that total, Silva received $200,000 in two individually wrapped “bricks” of $100,000 of sequentially numbered, new $100 bills.
According to court documents, with the assistance of the Zurich attorney, Silva mailed 26 packages containing over $200,000 in U.S. currency from Switzerland to the United States to himself and another person.
According to court documents, for the years 1997 through 2008, Silva made and subscribed false U.S. Individual Income Tax Returns, Forms 1040, that failed to report on the Schedules B attached to the returns that he had an interest in a financial account in a foreign country. Additionally, Silva failed to report the income he earned on his undeclared Swiss account on his tax returns.
According to court documents, from 1997 through 2008, Andrew Silva failed to file with the Department of the Treasury a Report of Foreign Bank and Financial Accounts on Form TD F 90-22.1 (FBAR) reporting his interest in his undeclared Swiss account that had an aggregate value of more than $10,000 at any time during a particular year.
As part of his plea agreement, Silva agreed to forfeit to the government $211,200 in U.S. currency that law enforcement officials seized from packages that Silva mailed from Switzerland to Silva’s residence in Sterling, Va.
“Today’s plea shows the continued efforts of the Justice Department to investigate and prosecute those citizens who use offshore accounts to hide income and assets,” said John A. DiCicco, Acting Assistant Attorney General of the Justice Department’s Tax Division. “American taxpayers should rest assured that those who do not file accurate tax returns and who utilize offshore accounts to hide money will be investigated, and when appropriate, prosecuted and sent to jail.”
“We are capable of thwarting offshore banking schemes because of the increased cooperation among ICE, Postal Service, and the IRS,” said Neil H. MacBride, U.S. Attorney for the Eastern District of Virginia. “The tax charges in this case came to light because agents caught Mr. Silva structuring cash to avoid reporting requirements, and that kind of coordination is making it possible for us to discover Americans who conceal their wealth overseas and make them pay for their actions.”
“Failing to report the transportation of more than $10,000 into or out of the United States is smuggling,” said Scot R. Rittenberg, Deputy Special Agent in Charge for U.S. Immigration and Customs Enforcement (ICE) in Washington, D.C. “ICE continues to work closely with it federal partners to ensure smugglers are held accountable for their crimes.”
“The U.S. Postal Inspection Service is dedicated to ensuring those that use the U.S. Postal Service to commit crimes are prosecuted to the fullest extent of the law,” said Daniel S. Cortez, Postal Inspector in Charge of the Washington Division. “We have Postal Inspectors throughout the country who work tirelessly to ensure the mail isn’t used to facilitate criminal activity.”
“At this time of year, when hard-working citizens are sitting down to prepare their tax returns, it is especially disappointing to see the overt steps some individuals will take to hide their taxable funds from the government," said IRS Criminal Investigation Chief Victor S. O. Song. "We are determined at the IRS and Department of Justice to halt international tax evasion, and the facts outlined in today's plea are strong indicators that we can and will find this fraudulent activity."
Acting Assistant Attorney General John A. DiCicco commended the criminal agents from ICE, USPIS, and IRS who investigated the case, as well as Assistant U.S. Attorney Gordon Kromberg, Tax Division Senior Litigation Counsel Kevin M. Downing, and Tax Division Trial Attorneys Mark F. Daly and John E. Sullivan, who are prosecuting the case.
United States citizens and residents have an obligation to report to the Internal Revenue Service on the Schedule B of a U.S. Individual Income Tax Return, Form 1040, whether that individual had a financial interest in, or signature authority over, a financial account in a foreign country in a particular year by checking “Yes” or “No” in the appropriate box and identifying the country where the account was maintained. United States citizens and residents have an obligation to report all income earned from foreign bank accounts on the tax return.
United States citizens and residents who had a financial interest in, or signature authority over, a financial account in a foreign country with an aggregate value of more than $10,000 at any time during a particular year were required to file with the Department of the Treasury a FBAR. The FBAR for the applicable year is due by June 30 of the following year.
Individuals who physically transport, mail or ship, or cause to be physically transported, mailed, shipped or received, currency, traveler’s checks, and certain other monetary instruments in an aggregate amount exceeding $10,000 into the United States are required to file a FinCen Form 105, Report of International Transportation of Currency or Monetary Instruments, with the Bureau of Customs and Border Protection (the CMIR).
United States law prohibits individuals from structuring mailings of U.S. currency into the United States in amounts less than $10,000 if the purpose of the structuring was to evade the requirement to file a CMIR.
Justice Department Settles Fair Housing Lawsuit in Nebraska Against the Latvian Tower Condominium Association and Its Former PresidentRead the Press Release
WASHINGTON – The Justice Department’s Civil Rights Division today announced an agreement with the Latvian Tower Condominium Association Inc. and its former president, Karl Tegtmeyer, to settle allegations of discrimination against families with children. Under the consent decree, which must still be approved in federal court in Omaha, Neb., the defendants must pay $112,500 to victims of discrimination and an additional $15,000 to the government as a civil penalty.
This lawsuit arose as a result of a complaint filed with the U.S. Department of Housing and Urban Development (HUD) by a couple who attempted to sell their condominium. After an investigation of the complaint, HUD issued a charge of discrimination and the complainants elected to have the case heard in federal court. The lawsuit alleged that the condominium association maintained rules that barred the sale or rental of condominiums to families with children. The lawsuit also alleged that the condominium association and Tegtmeyer’s conduct constituted a pattern or practice of discrimination, and sought a civil penalty as well as monetary damages for any other persons harmed by the defendants’ actions.
"Federal law guarantees families with children the right to equal access to housing. Settlements such as this one help ensure that all families can enjoy that right," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "The Department of Justice will vigorously pursue violations of the Fair Housing Act."
"This settlement sends a strong message that we will not tolerate discrimination in housing," said Deborah Gilg, U.S. Attorney for the District of Nebraska.
"Housing discriminating against families with children is illegal. Together with the Justice Department, HUD will ensure that neighborhoods are free from discrimination," stated John Trasviña, Assistant Secretary for Fair Housing & Equal Opportunity.
Fighting illegal housing discrimination is a top priority of the Justice Department. The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability.
More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt/. Persons who believe they have experienced or witnessed unlawful housing discrimination may call the Housing Discrimination Tip Line at 1-800-896-7743, e-mail the Justice Department at [email protected], or contact HUD at 1-800-669-9777. More information about the Fair Housing Act can also be found at www.justice.gov/crt/housing or www.hud.gov/fairhousing.
Justice Department Announces Streamlined Grant Solicitation for Tribal CommunitiesRead the Press Release
Associate Attorney General Tom Perrelli announced today that the Justice Department’s grant-making components have created a streamlined approach for American Indian and Alaska Native tribal communities to apply for Fiscal Year (FY) 2010 funding opportunities. The Coordinated Tribal Assistance Solicitation (CTAS) will serve as a single solicitation for existing tribal government-specific grant programs administered by the Office of Justice Programs (OJP), Community Oriented Policing Services (COPS) and the Office on Violence Against Women (OVW). This move comes after consultation with tribal leaders, including sessions at the department’s Tribal Nations Listening Session last year.
"This is a direct result of what we heard from tribal leaders at the department's listening session. Tribal leaders have made it clear that a single application would significantly improve their ability to apply and receive critical federal funding, which so many of their communities depend on," said Associate Attorney General Perrelli. "This comprehensive approach is another step in our efforts to work more effectively with tribal communities to improve public safety in those communities."
The Justice Department solicited input from tribal leaders on how to make a change to a single application process that would work most effectively for tribal grant applicants. For the FY2010 grant process, American Indian and Alaska Native tribal communities will submit a single application for all available tribal government-specific grant programs. This coordinated approach will allow the department’s grant-making components to consider the totality of a tribal community’s overall public safety needs. OJP, COPS and OVW will then coordinate in making award decisions to address these needs on a more comprehensive basis. The Department of Justice has begun providing information about the new process to tribal communities this week, with an expected solicitation process launch in mid-March.
Native communities and tribal consortiums may be eligible for other non-tribal government-specific grant-funding opportunities and are encouraged to submit a separate application to any grant programs for which they may be eligible. OVW’s "Grants to Tribal Domestic Violence and Sexual Assault Coalitions" will not be included in the single solicitation and application; OVW will release a separate solicitation and application and eligible applicants must apply separately for this grant program.
Today’s announcement is part of the Justice Department’s ongoing initiative to increase engagement, coordination and action on public safety in tribal communities.
Coordinated Tribal Assistance Solicitation Fact Sheet
Italian Subsidiary of U.S.-Based Company Agrees to Plead Guilty for Participating in International Price-Fixing ConspiracyRead the Press Release
WASHINGTON — An Italian subsidiary of a U.S.-based company has agreed to plead guilty and to pay a $2.29 million criminal fine for participating in a conspiracy to rig bids, fix prices and allocate market shares of marine hose sold in the United States and elsewhere, the Department of Justice announced today.
A one-count felony charge was filed today in U.S. District Court in Houston, against Parker ITR S.r.l., a manufacturer of marine hose, headquartered in Veniano, Italy. Under the terms of the plea agreement, which is subject to court approval, Parker ITR has agreed to pay a criminal fine and to cooperate fully in the Department’s ongoing antitrust investigation. Parker ITR is the fourth company to be charged in the investigation. To date, nine individuals have been convicted for their involvement in the marine hose conspiracy.
Marine hose is a flexible rubber hose used to transfer oil between tankers and storage facilities. The victims of this conspiracy included companies involved in the off-shore extraction and/or transportation of petroleum products, as well as the U.S. Department of Defense. During the conspiracy, the cartel affected prices for hundreds of millions of dollars worth of marine hose and related products sold worldwide.
Parker ITR is charged with participating in the conspiracy from as early as 1999 until as late as May 2, 2007. According to the charge, Parker ITR and its co-conspirators agreed to allocate shares of the marine hose market and to use a price list for marine hose in order to implement the conspiracy. Parker ITR and its co-conspirators agreed not to compete for one another’s customers either by not submitting prices or bids, or by submitting intentionally high prices or bids, to certain customers. As part of the conspiracy, Parker ITR and its co-conspirators provided information received from customers in the United States and elsewhere about upcoming marine hose jobs to a co-conspirator who served as the coordinator of the conspiracy. Parker ITR received marine hose prices for customers in the United States and elsewhere from the coordinator of the conspiracy and then sold the marine hose to those customers at collusive and noncompetitive prices and then concealed the conspiracy through various means, including code names, private email accounts and telephone numbers.
Parker ITR is charged with violating the Sherman Act, which carries a maximum fine of $100 million for corporations. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
Today’s charge is an example of the department’s commitment to protect U.S. taxpayers from public procurement fraud through its creation of the National Procurement Fraud Task Force. The National Procurement Fraud Initiative, announced in October 2006, is designed to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in contracting activity for national security and other government programs.
The investigation is being conducted by the Antitrust Division’s National Criminal Enforcement Section, the Defense Criminal Investigative Service of the Department of Defense’s Office of Inspector General, the U.S. Navy Criminal Investigative Service and the FBI. Law enforcement agencies from multiple foreign jurisdictions are also investigating or assisting in the ongoing matter.
Anyone with information concerning bid rigging or other anticompetitive conduct in the marine products industry is urged to call the National Criminal Enforcement Section of the Antitrust Division at 202-307-6694 or visit http://www.justice.gov/atr/contact/newcase.htm, or the Long Beach, Calif., Resident Agency of the DCIS at 562-256-2501.
Guyanese National Pleads Guilty to Smuggling Indian Nationals to the United StatesRead the Press Release
Annita Devi Gerald, a Guyanese national, pleaded guilty today to bringing an alien into the United States for commercial gain, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney José Angel Moreno of the Southern District of Texas and U.S. Immigration and Customs Enforcement (ICE) Assistant Secretary John Morton.
Gerald, 52, pleaded guilty today in Houston before U.S. District Court Judge Lynn Hughes. At sentencing, scheduled for May 17, 2010, Gerald faces a mandatory minimum prison sentence of three years, and a maximum penalty of 10 years in prison and a $250,000 fine.
"Today’s guilty plea puts another alien smuggling organizer out of business," said Assistant Attorney General Lanny A. Breuer of the Criminal Division. "Traveling the globe seeking people willing to pay for illegal entry into the United States, this defendant sought personal riches in exchange for disregarding the immigration laws of our country."
"My office will continue to work closely with the Department of Justice and ICE to pursue international smugglers who engage in elaborate schemes to import undocumented and/or fraudulently documented aliens into the United States through Houston and South Texas," said U.S. Attorney José Angel Moreno of the Southern District of Texas.
"ICE targets organizations that try to compromise the integrity of our immigration system for the sake of profit," said ICE Assistant Secretary John Morton . "The network of ICE offices around the world as well as our partnerships with law enforcement agencies around the globe, enable ICE to shut down these human smuggling operations."
According to plea documents, Gerald provided assistance to undocumented aliens from India in their efforts to illegally enter the United States. Gerald admitted that she and her co-conspirators prepared letters of invitation for several Indian nationals from a trading and agricultural company affiliated with Gerald. These letters falsely proclaimed the Indian nationals were farming experts whose expertise was needed for a project in Belize. The letters were used to assist the aliens in obtaining the Belizean visas that enabled them to board aircraft and transit through numerous countries in route to the United States.
According to plea documents, in July 2009, Gerald escorted two Indian nationals on a series of flights from Singapore to Belize. In addition, Gerald admitted to providing lodging for the aliens in Belize while they awaited additional smuggling arrangements; to obtaining a Mexican immigration stamp for one alien’s passport to facilitate domestic travel in Mexico; and arranging for transportation from Belize to Mexico for one of the aliens.
Upon Gerald’s direction, one of the aliens was smuggled into Mexico and then into the United States, according to court documents. Gerald was arrested in Houston on Nov. 17, 2009, on a criminal complaint charging her with conspiracy to commit alien smuggling, before any of the other aliens could be smuggled into the United States.
The investigation was conducted by ICE’s Office of Investigations in Miami and Houston, with the critical assistance of the ICE Attaché offices in El Salvador, Ecuador, Brazil, Singapore and Panama, as well as the ICE Office of Intelligence in Washington, and the Alien Smuggling Interdiction Unit of Customs and Border Protection in Washington. El Salvadoran authorities, particularly the Direción General de Migración y Extranjería (El Salvador Immigrations) and the Grupo Especial de Investigaciones Nacionales e Internacionales (El Salvador Police-GEINI) also provided invaluable assistance.
The case was prosecuted by Trial Attorneys Jerry Massie and Jessica Morris of the Criminal Division’s Domestic Security Section, with the assistance of Assistant U.S. Attorneys Edward Gallagher and Douglas Davis of the Southern District of Texas.
Federal Officials Close the Investigation into the Death of Sean BellRead the Press Release
WASHINGTON – There is insufficient evidence to pursue federal criminal civil rights charges against New York City Police Department (NYPD) officers involved in the fatal shooting of Sean Bell, the Justice Department announced today.
Officials from the department’s Civil Rights Division, the U.S. Attorney’s Office for the Eastern District of New York and the FBI met today with Bell’s family, his fiancée and their representatives to inform them of this decision, as well as with Joseph Guzman and Trent Benefield, friends of Bell who were wounded during the tragic incident.
The department conducted a comprehensive independent investigation of the events surrounding the Nov. 25, 2006, shooting that resulted in Bell’s death. A team of experienced civil rights prosecutors and agents reviewed all of the materials and evidence generated and provided by the Queens County District Attorney’s Office and the NYPD, including witness statements, crime scene evidence, ballistics reports, reconstruction analyses, medical reports, state grand jury proceedings and the state trial record. Federal officials also took additional investigative steps, including interviewing numerous individuals, such as Bell’s friends who witnessed the shooting, and retaining an independent ballistics reconstruction expert to conduct an analysis of significant ballistics evidence and to review the ballistics and reconstruction analyses performed by the NYPD.
Under the applicable federal criminal civil rights laws, prosecutors must establish, beyond a reasonable doubt, that a law enforcement officer willfully deprived an individual of a constitutional right, meaning with the deliberate and specific intent to do something the law forbids. This is the highest standard of intent imposed by law, and is different and higher than the intent standard under the relevant state statutes. Neither accident, mistake, fear, negligence nor bad judgment is sufficient to establish a federal criminal civil rights violation.
After a careful and thorough review, a team of experienced federal prosecutors and FBI agents determined that the evidence was insufficient to prove, beyond a reasonable doubt, that the law enforcement personnel who fired at Bell, Guzman and Benefield acted willfully. Accordingly, the investigation into this incident has been closed.
The Civil Rights Division, the U.S. Attorney’s Office for the Eastern District of New York and the FBI devoted significant time and resources to complete a thorough analysis of the evidence developed during the investigation.
Attorney General Holder Welcomes Judge Susan B. Carbon as Director of Office on Violence Against WomenRead the Press Release
Attorney General Eric Holder today welcomed the confirmation of Judge Susan B. Carbon of Concord, N.H., as the new Director for the Justice Department’s Office on Violence Against Women. Judge Carbon was confirmed by the U.S. Senate last week
“I am pleased to welcome Judge Carbon to the Justice Department and to the Office on Violence Against Women,” said Attorney General Holder. “Bringing greater public awareness and strengthening programs to fight sexual and domestic violence, dating violence and stalking is a top priority for the Department. Judge Carbon will bring strong leadership to this important office and to the Department’s mission to end violence against women."
The Office on Violence Against Women (OVW) provides national leadership in developing the nation's capacity to reduce violence against women through the implementation of the Violence Against Women Act (VAWA). Created in 1995, OVW administers financial and technical assistance to communities across the country that are developing programs, policies, and practices aimed at ending sexual and domestic violence, dating violence, and stalking. Currently, OVW administers two formula grant programs and 17 discretionary grant programs, which were established under VAWA and subsequent legislation. Since its inception, OVW has awarded nearly $4 billion in grants and cooperative agreements to communities throughout the nation.
In September 2009, the Department of Justice launched a year long commemoration of the 15th anniversary of the signing of the VAWA to raise public awareness of violence against women, and to build and strengthen relationships between and among federal, state, local and Tribal law enforcement, advocacy, courts and victim services communities.
Judge Susan Carbon was first appointed to the bench in 1991, and has served as Supervisory Judge of the New Hampshire Judicial Branch Family Division from 1996 until 2010. She is a member of the Governor’s Commission on Domestic and Sexual Violence and chaired New Hampshire’s Domestic Violence Fatality Review Committee. Judge Carbon also served as President of the National Council of Juvenile and Family Court Judges (NCJFCJ) from 2007 to 2008.
12 February 2010
Second Californian Pleads Guilty to False Tax Refund ConspiracyRead the Press Release
WASHINGTON – Ather Ali of Diamond Bar, Calif., pleaded guilty today to conspiracy to defraud the United States, the Justice Department and Internal Revenue Service (IRS) announced.
In December 2008, Ali and Haroon Amin of Upland, Calif., were indicted by a federal grand jury in Riverside, Calif., on charges of engaging in a scheme to file false returns with the IRS using the names and Social Security numbers of deceased individuals. Amin pleaded guilty on Jan. 25, 2010.
According to the indictment, in 2002 and 2003 Amin and Ali filed at least 250 fraudulent returns, falsely stating that these deceased individuals earned wages from which income tax was withheld. These false returns claimed more than $2 million in income tax refunds. Although the IRS rejected the bulk of these refund claims, a number of refund checks were issued and delivered to addresses controlled by Amin, Ali and their co-conspirators, including various mailboxes opened by Ali. Most of these refund checks then were delivered overseas to be deposited in bank accounts in Armenia and Pakistan.
Ali admitted that he was a knowing participant in this scheme. According to the indictment and statements made at the plea hearing, Ali and his co-conspirators prepared various false tax returns using deceased people’s Social Security numbers and other identification information obtained from the Internet. The returns filed as part of the scheme had fictitious Form W-2 wage and tax statements as attachments, falsely stating that the deceased people earned income from various employers. Ali and his co-conspirators created fake W-2 Forms using employer identification numbers that they had obtained from an acquaintance of Amin’s, who was a certified public accountant. Ali admitted using fake forms of identification to open mailboxes in the names of deceased people, from which he collected a number of these fraudulently obtained tax refund checks.
Judge Robert H. Whaley scheduled Ali’s sentencing for June 22, 2010. Ali faces a maximum sentence of five years in prison and a maximum fine of $250,000.
John A. DiCicco, Acting Assistant Attorney General of the Justice Department’s Tax Division, commended the efforts of agents from the IRS Criminal Investigation Division in Laguna Niguel, Calif, as well as Assistant U.S. Attorney Charles E. Pell and Tax Division trial attorney Joseph A. Rillotta, who are prosecuting the case.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at http://www.usdoj.gov/tax.
Justice Department Unveils Plan of Action for Consultation and Coordination with TribesRead the Press Release
The Justice Department today made public its plan of action, submitted to the Office of Management and Budget (OMB), to improve consultation and coordination between the Justice Department and tribal nations, as directed by President Barack Obama’s Memorandum on Tribal Consultation. The Presidential Memorandum, signed on Nov. 5, 2009, at the White House Tribal Nations Conference, directed each federal agency to submit to OMB within 90 days a plan of action to implement President Clinton’s Executive Order 13175 on Consultation and Coordination with Tribal Governments. The Justice Department’s plan was submitted to OMB on January 27, 2010.
The Justice Department’s plan, which is available at: http://justice.gov/opa/documents/exec13175-consultation-policy.pdf, identifies the steps it will take to develop a comprehensive consultation and coordination policy with tribal nations, after robust tribal input. In addition, the department’s submission makes a commitment to:
- expand the role of the Office of Tribal Justice;
- create a Tribal Nations Leadership Council to ensure ongoing communication and collaboration with tribal governments;
- convene consultations between tribal leadership and U.S. Attorneys whose jurisdictions include federally-recognized Indian tribes;
- mandate annual meetings between the department’s grants offices and tribal leadership to discuss grants policies, concerns or funding priorities;
- create a new federal-tribal taskforce to develop strategies and guidance for federal and tribal prosecutions of crimes of violence against women in tribal communities; and
- publish a progress report within 270 days of the Presidential Memorandum evaluating the implementation of these reforms.
The Justice Department’s plan of action was driven largely by input gathered from the department’s own Tribal Nations Listening Session in late October 2009 and from the department’s annual tribal consultation on violence against women, as well as from written comments submitted by tribal governments, groups and organizations to the Justice Department and tribal consultation conference calls conducted by the Office of Tribal Justice.
The department’s plan to improve consultation and coordination with tribal governments comes a month after Attorney General Eric Holder announced sweeping reforms within the department to improve safety on tribal land. The Attorney General also announced that the Justice Department’s FY 2010 appropriation included an additional $6 million for Indian Country prosecution efforts, enabling the department to bring the federal justice system closer to Indian Country. For more information, go to: http://www.justice.gov/opa/pr/2010/January/10-ag-019.html.
Justice Department Announces New Intellectual Property Task Force as Part of Broad IP Enforcement InitiativeRead the Press Release
Attorney General Eric Holder today announced the formation of a new Department of Justice Task Force on Intellectual Property as part of a Department-wide initiative to confront the growing number of domestic and international intellectual property (IP) crimes.
"The rise in intellectual property crime in the United States and abroad threatens not only our public safety but also our economic wellbeing. The Department of Justice must confront this threat with a strong and coordinated response," said Attorney General Holder. "This Task Force will allow us to identify and implement a multi-faceted strategy with our federal, state and international partners to effectively combat this type of crime."
The Attorney General’s announcement follows a summit meeting convened last December by Vice President Biden, a long-standing champion of U.S. intellectual property rights-holders. At that meeting, which was attended by Attorney General Holder and other cabinet heads, the Vice President discussed the importance of stronger enforcement and supported actions to raise the priority of combating IP theft and improving coordination -- including the establishment of an intellectual property task force at the Department of Justice.
"Theft of intellectual property does significant harm to our economy and endangers the health and safety of our citizens," said Vice President Biden. "This administration is committed to stronger and stricter enforcement of intellectual property rights, and this new task force is a step in the right direction."
The Task Force, to be chaired by the Deputy Attorney General, will focus on strengthening efforts to combat intellectual property crimes through close coordination with state and local law enforcement partners as well as international counterparts. It will also monitor and coordinate overall intellectual property enforcement efforts at the Department, with an increased focus on the international aspects of IP enforcement, including the links between IP crime and international organized crime. Building on previous efforts in the Department to target intellectual property crimes, the Task Force will also serve as an engine of policy development to address the evolving technological and legal landscape of this area of law enforcement.
As part of its mission, the Task Force will work closely with the recently established Office of the Intellectual Property Enforcement Coordinator (IPEC), housed in the Executive Office of the President and charged with drafting an Administration-wide strategic plan on intellectual property. As part of its mission, the Task Force will assist IPEC in recommending improvements to intellectual property enforcement efforts.
"Americans produce more technologies, more brands, more creative works and more innovation than any other nation on Earth," said Victoria Espinel, the U.S. intellectual property enforcement coordinator. "President Obama is committed to ensuring that the value created by American workers and enjoyed by communities around the world is protected. The Justice Department’s new task force will play a critical role in supporting the Administration's ongoing efforts to protect American intellectual property and the millions of jobs that depend on it."
The Task Force will include representatives from the offices of the Attorney General, the Deputy Attorney General, and the Associate Attorney General; the Criminal Division; the Civil Division; the Antitrust Division; the Office of Legal Policy; the Office of Justice Programs; the Attorney General’s Advisory Committee; the Executive Office for U.S. Attorneys and the FBI.
As part of its broader intellectual property initiative, the Department will also step up policy engagement with foreign law enforcement partners, develop a plan to expand civil IP enforcement efforts, and leverage existing partnerships with federal agencies and independent regulatory authorities such as the Department of Homeland Security and the Federal Communications Commission.
Justice Department Announces Agreement Protecting the Rights of Spanish-Speaking Voters in Riverside County, CaliforniaRead the Press Release
WASHINGTON — The Justice Department announced today the settlement of a lawsuit against Riverside County, Calif., alleging violations of the rights of Spanish-speaking voters under the Voting Rights Act.
"The right to vote is the foundation of our democracy, and language barriers should never keep citizens from accessing that right," said Thomas E. Perez, Assistant Attorney General in charge of the Justice Department’s Civil Rights Division. "Today’s agreement removes a procedural impediment to voting that hindered significant numbers of citizens from exercising that right. Riverside County should be congratulated for resolving the issue quickly and in a constructive manner."
The settlement agreement with Riverside County provides for a comprehensive Spanish language assistance program for voters, including trained bilingual election officials to be available at polling places where language assistance is needed. The Justice Department’s complaint alleged that the county failed to provide Spanish-language assistance at the polls to many of its Spanish-speaking voters in recent elections. In addition to the settlement agreement which resolves the claims in the complaint, the parties have agreed to a proposed order that will allow federal observers to monitor election day activities in its polling places.
The Voting Rights Act requires that jurisdictions determined by the Census Bureau to have a substantial population of minority-language citizens, such as Riverside County, provide voting materials and assistance in the minority language as well as in English. Enforcement of the language minority provisions of the Voting Rights Act is a significant priority for the Civil Rights Division.
To file complaints about discriminatory voting practices, voters may call the Voting Section of the Civil Rights Division at 1-800-253-3931. More information about the Voting Rights Act and other federal voting rights laws is available on the Department of Justice website at www.justice.gov/crt/voting/index.htm.
Canadian Firm and U.S. Subsidiary to Pay $4 Million <br /> to Settle Lawsuit in Connection with Sale of Defective<br /> Bullet-Proof VestsRead the Press Release
WASHINGTON - Lincoln Fabrics Ltd., a Canadian weaver of ballistic fabrics, and its American subsidiary, have agreed to pay the United States $4 million to settle the United States’ lawsuit against Lincoln for violations of the False Claims Act in connection with their role in the weaving of Zylon fabric used in the manufacture and sale of defective Zylon bullet-proof vests, the Justice Department announced today.
Using Zylon fiber manufactured by Toyobo Corp., Lincoln wove ballistic fabric for the body armor industry. Lincoln’s woven Zylon fabric was used in the manufacture of Zylon bullet-proof vests sold by several companies, including Second Chance Body Armor Inc., First Choice Armor Inc. and Point Blank Body Armor Inc. These vests were purchased by the United States, and by various state, local, and/or tribal law enforcement agencies, who were partially reimbursed by the United States.
The United States alleged that the Zylon in these vests lost its ballistic capability quickly, especially when exposed to heat and humidity. The United States further alleged that Lincoln was aware of the defective nature of the Zylon by at least December 2001, but continued to sell Zylon for use in ballistic armor until August 2005, when the National Institute of Justice issued a report that Zylon degraded quickly in ballistic applications. At that time, all American body armor manufacturers stopped using Zylon in body armor.
In October 2009, the United States filed suit against Lincoln for violations of the False Claims Act and related claims. The settlement announced today resolves this lawsuit.
"Companies that knowingly sell the government defective bulletproof vests not only commit fraud, they put the lives of our law enforcement women and men at risk," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "We will pursue vigorously allegations that these or any other companies manufactured flawed vests, knew about their problems, yet sold them anyway."
This settlement is part of a larger investigation of the body armor industry’s use of Zylon in body armor. As part of today’s agreement, Lincoln has pledged its cooperation in the Government’s on-going investigation. The United States previously has settled with six other participants in the Zylon body armor industry for over $54 million. Additionally, the United States has pending lawsuits against Toyobo Co., Honeywell Inc., Second Chance Body Armor, Inc. and First Choice Armor Inc.
Today’s settlement with Lincoln was the result of an ongoing investigation by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the District of Columbia, the General Services Administration Office of the Inspector General, the Department of Homeland Security Office of Inspector General, the Treasury Inspector General for Tax Administration, the Defense Criminal Investigative Service, the U.S. Army Criminal Investigative Command, the Air Force Office of Special Investigations, the Department of Energy Office of the Inspector General, the U.S. Agency for International Development Office of the Inspector General and the Defense Contracting Audit Agency.
This settlement is part of the government’s emphasis on combating fraud. One of the most powerful tools in that effort is the False Claims Act. The Justice Department’s total recoveries in False Claims Act cases since January 2009 have topped $3 billion.
10 February 2010
Virginia Resident Pleads Guilty to Bribing <br /> Former Panamanian Government Officials in Connection with Maritime ContractRead the Press Release
A Virginia resident pleaded guilty today in connection with his role in a conspiracy to pay bribes to former Panamanian government officials, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Neil H. MacBride of the Eastern District of Virginia; John Perren, Acting Assistant Director in Charge of the FBI’s Washington Field Office; Jennifer Smith Love, Special Agent in Charge of the FBI’s Richmond Field Office; and John P. Torres, Special Agent in Charge of U.S. Immigration and Customs Enforcement’s (ICE) Washington, D.C., office.
John W. Warwick, 64, of Virginia Beach, Va., pleaded guilty before U.S. District Court Judge Henry E. Hudson in Richmond, Va., to a one-count indictment charging him with conspiring to make corrupt payments to foreign government officials for the purpose of securing business for Ports Engineering Consultants Corporation (PECC) in violation of the Foreign Corrupt Practices Act (FCPA). Warwick was indicted on Dec. 15, 2009. PECC, a company incorporated under the laws of Panama, was affiliated with an engineering firm based in Virginia Beach. According to the indictment, PECC was created so that Warwick, co-conspirator Charles Jumet, the engineering firm and others could corruptly obtain certain maritime contracts from the Panamanian government.
According to court documents, Warwick and Jumet participated in a conspiracy to pay money secretly to Panamanian government officials for awarding contracts to PECC to maintain lighthouses and buoys along Panama’s waterway. In December 1997, the Panamanian government awarded PECC a no-bid 20-year concession to perform these duties. Upon receipt of the concession, Warwick, Jumet and others authorized corrupt payments to be made to the Panamanian government officials.
In connection with his guilty plea, Warwick admitted that at least from 1997 through approximately July 2003, he, Jumet and others conspired to make corrupt payments totaling more than $200,000 to the former administrator and deputy administrator of the Panama Maritime Authority and to a former, high-ranking elected executive official of the Republic of Panama.
As part of his plea agreement, Warwick has agreed to forfeit $331,000, which represents the proceeds of this crime. At sentencing, scheduled for May 14, 2010, at 10:30 a.m. before Judge Hudson, Warwick faces a maximum of five years in prison and a fine of the greater of $250,000 or twice the gain or loss.
Jumet pleaded guilty on Nov. 13, 2009, to a two-count criminal information charging him with conspiring to make corrupt payments to foreign government officials for the purpose of securing business for PECC, in violation of the FCPA, and making a false statement. Jumet is scheduled to be sentenced on March 26, 2010.
The case was prosecuted by Trial Attorney Rina Tucker Harris of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Michael S. Dry of the U.S. Attorney’s Office for the Eastern District of Virginia. The case was investigated by the FBI’s Washington and Richmond Field Offices, as well as by ICE.
8 February 2010
New Jersey Man Indicted for Threatening Employees of Latino Civil Rights OrganizationsRead the Press Release
WASHINGTON – A federal grand jury in Trenton, N.J., has charged Vincent Johnson of Brick, N.J., with threatening employees of five civil rights organizations that work to improve opportunities for and challenge discrimination against Latinos in the United States, announced Thomas E. Perez, Assistant Attorney General for the Justice Department’s Civil Rights Division, and Paul J. Fishman, U.S. Attorney for the District of New Jersey.
The 14-count indictment, returned by the grand jury on Feb. 4, 2010, alleges that between November 2006 and February 2009, Johnson, using the internet username "Devilfish579", repeatedly sent threatening e-mail communications to employees of the LatinoJustice Puerto Rican Legal Defense and Education Fund; the Mexican American Legal Defense and Educational Fund; the National Council of La Raza; the League of United Latin American Citizens; and the National Coalition of Latino Clergy and Christian Leaders. The indictment further alleges that Johnson intended to place the victims in fear of bodily injury and that Johnson acted because the victims were aiding and encouraging persons of Latino descent to participate without discrimination in activities provided by the federal and state governments.
According to the indictment, among multiple e-mails Johnson sent, in November 2006, he wrote "[d]o you have a last will and testament? If not, better get one real soon." Additionally, in January 2007, Johnson sent two e-mails to the victims, stating "[o]ur guns are loaded and we will take you out as well whether by the courts or by true fire power" and "[i]f the idiots in the organizations which this e-mail is being copied to can’t fathom the serious nature of their actions, then they will be on the hit list just like any illegal alien...actually, they are already on the list." In February 2007, he wrote "I am giving you fair warning that your presence and position is being tracked...you are dead meat...along with anyone else in your organization." In September 2007, he sent two e-mails, in which he wrote "my preference would be to buy more ammunition to deal with the growing chaos created by the pro-illegal alien groups. RIP [names] who are not the friends of our democracy" and "[a]fter reading the article below can you give me simply one good reason why someone should not put a bullet between your eyes for your actions that are promoting lawlessness in this country?"
The indictment charges Johnson with five counts of transmitting threatening communications in interstate commerce and four counts of using a computer service to place a person in reasonable fear of death or serious bodily injury, commonly known as cyberstalking, each of which carries a statutory maximum penalty of five years in prison and a fine of $250,000. Johnson is also charged with five counts of interfering with the exercise of civil rights, each of which carries a maximum penalty of 10 years in prison and a fine of $250,000.
An indictment is merely an accusation and the defendant is presumed innocent unless proven guilty.
The case was investigated by the Washington Field Office of the FBI. The case is being prosecuted by Trial Attorney Benjamin J. Hawk of the Civil Rights Division and Assistant U.S. Attorney in Charge Thomas Eicher of the District of New Jersey.
5 February 2010
U.K. Firm Pleads Guilty to Illegally Exporting <br /> Boeing 747 Aircraft to IranRead the Press Release
Balli Aviation Ltd., a subsidiary of the United Kingdom-based Balli Group PLC, pleaded guilty today in the U.S. District Court for the District of Columbia to a two-count criminal information in connection with its illegal export of commercial Boeing 747 aircraft from the United States to Iran, announced David Kris, Assistant Attorney General for National Security; Channing D. Phillips, U.S. Attorney for the District of Columbia; Thomas Madigan, Acting Deputy Assistant Secretary of Commerce for Export Enforcement; and Adam J. Szubin, Director of the Department of Treasury's Office of Foreign Assets Control.
Under the plea agreement, Balli Aviation Ltd. agreed to pay a $2 million criminal fine and be placed on corporate probation for five years. The $2 million fine, combined with a related $15 million civil settlement among Balli Group PLC, Balli Aviation Ltd., the U.S. Department of Commerce’s Bureau of Industry and Security (BIS), and the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), that was also announced today, represents one of the largest fines for an export violation in BIS history. Under the terms of the related civil settlement, Balli Group PLC and Balli Aviation Ltd. have agreed to pay a civil penalty of $15 million of which $2 million will be suspended if there are no further export control violations. In addition, Balli Aviation Ltd. and Balli Group PLC are denied export privileges for five years, although this penalty will be suspended provided that neither Balli Aviation nor Balli Group commits any export violations and pays the civil penalty. Under the terms of the settlement, Balli Group PLC and Balli Aviation, Ltd. will also have to submit the results of an independent audit of its export compliance program to BIS and OFAC for each of the next five years.
According to count one of the information filed with the court, beginning in at least October 2007, through July 2008, Balli Aviation Ltd. conspired to export three Boeing 747 aircraft from the United States to Iran without first having obtained the required export license from BIS or authorization from OFAC, in violation of the Export Administration Regulations (EAR) and the Iranian Transactions Regulations. More particularly, the information states that Balli Aviation Ltd., through its subsidiaries, the Blue Sky Companies, purchased U.S.-origin aircraft with financing obtained from an Iranian airline and caused these aircraft to be exported to Iran without obtaining the required U.S. government licenses. Further, Balli Aviation Ltd. entered into lease arrangements that permitted the Iranian airline to use the U.S.-origin aircraft for flights in and out of Iran.
Count two of the information states that Balli Aviation Ltd. violated a Temporary Denial Order (TDO) issued by BIS on March 17, 2008, that prohibited the company from conducting any transaction involving any item subject to the EAR. Starting in or about March 2008 and continuing through about August 2008, Balli Aviation Ltd. willfully violated the TDO by carrying on negotiations with others concerning buying, receiving, using, selling and delivering U.S.-origin aircraft which went to the Export Administration Regulations.
"As this case demonstrates, corporations that conduct business with Iran in violation of U.S. export laws and sanctions face serious consequences," said David Kris, Assistant Attorney General for National Security. "The many agents, analysts and attorneys who worked on this successful investigation and prosecution deserve special thanks for their efforts."
"These charges reflect the commitment of the United States to vigorously enforce our laws against corporations that illegally seek to acquire U.S. aircraft from the U.S. on behalf of Iranian customers," said Channing Phillips, Acting U.S. Attorney for the District of Columbia. "Those who seek to profit by violating and circumventing U.S. trade laws should take heed of today’s guilty plea by Balli Aviation."
"The significant fine is a direct consequence of the level of deception used to mislead investigators," said Thomas Madigan, Acting Deputy Assistant Secretary of Commerce for Export Enforcement. "The case agents worked through a complex corporate maze to obtain the facts and bring the violators to justice."
"Today’s case should serve as further warning of Iran’s continued efforts to circumvent sanctions and obtain U.S. technology. Together with our colleagues from the Justice and Commerce departments, OFAC will continue to aggressively pursue both domestic and foreign entities that seek to violate U.S. sanctions programs by exporting goods to Iran from the United States." said Adam J. Szubin, Director, Office of Foreign Assets Control.
In announcing the plea, Assistant Attorney General Kris, Acting U.S. Attorney Phillips, Acting Deputy Assistant Secretary Madigan and OFAC Director Szubin commended Assistant Director for Operations John Sonderman, Special Agent in Charge Rick Shimon, Special Agent Joseph Varga, and Chief Counsel Attorney Gregory Michelsen, all of the Department of Commerce’s Bureau of Industry and Security. They also thanked Trial Attorney Jonathan C. Poling of the Counterespionage Section of the Justice Department’s National Security Division, and Assistant U.S. Attorney Anthony Asuncion of the U.S. Attorney’s Office for the District of Columbia, who are prosecuting this matter.
Resident of India Pleads Guilty in International Online Brokerage “Hack, Pump and Dump” SchemeRead the Press Release
WASHINGTON - A resident of India pleaded guilty today to conspiracy and aggravated identity theft charges arising from an international fraud scheme to "hack" into online brokerage accounts in the United States and use those accounts to manipulate stock prices, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Deborah K.R. Gilg of the District of Nebraska.
Jaisankar Marimuthu, 35, a native of Chennai, India, pleaded guilty to one count of conspiracy to commit wire fraud, securities fraud, computer fraud and aggravated identity theft, and to one count of aggravated identity theft before U.S. District Magistrate Judge F.A. Gossett III in Omaha, Neb. Marimuthu, who was extradited for trial following his arrest in Hong Kong, faces up to seven years in prison, a maximum fine of $500,000 and three years of supervised release following his prison term. Sentencing has been set for April 26, 2010, before U.S. District Court Judge Laurie Smith Camp.
According to the indictment, Marimuthu was part of a conspiracy operated out of Thailand and India from February 2006 through December 2006 in which the prices of thinly-traded securities were fraudulently inflated by hacking into brokerage accounts in the United States and then illegally using the accounts to make large unauthorized purchases of securities in the name of unsuspecting customers. After the price of the securities had been artificially increased or "pumped up" through the bogus trading, Marimuthu admitted that the conspirators’ own holdings of the securities would be sold at a profit. At least 95 customers and nine brokerage firms in the United States have been identified as victims.
Co-defendant Thirugnanam Ramanathan, 37, pleaded guilty on June 2, 2008, to one count of conspiracy to commit wire fraud, securities fraud, computer fraud and aggravated identity theft. Following his arrest in Hong Kong, Ramanathan was extradited on May 25, 2007, to the United States. He was sentenced to two years in prison by Judge Camp, and has since been returned to India upon completion of his sentence. Co-defendant Chockalingham Ramanathan, 36, remains charged on one count of conspiracy, eight counts of computer fraud, six counts of wire fraud, two counts of securities fraud and six counts of aggravated identity theft. Chockalingham Ramanathan remains at large.
The case is being prosecuted by Trial Attorney Richard D. Green of the Computer Crime and Intellectual Property Section; Senior Litigation Counsel Jack Patrick and Trial Attorney Ryan Faulconer of the Fraud Section; and Assistant U.S. Attorney Michael Norris in the District of Nebraska. This case was investigated by the FBI in Omaha.