Latest Records
Newest first across public DOJ and U.S. Attorney press releases.
22 January 2010
U.S. Citizen Pleads Guilty in Connection with Costa Rica-Based<br /> Business Opportunity Fraud SchemeRead the Press Release
WASHINGTON – Stephen Schultz entered a guilty plea in federal district court in Miami to 12 counts of an indictment pending against him, the Justice Department and the U.S. Postal Inspection Service announced today. Schultz pleaded guilty Thursday to one count of conspiracy to commit mail and wire fraud, eight counts of mail fraud, and three counts of wire fraud. The actions against Schultz are part of the government’s continued nationwide crackdown on business opportunity fraud.
Schultz was arrested on Dec. 12, 2008, in Costa Rica following his indictment by a federal grand jury in Miami on Nov. 20, 2008. According to the charges against him, Schultz and a co-conspirator, Jeffrey Pearson, purported to sell beverage and greeting card business opportunities, including assistance in establishing, maintaining, and operating such businesses. Following his arrest in Costa Rica, Schultz was extradited to the United States.
Schultz worked for USA Beverages Inc., Twin Peaks Gourmet Coffee Inc. and Cards-R-Us Inc. Beginning in 2005, USA Beverages sold business opportunities to own and operate coffee beverage display racks. USA Beverages rented office space in Las Cruces, N.M., and otherwise made it appear to potential purchasers that USA Beverages’ operations were fully within the United States. However, USA Beverages actually operated from Costa Rica.
After USA Beverages, Schultz worked for Twin Peaks, which was a Florida and Colorado corporation. Twin Peaks sold business opportunities to own and operate coffee beverage sale display racks. Twin Peaks rented office space in Fort Collins, Colo., to make it appear to potential purchasers that its operations were fully within the United States. In truth, Twin Peaks also operated from Costa Rica.
Schultz next worked for Cards-R-Us, which was a Nevada corporation that sold business opportunities to own and operate greeting card sale display racks. Cards-R-Us rented office space in Reno, Nev., to make it appear to potential purchasers that Cards-R-Us’ operations were fully within the United States. Like USA Beverages and Twin Peaks, Cards-R-Us actually operated out of Costa Rica.
Schultz and his co-conspirators made, and caused others to make, numerous false statements to fraudulently induce the purchase of business opportunities. Potential purchasers were falsely told that the companies were established years earlier, had a significant number of distributors across the country, and had a track record of success. Potential purchasers were referred to references who told false tales of their success as business opportunity owners. Through these and other misrepresentations, purchasers of the business opportunities were led to believe that they would likely earn substantial profits.
"Business opportunity fraud targets Americans who are working hard to start a business and earn an honest living. While these fraud schemes may sometimes operate beyond our borders, they aren’t beyond the reach of United States law," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "The Justice Department is committed to prosecuting those who steal through false promises of financial success."
In pleading guilty, Schultz admitted that his role in the conspiracy resulted in between $2.5 million and $7 million in losses to investors and harmed more than 250 victims. Schultz faces a maximum sentence of 10 years in prison on the conspiracy count, and 25 years on each of the mail and wire fraud counts. He also faces a possible fine and mandatory restitution.
Assistant Attorney General West commended the investigative efforts of the agencies involved in this matter, the Postal Inspection Service and the Federal Trade Commission, which previously brought a related civil suit and made a criminal referral. The Justice Department’s Civil Division is handling the criminal prosecution.
Louisiana Man Convicted of Civil Rights Violationin Connection with Cross-burningRead the Press Release
WASHINGTON – Daniel Earl Danforth of Minden, La., was convicted yesterday by a jury in Shreveport, La., of a civil rights conspiracy, use of fire in the commission of a federal felony, and obstruction of justice in connection with a cross-burning near the home of an interracial couple in Athens, La., the Justice Department announced.
Sentencing has been set for April 14, 2010. At sentencing, Danforth, 31, faces a maximum penalty of 10 years for the civil rights conspiracy; 20 years for obstruction of justice; and an additional 10 years for use of fire.
At trial, evidence revealed that on Oct. 23 or 24, 2008, Danforth agreed with his two cousins to build, erect, and burn a cross near the homes of a cousin and her African American boyfriend (now husband), and other relatives who approved of their interracial relationship. Danforth and his co-conspirators built the cross using two pine trees, wire or cable, and a large nail. One of Danforth’s cousins then went to get diesel fuel to use to burn the cross. Meanwhile, Danforth and his other cousin transported the cross to an area adjacent to the victims’ homes where, using chainsaw gas, they set the cross on fire in order to intimidate the victims. On Oct. 26, 2008, Danforth telephoned a relative who was living with the victims and directed her to the location of the burned cross.
The evidence also showed that several days later, after the defendant and his co-conspirators learned that the FBI was investigating this crime as a potential civil rights violation, Danforth, his cousin who helped transport and burn the cross, and the cousin’s girlfriend formed a plan to get rid of the burned cross to prevent the FBI from discovering it and using it as evidence. Danforth’s cousin then drove Danforth to the woods behind the victims’ homes, where Danforth removed the cross, disassembled it and hid it in the woods in an effort to thwart the FBI investigation.
"The defendant and his co-conspirators, driven by hatred, threatened a family with violence simply because they associated with persons of another race. Incidents of this kind have no place in this country, but they are regrettably all too common," said Assistant Attorney General Thomas E. Perez of the Justice Department’s Civil Rights Division.
"Burning a cross near someone's home to threaten or strike fear and terror in the hearts of other human beings is a criminal act deserving vigorous investigation and punishment. This office will continue to aggressively direct federal law enforcement resources toward investigating and prosecuting those criminals who infringe and violate the civil rights of others," said William J. Flanagan, Acting U. S. Attorney for the Western District of Louisiana.
This case was investigated by the FBI. The case is being prosecuted by Assistant U.S. Attorney Mary J. Mudrick for the Western District of Louisiana and Trial Attorney Erin Aslan from the Justice Department’s Civil Rights Division.
Justice Department to Monitor Election in TexasRead the Press Release
WASHINGTON – The Justice Department today announced that it will monitor the Jan. 23, 2010, special municipal election in the city of Hondo, Texas, to ensure compliance with the anti-discrimination and minority language requirements of the Voting Rights Act of 1965. The Act prohibits discrimination in the election process on the basis of race, color or membership in a minority language group. It also requires certain covered jurisdictions, such as Hondo, to provide language assistance in Spanish.
Under the Act, the Justice Department is authorized to ask the U.S. Office of Personnel Management (OPM) to send federal observers to areas that are certified by the Attorney General or by a federal court order. Federal observers will be assigned to monitor polling place activities in Hondo based on the Attorney General’s certification of Medina County, Texas. The observers will watch and record activities during voting hours at the polling location in Hondo and a Civil Rights Division attorney will coordinate the federal activities and maintain contact with local election officials.
Each year, the Justice Department deploys hundreds of federal observers from OPM, as well as departmental staff, to monitor elections across the country. To file complaints about discriminatory voting practices, including acts of harassment or intimidation, voters may call the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.
Visit http://www.usdoj.gov/crt/voting/index.htm for more information about the Voting Rights Act and other federal voting laws.
Justice Department Files Antitrust Lawsuit Against Dean Foods CompanyRead the Press Release
WASHINGTON — The Department of Justice filed a civil antitrust lawsuit today against Dean Foods Company challenging its April 2009 acquisition of Foremost Farms USA’s Consumer Products Division. The department said that the merger eliminates substantial competition between the two companies in the sale of milk to schools, grocery stores, convenience stores and other retailers in Illinois, Michigan and Wisconsin.
The Department of Justice’s Antitrust Division, along with state attorneys general from Illinois, Michigan and Wisconsin, filed a lawsuit today in U.S. District Court in Milwaukee, seeking to require Dean Foods to sell the dairy processing plants it acquired from Foremost Farms.
Dairy processors, such as Dean Foods and Foremost Farms, purchase raw milk from dairy farms and agricultural cooperatives to pasteurize and package the milk. The processors then distribute and sell the milk to school districts, supermarkets, grocery stores and other commercial customers.
"The purpose of the department’s lawsuit is to restore competition so that schools, grocery stores and other retailers in Illinois, Michigan and Wisconsin, will pay lower prices for their milk," said Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.
The department’s lawsuit not only seeks to undo the 2009 deal but also requires Dean Foods to notify the department at least 30 days prior to any future acquisition involving a milk processing operation.
Dean Foods’ acquisition of Foremost Farms’ two dairy processing plants in De Pere and Waukesha, Wis., eliminated an aggressive competitor against Dean Foods, the department said. Dean Foods and Foremost Farms were the first and fourth largest milk processors in northeastern Illinois, the Upper Peninsula of Michigan (the UP) and Wisconsin, respectively. Dean Foods now has approximately 57 percent of the market for processed milk in northeastern Illinois, the UP and Wisconsin.
The department’s complaint alleges that the transaction reduced competition substantially in the sale of milk to school districts in the UP and Wisconsin. Dean Foods and Foremost Farms were the two best-situated processors from which to purchase milk for numerous school districts in the UP and Wisconsin. After Dean Foods’ acquisition of Foremost Farms’ Consumer Products Division, these districts have been left with a monopoly provider. There are also a substantial number of school districts in the region for which Dean Foods and Foremost Farms were two of only three recent or likely future bidders. These school districts have been left with only two choices after the acquisition.
The department also alleges that the acquisition reduced competition substantially in the sale of milk to supermarkets, grocery stores, and other commercial customers throughout northeastern Illinois, the UP and Wisconsin. Dean Foods’ acquisition deprived these retailers of the benefits of substantial head-to-head competition between Dean Foods and Foremost Farms. Further, the department said that with Foremost Farms eliminated as a competitor, it would be easier for Dean Foods to coordinate with the remaining milk processors, whose competitive decision-making Dean Foods has described as "more predictable" and "rational."
The April 2009 transaction between Dean Foods and Foremost Farms was not required to be reported under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, which requires companies to notify and provide information to the department and the Federal Trade Commission before consummating certain acquisitions. The purchase price of the transaction was less than the minimum reporting threshold.
Dean Foods is a Delaware corporation with its principal place of business in Dallas. It is one of the largest food and beverage producers in the United States, with revenues of $12.5 billion in 2008. Dean Foods’ Dairy Group is the country’s largest processor and distributor of milk and other dairy products.
Foremost Farms is a Wisconsin member-owned business association headquartered in Baraboo, Wis., the members of which are dairy farmers. In 2008, its Consumer Products Division had net sales of $233.7 million. Prior to Dean Foods’ acquisition of its Consumer Products Division, Foremost Farms processed its members’ raw milk at its plants in DePere and Waukesha, Wis., as well as at other facilities.
Justice Department Announces Release of New InformationOnline as Part of President’s Open Government InitiativeRead the Press Release
As part of the Obama Administration’s Open Government Initiative, and in compliance with the Open Government Directive issued by the Office of Management and Budget (OMB), Associate Attorney General Tom Perrelli today announced the online publication of three high-value sets of data not previously made available by the Department of Justice. The new data sets include statistics on crime victimizations, information about compensation for radiation victims, and final reports from federal bankruptcy trustees.
This information is being posted on the department’s Web site and is also available on www.Data.gov . A number of other department components are in the process of identifying and publishing newly available data in machine-readable format, the department said.
The department is releasing information not previously available online to increase accountability and responsiveness; improve public knowledge of the department’s operations; create economic opportunity; and respond to need and demand as identified through public consultation.
"We are committed to achieving the President’s goal of making this the most transparent Administration in history," Perrelli said. "The information we are making available today represents another step in our ongoing commitment toward becoming a more open and accessible Justice Department to the public, the media, academia and others interested in what we do every day."
The three data sets posted today are:
Bureau of Justice Statistics Criminal Victimization (data for 2008)
The survey enables the Bureau of Justice Statistics (BJS) to estimate the likelihood of victimization by rape, sexual assault, robbery, assault, theft, household burglary and motor vehicle theft for the population as a whole, as well as for different segments of the population, such as women, the elderly, members of various racial groups, city dwellers or others.
The report is based on the National Criminal Victimization Survey, the nation’s primary source of information on criminal victimization. Each year, data are obtained from a nationally representative sample of 76,000 households comprising nearly 135,300 persons on the frequency, characteristics and consequences of criminal victimization in the United States.
The Civil Division’s Radiation Exposure Compensation Program
The Radiation Exposure Compensation Program (RECA) will make available three new reports not currently publicly available on line:
- RECA claims as of Jan. 13, 2010 by state/country. The data reflect the number of claims filed, pending, denied, approved, and compensation awarded, by state or country.
- Outreach log since FY 2006. Each time RECA staff attempt to reach an individual, that action is recorded as an "outreach event," with numbers of staff and hours detailed.
- RECA Summary Report FY 1992-2010, containing two charts; one a count of claims received and the second reflecting the number of claims awarded and denied, with award amounts for each fiscal year since 1992.
RECA was passed by Congress in 1990 to provide partial restitution for individuals who developed serious illnesses after exposure to radiation released during atmospheric nuclear tests or after employment in the uranium industry. The program enables claimants to use existing records so that their claims can be resolved in a reliable, objective and non-adversarial manner, with little administrative cost to the person filing the claim.
The U.S. Trustee Program
The U.S. Trustee Program (USTP) is making available certain final reports filed by trustees after a Chapter 7 case with assets is closed. These reports contain the disposition of assets, distribution of funds to creditors, and administrative expenses for the calendar years 2000 to 2008. For privacy reasons, the files will not identify case numbers or the names of debtors or trustees. The USTP is also releasing information on instances where interpreter services were used.
USTP oversees the administration of federal bankruptcy cases, including oversight of approximately 1,100 private trustees who administer Chapter 7 cases. Chapter 7 trustees collect and liquidate non-exempt assets and distribute funds to creditors in accordance with the Bankruptcy Code. In FY 2008, Chapter 7 trustees administered approximately 69,000 Chapter 7 asset cases that generated more than $3 billion in funds.
In addition to the above data sets, other department components have identified and will publish additional high-value data sets including:
Community Oriented Policing Services (COPS) will publish FY 2009 grant award data for the Secure Our Schools (SOS), including number of applicants, number of awards and list of successful applicants with award amount, schools served and items requested. COPS anticipates posting the new data within a few days.
The Federal Bureau of Prisons (BOP) will post the following new statistical graphs and table: graphs showing for each year and month the count and rate of incidents of assault on both staff and other inmates. The graphs are updated monthly and cover each month for the previous five years. BOP will also provide a table showing the count of inmates who have court-imposed financial responsibilities and their current status in meeting them; updated monthly.
BJS is also releasing three additional data files:
- National Corrections Reporting Program 2004; the program annually collects administrative information on adults admitted to and released from prison, and on parole entries and discharges, in participating jurisdictions.
- Census of Jails 2006; the census of jails is conducted every five to seven years, and provides information on one-day counts plus average daily populations, staffing and programs of individual jails
- Annual Survey of Jails 2007; the annual survey of jails collects data from a nationally representative sample of local jails on jail inmate populations, jail capacity and other related information. The 2007 data set marks the first release of facility-level data.
USTP will release next month summary statistical tables on civil enforcement activity, which provide comparison data for the Fiscal Years 2004 to 2009.
Jury Convicts Detroit Area Doctor of Health Care Fraud ConspiracyRead the Press Release
Troy, Mich., physician Toe Myint was convicted today by a Detroit jury of conspiracy to commit health care fraud in a $4.2 million Medicare Fraud scheme, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan; Special-Agent-in-Charge Andrew G. Arena of the FBI’s Detroit Field Office; and Daniel R. Levinson, Inspector General of the Department of Health and Human Services (HHS).
After a week-long trial in Detroit, the jury convicted Dr. Myint of one count of conspiracy to commit health care fraud. The conspiracy count carries a maximum prison sentence of 10 years. Dr. Myint was acquitted on charges of filing three specific false claims. Prior to trial, 10 of Dr. Myint’s co-conspirator defendants pleaded guilty to a variety of Medicare fraud related charges.
Evidence at trial showed that Dr. Myint was the physician at Sacred Hope Center, a Southfield, Mich., clinic that purported to specialize in providing infusion therapy to Medicare beneficiaries. Evidence established that Dr. Myint ordered medications for patients that he knew were not needed. Specifically, Dr. Myint signed patient files ordering infusions and injections of corticosteroids and other medications, despite being aware that the patients did not need the drugs and that Medicare was being billed for the drugs.
Trial evidence established that patients were not referred to Sacred Hope Center or Dr. Myint by their real physicians for any legitimate purpose, but rather were recruited to come to the clinic through the payment of kickbacks. In the six months between September 2006 and March 2007, Dr. Myint and his co-conspirators caused approximately $4.2 million to be submitted to the Medicare program for services that were unnecessary and never provided.
The case was prosecuted by Senior Trial Attorney John K. Neal and Trial Attorney Benjamin D. Singer of the Criminal Division’s Fraud Section. The FBI and the HHS Office of Inspector General (HHS-OIG) conducted the investigation. The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.
Since their inception in March 2007, Strike Force operations in seven districts have obtained indictments of 508 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 HEAT team, go to: www.stopmedicarefraud.gov.
Former U.S. Army Officer Sentenced to 42 Months in Prison for<br /> Bribery and Weapons ConspiracyRead the Press Release
Michael Wheeler, a former lieutenant colonel in the U.S. Army Reserves, was sentenced late yesterday to 42 months in prison for his participation in a wide-ranging bribery conspiracy involving the U.S. government, the Republic of Iraq and the Coalition Provisional Authority - South Central Region (CPA-SC) in Al-Hillah, Iraq, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division. Wheeler was also sentenced by U.S. District Court Judge Mary L. Cooper for the District of New Jersey - Trenton Division to serve three years of supervised release following his prison term and to pay $1,200 in restitution.
Wheeler, 50, of Amherst Junction, Wis., was charged in a 25-count indictment unsealed on Feb. 7, 2007, along with former U.S. Army Colonel Curtis G. Whiteford, former Lt. Col. Debra M. Harrison, and civilians William Driver and Seymour Morris Jr., with various crimes related to a scheme to defraud the CPA-SC. Wheeler was an adviser and project officer for CPA reconstruction projects.
According to testimony at trial, Wheeler, along with Whiteford and Harrison, conspired from December 2003 to December 2005 with at least three others—Robert Stein, at the time the comptroller and funding officer for the CPA-SC; Philip H. Bloom, a U.S. citizen who owned and operated several companies in Iraq and Romania; and former U.S. Army Lt. Col. Bruce D. Hopfengardner—to rig the bids on contracts being awarded by the CPA-SC so that more than 20 contracts were awarded to Bloom. In total, Bloom received approximately $8 million in rigged contracts. Testimony revealed that Bloom, in return, provided Whiteford, Harrison, Wheeler, Stein, Hopfengardner and others with more than $1 million in cash, SUVs, sports cars, a motorcycle, jewelry, computers, business class airline tickets, liquor, promise of future employment with Bloom and other items of value.
Bloom admitted he laundered more than $2 million in currency that Whiteford, Harrison, Wheeler, Hopfengardner, Stein and others stole from the CPA-SC that had been designated for the reconstruction of Iraq. Bloom then used his foreign bank accounts in Iraq, Romania and Switzerland to send some of the stolen money to Harrison, Stein, Hopfengardner and other Army officials in return for them awarding contracts to Bloom and his companies.
"These defendants betrayed the trust and confidence placed in them by both the U.S. government and the people of Iraq," said Assistant Attorney General Lanny A. Breuer. "By using their positions to line their own pockets, they made it more difficult for others to carry out the legitimate goals of rebuilding and reconstruction. We will continue to vigorously investigate and prosecute this kind of corruption, wherever it occurs and no matter who commits it."
At trial, Wheeler was convicted of conspiracy to commit bribery, honest services wire fraud, the interstate transport of stolen property (ITSP) and the possession of unregistered firearms. Whiteford was convicted at trial of conspiracy to commit bribery and ITSP, and Driver pleaded guilty to money laundering on Aug. 5, 2009. Morris was acquitted.
"This sentence illustrates that even military officers are not above the law and will be brought to justice for their participation in defrauding efforts to support Iraqi reconstruction, no matter how complex the fraud scheme," said Acting Assistant Director in Charge John G. Perren of the FBI’s Washington Field Office.
"The sentencing of Michael Wheeler marks the culmination of SIGIR’s lengthy investigation into a wide-ranging bribery, contract fraud, and kickback scheme that occurred in Hilla, Iraq, during 2003-2004" said Stuart W. Bowen Jr., the Special Inspector General for Iraq Reconstruction (SIGIR). "In concert with our partner law enforcement agencies, SIGIR will continue to pursue vigorously its many other ongoing cases to hold accountable those who took advantage of the Iraq reconstruction program to criminally enrich themselves."
"Wheeler and the others abused their positions of trust to line their own pockets," said Homeland Security Assistant Secretary for Immigration and Customs Enforcement (ICE) John Morton. "We hope these sentences deter others from attempting to scheme the government for their own advantage ."
"As a project officer of government contracts, Mr. Wheeler was entrusted to oversee contractors and ensure taxpayer money was spent wisely," said Victor S.O. Song, Chief, Internal Revenue Service Criminal Investigation. "He broke that trust to enrich himself at the expense of the American taxpayers. IRS Criminal Investigation is committed to exposing public corruption at any level by following the money from the crime to the criminal."
On Jan. 29, 2007, co-conspirator Stein was sentenced to nine years in prison for related charges of conspiracy, bribery and money laundering, as well as weapons possession charges, for his role in the same scheme. Stein was also ordered to forfeit $3.6 million for his role in the bribery and money laundering scheme.
On Feb. 16, 2007, co-conspirator Bloom was sentenced to 46 months in prison for related charges of conspiracy, bribery and money laundering for his role in the scheme. Bloom was also ordered to forfeit $3.6 million for his role in the bribery and money laundering scheme.
On June 25, 2007, Hopfengardner was sentenced to 21 months in prison for conspiracy and money laundering related to this scheme. Hopfengardner was also ordered to forfeit $144,500.
On Dec. 8, 2009, Whiteford was sentenced to 60 months in prison for conspiring to commit bribery and ITSP. He was also ordered to forfeit the things of value he received from Stein and others, including a Breitling watch, a Toshiba laptop computer and $10,000 in cash.
On June 4, 2009, Harrison was sentenced to 30 months in prison and ordered to pay $366, 640 in restitution. Harrison pleaded guilty on July 28, 2008, admitting that she took more than $300,000 from the CPA-SC while she was deployed there and that she used some of the stolen money to make improvements at her home. Harrison also admitted that she received a Cadillac Escalade from Bloom and that she helped to move unregistered firearms from a hotel in North Carolina to Stein’s home.
On Dec. 10, 2009, Driver was sentenced to six months home confinement and ordered to pay $36,000 in restitution for his role in laundering portions of stolen CPA money brought from Iraq back into the United States by Harrison, his wife.
These cases are being prosecuted by Trial Attorneys John P. Pearson and Kevin Driscoll of the Criminal Division’s Public Integrity Section, as well as Trial Attorney Ann C. Brickley. The cases are being investigated by the IRS Criminal Investigation; the Special Inspector General for Iraq Reconstruction; ICE; and the FBI-Washington Field Office.
Defense Department Official Sentenced to 36 Months for Espionage, False Statement ChargesRead the Press Release
James Wilbur Fondren Jr. was sentenced today to 36 months in prison, followed by two years of supervised release, for charges involving espionage and making false statements to the FBI.
David Kris, Assistant Attorney General for National Security; Neil H. MacBride, U.S. Attorney for the Eastern District of Virginia; and John Perren, Acting Assistant Director in Charge of the FBI’s Washington Field Office, made the announcement.
Fondren, 62, worked at the Pentagon and, from August 2001 through Feb. 11, 2008, was the Deputy Director, Washington Liaison Office, U.S. Pacific Command (PACOM). He held a top secret security clearance, worked in a Sensitive Compartmentalized Information Facility (SCIF) and had a classified and unclassified computer at his cubicle.
On Sept. 25, 2009, Fondren was convicted by a jury of unlawful communication of classified information by a government employee and two counts of making false statements. According to court documents and evidence at trial, Fondren provided certain classified Defense Department documents and other information to Tai Shen Kuo, a naturalized U.S. citizen from Taiwan from approximately November 2004, to Feb. 11, 2008. Fondren was aware that Kuo had maintained a close relationship with an official of the People’s Republic of China (PRC), to whom Kuo introduced Fondren during a trip the two took to the PRC in March 1999. As Kuo well knew, this individual was an official of the PRC government. Fondren and the PRC official exchanged more than 40 e-mail messages between March 1999 and November 2000.
Fondren was found to have provided classified information through Kuo, under the guise of consulting services, using a business that had Kuo as its sole customer. Fondren would incorporate this information into "opinion papers" that he sold to Kuo. He would also provide Kuo with sensitive, but unclassified Defense Department publications.
The jury also found Fondren guilty of falsely representing to the FBI that everything he wrote to Kuo in his opinion papers was based on information from press and media reports and from his experience and that he had not given Kuo a draft copy of an unclassified document on military strategy.
This investigation was conducted by the FBI. The Air Force Office of Special Investigations (OSI) provided substantial assistance and cooperation throughout the course of the investigation.
The prosecution is being handled by Assistant U.S. Attorneys Neil Hammerstrom and James P. Gillis from the U.S. Attorney’s Office for the Eastern District of Virginia and Trial Attorney Ryan Fayhee from the Counterespionage Section of the Justice Department’s National Security Division.
Attorney General Announces $11 Million from Zylon Settlement Set Aside for Bulletproof VestsRead the Press Release
Today at the National Sheriffs’ Association Winter Conference, Attorney General Eric Holder announced that the Department of Justice will set aside $11 million from settlements with companies that produced Zylon vests to help purchase approximately 26,000 additional bullet-resistant vests through the Bulletproof Vest Partnership (BVP) Program.
“There is nothing more basic, or more important, to our work than keeping our law enforcement officers safe,” Attorney General Holder said. “We are dedicating millions of dollars to the Bulletproof Vest Partnership Program because it’s vital that we protect the people protecting us every day.”
Since 2007, the body armor industry has paid the United States more than $54 million to resolve allegations that it violated the False Claims Act by knowingly manufacturing and selling defective Zylon bulletproof vests. Of this amount, $11 million will be returned to the BVP Program to help purchase approximately 26,000 additional bullet-resistant vests, based on an average price of $800 per vest.
The BVP Program, administered by the Office of Justice Programs’ (OJP) Bureau of Justice Assistance (BJA), protects the lives of law enforcement officers by helping state, local, and tribal governments equip their law enforcement officers with bullet-resistant vests. Since 1999, over 13,100 jurisdictions have participated in the BVP Program, with more than $277.6 million in federal funds used to support the purchase of more than 805,000 vests.
BVP funding covers 50 percent of total vest costs for rural law enforcement agencies with community populations of fewer than 100,000 residents. For larger jurisdictions, the program provides up to 50 percent of funding, depending on the annual appropriation from Congress and the amount of funds requested by the rural jurisdictions that apply.
BVP funds may be used to purchase only vests that meet the minimum performance standards established by OJP’s National Institute of Justice (NIJ) Ballistic Resistance of Body Armor Standard. The NIJ Standard, updated in July 2008, establishes minimum performance requirements and test methods for the ballistic resistance of personal body armor designed to protect the torso against gunfire.
According to the International Association of Chiefs of Police/DuPont Kevlar Survivors' Club, since 1987 there have been over 3,000 recorded cases where individuals working in law enforcement have survived both ballistic and non-ballistic incidents because they were wearing body armor.
For additional information about the BVP Program and the NIJ Ballistic Resistance of Body Armor Standard visit: http://www.ojp.usdoj.gov/bvpbasi/ .
21 January 2010
Wyoming Used Car Dealer Convicted in Federal Court for Odometer TamperingRead the Press Release
WASHINGTON – After a two-week trial, a federal jury in Cheyenne, Wyo., today convicted Randy Lee (aka Jimmy Lee) on eleven of fourteen felony counts with which he was charged, the Justice Department announced. The jury convicted Lee of conspiracy, five counts of odometer tampering, and five counts of securities fraud related to fraudulent motor vehicle titles. The jury acquitted the Cheyenne resident of two counts of providing false odometer certifications and one count of mail fraud. According to the charges and the evidence presented at trial, from as early as 2002 and through at least 2006, the defendant defrauded buyers of used motor vehicles by misrepresenting the mileage of the vehicles when sold.
On July 23, 2009, a Casper, Wyo., grand jury returned an indictment charging Lee and a co-defendant, Jay Lee, in a 28-count indictment alleging the above offenses, all of which related to an odometer tampering scheme. Jay Lee remains at large. Anyone with information on his whereabouts is asked to contact the law enforcement officials identified below. Sentencing for Randy Lee has been scheduled for April 2, 2010.
The indictment alleged that the defendants, who bought and sold vehicles on behalf of a Cheyenne used-auto dealership, purchased pickup trucks in Wyoming and surrounding states, rolled back the odometers to false, lower mileages, obtained fraudulent Wyoming titles, and then resold the trucks to auto dealers and consumers in Wyoming and Colorado. The odometers were often rolled back over 100,000 miles. While some of the vehicles were sold with notice of an odometer discrepancy, none were sold with information about the size of the discrepancy.
"For most people, a car is one of the biggest investments they own, aside from their home. Dishonest dealers who hide a vehicle’s high mileage cheat consumers out of their hard-earned money, impede intelligent buying choices and raise safety concerns by misrepresenting the true condition of the vehicles they sell," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "This sort of financial fraud strikes hard at those who can least afford it, and we will continue vigorously to prosecute those engaging in these illegal practices."
Assistant Attorney General West thanked the agencies which worked collaboratively to achieve this result. The underlying investigation was conducted by the Wyoming Department of Transportation’s Office of Compliance and Investigation and the U.S. Department of Transportation’s National Highway Traffic Safety Administration in Denver. The case was prosecuted by the Department of Justice’s Office of Consumer Litigation.
United States Announces Two Major Clean Air Act New Source Review Settlements at 28 Industrial Plants NationwideRead the Press Release
WASHINGTON—The United States today filed two major Clean Air Act settlements to reduce air emissions from container glass and Portland cement plants throughout the country, announced Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division and Cynthia Giles, Assistant Administrator for the U.S. Environmental Protection Agency’s (EPA) Office of Enforcement and Compliance Assurance.
The settlements cover 15 U.S. plants owned by Saint-Gobain Containers Inc., the nation’s second largest container glass manufacturer, and all 13 U.S. plants owned by the Lafarge Company and two subsidiaries, the nation’s second largest manufacturer of Portland cement. These settlements are the first system-wide settlements for these sectors under the Clean Air Act and require pollution control upgrades, acceptance of enforceable emission limits and payment of civil penalties.
The facilities are estimated to reduce a combined 41,000 tons of sulfur dioxide (SO2), nitrogen oxides (NOx), and particulate matter (PM) each year. SO2, NOx and PM can trigger respiratory difficulties and asthma, and environmental harms such as acid rain, visibility impairments and water quality impacts.
"These two settlements are excellent examples of businesses working with government to achieve compliance at their facilities around the country, which will benefit the health of local communities and the environment," said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. "Enforcing the Clean Air Act's new source review program is a priority, not just in the coal-fired power plant industry, but also in industries like cement and glass manufacturing that have been identified as major sources of air pollution. Companies in these industries should strongly consider the benefits of these types of settlements as we intend to aggressively enforce compliance with the law."
"Consistent with Administrator Lisa P. Jackson’s seven priorities, these settlements call for tough new controls and innovative technologies to cut down on harmful air emissions that threaten the health of millions of Americans," said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. "I am also pleased that 17 states and two local governments have joined as signatories to these actions."
These settlements are part of the federal government’s focus on improving compliance among industries that emit significant amounts of air pollution, including cement manufacturing, glass manufacturing, acid production and coal-fired power. The settlements also reflect the seven key themes EPA Administrator Lisa P. Jackson outlined last week to guide EPA’s work. Installing tough new controls and technology at these facilities will greatly reduce air pollution in the communities that are downwind of the facilities covered by the settlements. The settlements also build on strong state partnerships as 17 states and two local air control agencies are joining in the settlements.
Saint-Gobain Containers
Saint-Gobain Containers Inc. of Muncie, Ind., has agreed, in a consent decree filed today in federal court in Seattle, to install pollution control equipment at an estimated cost of $112 million to reduce emissions of NOx, SO2 and PM by approximately 6,000 tons each year. The settlement covers 15 plants in 13 states. Two of the 15 plants have been closed by Saint-Gobain for independent business reasons.
This is the federal government’s first nationwide Clean Air Act settlement with a glass manufacturer that covers all of a company’s plants. The states of Illinois, Indiana, Louisiana, Commonwealth of Massachusetts, Missouri, North Carolina, Oklahoma, Commonwealth of Pennsylvania, Washington and Wisconsin, as well as the Puget Sound Clean Air Agency and the San Joaquin Valley Unified Air Pollution Control District, joined in today’s settlement.
In addition, as part of the settlement, Saint-Gobain has agreed to pay a $2.25 million civil penalty to resolve its alleged violations of the Clean Air Act’s new source review regulations. Of the $2.25 million civil penalty, Saint-Gobain will pay $1.15 million to the United States and $1.1 million to the 10 states and two local regulatory agencies that joined the case.
The settlement covers the following 15 facilities located in the following cities: Burlington, Wis. (two furnaces); Carteret, N.J. (one furnace) (closed); Dolton, Ill. (three furnaces); Dunkirk, Ind. (two furnaces); Henderson, N.C. (two furnaces); Lincoln, Ill. (one furnace); Madera, Calif. (one furnace); Milford, Mass. (two furnaces); Pevely, Mo. (two furnaces); Port Allegany, Pa.(three furnaces) (one closed); Ruston, La. (two furnaces); Sapulpa, Okla.(three furnaces); Seattle (four furnaces); Waxahachie, Texas (one furnace) (closed); and Wilson, N.C. (two furnaces).
Saint-Gobain has agreed to implement pollution controls, including the installation of the first-ever selective catalytic reduction (SCR) system at a container glass plant in the U.S. Saint-Gobain will also install continuous emission monitoring systems (CEMS) at all of their glass plants.
In the complaint filed concurrently with today’s settlement, the federal government and the 10 state and two local governments alleged that the company constructed new glass furnaces or modified existing ones over the course of two decades without first obtaining pre-construction permits and installing required pollution control equipment. The alleged violations were discovered after an EPA investigation that included inspections, file reviews, information requests, and the review and analysis of data obtained from the company. The Clean Air Act requires major sources of air pollution to obtain such permits before making changes that would result in a significant increase in emissions of any pollutant.
The consent decree, lodged today in the U.S. District Court for the Western District of Washington, is subject to a 30-day public comment period and approval by the federal court.
Lafarge North America
Lafarge North America Inc., based in Herndon, Va., and two of its subsidiaries have agreed in a consent decree filed in federal court in Benton, Ill., to install and implement control technologies at an expected cost of up to $170 million to reduce emissions of NOx by more than 9,000 tons each year and SO2 by more than 26,000 tons per year at their cement plants
The states of Alabama, Illinois, Iowa, Kansas, Michigan, Missouri, New York, Ohio and the Commonwealth of Pennsylvania Department of Environmental Protection, the South Carolina Department of Health and Environmental Control, the Washington State Department of Ecology, the Oklahoma Department of Environmental Quality, and the Puget Sound Clean Air Agency are joining the settlement.
In addition, as part of the settlement, Lafarge has agreed to pay a $5 million civil penalty to resolve alleged violations of the Clean Air Act’s new source review regulations. Of the $5 million civil penalty, Lafarge will pay $3.4 million to the United States and $1.7 million to the 13 participating states and agencies. The facilities included in the settlement are located in or near: Whitehall, Pa.; Ravena, N.Y.; Calera, Ala.; Atlanta; Harleyville, S.C.; Paulding, Ohio; Alpena, Mich.; Tulsa, Okla.; Sugar Creek, Mo.; Buffalo, Iowa; Fredonia, Kan.; Grand Chain, Ill. and Seattle.
Lafarge has agreed to install the first-ever SCR system at a cement plant in the United States. In addition, Lafarge has also agreed to install seven selective non-catalytic reduction (SNCR) systems at long dry cement kilns. This is among the first application of this technology to this type of kiln in the United States. Lafarge will also install CEMS at all of their cement kilns.
In the complaint filed concurrently with today’s settlement, the United States alleged that Lafarge and its subsidiaries, or their predecessors, modified one or more of each of their facilities without first obtaining pre-construction permits and installing required pollution control equipment as required by the Clean Air Act. These violations were discovered as a result of EPA investigations and review of company submitted data. The states and agencies joining in the settlement have made similar allegations in their complaint, which is filed separately.
The consent decree, lodged today in the U.S. District Court for the Southern District of Illinois, is subject to a 30-day public comment period and approval by the federal court.
Nitrogen oxides are one of the main ingredients involved in the formation of ground-level ozone, which can trigger serious respiratory problems. They react to form nitrate particles, acid aerosols, as well as nitrogen dioxides (NO2), which also cause respiratory problems. They also contribute to formation of acid rain, nutrient overload that deteriorates water quality, the creation of atmospheric particles that cause visibility impairment most noticeable in national parks, react to form toxic chemicals and contribute to climate change.
Exposure to SO2 can aggravate asthma, cause respiratory difficulties, and result in emergency room visits and hospitalization. People with asthma, children and the elderly are especially vulnerable to SO2’s effects. Exposure to particulate matter is also linked to respiratory problems like asthma and other adverse health effects.
Copies of the consent decrees are available on the Justice Department Web site at http://www.justice.gov/enrd/Consent_Decrees.html.
State Department Employee Sentenced<br /> for Illegally Accessing Confidential Passport FilesRead the Press Release
A State Department employee was sentenced today to 12 months of probation for illegally accessing 70 confidential passport application files, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division. Susan Holloman, 58, of Washington, D.C., was also ordered by U.S. Magistrate Judge Alan Kay in the District of Columbia to perform 75 hours of community service. On Nov. 9, 2009, Holloman pleaded guilty to a one-count criminal information charging her with unauthorized computer access.
According to court documents, Holloman has worked full-time for the State Department since November 1980, as a file assistant within the Bureau of Consular Affairs. In pleading guilty, Holloman admitted that she had access to official State Department computer databases in the regular course of her employment, including the Passport Information Electronic Records System (PIERS), which contains all imaged passport applications dating back to 1994. The imaged passport applications on PIERS contain, among other things, a photograph of the passport applicant as well as certain personal information including the applicant’s full name, date and place of birth, current address, telephone numbers, parent information, spouse’s name and emergency contact information. These confidential files are protected by the Privacy Act of 1974, and access by State Department employees is strictly limited to official government duties.
In pleading guilty, Holloman admitted that between Feb. 13 and Dec. 5, 2007, she logged onto the PIERS database and repeatedly searched for and viewed the passport applications of 70 celebrities and their families, actors, professional athletes, musicians and other individuals identified in the press. Holloman admitted that she had no official government reason to access and view these passport applications, but that her sole purpose in accessing and viewing these passport applications was idle curiosity.
To date, nine current or former State Department employees or contractors, including Holloman, have pleaded guilty in this continuing investigation. On Sept. 22, 2008, Lawrence C. Yontz, a former Foreign Service Officer and intelligence analyst, pleaded guilty to unlawfully accessing nearly 200 confidential passport files. Yontz was sentenced on Dec. 19, 2008, to 12 months of probation and ordered to perform 50 hours of community service. On Jan. 14, 2009, Dwayne F. Cross, a former administrative assistant and contract specialist, pleaded guilty to unlawfully accessing more than 150 confidential passport files. Cross was sentenced on March 23, 2009, to 12 months of probation and ordered to perform 100 hours of community service. On Jan. 27, 2009, Gerald R. Lueders, a former Foreign Service Officer, watch officer and recruitment coordinator, pleaded guilty to unlawfully accessing more than 50 confidential passport files. Lueders was sentenced on July 8, 2009, to 12 months of probation and ordered to pay a $5,000 fine.
In addition, on July 10, 2009, William A. Celey, a file assistant, pleaded guilty to unlawfully accessing more than 75 confidential passport files. Celey was sentenced on Oct. 23, 2009, to 12 months of probation and ordered to perform 50 hours of community service. On Aug. 26, 2009, Karal Busch, a former citizens services specialist, pleaded guilty to unlawfully accessing more than 65 confidential passport files. Busch was sentenced on Dec. 15, 2009, to 24 months of probation and ordered to perform 25 hours of community service. On Aug. 17, 2009, Kevin M. Young, a contact representative, pleaded guilty to unlawfully accessing more than 125 confidential passport files. Young was sentenced on Dec. 9, 2009, to 12 months of probation and ordered to perform 100 hours of community service. On Oct. 28, 2009, Yvette M. Burrison, a passport specialist, pleaded guilty to unlawfully accessing nearly 100 confidential passport files. A sentencing date has not yet been scheduled for Burrison. On Dec. 11, 2009, Debra Sue Brown, a file assistant, pleaded guilty to unlawfully accessing more than 60 confidential passport files. Brown is scheduled to be sentenced on Mar. 23, 2010.
These cases are being prosecuted by Trial Attorney Armando O. Bonilla of the Criminal Division's Public Integrity Section. The cases are being investigated by the State Department Office of Inspector General.
Smithfield Foods and Premium Standard Farms Charged with Illegal Premerger CoordinationRead the Press Release
WASHINGTON – The Department of Justice today announced a settlement with Smithfield Foods Inc. and Premium Standard Farms LLC that requires the companies to pay a total of $900,000 in civil penalties for violating premerger waiting period requirements.
The Department’s Antitrust Division today filed a civil antitrust lawsuit in U.S. District Court for the District of Columbia, along with the proposed settlement that, if approved by the court, would resolve the lawsuit.
According to the complaint, after Smithfield and Premium Standard announced their proposed merger in September 2006, Smithfield exercised operational control over a significant segment of Premium Standard’s business without observing the premerger waiting period requirement in violation of federal antitrust law. Such conduct, commonly known as "gun jumping" violates the Hart-Scott-Rodino (HSR) Act of 1976.
After entering into the merger agreement, Premium Standard stopped exercising its independent business judgment with respect to hog procurement. Instead, Premium Standard sought Smithfield’s consent for all of the hog procurement contracts that arose during the waiting period, providing Smithfield with the contract terms, including price, quantity and duration. The hog procurement contracts were necessary to Premium Standard’s ongoing business and were entered into in the ordinary course. Requiring a buyer’s approval of the seller’s ordinary course contracts can prematurely transfer operational control, violating premerger notification requirements, the Department said.
"Merging companies must remain independent in their ordinary business operations, including purchasing decisions, until the end of the premerger waiting period," said Christine Varney, Assistant Attorney General in charge of the Department’s Antitrust Division. "Observing the waiting period ensures that the marketplace remains competitive which ultimately benefits consumers."
The HSR Act requires companies planning mergers or acquisitions that meet certain threshold requirements to file premerger notifications with the Department of Justice and Federal Trade Commission. The Act gives the federal antitrust agencies an opportunity before the parties merge to investigate the proposed transactions and determine whether they would violate the antitrust laws. When the HSR Act applies, it requires that companies observe a waiting period before the acquisition occurs. A purpose of the waiting period is to preserve the companies as independent companies in case the proposed merger or acquisition is blocked so that the competition that the antitrust laws protect does not suffer.
Federal courts can assess civil penalties for premerger notification or waiting period violations under the HSR Act in lawsuits brought by the Department of Justice. During the time period relevant to this case, the maximum civil penalty for a party in violation of the HSR Act is $11,000 for each day it is in violation. The Department’s complaint does not challenge the underlying merger, which the companies announced they had closed on May 7, 2007.
Smithfield is headquartered in Smithfield, Va. Premium Standard, now a subsidiary of Smithfield, maintains its principal offices in Princeton, Mo.
Northern Virginia Business Owner Pleads Guilty<br /> to Failure to File Tax ReturnRead the Press Release
WASHINGTON - Dallas S. Hale of Reston, Va., pleaded guilty today to willful failure to file a tax return, the Justice Department and Internal Revenue Service (IRS) announced. Hale appeared before U.S. Magistrate Judge Theresa C. Buchanan in Alexandria, Va.
According to court documents and statements made at the change of plea hearing, Hale owns and operates Dalcorp Advisory Group, a consulting business that helps private businesses secure contracts with the government. Although Hale received $328,440 in income during 2004 as a result of services he rendered through Dalcorp, he failed to timely file a federal income tax return for tax year 2004. The tax loss associated with the charge to which Hale pleaded guilty is $42,770.
Judge Buchanan scheduled Hale’s sentencing for April 27, 2010. Hale faces a maximum sentence of one year in prison and a maximum fine of $100,000.
Acting Assistant Attorney General John A. DiCicco of the Justice Department’s Tax Division thanked the U.S. Attorney’s Office for the Eastern District of Virginia for their assistance in the prosecution of the case. Acting Assistant Attorney General DiCicco commended the investigative efforts of the IRS agents involved in the case, as well as Assistant U.S. Attorney Gene Rossi and Tax Division Trial Attorney Tracy Gostyla 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/.
Columbus Accountant and Realtor Plead Guilty<br /> to Mortgage Fraud & Obstruction of Justice ConspiraciesRead the Press Release
WASHINGTON – Dennis G. Sartain of Hilliard, Ohio; and Bonnie Helt, of Columbus, Ohio, pleaded guilty today to conspiring to commit mortgage fraud, money laundering and obstruction of justice, the Justice Department and Internal Revenue Service (IRS) announced. Sartain, the accountant for co-defendant Thomas Parenteau, pleaded guilty to one count of conspiring to defraud the United States by impeding and impairing the IRS, one count of conspiring to commit money laundering and one count of conspiring to obstruct justice. Helt, a real estate agent for co-defendant Parenteau, pleaded guilty to one count of conspiring to commit bank and wire fraud and one count of conspiring to obstruct justice. Parenteau is scheduled to begin trial on March 8, 2010.
In April 2009, Sartain, Helt and Parenteau were charged with tax fraud, bank and wire fraud, money laundering, and obstruction of justice in a superseding indictment. According to the indictment and statements made at the plea hearing, Sartain conspired with Parenteau and others to file false individual income tax returns for Pamela McCarty with the IRS for the tax years 2000 through 2003. These four tax returns falsely reported substantial losses and generated tax refunds from the IRS and state of Ohio of over $800,000 in total. McCarty, who was Parenteau’s mistress, gave a substantial portion of the fraudulent tax refunds to Parenteau or his nominees.
According to the indictment and statements made at the plea hearing, Sartain conspired with Parenteau, McCarty and others to prepare a $4.5 million fictitious loan application to refinance to improve a 30,000 square foot home. As a result of the fraudulent loan documents, McCarty obtained nearly $4.5 million from one bank and an additional $1.5 million from a second bank, and she transferred the money to Parenteau. From March 2004 through September 2006, Parenteau and Sartain dispersed in excess of $1 million of the loan proceeds back to McCarty by disguising the payments as payroll checks from Your Home Source (YHS) and JSS Investments, rental payments and consulting payments from YHS and other miscellaneous payments. On Jan. 31, 2007, Parenteau and his wife refinanced the 30,000 square foot property and received a $12 million loan, which was used in part to pay off McCarty's existing obligations at the two banks.
According to the indictment and statements made at the plea hearing, Helt admitted that from 2005 through 2007, she, Parenteau, and others negotiated and participated in real estate deals in which they sold luxury homes for a falsely inflated purchase price from the builder in exchange for an undisclosed or disguised kickback. In many of the transactions, the buyers misrepresented their income and assets in order to obtain financing of the inflated purchase price. The buyers and sellers in the transactions attempted to justify the inflated purchase prices by creating false work change orders and addendums which created the appearance that the inflated price represented additional substantial work to be completed on the homes. No such agreement was actually intended by any party. Further, those documents were not disclosed to the lenders. The object of each transaction was to use the loan proceeds in excess of the actual purchase price in order to fund hundreds of thousands of dollars in kickback payments to the buyers. The loans associated with several of the real estate purchases have gone into default.
According to the indictment and statements made at the plea hearing, both Sartain and Helt admitted to conspiring with Parenteau and others to obstruct the IRS criminal investigations of Sartain, Parenteau and others. Sartain and Helt admitted to altering or destroying records as well as lying to federal and local law enforcement agents.
The U.S. District Court Judge Michael H. Watson has not scheduled sentencing date. Sartain faces a maximum sentence of 30 years in prison and a maximum fine of $1 million or twice the monetary loss or gain from the offense. Helt faces a maximum sentence of 35 years in prison and a maximum fine of $1.25 million or twice the monetary loss or gain from the offense.
John DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division, commended the special agents of the IRS Criminal Investigation for the investigation, as well as Tax Division trial attorneys Richard Rolwing, Sean O’Connell and Jessica Nuzzelillo who are prosecuting the case.
20 January 2010
Southern California Pipeline Firm to Pay $1.3 Million to Resolve Pyramid Lake Oil DischargesRead the Press Release
WASHINGTON—Pacific Pipeline Systems LLP, a Long Beach, Calif.-based oil transport company, has agreed to pay a $1.3 million civil penalty and discontinue the use of a section of pipeline through an unstable section of mountains to resolve a Clean Water Act violation, the Justice Department and U.S. Environmental Protection Agency (EPA) announced today.
"The United States brought this case to protect an important body of water, Pyramid Lake," said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. "Through this Clean Water Act settlement, we are protecting Pyramid Lake from future oil spills and receiving a significant civil penalty from Pacific Pipeline."
"Californians expect, deserve and are entitled to clean water. When these environmental laws are violated, EPA will always be vigilant," said Jared Blumenfeld, Regional Administrator of EPA’s Pacific Southwest region. "Today’s successful enforcement settlement addresses multiple flaws in Pacific Pipeline’s system and also provides for a substantial penalty."
The agreement resolves a complaint filed in federal court in Los Angeles for the discharge of crude oil into Pyramid Lake, located about 60 miles northwest of downtown Los Angeles. In March 2005, a landslide caused a portion of Pacific Pipeline Systems’ Line 63, an underground pipeline that runs from Bakersfield, Calif., to Los Angeles to fail.
The resulting pipeline break discharged approximately 3,393 barrels of oil, much of which flowed into Pyramid Lake, which is part of the California Aqueduct and is a potential drinking water supply. Water served through the public water system was not impaired by the discharge.
As part of the agreement, Pacific Pipeline Systems will discontinue use of approximately 70 miles of the Line 63 pipeline that travels through the Tehachapi Mountains, portions of which are geologically unstable. The agreement does allow for the reuse of the pipeline. Prior to that, Pacific Pipeline must perform specific actions to relocate the pipeline into more geologically stable areas or improve its resistance to earth movement.
The consent decree, lodged in the U.S. District Court for the Central District of California, is subject to a 30-day public comment period and approval by the federal court. A copy of the consent decree is available on the Justice Department Web site at http://www.justice.gov/enrd/Consent_Decrees.html.
National Dental Management Company Pays $24 Million to Resolve Fraud AllegationsRead the Press Release
WASHINGTON - The United States today announced that it has settled False Claims Act allegations against FORBA Holdings LLC, a dental management company that provides business management and administrative services to 69 clinics nationwide known as "Small Smiles Centers." Under the agreement, FORBA will pay the United States and participating states $24 million, plus interest, to resolve allegations that it caused bills to be submitted to state Medicaid programs for medically unnecessary dental services performed on children insured by Medicaid, which is funded jointly by the federal and state governments. FORBA has further agreed to put in place various remedial measures designed to prevent similar unlawful conduct from occurring in the future. The government’s investigation of individual dentists is ongoing, and FORBA is cooperating with that investigation by providing information about dentists who may have violated professional standards.
The United States alleged that FORBA was liable for causing the submission of claims for reimbursement for a wide range of dental services provided to low-income children that were either medically unnecessary or performed in a manner that failed to meet professionally-recognized standards of care. These services included performing pulpotomies (baby root canals), placing crowns, administering anesthesia (including nitrous oxide), performing extractions, and providing fillings and/or sealants.
"We have zero tolerance for those who break the law to exploit needy children," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "Illegal conduct like this endangers a child’s well-being, distorts the judgments of health care professionals, and puts corporate profits ahead of patient safety."
Assistant Attorney General West praised the collaborative efforts of the federal and state agencies that made this result possible. The Justice Department’s Civil Division and the U.S. Attorneys’ Offices for the District of Maryland, the Western District of Virginia, the District of South Carolina, and the District of Colorado handled these cases. The Civil Division led the nationwide investigation, which was conducted by the Office of Inspector General for the Department of Health and Human Services, the Federal Bureau of Investigation, and the National Association of Medicaid Fraud Control Units.
To resolve the allegations against it, FORBA will pay $24 million, plus interest. The federal share of the civil settlement is $14,285,645, and the states’ Medicaid share is $9,714,355.25. In addition, as part of the settlement, FORBA has agreed to enter into an expansive five-year Corporate Integrity Agreement with the Office of Inspector General of the Department of Health and Human Services. The agreement provides for procedures and reviews to be put in place to avoid and promptly detect conduct similar to that which gave rise to this matter. Specifically, FORBA must engage external reviewers to monitor its quality of care and reimbursement processes. In addition, the chief dental officer must develop and implement policies and procedures to ensure that the Small Smiles clinics provide services consistent with professionally recognized standards of care. FORBA has also agreed to cooperate in the government’s continuing investigation of individual dentists.
"We will not tolerate Medicaid providers who prey on vulnerable children and seek unjust enrichment at taxpayers’ expense," said Daniel R. Levinson, Inspector General of the U.S. Department of Health and Human Services. "This settlement reaffirms our commitment to protect the health and well-being of Medicaid beneficiaries and to ensure the integrity of this essential health care program."
"Health care providers must be held accountable when they mistreat patients and overcharge insurers," said Rod J. Rosenstein, U.S. Attorney for the District of Maryland. "We are committed to using our affirmative civil enforcement authority to protect patients from inadequate care and protect governmental health coverage programs from fraudulent charges."
The government’s investigation was initiated by three lawsuits filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private citizens to sue on behalf of the United States and share in any recovery. These actions are pending in the U.S. District Courts for the District of Maryland, the Western District of Virginia, and the District of South Carolina. As part of today’s resolution, the three whistleblowers will receive payments totaling more than $2.4 million from the federal share of the settlement.
"In this case, FORBA put greed and profits before the well-being of children," said Timothy J. Heaphy, U.S. Attorney for the Western District of Virginia. "It endangered the health and safety of innocent children and defrauded the taxpayer of millions of dollars. Today’s settlement addresses these egregious acts and sends a clear message that Medicaid fraud will be expeditiously addressed by this Department."
This settlement with FORBA 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 Department of Justice 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 Reaches Settlement with Daily Gazette Company and MediaNews Group Inc.Read the Press Release
WASHINGTON – The Department of Justice announced today that it has reached a proposed settlement with the Daily Gazette Company and MediaNews Group Inc. (now known as Affiliated Media Inc.), that requires the companies to restructure their newspaper joint operating arrangement and take other steps to remedy the anticompetitive effects of the 2004 transaction, which was originally challenged by the department in May 2007.
In May 2007, the department filed a civil antitrust lawsuit alleging that the transaction violated the Clayton and Sherman Acts by consolidating ownership and control of the only two local daily newspapers in Charleston, W.Va., under the Daily Gazette Company and eliminating competition between them. Previously, the two newspapers had been separately owned and controlled, while operating within a newspaper joint operating agreement under the Newspaper Preservation Act. The department alleged that the transaction was part of a plan by the Daily Gazette Company to terminate publication of the Charleston Daily Mail and leave Charleston with a single daily newspaper, the Charleston Gazette.
The proposed settlement requires the companies to restructure their 2004 transaction to address the department’s competitive concerns. Upon settling and restructuring their arrangement, MediaNews Group (Affiliated Media Inc.) will regain independent control over the operations of the Charleston Daily Mail and economic incentives to grow the newspaper. Additionally, the settlement requires the companies to offer substantial discounts of the Charleston Daily Mail in order to rebuild its subscriber base and prohibits the Daily Gazette Company from discriminating against the Charleston Daily Mail in circulation, advertising sales, and other key joint activities. The settlement also requires the companies to continue publishing the Charleston Daily Mail as long as it has not failed financially.
"Today’s settlement resolves the department’s antitrust concerns and allows readers to continue to have a choice between two independent local daily newspapers –the Charleston Gazette and the Charleston Daily Mail," said Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.
The department today filed its proposed settlement in U.S. District Court in Charleston, W.Va. If approved by the court, the proposed settlement would resolve the department’s antitrust concerns.
The proposed settlement, along with the department’s competitive impact statement, will be published in the Federal Register, as required by the Antitrust Procedures and Penalties Act. Any person may submit written comments regarding the proposed final judgment within 60 days of its publication to John R. Read, Chief, Litigation III Section, Antitrust Division, U.S. Department of Justice, 450 5th Street, N.W., Suite 4000, Washington, D.C. 20530 (Tel: 202-307-0468). At the conclusion of the 60-day comment period, the court may enter the proposed final judgment upon a finding that it serves the public interest.
General Reinsurance Corporation Enters into Agreement Resolving Its Role in Fraudulent Reinsurance Transaction with AIGRead the Press Release
WASHINGTON – General Reinsurance Corporation (General Re), a Connecticut–based corporation, has entered into an agreement with the Department of Justice related to its role in a fraudulent scheme from 2000 through 2004 to manipulate AIG’s financial statements, the Justice Department announced. General Re is a subsidiary of Berkshire Hathaway Inc., a company incorporated in Delaware with its principal place of business in Omaha, Neb.
Also as part of the agreement announced today, General Re has agreed to pay $19.5 million to the U.S. Postal Inspection Service Consumer Fraud Fund. General Re previously contributed $5 million to the fund as forfeiture of the illicit $5 million accommodation fee it received from AIG. General Re has agreed to pay $60.5 million through a civil class action settlement to AIG’s injured shareholders. In addition, the U.S. Securities and Exchange Commission (SEC) announced today that General Re has agreed to pay $12.2 million to settle the SEC’s charges related in part to this scheme
As part of its resolution with the Justice Department, General Re has admitted that its most senior management engaged in a scheme to falsely inflate AIG’s reported loss reserves, a key indicator of financial health to insurance industry analysts and investors. According to the statement of facts, the fraud was carried out through the use of two sham reinsurance transactions between subsidiaries of AIG and General Re in response to analysts’ criticism of a $59 million decrease in AIG’s loss reserves for the third quarter of 2000.
According to the statement of facts, the two sham transactions increased AIG’s loss reserves by $250 million in the fourth quarter of 2000 and $250 million in the first quarter of 2001, masking a declining trend in loss reserves in the face of premium growth. AIG restated the transactions in filings with the SEC in May 2005. Evidence presented at the related federal criminal trial of four former General Re officers and one former AIG officer established that when the investigation was disclosed to investors by AIG and through various media outlets between Feb. 14 and March 14, 2005, shares of AIG stock dropped from $73.12 to $61.92. Subsequently, on Oct. 31, 2008, the U.S. District Court presiding over the trial found that AIG’s shareholders lost between $544 million and $597 million as a consequence of the fraudulent scheme.
General Re has admitted that its senior management who were involved in the scheme knew that the true purpose of the transactions was to permit AIG to falsely report increasing loss reserves in its statements to analysts, investors and in its SEC filings. As part of the agreement, General Re admitted its senior management participated in structuring a sham reinsurance transaction and creating a phony paper trail to make it appear as though General Re’s subsidiary, Cologne Re Dublin, had solicited reinsurance from AIG when the evidence demonstrated that the parties knew AIG wanted the transaction to manipulate its financial statements. Additionally, General Re entered into a secret side deal whereby AIG would never have to pay any losses under the contracts; AIG would return to General Re’s subsidiary the $10 million in premiums General Re’s subsidiary paid to AIG and AIG paid General Re an illicit accommodation $5 million fee for entering into the transaction.
The agreement announced today requires General Re, for a term of three years, to maintain significant internal corporate remediation provisions it has already implemented, including: (1) appointment of an independent member to General Re’s Board of Directors, who will also be a member of the Audit Committee; (2) the attendance of General Re’s Audit Committee meetings by representatives of Berkshire Hathaway Inc.; (3) the creation of a Complex Transaction Committee, consisting of senior managers that, among other responsibilities, will review relevant actuarial protocols for reinsurance contracts and will review on a quarterly basis certain reinsurance transactions to ensure that they are not designed to assist other parties in falsifying, manipulating and/or window-dressing its financial statements; (4) to enhance the review and reporting roles of its Internal Audit Group; (5) to establish a Risk Committee charged with examining risk exposure in underwriting transactions; (6) to implement enhanced underwriting rules for reinsurance and deposit transactions; (7) to ensure proper training and ethical compliance in risk-transfer protocols applicable to reinsurance contracts; and (8) to dissolve its subsidiary, Cologne Re Dublin, that had helped to structure the sham transaction.
In addition, the agreement requires General Re to acknowledge its obligation toward restitution to AIG’s shareholders who were injured as a consequence of General Re’s and AIG’s conduct. As part of the agreement, the Justice Department acknowledged that General Re has agreed to contribute $60.5 million, exclusive of attorneys’ fees and expenses, toward a civil settlement with AIG’s injured shareholders, which, when combined with payments contributed or agreed to be contributed by other third-parties involved in the fraudulent scheme, will satisfy the loss amount determined by the U.S. District Court in the related criminal proceedings.
The agreement recognizes General Re’s willingness to conduct an internal investigation; its ongoing cooperation with the Justice Department and the SEC; its disclosure to the Justice Department and the SEC of other unrelated finite reinsurance transactions of concern; its willingness to accept responsibility for the conduct of its senior officers; its agreement to undertake remedial measures; and its demonstration of future compliance with the federal securities laws and Generally Accepted Accounting Principles. These factors contributed to the Department’s agreement not to prosecute General Re for this conduct, provided that General Re satisfies its ongoing obligations under the agreement.
The prosecution of General Re was conducted by Principal Deputy Chief Paul E. Pelletier and Assistant Chief Adam Safwat of the Criminal Division’s Fraud Section. The U.S. Postal Inspection Service participated in the investigation with the Justice Department. The prosecution of the individuals from General Re and AIG was conducted jointly by the Fraud Section, the U.S. Attorney’s Office for the Eastern District of Virginia and the U.S. Attorney’s Office for the District of Connecticut. The Justice Department also acknowledges and expresses its appreciation for the significant assistance provided by the SEC’s Enforcement Division.
Agreement
Agreement Statement of Facts
CEO of Seafood Importer Pleads Guilty to Importing and Selling Falsely Labeled Fish from VietnamRead the Press Release
WASHINGTON—The chief executive officer of Sterling Seafood Corporation located in Cresskill, N.J., pleaded guilty today to importing falsely labeled fish from Vietnam and evading over $60 million in federal tariffs, as well as selling over $500,000 in similarly misbranded fish purchased from another importer in the United States, the Justice Department announced.
Thomas George, 61, of Old Tappan, N.J., made his first appearance in federal court and pleaded guilty before U.S. Magistrate Judge Patty Shwartz for the District of New Jersey to a two-count information charging him with one count of importing falsely labeled goods into the United States and one of selling falsely labeled fish in the United States with the intent to defraud. Sentencing is scheduled for April 28, 2010, before U.S. District Judge Faith S. Hochberg.
"This case is an example of effective coordination among federal law enforcement agencies to investigate illegal activity that hurts economic markets, defrauds consumers and masks the depletion of fishery resources by substituting a lower value farmed species for one being depleted in the wild," said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division.
"Today’s plea reflects this office’s commitment to enforcing customs duties and prosecuting consumer fraud," said Paul J. Fishman, U.S. Attorney for the District of New Jersey. "This office will continue to protect fair competition in the marketplace and consumers’ right to know what they are purchasing."
"ICE will use its global law enforcement experience, expertise and proficiency to investigate, disrupt and dismantle organizations that engage in grand scale consumer fraud, "said Peter T. Edge, Special Agent in Charge of U.S. Immigration and Customs Enforcement’s Office of Investigations in Newark. "While the monetary loss to the U.S. government in this case was significant, American consumers have a right to be protected from improperly labeled seafood."
An investigation by special agents with ICE revealed that from January 2003 to June 2006, George maintained a business relationship through Sterling Seafood with a seafood distribution company located in Vietnam. As part of that business relationship, Sterling Seafood regularly purchased a type of fish, specifically Pagasius hypophthalmus, sometimes referred to as Vietnamese catfish. Sterling Seafood would then resell the product in the United States.
In the interest of fairly regulating commerce in the United States, the U.S. Department of Commerce establishes antidumping duties or tariffs on certain imported products. In January 2003, an anti-dumping duty or tariff was placed on all imports of Vietnamese catfish into the United States because the Vietnamese catfish was being marketed at a significantly lower price than was market rate at the time. That initial anti-dumping order imposed a duty of up to 63.88 percent on fish subject to the order which was adjusted at various later dates based on market conditions.
At his plea hearing, George admitted that from 2004 to 2006, he agreed with the Vietnamese distribution company to engage in a scheme to falsely identify and declare the purchase and importation of the Vietnamese catfish in order to evade the applicable anti-dumping duties. George stated he specifically instructed the Vietnamese company to fraudulently identify the Vietnamese catfish as "grouper" on commercial contracts, purchase orders, and other documents because grouper fish was not subject to any anti-dumping duties. George further admitted that, based upon these false statements and fraudulent documents, he, through Sterling Seafood, avoided over $60 million in anti-dumping duties.
Additionally, George admitted that from 2004 to 2005 he purchased over $500,000 of similarly misbranded fish that was imported by a Virginia corporation from Vietnam and then sold that misbranded fish throughout the United States.
The charge of importing of falsely labeled goods into the United States carries a maximum statutory sentence of two years in prison and a $250,000 fine, or twice the monetary gain derived from the offense. The second count, which charges selling misbranded fish in the United States, carries a maximum statutory sentence of three years in prison and a $250,000 fine, or twice the monetary gain derived from the offense.
In addition, George has agreed to make a $50,000 community service payment to the National Fish and Wildlife Foundation to be expressly designated for research into the identification of fish and other marine organisms.
The case was investigated by special agents with ICE, NOAA Fisheries Office of Law Enforcement, FDA Office of Criminal Investigations. The case is being prosecuted by the U.S. Attorney’s office for the District of New Jersey and the Justice Department’s Environmental Crimes Section in Washington, D.C.
19 January 2010
Twenty-Two Executives and Employees of Military and Law Enforcement Products Companies Charged in Foreign Bribery SchemeRead the Press Release
Update: On December 22, 2011, defendant Giordanella was acquitted of the charge pending against him, and on January 30, 2012, defendants Caldwell and Godsey were acquitted of the charges pending against them. On February 23, 2012, U.S. District Court Judge Richard J. Leon of the District of Columbia granted the government’s motion to dismiss all then-pending charges against the remaining defendants in this matter, and on March 30, 2012, Judge Leon granted the government’s motions to vacate the guilty pleas of, and to dismiss all charges against, defendants Alvirez, Geri, and Spiller.
Twenty-two executives and employees of companies in the military and law enforcement products industry have been indicted for engaging in schemes to bribe foreign government officials to obtain and retain business, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Channing Phillips for the District of Columbia; and Assistant Director Kevin Perkins of the FBI’s Criminal Investigative Division Twenty-one defendants were arrested in Las Vegas yesterday. One defendant was arrested in Miami. The indictments stem from an FBI undercover operation that focused on allegations of foreign bribery in the military and law enforcement products industry.
The 16 indictments unsealed today represent the largest single investigation and prosecution against individuals in the history of DOJ’s enforcement of the Foreign Corrupt Practices Act (FCPA), a law that prohibits U.S. persons and companies, and foreign persons and companies acting in the United States, from bribing foreign government officials for the purpose of obtaining or retaining business. The indictments unsealed today were returned on Dec. 11, 2009, by a grand jury in Washington, D.C.
In connection with these indictments, approximately 150 FBI agents executed 14 search warrants in locations across the country, including Bull Shoals, Ark.; San Francisco; Miami; Ponte Vedra Beach, Fla.; Sarasota, Fla.; St. Petersburg, Fla.; Sunrise, Fla.; University Park, Fla.; Decatur, Ga.; Stearns, Ky.; Upper Darby, Penn.; and Woodbridge, Va. Additionally, the United Kingdom’s City of London Police executed seven search warrants in connection with their own investigations into companies involved in the foreign bribery conduct that formed the basis for the indictments.
"This ongoing investigation is the first large-scale use of undercover law enforcement techniques to uncover FCPA violations and the largest action ever undertaken by the Justice Department against individuals for FCPA violations," said Assistant Attorney General Lanny A. Breuer. "The fight to erase foreign bribery from the corporate playbook will not be won overnight, but these actions are a turning point. From now on, would-be FCPA violators should stop and ponder whether the person they are trying to bribe might really be a federal agent."
"Corrupt payments to foreign officials to obtain or retain business erode public confidence in our free market system and threaten to undermine foreign governments," said U.S. Attorney Channing Phillips. "These indictments set forth serious allegations and reflect the Department's commitment to aggressively investigate and prosecute those who try to advance their businesses through foreign bribery."
"Investigating corruption at all levels is the number one priority of the FBI’s Criminal Division," said Assistant Director Kevin Perkins of the FBI’s Criminal Investigative Division. "In this era of global commerce, the FBI is committed to curbing corruption at home or overseas. Companies should prosper through honest business practices, not the practice of back room deals and bribery."
The indictments allege that the defendants engaged in a scheme to pay bribes to the minister of defense for a country in Africa. In fact, the scheme was part of the undercover operation, with no actual involvement from any minister of defense. As part of the undercover operation, the defendants allegedly agreed to pay a 20 percent "commission" to a sales agent who the defendants believed represented the minister of defense for a country in Africa in order to win a portion of a $15 million deal to outfit the country’s presidential guard. In reality, the "sales agent" was an undercover FBI agent. The defendants were told that half of that "commission" would be paid directly to the minister of defense. The defendants allegedly agreed to create two price quotations in connection with the deals, with one quote representing the true cost of the goods and the second quote representing the true cost, plus the 20 percent "commission." The defendants also allegedly agreed to engage in a small "test" deal to show the minister of defense that he would personally receive the 10 percent bribe.
The indictments charge the following executives and employees of the various companies in the military and law enforcement product industries:
- Daniel Alvirez, 32, and Lee Allen Tolleson, 25, the president and director of acquisitions and logistics at a company in Bull Shoals, Ark., that manufactures and sells law enforcement and military equipment;
- Helmie Ashiblie, 44, the vice president and founder of a company in Woodbridge, Va., that supplies tactical bags and other security-related articles for law enforcement agencies and governments worldwide;
- Andrew Bigelow, 40, the managing partner and director of government programs for a Sarasota, Fla., company that sells machine guns, grenade launchers and other small arms and accessories;
- R. Patrick Caldwell, 61, and Stephen Gerard Giordanella, 50, the current and former chief executive officers of a Sunrise, Fla., company that designs and manufactures concealable and tactical body armor;
- Yochanan R. Cohen, aka Yochi Cohen, 47, the chief executive officer of a San Francisco company that manufactures security equipment, including body armor and ballistic plates;
- Haim Geri, 50, the president of a North Miami Beach, Fla., company that serves as a sales agent for companies in the law enforcement and military products industries;
- Amaro Goncalves, 49, the vice president of sales for a Springfield, Mass., company that designs and manufactures firearms, firearm safety/security products, rifles, firearms systems and accessories;
- John Gregory Godsey, aka Greg Godsey, 37, and Mark Frederick Morales, 37, the owner and agent of a Decatur, Ga., company that sells ammunition and other law enforcement and military equipment;
- Saul Mishkin, 38, the owner and chief executive officer of an Aventura, Fla., company that sells law enforcement and military equipment;
- John M. Mushriqui, 28, and Jeana Mushriqui, 30, the director of international development and general counsel/U.S. manager of an Upper Darby, Penn., company that manufactures and exports bulletproof vests and other law enforcement and military equipment;
- David R. Painter, 56, and Lee M. Wares, 43, the chairman and director of a United Kingdom company that markets armored vehicles;
- Pankesh Patel, 43, the managing director of a United Kingdom company that acts as sales agent for companies in the law enforcement and military products industries;
- Ofer Paz, 50, the president and chief executive officer of an Israeli company that acts as sales agent for companies in the law enforcement and military products industries;
- Jonathan M. Spiller, 58, the owner and president of a Ponte Vedra Beach, Fla., company that markets and sells law enforcement and military equipment;
- Israel Weisler, aka Wayne Weisler, 63, and Michael Sacks, 66, owners and co-chief executive officers of a Stearns, Ky., company that designs, manufactures and sells armor products, including body armor;
- John Benson Wier III, 46, the president of a St. Petersburg, Fla., company that sells tactical and ballistic equipment.
All of the defendants except Giordanella were arrested yesterday by FBI agents in Las Vegas. Giordanella was arrested in Miami, also by FBI agents.
Each of the indictments allege that the defendants conspired to violate the FCPA, conspired to engage in money laundering, and engaged in substantive violations of the FCPA. The indictments also seek criminal forfeiture of the defendants’ ill gotten gains.
The maximum prison sentence for the conspiracy count and for each FCPA count is five years. The maximum sentence for the money laundering conspiracy charge is 20 years in prison.
These cases are being prosecuted by Assistant Chief Hank Bond Walther and Trial Attorney Laura N. Perkins of the Criminal Division’s Fraud Section, and Matthew C. Solomon of the U.S. Attorney’s Office for the District of Columbia. The cases were investigated by the FBI Washington Field Office squad that specializes in investigations into FCPA violations.
Daniel Alvirez And Lee Allen Tolleson - Indictment
Helmie Ashiblie - Indictment
Ofer Paz - Indictment
Andrew Bigelow Indictment
R. Patrick Caldwell And Stephen Gerard Giordanella - Indictment
Haim Geri Indictment
Saul Mishkin - Indictment
John M. Mushriqui And Jeana Mushriqui - Indictment
Jonathan M. Spiller - Indictment
John Benson Wier III - Indictment
Amaro Goncalves - Indictment
David R. Painter and Lee M. Wares - Indictment
Israel Weisler - Indictment
Pankesh Patel - Indictment
John Gregory Godsey - Indictment
Yochanan R.Cohen - Indictment
Justice Department Settles Lawsuit Alleging HIV Discrimination by RV Resort in AlabamaRead the Press Release
WASHINGTON – The Justice Department today announced the settlement of an Americans with Disabilities Act (ADA) discrimination lawsuit against Wales West LLC, owner and operator of Wales West RV Resort and Train and Garden Lovers Family Park in Silverhill, Ala. The settlement, embodied in a consent decree, was approved today by Judge Callie V.S. Granade in U.S. District Court for the Southern District of Alabama.
In its complaint, the Justice Department alleged that Wales West LLC violated Title III of the ADA when it unlawfully denied full and equal services to a child and his family because the child has HIV. Specifically, the complaint alleged that Wales West LLC, upon learning that a guest family’s two-year-old child has HIV, banned the family from using the common areas of the RV resort, such as the swimming pool and showers. The child’s parents had planned a month-long stay at the family-themed RV resort while the father commuted to nearby Mobile, Ala., for ongoing cancer treatment. After Wales West LLC denied them full use of the facilities, the family left early the next morning.
Under the terms of the consent decree, Wales West LLC will establish policies, procedures and training practices to ensure that patrons and their families are not discriminated against on the basis of disability. Wales West LLC will pay a $10,000 civil penalty to the United States and $36,000 in damages to the affected family.
"Ensuring that individuals with disabilities are not subjected to discriminatory, stigmatizing treatment based on unfounded fears and stereotypes is critically important. The ADA protects individuals with HIV and other disabilities from this kind of discrimination," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.
"Our office is dedicated to providing equal protection of the laws by ensuring equal access to accommodations for those with impairments or disabilities," said Kenyen R. Brown, U. S. Attorney for the Southern District of Alabama. "Whether it is discrimination against families in a mobile home park, improper lending practices at a bank or other issues regarding fairness, we fully intend to bring cases each time we learn of wrongful discrimination."
Title III of the ADA prohibits public accommodations, such as Wales West LLC, from excluding people with disabilities, including people with HIV, from enjoying the services, goods, and accommodations provided by the public accommodation. Those interested in finding out more about federal disability rights statutes can call the Justice Department’s toll-free ADA Information Line at (800) 514-0301 or (800) 514-0383 (TTY), or access the ADA Web site at www.ada.gov.
Justice Department Settles Lawsuit Against Milwaukee to Enforce the Employment Rights of Air National Guard MemberRead the Press Release
WASHINGTON — The Justice Department announced today that it has reached a settlement in its lawsuit against the city of Milwaukee on behalf of Michael Crivello, a detective in the Milwaukee Police Department, alleging the city violated the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA). The settlement, embodied in a consent decree that the parties have submitted to the court for approval, calls for Milwaukee to provide Crivello with a retroactive promotion date in the rank of detective, as well as $21,190 in backpay, retroactive seniority and other benefits that flow from the date adjustment.
The complaint, filed in U.S. District Court in Milwaukee in July 2009, alleges that the city violated USERRA when it did not provide Crivello, while he was a police officer, with the opportunity to take a make-up examination for promotion to detective that he missed while on active duty military service, thereby denying him the seniority, status and compensation he would have received but for his active duty service in the military. The city subsequently promoted Crivello to detective after he passed the next scheduled administration of the examination, but the delay still resulted in his loss of pay, seniority and other benefits, including eligibility for future promotions.
Because his delay in promotion to detective also delayed his eligibility to take subsequent promotional examinations, Crivello may also qualify for additional relief if the city administers a lieutenant of detectives promotional examination within one year from the entry of the decree.
"No member of our armed services should be disadvantaged in the workplace because he or she answered a call to duty," said Thomas Perez, Assistant Attorney General for the Civil Rights Division. "I am pleased the city of Milwaukee cooperated in working towards a resolution that restores Mr. Crivello’s rights without the need for protracted litigation that would unnecessarily expend the resources of two public bodies."
The lawsuit was filed after the Labor Department’s Veterans’ Employment and Training Service referred a complaint filed by Crivello under USERRA to the Justice Department’s Civil Rights Division upon completion of its investigation and unresolved settlement efforts.
Additional information about USERRA can be found on the Justice Department Web site at www.servicemembers.gov and www.usdoj.gov/crt/emp, as well as on the Labor Department’s Web site at www.dol.gov/vets/programs/userra/main.htm.
Former Owner of New Hampshire Direct Mail Advertising Printing Company Agrees to Plead Guilty to Tax ConspiracyRead the Press Release
WASHINGTON — A former owner of a New Hampshire printing company specializing in direct mail advertisements has agreed to plead guilty to a charge relating to his role in a tax conspiracy, the Department of Justice announced today.
According to the one-count felony charge filed today in the U.S. District Court in Boston, Ronald Boyarsky of Apollo, Fla., was the president and part-owner of a direct mail advertising printing company located in Pembroke, N.H. As a part of the tax conspiracy, Boyarsky assisted in paying approximately $2.6 million in commissions earned by a printing services broker to third parties, so that the broker and his companies could avoid paying taxes on the income they earned.
The department said in a court document that from 1999 through at least 2004, Boyarsky directed his company to pay the commissions to family, friends and associates of the broker. Many of the third parties typically cashed checks written to them, and then passed the cash back to the broker. As part of this scheme, the printing company paid some of the commissions directly to businesses from which the broker procured personal goods and services.
Direct mail advertising is the process by which companies specifically target potential customers and contact them with custom tailored offers, promotional materials or advertisements using the U.S. mail.
The tax conspiracy charge carries a maximum sentence of five years in prison and a maximum fine of $250,000. The maximum fine for the offense may be increased to twice the gain derived from the offense or twice the loss suffered by the victims of the offense, if either of those amounts is greater than the statutory maximum fine.
Today’s charge arose from an ongoing investigation into the direct mail printing services industry. The investigation is being conducted by the Antitrust Division’s New York Field Office, with the assistance of the Internal Revenue Service (IRS) Criminal Investigation in Springfield, Mass.
Anyone with information concerning antitrust, fraud or tax offenses relating to the direct mail printing services industry should contact the Antitrust Division’s New York Field Office at 212-264-9308 or the IRS Criminal Investigation’s Springfield Office at 413-785-0090.
18 January 2010
Statement by Attorney General Eric Holder on Martin Luther King DayRead the Press Release
Attorney General Eric Holder released the following statement today in recognition of Martin Luther King Day:
"Each year, Martin Luther King Day provides an opportunity for all Americans to rededicate ourselves to Dr. King’s dream of racial, social, and economic justice. Today is also a reminder of the power and importance of service to others. Dr. King’s example, and his enduring legacy, offer proof that the contributions of a single person can help to improve and inspire an entire nation.
"Without question, there are great needs to be met in America and beyond. Just this week, with the catastrophic earthquake in Haiti, we have been reminded that the work of helping others often extends beyond our borders. In the aftermath of this disaster, the outpouring of compassion, resources, and relief-delivery efforts from across our country are evidence that, even during tough economic times, the American spirit of giving remains strong.
"One of the most meaningful ways we can give life to Dr. King’s dreams is by seeking out opportunities to serve and empower others. Today, I am volunteering with DC’s Youth Service Opportunities Project to prepare and serve breakfast to the homeless. I encourage everyone who has a holiday from work or class to help make sure that Martin Luther King Day is not simply a ‘day off.’, it is truly a ‘day on.’ Together, we can ensure it becomes a day of national service and an occasion to carry on Dr. King’s work today and into the future."
To search for local volunteer opportunities, please visit: Serve.gov/mlkday.
15 January 2010
U.S. Files Suit Against Johnson & Johnson for Paying Kickbacks<br /> to Nation’s Largest Nursing Home PharmacyRead the Press Release
WASHINGTON — The United States has filed a civil False Claims Act complaint against drug manufacturer Johnson & Johnson (J&J) of New Brunswick, N.J., and two of its subsidiaries, Ortho-McNeil-Janssen Pharmaceuticals Inc. and Johnson & Johnson Health Care Systems Inc., the Justice Department announced today. The complaint alleges that these companies paid millions of dollars in kickbacks to Omnicare Inc., the nation’s largest pharmacy that specializes in dispensing drugs to nursing home patients. In November 2009, the United States, numerous states, and Omnicare entered into a $98 million settlement agreement that, among other things, resolved Omnicare’s civil liability under the False Claims Act for taking kickbacks from J&J.
In its complaint against J&J, the United States alleges that the company paid kickbacks to Omnicare to induce the nursing home pharmacy company to purchase and recommend J&J drugs, including the anti-psychotic drug Risperdal, for use in nursing homes. According to the complaint, J&J understood that Omnicare’s pharmacists reviewed nursing home patients’ charts at least monthly and made recommendations to physicians on what drugs should be prescribed for those patients. The government further alleges that J&J knew that physicians accepted the Omnicare pharmacists’ recommendations more than 80 percent of the time, and that J&J viewed such pharmacists as an "extension of [J&J’s] sales force."
The United States alleges that, in order to induce Omnicare and its pharmacists to recommend J&J drugs, the company paid kickbacks to Omnicare in numerous ways. First, the complaint alleges that J&J entered into agreements with Omnicare by which Omnicare was entitled to increasing levels of rebates from Johnson & Johnson so long as Omnicare implemented specific programs to increase the prescriptions of J&J drugs. Second, the complaint alleges that J&J paid Omnicare millions of dollars for "data," much of which Omnicare never provided. According to the complaint, the true purpose of these payments was to induce Omnicare to recommend J&J drugs. Third, the complaint alleges that J&J made various other substantial kickback payments to Omnicare, calling the payments "grants" and "educational funding," even though their true purpose was to induce Omnicare to recommend J&J drugs.
"We will pursue those who break the law to take advantage of the elderly and the poor," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "Kickbacks such as those alleged here distort the judgments of health care professionals and put profits ahead of sound medical treatment."
The United States filed its complaint in two consolidated whistleblower lawsuits presently on file in the District of Massachusetts.
Assistant Attorney General West thanked the collaborative efforts of the Justice Department’s Civil Division, the U.S. Attorney for the District of Massachusetts, the Office of Inspector General of the Department of Health and Human Services, the Food and Drug Administration Office of Criminal Investigations and the Federal Bureau of Investigation .
General Manager of Houston Medical Supply Company<br /> Pleads Guilty to Conspiracy to Commit Health Care FraudRead the Press Release
Manual Deluna has pleaded guilty to one count of conspiracy to commit health care fraud.
Deluna, 48, pleaded guilty on Jan. 14, 2010, before U.S. District Court Judge Ewing Werlein Jr., in connection with Deluna’s role in Memorial Medical Supply, a Houston durable medical equipment company. Deluna was the general manager of Memorial Medical Supply, and began his association with the company in approximately October 2007. Deluna, along with co-defendants Sunny Robinson, Lisa Jones and Shirley A. Chavis, was originally indicted on July 22, 2009.
In connection with his plea, Deluna admitted that he and others illegally obtained protected Medicare beneficiary health information including names, dates of birth, medical histories, and Medicare and Social Security numbers from individuals and home health agencies. Deluna admitted that this health information was used to submit false and fraudulent claims to Medicare for reimbursement for equipment such as "Arthritis Kits," power wheelchairs, and diabetic and incontinence supplies. Deluna admitted that the Medicare beneficiaries in many instances did not order or even need the medical equipment, nor did a physician actually prescribe these items. Deluna admitted that in several instances, Memorial Medical Supply also submitted false claims to Medicare in the names of Medicare beneficiaries who were deceased. Deluna admitted that from May 2006 through January 2009, Memorial Medical Supply submitted claims to Medicare in excess of $4.3 million.
Deluna remains on bond pending sentence, which is currently scheduled for April 9, 2010. Robinson, Jones and Chavis remain on bond pending trial.
This case is being prosecuted by Special Assistant U.S. Attorney Justin Blan, and was investigated by agents of the HHS-OIG, the Office of Personnel Management, the FBI and the Texas Attorney General’s Office - Medicaid Fraud Control Unit. This prosecution is the latest in the Medicare Fraud Strike Force’s efforts in the Houston area. The Strike Force is supervised by the U.S. Attorney’s Office for the Southern District of Texas and the Criminal Division’s Fraud Section.
Since the inception of Strike Force operations in March 2007 - Miami (Phase One), Los Angeles (Phase Two), Detroit (Phase Three), Houston (Phase Four), Brooklyn (Phase Five), Tampa (Phase Six) and Baton Rouge (Phase Seven) - the Strike Force has obtained indictments of more than 475 individuals and organizations that collectively have 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
Andrew Goldsmith Appointed as National Coordinator of Criminal Discovery InitiativesRead the Press Release
The Department of Justice today announced the appointment of Andrew Goldsmith as the new national coordinator for its criminal discovery initiatives.
The position was established as part of the Department’s ongoing efforts, initiated last year at the direction of the Attorney General, to review and improve its criminal discovery and case management policies and procedures.
"Andrew brings a wealth of knowledge and experience in this field, and I am pleased he is taking on this crucial role," said Deputy Attorney General David W. Ogden. "He will be instrumental in overseeing our efforts to ensure all of our prosecutors and law enforcement agents have the necessary training and tools to achieve fair and just results in the nation’s courts."
As the national coordinator, Goldsmith will oversee the implementation of a number of initiatives designed to provide prosecutors with the training and resources they need to meet discovery obligations in criminal cases. These efforts include:
- Creating an online directory of resources on discovery issues available to all prosecutors at their desktop;
- Producing a Handbook on Discovery and Case Management similar to the Grand Jury Manual so that prosecutors will have an accessible and comprehensive resource on discovery obligations;
- Implementing a training curriculum and a mandatory training program for paralegals and law enforcement agents;
- Revitalizing the Computer Forensics Working Group to ensure the proper cataloguing of electronically stored information recovered as part of federal investigations; and
- Creating a pilot case management project to fully explore the available case management software and possible new practices to better catalogue law enforcement investigative files and to ensure that all the information is transmitted in the most useful way to federal prosecutors.
Goldsmith will also act as the primary liaison to all of the United States Attorneys’ Offices and Department components on these issues, as well as issues relating to electronic evidence in criminal cases.
As part of the Department-wide initiative, Deputy Attorney General Ogden issued three memoranda earlier this month regarding criminal discovery practices including a memorandum to all prosecutors containing guidance on criminal discovery obligations.
The guidance to prosecutors, United States Attorneys’ Offices and the heads of all litigating components followed a review of the Department’s policies, practices, and training related to criminal case management and discovery ordered by the Attorney General. That review determined that incidents of discovery failures were rare in comparison to the number of cases prosecuted. However, the Department has instituted a number of steps intended to further ensure the Department complies with its discovery obligations.
Goldsmith serves as the First Assistant Chief of the Environment and Natural Resources Division’s Environmental Crimes Section, where he supervises environmental prosecutions and develops training on worker endangerment, environmental terrorism, and laboratory fraud, as well as electronic discovery. He served as Chief of the Environmental Crimes Unit of the New York Attorney General's Office and was an Assistant United States Attorney for the District of New Jersey. He previously worked as an Assistant District Attorney in the Manhattan District Attorney’s Office and in private practice.
Goldsmith has received the Attorney General’s John Marshall award as well as the Justice Department’s Distinguished Service Award. He earned his law degree from Albany Law School and his undergraduate degree from Cornell University.
14 January 2010
Two Brothers Plead Guilty in Conspiracy to Hold Thai Workers in Forced Labor in HawaiiRead the Press Release
WASHINGTON – Defendants Alec Sou and Mike Sou, co-owners of Aloun Farm, pleaded guilty on Jan.13, 2010, in federal district court in Honolulu, to conspiring to commit forced labor. The two defendants, who are brothers, each face up to five years in prison for their respective roles in a labor trafficking scheme that held Thai agricultural workers in service at Aloun Farm through a scheme of debts, threats and restraint.
During their respective plea hearings, the defendants acknowledged that they conspired with one another and with others to hold 44 Thai men in forced labor on a farm operated by the defendants, using a scheme of physical restraint and threats of serious harm to intimidate the workers and hold them in fear of attempting to leave the defendants’ service.
"Holding other human beings in servitude against their will is a violation of individual rights that is intolerable in a free society," stated Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "This prosecution demonstrates our commitment to combating human trafficking in all its forms, vindicating the rights of trafficking victims, and bringing human traffickers to justice."
"Labor traffickers prey on vulnerable victims and their dreams of a better life. Those who conspire to hold workers in forced labor undermine this country's promise of liberty and opportunity," said Florence T. Nakakuni, U.S. Attorney for the District of Hawaii. "We will continue to hold accountable those who seek to enrich themselves at the expense of the freedom, rights and dignity of others."
In the past fiscal year, the Civil Rights Division, in partnership with U.S. Attorney’s Offices, brought a record number of human trafficking cases, including the highest number of labor trafficking cases ever brought in a single year.
The government’s case is being prosecuted by trial attorneys Susan French and Kevonne Small of the Criminal Section of the Civil Rights Division and its Human Trafficking Prosecution Unit and by Assistant U.S. Attorney Susan Cushman.
This case was investigated by FBI Special Agents Gary Brown in Honolulu and Tricia Whitehill in Los Angeles, with support from ICE Special Agents Frank Kalepa and Daniel Kenney.
Thirteen Detroit-Area Individuals Arrested and Charged for $14.5 Million Medicare FraudRead the Press Release
Thirteen Detroit-area residents were arrested today by federal agents from the Department of Health and Human Services, Office of the Inspector General (HHS-OIG) and FBI in connection with an alleged home health care scheme to defraud the Medicare program of more than $14.5 million.
In a six-count indictment returned on Jan. 12, 2009, and unsealed today, the 13 individuals are alleged to have participated in a Medicare fraud scheme operated out of Patient Choice Home Healthcare (Patient Choice) and All American Home Care (All American), two Oakland County, Mich., home health agencies that purported to provide in-home health services. Muhammad Shahab, 50; Christopher Collins, 38; Hassan Akhtar, 26; Curtis Mallory, 35; Mohammed El-Fallal, 55; Jessica Vigil, 34; Tariq Chaudhary, 36; Faisal Chaudry, 31; and Visnhu Meda, 29, were all indicted for conspiracy to commit health care fraud. In addition, Shahab; Pramod Raval, M.D., 56; Guy Ross, 48; Lura Barrett, 61; and Stephen Cartier, 50, were charged with conspiracy to violate the Anti-Kickback Statute. Shahab and Akhtar were also each charged with two counts of money laundering. The indictment seeks the forfeiture of assets from all the defendants.
According to the indictment, Shahab, Akhtar and Collins owned and operated Patient Choice and All American. The home health agencies purported to provide home health therapy services to Medicare beneficiaries. The indictment alleges that Patient Choice and All American billed for home health therapy services that were unnecessary and were never performed. In addition, it alleges that Collins and Mallory recruited patients and paid them kickbacks for their Medicare information and signatures on documents. These false documents were then used to bill Medicare for home health services that were not rendered. The indictment also alleges that El-Fallal used the identity of a licensed physician to sign physician referrals for home health therapy services that were medically unnecessary and not performed. The indictment charges Vigil, Chaudhary, Chaudry and Meda with falsifying medical records to make it appear that home health therapy services were provided.
In addition, the indictment alleges that Shahab, Dr. Raval, Ross, Barrett and Cartier engaged in a conspiracy where Shahab would pay kickbacks to the others in exchange for patient referrals and access to Medicare beneficiaries under Dr. Raval, Ross, Barrett and Cartier’s care.
The indictment alleges that Medicare paid Patient Choice and All American more than $14.5 million for services that were medically unnecessary and not provided between August 2007 and September 2009. The charge of health care fraud conspiracy carries a maximum penalty of 10 years in prison and a $250,000 fine. The charge of violating the Anti-Kickback Statute carries a maximum prison sentence of five years and a fine of up to $25,000. Each violation of 18 USC 1956 (money laundering) carries a maximum prison sentence of 20 years and a maximum fine of $500,000. Each violation of 18 USC 1957 (money laundering) carries a maximum prison sentence of 10 years in prison and a maximum fine of $250,000.
An indictment is merely a charge and defendants are presumed innocent until proven guilty.
The case is being prosecuted by Deputy Chief Kirk Ogrosky, Senior Trial Attorney John Neal and Trial Attorney Gejaa Gobena of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG. This prosecution is the latest in the Medicare Fraud Strike Force’s efforts in the Detroit area. The Strike Force is supervised by the Criminal Division’s Fraud Section and U.S. Attorney’s Office for the Eastern District of Michigan.
Since the inception of Strike Force operations in March 2007 - Miami (Phase One), Los Angeles (Phase Two), Detroit (Phase Three), Houston (Phase Four), Brooklyn (Phase Five), Tampa (Phase Six) and Baton Rouge (Phase Seven) - the Strike Force has obtained indictments of more than 475 individuals and organizations that collectively have 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.
Indictment
Tahawwur Rana and David Headley Indicted for Alleged Roles <br /> in India and Denmark Terrorism ConspiraciesRead the Press Release
A federal grand jury today returned a superseding indictment adding three defendants, including Tahawwur Rana, to charges filed last month against David Coleman Headley, alleging that they and others participated in conspiracies involving a planned terrorist attack against a Danish newspaper and the November 2008 terrorist attacks in Mumbai, India, that killed approximately 164 people, including six Americans.
The 12-count superseding indictment contains the identical charges that were filed against Headley on Dec. 7, 2009, while adding Rana as a defendant in three of the counts charging material support of the terrorism plots in Denmark and India, as well as in support of the designated foreign terrorist organization Lashkar e Tayyiba. Also indicted were Ilyas Kashmiri, an allegedly influential terrorist organization leader in Pakistan who is alleged to be in regular contact with leaders of al Qaeda, and Abdur Rehman Hashim Syed (Abdur Rehman), a retired major in the Pakistani military, both of whom were charged in two conspiracy counts relating to the Denmark terrorism plot.
Both Rana and Abdur Rehman were charged separately in previous court filings, but today’s indictment charges Kashmiri for the first time, although he was identified by name in the charges filed previously against Rana, Abdur Rehman and Headley.
Rana, 49, a Canadian citizen, Chicago resident and native of Pakistan, has remained in federal custody in Chicago since he was arrested on Oct. 18, 2009, in connection with the planned attack in Denmark. He was indicted today on three counts of providing material support to terrorism or a terrorist organization — one count of providing material support in preparation for and in carrying out the Mumbai attacks; one count of providing material support to the Denmark terrorism plot; and one count of providing material support to Lashkar e Tayyiba (Lashkar.) Translated as the "Army of the Good," Lashkar operated in Pakistan for the principal purpose of fighting to separate from India portions of the Indian state of Jammu and Kashmir. Lashkar was designated as a foreign terrorist organization by the United States in December 2001.
No date has been set yet for Rana to be arraigned in federal court in Chicago. The case is assigned to U.S. District Judge Harry D. Leinenweber.
Kashmiri and Abdur Rehman, also known as "Major Abdur Rehman" and "Pasha," were each charged with one count of conspiracy to murder and maim persons in Denmark, and one count of providing material support to the Danish terrorism plot. Neither man is in U.S. custody.
Headley, 49, a U.S. citizen and Chicago resident, faces the same 12 counts that were filed against him last month — six counts of conspiracy involving bombing public places in India, murdering and maiming persons in India and Denmark, providing material support to foreign terrorist plots, and providing material support to Lashkar, and six counts of aiding and abetting the murder of U.S. citizens in India. Headley has remained in federal custody in Chicago since he was arrested in Chicago on Oct. 3, 2009. He has pleaded not guilty to the charges but previously authorized the Justice Department to disclose that he is cooperating in the ongoing investigation.
In 2002 and 2003, Headley allegedly attended terrorism training camps in Pakistan maintained by Lashkar, and conspired with its members and others, including Rana, Kashmiri and Abdur Rehman, in planning and executing the attacks in Denmark and India. He allegedly conducted extensive surveillance of targets in Mumbai for more than two years preceding the November 2008 attacks that killed approximately 164 people and left hundreds more injured.
Mumbai Terror Attacks
According to the charges, unnamed Lashkar Member A, who served as a "handler" for Headley and another person associated with Lashkar, advised Headley in late 2005 that Headley would be traveling to India to perform surveillance of potential targets for Lashkar. Headley changed his given name of Daood Gilani on Feb. 15, 2006, in Philadelphia, enabling him to present himself in India as an American who was neither Muslim nor Pakistani. In the spring of 2006, Lashkar Member A and a Lashkar associate discussed with Headley the idea that he could open an immigration office in Mumbai as a cover for his surveillance activities.
In approximately June 2006, Headley allegedly traveled to Chicago, advised Rana of his assignment to scout potential targets in India, and obtained approval from Rana, who owned First World Immigration Services in Chicago and elsewhere, to open a First World office in Mumbai as cover for his activities. Rana allegedly directed an individual associated with First World to prepare documents supporting Headley’s cover story of opening a First World office in Mumbai, and advised Headley how to obtain a visa for travel to India. Headley misrepresented his birth name, his father’s true name and the purpose of his travel in his visa application, the indictment alleges.
In July 2006, unnamed Person A in Pakistan gave Headley approximately $25,000 to establish and operate the Mumbai office of First World and to pay for living expenses while Headley carried out his assignment for Lashkar, the charges add.
Headley later made five extended trips to Mumbai — in September 2006, February and September 2007, and April and July 2008 — each time taking photographs and making videotapes of various potential targets, including those attacked in November 2008, and using his association with First World as cover for his travels. Before each trip, Lashkar members and associates allegedly instructed Headley regarding specific locations where he was to conduct surveillance, and Headley traveled to Pakistan after each trip to meet with Lashkar members and associates, report on the results of his surveillance, and provide the surveillance photos and videos.
During his meetings with Lashkar members and associates in Pakistan after the September 2007 surveillance trip to Mumbai, Lashkar Member A showed Headley a styrofoam mockup of the Taj Mahal hotel, and Person A provided Headley with approximately $2,000 worth of Indian currency for expenses, according to the indictment. Before the April 2008 surveillance trip, Lashkar Member A provided Headley with an additional $1,000 worth of Indian currency. In addition, Lashkar Members A and B provided Headley with a global positioning system device and showed him how to use it to record the locations of possible landing sites and potential targets in Mumbai, which Headley then used during his surveillance trips in April and July 2008, the charges state.
Before the July 2008 visit, Person A provided an additional $1,500 worth of Indian currency to Headley to keep the First World office open, but approved closing that office in the future and opening a new business in Delhi, India, to be used as cover for future activities. During Headley’s July 2008 surveillance mission, Person A communicated with Headley by passing messages to him through Rana, the indictment alleges.
Starting Nov. 26, 2008, and continuing through Nov. 28, 2008, 10 attackers trained by Lashkar carried out multiple assaults with firearms, grenades and improvised explosive devices against multiple targets in Mumbai, including the Taj Mahal and Oberoi hotels, the Leopold Café, the Chabad House and the Chhatrapati Shivaji Terminus train station, each of which Headley allegedly had scouted in advance, killing approximately 164 victims.
The six Americans killed during the three-day siege are identified in the charges as Ben Zion Chroman, Gavriel Holtzberg, Sandeep Jeswani, Alan Scherr, his daughter Naomi Scherr and Aryeh Leibish Teitelbaum.
Denmark Terror Plot
Regarding the Denmark terror plot, Headley allegedly conspired between October 2008, and Oct. 3, 2009, with Kashmiri, Abdur Rehman and others to plan and carry out terrorist attacks, including murder and maiming, against the facilities of the Morgenavisen Jyllands-Posten, a Danish newspaper, and two of its employees, Editor A and Cartoonist A. In 2005, the newspaper had published 12 cartoons, some of which depicted the Prophet Mohammed, setting off protests throughout the Muslim world. In early 2008, the Jyllands-Posten and other Danish newspapers republished one of the cartoons which had drawn particularly strong criticism.
Today’s indictment alleges that Headley met with Lashkar Member A in Pakistan in October 2008 and discussed the prospect of an attack on the newspaper, including extensive surveillance work that Headley would perform. Lashkar Member A allegedly provided Headley with a thumb drive containing information about Denmark, the city of Copenhagen, and the newspaper. In late December 2008 and early January 2009, after reviewing with Rana how he had performed surveillance of the targets attacked in Mumbai, Headley advised Rana of the planned attack on the Danish newspaper and his intended travel to Denmark to conduct surveillance of its facilities. Headley allegedly obtained Rana’s approval and assistance to identify himself as a representative of First World and gain access to the newspaper’s offices by falsely expressing interest in placing advertising for First World in the newspaper. At the same time, while in Chicago, Headley exchanged emails with Abdur Rehman to continue planning for the attack and to coordinate his travel to Denmark to conduct surveillance. Before departing Chicago, Headley and Rana caused business cards to be made that identified Headley as a representative of the Immigration Law Center, the business name of First World, according to the charges.
Headley allegedly traveled in January 2009, from Chicago to Copenhagen, Denmark, to conduct surveillance of the Jyllands-Posten newspaper offices in Copenhagen and Aarhus and to videotape the surrounding areas. On Jan. 29, 2009, Rana, posing as Headley, allegedly sent an email to the Jyllands-Posten pretending to be interested in placing an advertisement in the newspaper on behalf of First World.
In late January 2009, Headley traveled to Pakistan and met separately to discuss the planning with Abdur Rehman and Lashkar Member A. In February 2009, Abdur Rehman allegedly took Headley to meet with Kashmiri in the Waziristan region of Pakistan. During the meeting, Kashmiri allegedly indicated that he had reviewed the surveillance videos made by Headley and suggested using a truck bomb in the operation. Kashmiri further indicated that he could provide manpower for the operation and that Lashkar’s participation was not necessary, the indictment alleges. Subsequently, in March 2009, Lashkar Member A advised Headley that Lashkar put the newspaper attack on hold because of pressure in the aftermath of the Mumbai attacks, according to the charges.
In May 2009, Headley and Abdur Rehman met again with Kashmiri in Waziristan and Kashmiri allegedly directed Headley to meet with his European contacts who could provide Headley with money, weapons and manpower for the newspaper attack. In late July and early August 2009, Headley traveled from Chicago to various places in Europe, including Copenhagen, attempting to obtain assistance from Kashmiri’s contacts and, while there, made approximately 13 additional surveillance videos, according to the charges.
In September 2009, Headley and Rana allegedly spoke about reports that Kashmiri had been killed in a drone attack and the implications of his possible death for the plan to attack the newspaper. Later that month, Abdur Rehman, from Pakistan, allegedly called Headley to report that Kashmiri was not killed and was anxious to move forward with attacking the newspaper. In the late summer of 2009, Rana and Headley allegedly agreed that funds that had been provided to Rana could be used to fund Headley’s work in Denmark.
On Oct. 3, 2009, Headley was arrested at O’Hare International Airport in Chicago, intending ultimately to travel to Pakistan to meet with and deliver the approximately 13 surveillance videos to Abdur Rehman and Kashmiri, the indictment alleges.
The charges identify Kashmiri as an influential leader of Harakat-ul Jihad Islami (HUJI), an organization that trained terrorists and executed attacks in the state of Jammu and Kashmir under Indian control and other areas. Kashmiri based his operations from the Federally Administered Tribal Areas (FATA) of western Pakistan, an area which served as a haven for terrorist organizations, including al Qaeda. Kashmiri allegedly was in regular contact with al Qaeda and in particular with an al Qaeda leader, Mustafa Abu al Yazid, also known as "Sheik Said al Masri."
According to the indictment, in June 2008, al Qaeda, through its media wing known as "As Sahab Media," took credit for an attack on the Danish Embassy in Islamabad, Pakistan, and called for further attacks against Danish interests to avenge the publication of the cartoons depicting the Prophet Mohamed first published in the Jyllands-Posten in 2005. In August 2008, al Qaeda released a video through As Sahab Media calling for further attacks in retaliation for the publication of the cartoons, and Mustafa Abu al Yazid, among others, appeared in the video. The indictment alleges that in July 2009, Headley provided the al Qaeda video to Rana in Chicago.
The counts against Headley charging conspiracy to bomb public places in India that resulted in deaths and aiding and abetting the murders of U.S. nationals each carry a maximum statutory penalty of life imprisonment or death. All of the other counts against Headley carry a maximum of life imprisonment, except providing material support to the Denmark terror plot — against all four defendants — carries a maximum prison term of 15 years.
The other two material support counts against Rana, and the conspiracy to murder and maim people in Denmark against Kashmiri and Abdur Rehman, also carry a maximum of life in prison.
The government is being represented by Assistant U.S. Attorneys Daniel Collins and Victoria J. Peters, as well as Assistant U.S. Attorneys Christopher Grigg and Janet Hudson of the Los Angeles U.S. Attorney’s Office, with assistance from the Counterterrorism Section of the Justice Department’s National Security Division.
The public is reminded that an indictment contains mere allegations and is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
German National Sentenced for Smuggling Coral from the PhilippinesRead the Press Release
WASHINGTON—Gunther Wenzek, a German national, was sentenced today to serve three years on probation and pay a criminal penalty of over $35,000 by Judge Anna J. Brown of the U.S. District Court for the District of Oregon for smuggling coral into the Port of Portland, Ore., the Justice Department announced.
The penalty included a criminal fine of $16,510, nearly $10,000 in restitution to the National Oceanic and Atmospheric Administration, and a community service payment of $8,890.
Wenzek owns a company named CoraPet, based in Essen, Germany, that sells various coral products to retailers in the United States. The investigation was launched in 2007 after Wenzek tried to ship a container loaded with fragments of endangered coral from reefs off the Philippine coast to Portland. After this initial shipment, agents subsequently seized two full containers of endangered coral shipped by Wenzek to a customer in Portland. These two shipments made up a total of over 40 tonsof coral.
A grand jury indicted Wenzek in July of 2008. He pleaded guilty on Oct. 14, 2009, to a smuggling charge for illegally importing merchandise contrary to law. Wenzek admitted that he knowingly failed to declare the coral as wildlife. Wildlife declarations for imports are essential to ensuring that endangered and threatened species are not being illegally imported into the United States.
The corals seized have been identified as corals from the scientific order Scleractinia, genera Porites, Acropora, and Pocillopora, common to Philippine reefs. Due to the threat of extinction, stony corals, such as those seized in this case are protected by international law. Philippine law specifically forbids exports of all coral. Moreover, the Convention on International Trade in Endangered Species bars importation of the coral Wenzek tried to import to customers in the United States, without a permit.
"Protection of coral reefs both domestically and internationally is critically important for the health of our marine environment," said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. "We will continue to use law enforcement resources at our disposal to investigate and prosecute those who smuggle endangered species like coral."
"Reefs are essential resources for maintaining fisheries, for biodiversity, for habitat and for addressing climate change. Importers need to know that we will defend these resources and prosecute criminal violators, and we stand ready to pursue these cases worldwide," said Kent Robinson, Acting U.S. Attorney for the District of Oregon. "The assistance of the Philippine government was absolutely critical to the success of this case, and we thank the government and people of the Philippines for their vital help in protecting marine resources."
"With many of the world’s coral reefs increasingly threatened by climate change, stopping the illegal harvest and trade of coral is more important than ever," said Paul Chang, Special Agent in Charge of Law Enforcement for the U.S. Fish and Wildlife Service's Pacific Region, based in Portland, Ore. "The cooperation of law enforcement agents in this case sends a message to would-be smugglers that this assault on a precious resource will not be tolerated."
The case was investigated by the U.S. Fish and Wildlife Service, U.S. Immigration and Customs Enforcement and the National Marine Fisheries Service. The case was prosecuted by U.S. Attorney’s Office for the District of Oregon and the Justice Department’s Environmental Crimes Section.
British Citizen Pleads Guilty in Connection with Costa Rica-Based Business Opportunity Fraud VenturesRead the Press Release
WASHINGTON – On Jan. 13, 2010, Dilraj Mathaudaentered a guilty plea in federal district court in Miami to one count of an indictment pending against him, charging conspiracy to commit mail and wire fraud, the Justice Department and the U.S. Postal Inspection Service announced today.
Mathauda was arrested following his indictment by a Miami federal grand jury on June 9, 2009, based on charges that he and his co-conspirators purported to sell beverage and greeting card business opportunities, including assistance in establishing, maintaining and operating such businesses. The charges form part of the government’s continued nationwide crackdown on business opportunity fraud.
Mathauda worked for USA Beverages Inc. and Omega Business Systems Incorporated. Beginning in 2005, USA Beverages sold business opportunities to own and operate coffee beverage display racks. USA Beverages rented office space in Las Cruces, N.M., and otherwise made it appear to potential purchasers that USA Beverages’ operations were fully within the United States. However, USA Beverages actually operated from Costa Rica. Omega was a Wisconsin and Florida corporation.
In 2007 and early 2008, Omega sold business opportunities to own and operate greeting card display racks. Omega rented office space in Madison, Wis., and otherwise made it appear to potential purchasers that Omega’s operations were fully within the United States. However, Omega actually operated from Costa Rica.
To fraudulently induce others to purchase the business opportunities, Dilraj Mathauda and his co-conspirators made, and caused others to make, numerous false statements to potential purchasers of the business opportunities. Potential purchasers were falsely told that the companies were established years earlier, had a significant number of distributors across the country, and had a track record of success. Potential purchasers were referred to references who told false tales of their success as business opportunity owners. Through these and other misrepresentations, purchasers of the business opportunities were led to believe that they would likely earn substantial profits.
"Business opportunity fraud causes significant financial hardship for victims who are trying to start a business and earn a living," said Tony West, Assistant Attorney General for the Department of Justice’s Civil Division. "The Justice Department is committed to uncovering and vigorously prosecuting business opportunity fraud."
Mathauda faces a maximum sentence of 25 years in prison, a possible fine and mandatory restitution.
"This guilty plea demonstrates that individuals living outside of the United States will not be allowed to use technology to commit fraud on the American public. This investigation illustrates our resolve to protect American consumers from business scams, wherever they occur," said U.S. Postal Inspector in Charge, Henry Gutierrez, based in Miami.
"The Postal Inspection Service remains vigilant in investigating and rooting out business opportunity fraud. Consumers must be aware that false references and empty promises of assistance locating display racks and merchandise are extremely common in this type of scam," said U.S. Postal Inspector in Charge Pete Zegarac, based in Phoenix. "These companies took over the corporate identities of businesses established long ago – so even claims of being in business for many years must be viewed with caution."
Assistant Attorney General West commended the investigative efforts of the Postal Inspection Service, as well as the Federal Trade Commission, which previously brought a related civil suit and made a criminal referral. This matter is being prosecuted by trial attorneys in the Justice Department’s Office of Consumer Litigation.
Arkansas Man Pleads Guilty to Conspiring to Commit Murders of African-AmericansRead the Press Release
WASHINGTON – The Department of Justice today announced that Paul Schlesselman pleaded guilty to one count of conspiracy, one count of threatening to kill and inflict bodily harm upon a presidential candidate, and one count of possessing a firearm in furtherance of a crime of violence. Schlesselman faces a sentence of 10 years under the plea agreement. A sentencing date of April 15, 2010, was set by Judge J. Daniel Breen, who is presiding over the case in Jackson, Tenn.
Schlesselman of West Helena, Ark., admitted to conspiring to murder dozens of people, with a focus on murdering African-Americans. He further acknowledged that he intended to culminate his killing spree by assassinating then-Senator Barack Obama, who was a presidential candidate at the time.
"Despite great civil rights progress, hate-fueled violence remains all too common in our country, as illustrated by this unthinkable conspiracy," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "Tragedy was averted thanks to the capable work of the Crockett County Sheriff’s Department and their willingness to work with the ATF, the Secret Service and the FBI."
"Crimes committed against individuals because of their race will not be tolerated," said Lawrence J. Laurenzi, U.S. Attorney for the Western District of Tennessee. "I commend the work of the investigative agencies in thwarting what could have been a series of tragic events."
Schlesselman admitted that beginning on or about Sept. 1, 2008, and continuing until Oct. 22, 2008, he conspired to transport firearms and ammunition in interstate commerce, steal firearms from a licensed firearms dealer and transport in interstate commerce a short-barreled shotgun, all for the purpose of committing murders, robberies and burglaries.
Schlesselman further acknowledged that on Oct. 20, 2008, he unlawfully transported an unregistered short barreled shotgun and a .357 magnum caliber handgun across state lines for the purpose of committing felonies, including racially targeted murders.
Schlesselman also admitted that on Oct. 23, 2008, he threatened to kill and inflict bodily harm on President Barack Obama, who was a presidential candidate at the time.
The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives; the U.S. Secret Service; the FBI; and the Crockett County Sheriff’s Office. The case is being prosecuted by U.S. Attorney Larry Laurenzi, Assistant U.S. Attorney James Powell and Civil Rights Division Trial Attorney Jonathan Skrmetti.
13 January 2010
Two Former Executives of Indicted Video Relay Services Company <br /> Plead Guilty to Defrauding FCC ProgramRead the Press Release
Anthony Mowl, the former assistant vice president of business development for Viable Communications Inc. (Viable), and Donald Tropp, the former human resources manager for Viable, pleaded guilty today to engaging in a conspiracy to defraud the Federal Communications Commission’s (FCC) Video Relay Service (VRS) program of more than $2.5 million, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division.
Today, Mowl, 25, and Tropp, 25, pleaded guilty before U.S. District Court Judge Joel A. Pisano in Trenton, N.J., to conspiracy to commit mail fraud. Mowl and Tropp were indicted on Nov. 19, 2009, along with Viable’s president, John T.C. Yeh; Viable’s vice president of corporate strategy, Joseph Yeh; and the Viable corporate entity.
In pleading guilty, Mowl and Tropp admitted that beginning in approximately fall of 2007 and continuing through approximately January 2009, they conspired with others to pay individuals to make fraudulent VRS phone calls using Viable’s VRS service. According to the pleas, John and Joseph Yeh paid Mowl and Tropp who would then pay people for using Viable’s VRS service. Mowl and Tropp kept a portion of the payments for themselves and distributed the remainder to the paid callers. Viable then caused the submission of fraudulent call minute claims to the FCC, causing the FCC to pay those claims at a rate of approximately $390 per hour for each of the VRS calls that it processed.
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, Mowl and Tropp admitted that their role in defrauding the FCC’s VRS program led to a total of between $2.5 million and $7 million in fraudulent billing to the program. At sentencing, both Mowl and Tropp face a maximum sentence of 20 years in prison, a fine of $250,000, as well as mandatory restitution and forfeiture. A sentencing date has not yet been set by the court.
Co-defendants John T.C. Yeh, Joseph Yeh and Viable are scheduled to stand trial on the charges in the indictment on May 24, 2010. An indictment is merely an accusation, and defendants are presumed innocent until and unless proven guilty at trial beyond a reasonable doubt.
In addition to the indictment charging the Yehs, Mowl, Tropp and Viable, five indictments were unsealed on Nov. 19, 2009, charging an additional 22 people with engaging in a scheme to steal millions of dollars from the FCC’s VRS program. The indictments charge owners and employees of the following six companies with engaging in a scheme to defraud the FCC’s VRS program:
- Master Communications LLC, of Las Vegas;
- KL Communications LLC, of Phoenix;
- Mascom LLC of Austin, Texas;
- Deaf and Hard-of-Hearing Interpreting Services Inc. (DHIS), of New York and New Jersey;
- 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 and the FCC Office of Inspector General.
Two Cincinnati Dentists Plead Guilty to Conspiracy, Tax Evasion on Eve of TrialRead the Press Release
WASHINGTON – Bradley C. Brennecke, a resident of Pleasant Plain, Ohio, and Bruce A. Mrusek, a resident of Maineville, Ohio, pleaded guilty late Tuesday to conspiracy and tax evasion charges before District Court Judge Michael R. Barrett in Cincinnati, the Justice Department and Internal Revenue Service (IRS) announced.
Mrusek and Brennecke, who are both dentists, were indicted in July 2009 and charged with tax evasion, conspiracy to defraud the IRS and passing fictitious instruments. Mrusek and Brennecke were scheduled to begin trial on Jan.11, 2010. However, both defendants failed to appear in court. Both defendants were subsequently arrested. Facing trial on multiple counts, each defendant elected to plead guilty to conspiracy and tax evasion.
According to admissions made by the defendants at the plea hearing, Brennecke, who operated Goshen Family Dentistry Ltd. in Goshen, Ohio, failed to pay taxes for 1998, 2002, 2003 and 2004. Additionally, the indictment alleges that Brennecke transferred title of his house to his wife to conceal it from the IRS, sent the government bogus documents that purported to pay his tax liabilities and filed false tax returns.
According to admissions made by the defendants at the plea hearing, Mrusek, who owned and operated Wilmington Dental Management Services in Wilmington, Ohio, evaded his 2002, 2003 and 2004 taxes by transferring his assets to his wife’s name, sending bogus documents to the IRS that purported to pay his tax liabilities, using a trust to pay personal expenses and filing false personal tax returns. Additionally, the indictment alleges that Mrusek filed false tax returns for Wilmington Dental Management Services by reporting deductions that the business did not incur.
According to admissions made by the defendants at the plea hearing, Brennecke and Mrusek conspired to defraud the IRS beginning around the time that the IRS began civil audits of each of them. Brennecke and Mrusek assisted each other in the mailing of various fraudulent documents to the IRS and U.S. Treasury Department. Brennecke assisted Mrusek in the transfer of assets out of Mrusek’s name. For each defendant, the total attempted tax loss was between $400,000 and $1 million.
Judge Barrett has not yet set a sentencing date. Both men face a maximum term of 10 years in prison and a maximum fine of $500,000.
John A. DiCicco, Acting Assistant Attorney General of the Justice Department’s Tax Division, commended the IRS Criminal Investigation Division who investigated this case, as well as Tax Division trial attorneys Shawn T. Noud and Daren H. Firestone who prosecuted this case.
Member of the Cherokee Nation Sentenced to Prison for Transporting and Selling Bear PartsRead the Press Release
WASHINGTON—Clement Calhoun, a member of the Cherokee Nation in North Carolina, was sentenced in federal court in the Western District of North Carolina, to six months in prison for illegally transporting and selling 51 bear gall bladders, the Justice Department announced today.
He was also sentenced to serve one year of supervised release following the prison sentence. As a condition of release, he is not permitted to hunt or possess a hunting license.
Calhoun pleaded guilty on Dec. 9, 2009, to two counts charging him with transporting and selling bear parts in violation of the Lacey Act. He admitted that on various occasions during 2005, he knowingly transported 51 bear gall bladders from trust lands and sold them to non-members in violation of the Cherokee code.
Traditional Asian medicinals involve the use of many parts of the bear, with bile from the gall bladder being the most coveted part. Increasing demand for bear gall bladders may threaten the black bear population within the United States.
The conviction arose from a three-year anti-poaching investigation intended to document the unlawful take, purchase, sale and transport of ginseng and bear parts within and along the southern Appalachians by various individuals.
The Lacey Act is a federal law that makes it illegal to transport or sell wildlife taken, possessed, transported or sold in violation of Tribal law or regulation. Bear, whether taken alive or dead, are considered wildlife under both the Lacey Act and the Cherokee code. The Cherokee code makes it illegal for any person to sell body parts from bears to any non-member or to any person beyond the boundaries of Cherokee Indian trust lands or to any person who will remove such organ, skin or body part from Cherokee Indian trust lands.
"This operation and its resulting conviction and sentence should send a message to those illegally trafficking in animal parts," said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. "We at the Justice Department take these crimes seriously and will continue to focus on regions and areas where this activity is suspected."
The case was prosecuted by Shennie Patel of the Justice Department’s Environmental Crimes Section and the U.S. Attorney’s Office for the Western District of North Carolina. The case was investigated by the U. S. Fish and Wildlife Service’s Office of Law Enforcement, with assistance from the Georgia Department of Natural Resources.
Justice Department Sues to Close Georgia Tax Return PreparerRead the Press Release
WASHINGTON - The United States has asked a federal court in Dublin, Ga., to permanently bar James J. King from preparing federal income tax returns for others, the Justice Department announced today. According to the government complaint, King of Telfair County, Ga., operates a business called "James King Tax Service" which prepares federal income tax returns for customers that unlawfully understate income tax liabilities through a variety of schemes.
The government complaint alleges that King prepared returns that fabricate or inflate deductions and that he prepared returns that unlawfully claim the Earned Income Tax Credit. According to the complaint, the Internal Revenue Service has examined over 100 returns prepared by King and found that the great majority of those resulted in a tax deficiency. The total deficiency of the audited returns is alleged to be greater than $400,000. Altogether, the government complaint alleges that King’s activities may have resulted in the tax loss of tens of millions of dollars.
Over the past decade, the Justice Department’s Tax Division has obtained more than 435 injunctions to stop tax fraud promoters and dishonest tax return preparers. Information about these cases is available on the Justice Department Web Site.
Justice Department Reaches Three Settlements Under the Americans with Disabilities Act Regarding the Use of Electronic Book ReadersRead the Press Release
WASHINGTON – The Justice Department today announced separate agreements under the Americans with Disabilities Act (ADA) with Case Western Reserve University in Cleveland, Pace University in New York City and Reed College in Portland, Ore., regarding the use in a classroom setting of the electronic book reader, the Kindle DX, a hand-held technological device that simulates the experience of reading a book.
Under the agreements reached today, the universities generally will not purchase, recommend or promote use of the Kindle DX, or any other dedicated electronic book reader, unless the devices are fully accessible to students who are blind and have low vision. The universities agree that if they use dedicated electronic book readers, they will ensure that students with vision disabilities are able to access and acquire the same materials and information, engage in the same interactions, and enjoy the same services as sighted students with substantially equivalent ease of use. The agreements that the Justice Department reached with these universities extend beyond the Kindle DX to any dedicated electronic reading device.
These agreements follow the Jan. 11, 2010 agreement between the Justice Department, Arizona State University, the National Federation of the Blind and the American Council of the Blind concerning the use of electronic book readers.
"Advancing technology is systematically changing the way universities approach education, but we must be sure that emerging technologies offer individuals with disabilities the same opportunities as other students," said Assistant Attorney General Thomas E. Perez. "These agreements underscore the importance of full and equal educational opportunities for everyone."
A handful of universities participated in a pilot project in cooperation with Amazon.com Inc. to test the viability of the Kindle DX in a classroom setting. The terms of the Justice Department’s agreement with each university become effective at the end of the pilot projects.
The current model of the Kindle DX has the capability to read texts aloud, so that the materials would be accessible to blind individuals, but the device does not include a similar text-to-speech function for the menu and navigational controls. Without access to the menus, students who are blind have no way to know which book they have selected or how to access the Kindle DX Web browser or its other functions. The technological "know how" to make navigational controls or menu selections accessible is available.
Other universities, such as Syracuse University and the University of Wisconsin at Madison, also examined the utility of the Kindle DX as a teaching device and decided that they would not use the Kindle DX until it is accessible to blind individuals.
In passing the ADA and the recent ADA Amendments Act, Congress found that individuals with disabilities were uniquely disadvantaged in critical areas, including education. It is a core priority of the Civil Rights Division to strengthen and expand the educational opportunities for individuals with disabilities.
The ADA prohibits discrimination by public accommodations on the basis of disability, including discrimination in private post-secondary institutions. Those interested in finding out more about these agreements or seeking information about and how to comply with the ADA can call the Justice Department’s toll-free ADA Information Line at (800) 514-0301 or (800) 514-0383 (TDD), or access its ADA Web site at http://www.ada.gov .
Justice Department Files Lawsuit Against Huntingdon Valley, Pennsylvania, Country Club Alleging DiscriminationRead the Press Release
WASHINGTON – The Justice Department filed a lawsuit today against the Valley Club of Huntingdon Valley, Penn., alleging that the club engaged in a pattern or practice of discrimination on the basis of race or color.
The United States’ lawsuit alleges that the Valley Club, which operates and maintains educational and recreational facilities, including a swimming pool, adopted a racially-discriminatory policy to bar summer camps from using its facilities after a group of predominantly African-American school children visited the facility.
The complaint, filed today in U.S. District Court in Philadelphia, is brought according to Title II of the Civil Rights Act of 1964. Title II mandates the full and equal enjoyment of rights in places of public accommodation regardless of race, color, religion or national origin. The lawsuit seeks to obtain injunctive relief under Title II to remedy such discrimination by changing policies and practices.
The complaint alleges that on June 30, 2009, one day after a group of 56 school children from Creative Steps Inc., a Philadelphia-area summer camp program, visited Valley Club, the club’s president and board of directors adopted a policy to bar all summer camps from using its facilities. The complaint further alleges that the Valley Club adopted this policy in response to racially-motivated opposition from the Valley Club’s members to the children of Creative Steps, which had contracted with the club to permit elementary school-aged campers to swim there for 90 minutes once per week during the summer. Immediately after Valley Club adopted the policy, it informed Creative Steps that the children could not return to the club and refunded the camp’s money.
"Denying African-American children entry to a swimming pool because of the color of their skin is a deplorable violation of this nation’s civil rights laws," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "It is illegal and inexcusable to discriminate against patrons by barring them from a place of public accommodation on the basis of race or color."
The enforcement of Title II is a priority of the Justice Department’s Civil Rights Division. Additional information about the Civil Rights Division of the Justice Department is available on its Web site at http://www.usdoj.gov/crt. Persons with information or complaints regarding discriminatory practices at the Valley Club or other public facilities may call the Department of Justice at 1-800-896-7743, ext. 997.
Justice Department Asks Federal Court to Bar Nationwide<br /> Frivolous Lawsuit SchemeRead the Press Release
WASHINGTON - The Justice Department announced today it has sued George K. Pragovich of Clarksville, Tenn., to stop him from promoting an alleged nationwide scheme involving hundreds of frivolous lawsuits filed against the United States. According to the civil injunction lawsuit, filed in U.S. District Court in Nashville, Tenn., Pragovich sells services and materials that help customers, many of whom have substantial federal income tax liabilities, to file frivolous lawsuits against the United States in the U.S. District Court for the District of Columbia. Customers from at least 35 different states have allegedly used Pragovich’s scheme to file over 200 of the frivolous lawsuits.
The government complaint alleges that Pragovich falsely tells customers that he can fix their tax problems and, in addition, help them get thousands of dollars from the government in damages, by helping them file the lawsuits. Pragovich also allegedly falsely tells customers that if their lawsuit is successful, they will never have to file a federal income tax return or pay federal income taxes again and that all of the lawsuits will eliminate the Internal Revenue Service (IRS).
Pragovich, who the complaint says is not a lawyer, allegedly provides customers with ready-to-file lawsuit complaints that falsely claim that the IRS and its employees have unlawfully disclosed customers’ federal tax information or unlawfully collected taxes. Pragovich also allegedly provides customers with detailed instructions regarding how to file the complaints and how to respond to government motions in the lawsuits. According to the government’s complaint, Pragovich charges an average of about $7,500 per customer for these services, and has received a total of more than $1 million from his clients.
The government complaint alleges that the frivolous suits are largely premised on misguided tax protester arguments. The complaint says that almost every Pragovich-promoted case has been dismissed. One judge, in dismissing one of the cases, described the lawsuit as "frivolous" and "groundless," a "boilerplate pleading filed without concern for the law, the facts, or the redundant expenditure of judicial resources."
Despite the repeated dismissals, Pragovich allegedly continues to promote the frivolous scheme, and frivolous suits continue to be filed with the court in the District of Columbia. Pragovich has allegedly stated to customers that he intends to "bury" the Department of Justice and the court system with at least 1,000 lawsuits in ten separate jurisdictions.
In the past decade the Tax Division has obtained injunctions against more than 435 tax preparers and tax fraud promoters. Information about these cases is available on the Justice Department Web site.
Former Texas Department of Public Safety Trooper Convicted on Civil Rights ChargesRead the Press Release
WASHINGTON Assistant Attorney General for Civil Rights Thomas E. Perez and U.S. Attorney for the Southern District of Texas Tim Johnson today announced the conviction of a former trooper with the Texas Department of Public Safety who was charged with depriving multiple motorists of their civil rights. The jury returned guilty verdicts on all four counts of the indictment that charged Michael Anthony Higgins with violating federal law by willfully stealing money from motorists that he had stopped on the highway while working as a trooper. The jury’s verdicts were returned today after one and one-half hours of deliberation in federal court in Corpus Christi, Texas.
Higgins was prosecuted for stopping motorists who appeared to be of Hispanic descent and stealing their money, usually in amounts of several hundred dollars. As a result of the civilian complaints, the Department of Public Safety (DPS), in conjunction with the Texas Rangers, initiated an undercover operation to investigate Higgins. An undercover officer posed as a civilian of Hispanic descent with limited English language ability. The undercover officer was issued several pre-recorded $100 bills. While being monitored by DPS aerial surveillance, the undercover officer drove past Higgins’ duty area in Kleberg County and was eventually stopped by Higgins. Upon making the traffic stop, Higgins asked the undercover officer for money in his possession and then took the money behind the passenger side door of his patrol vehicle.
After Higgins returned bills to the officer, the officer realized that some of the money was missing. Texas Rangers and DPS officers confronted Higgins and, upon inspection of the patrol vehicle, found two of the pre-recorded $100 bills secreted in the passenger side door pocket which was next to the area where Higgins had gone to count the money.
"The defendant abused the power granted to him as a law enforcement officer to prey upon unsuspecting motorists for personal gain. He violated not only the law, but also the public trust," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "I commend the Department of Public Safety and the FBI for their thorough investigation."
"This defendant’s duty was to protect and defend motorists, not to profile drivers and steal their money," said Tim Johnson, U.S. Attorney for the Southern District of Texas. "We commend the action of the Department of Public Safety and the Texas Rangers to investigate the civilian complaints quickly and that of the FBI to further the investigation leading to today’s convictions."
Higgins faces a maximum sentence of up to four years in prison, restitution and a $400,000 fine. Sentencing has been set for April 20, 2010.
The case was investigated by the FBI, Texas Rangers and Officers of the Texas Department of Public Safety. The case is being prosecuted by Assistant U.S. Attorney Ruben Perez of the U.S. Attorney’s Office for the Southern District of Texas and Trial Attorney Jim Felte from the Civil Rights Division.
Deputy Attorney General David W. Ogden Announces Francey Hakes as National Coordinator for Child Exploitation Prevention and InterdictionRead the Press Release
The Department of Justice has appointed Francey Hakes to serve as the National Coordinator for Child Exploitation Prevention and Interdiction. The position, working out of the Office of the Deputy Attorney General, was created by Congress in the Protect Our Children Act of 2008.
"I am thrilled to announce Francey in this important position at the Department of Justice," said Deputy Attorney General Ogden. "The national coordinator will play a crucial role in combating child exploitation around the country, and I am certain that Francey will do an outstanding job."
The national coordinator is charged with formulating and implementing a national strategy to combat child exploitation, and with submitting the strategy and relevant reports to Congress. This effort has been underway at the Justice Department since the legislation was enacted. As the national coordinator, Hakes will serve as the department’s liaison with all federal agencies regarding the development and implementation of the national strategy, work to ensure proper coordination among agencies involved in child exploitation prevention and interdiction, and communicate with Congress on issues relating to the national strategy.
Hakes is currently an Assistant U.S. Attorney in the Northern District of Georgia. She joined the U.S. Attorney’s office in 2002, after having served as an Assistant District Attorney in Georgia for six years. Over the last 13 years, Hakes has focused on child exploitation offenses, and has worked with international, federal, state and local law enforcement as well as victim’s groups to prosecute offenders and protect children.
12 January 2010
Purchasing Official at a New York City Hospital Pleads Guilty to Bid RiggingRead the Press Release
WASHINGTON — A New York Presbyterian Hospital (NYPH) purchasing official pleaded guilty today to conspiring to rig bids on re-insulation services contracts, the Department of Justice announced today.
Freddy Deoliveira, who held various supervisory positions at the NYPH, pleaded guilty in U.S. District Court in Manhattan. According to the charge, between approximately October 2000 and March 2005, Deoliveira conspired with others to create the appearance that contracts at NYPH were awarded in accordance with NYPH’s competitive bid policy, when, in fact, they were not. Deoliveira admitted that he designated which company would submit the low bid on a contract, and which company or companies would submit higher, complementary bids, to ensure that his designated company would be awarded the contract. To create the illusion of a competitive bidding process, Deoliveira’s co-conspirators would use each other’s letterhead to submit the high, noncompetitive bids. In exchange for awarding the contracts to the designated bidder, Deoliveira received cash kickbacks from his co-conspirators.
The bid rigging violation with which Deoliveira is charged carries a maximum penalty of 10 years in prison and a $1 million fine. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victim of the crime, if either of those amounts is greater than the statutory maximum fine.
This charge arose from an ongoing federal antitrust investigation of fraud, bribery, tax-related offenses and bidding irregularities relating to contracts administered by the Facilities Operations Department and the Engineering Department at NYPH and the Engineering Department at Mount Sinai Medical Center. To date, seven individuals and three companies have pleaded guilty to charges arising out of the same investigation. The investigation is being conducted by the Antitrust Division’s New York Field Office, the FBI and the Internal Revenue Service Criminal Investigation’s New York Field Office.
Anyone with information concerning bid rigging, bribery, tax offenses or fraud related to contracts administered by the Facilities Operations Department at NYPH or the Engineering Departments at Mount Sinai or NYPH should contact the Antitrust Division’s New York Field Office at 212-264-9308 or the FBI’s New York Division at 212-384-4467.
Phoenix Asphalt Paver Sentenced to Prison for Tax EvasionRead the Press Release
WASHINGTON - John D. Stacey of Mesa, Ariz., was sentenced by U.S. District Judge Neil V. Wake to 77 months in prison and ordered to pay $1.5 million dollars in restitution on Jan. 7, 2010, the Justice Department and Internal Revenue Service (IRS) announced today.
Following a jury trial in June 2009, Stacey was convicted on charges of income tax evasion, corrupt interference with the due administration of the IRS, and multiple counts of fraudulent use of a social security number. According to the evidence presented at trial, Stacey operated a sole proprietorship asphalt paving company that did business under various names, including A to Z Paving, Triple A Paving, Texas Paving, Pave Your Way Construction and A to Z Paving Engineering, among others. Stacey earned gross income in excess of $4 million from his business during the years 2000 to 2003, but he has never filed an individual income tax return with the IRS.
According to the evidence presented at trial, since at least February 2002, Stacey knew that he owed taxes, penalties and interest for tax years 1995, 1996 and 1997. Stacey has made no payments to the IRS towards this tax debt. In addition to not paying his outstanding tax debt, Stacey took numerous steps to frustrate the IRS’s efforts to both investigate the case and collect tax that he owed. For example, Stacey made multiple false statements to IRS agents, operated his business to prevent creating business records, made a number of luxury purchases rather than paying his outstanding tax debt and provided paving customers and financial institutions with multiple false social security numbers to prevent the IRS from receiving accurate information about his income, assets and financial transactions.
John A. DiCicco, Acting Assistant Attorney General of the Justice Department’s Tax Division, commended the IRS Criminal Investigation Division agents who investigated the case, as well as Tax Division trial attorneys Monica Edelstein and Ellen Quattrucci who prosecuted the case.
North Carolina Ginseng Dealer Sentenced to Prison for Illegal Export of Ginseng Valued over $100,000Read the Press Release
WASHINGTON—Howard William Ledford of Hayesville, N.C., was sentenced today in federal court in the Western District of North Carolina to serve one year in prison for illegally selling and transporting wild American ginseng into Georgia, the Justice Department announced. Ledford was also fined $50,000 which will be placed in the Lacey Act Reward Account.
Ledford pleaded guilty on Nov. 9, 2009, to two counts charging him with selling and transporting wild American ginseng in violation of the Lacey Act. Ledford admitted that in 2004 and 2005 he sold wild ginseng for approximately $109,000 without the required export certificates and transported, or caused the transport of wild ginseng into Georgia from North Carolina.
The conviction arose from a three-year anti-poaching investigation intended to document the unlawful take, purchase, sale and transport of ginseng and bear parts within and along the southern Appalachians by various individuals. The individual to whom Ledford illegally sold the ginseng, Chiu Hung Lo, aka Sherry Lo, also pleaded guilty on Nov. 9, 2009 and will be sentenced at a later date.
The Lacey Act is a federal law that makes it illegal to transport or sell plants taken, possessed, transported, or sold in violation of state law or regulation. Wild ginseng is considered a plant under both the Lacey Act and North Carolina law. It is unlawful under North Carolina law to export or ship any amount of ginseng out of the state without an export certificate issued by the state.
The case was prosecuted the Justice Department’s Environmental Crimes Section and the U.S. Attorney’s Office for the Western District of North Carolina. The case was investigated by the U. S. Fish and Wildlife Service’s Office of Law Enforcement, with assistance from the National Park Service and Georgia Department of Natural Resources.
Clinic Manager Pleads Guilty in Medicare Fraud SchemeRead the Press Release
Miami resident Ingrid Mazorra pleaded guilty today in U.S. District Court in Miami to participating in a conspiracy to defraud the Medicare program.
Mazorra, 35, pleaded guilty to one count of conspiracy to commit health care fraud before U.S. District Judge Ursula Ungaro. In pleading guilty, Mazorra admitted that in approximately September 2006, she agreed to help operate a fraudulent infusion and injection clinic, called Xpress Center Inc., in Livonia, Mich. Mazorra admitted that while the clinic was open, the clinic routinely billed the Medicare program for services that were medically unnecessary or were never provided. Mazorra admitted that she and her co-conspirators at the clinic had purchased only a small fraction of the medications that the clinic billed the Medicare program for providing.
Mazorra admitted that Medicare beneficiaries were recruited to come to the clinic through the payment of kickbacks. Mazorra admitted that in exchange for those kickbacks, the Medicare beneficiaries would visit the clinic and sign documents indicating that they had received the services billed to Medicare. According to court documents, kickbacks paid to Medicare beneficiaries at the clinic were made in the form of cash and prescriptions for narcotic drugs. Mazorra also admitted that she and other co-conspirators created false patient files and other false documents to conceal the fraud at Xpress Center, and to make it appear that Xpress Center was a legitimate medical clinic.
Mazorra admitted that between approximately September 2006 and March 2007, she and her co-conspirators at Xpress Center caused the submission of approximately $2.3 million in false and fraudulent claims to the Medicare program for services purportedly provided at Xpress Center. Medicare paid approximately $1.8 million on those claims.
Mazorra was originally charged in the Eastern District of Michigan, but after her arrest in Miami, she consented to have her case transferred to the Southern District of Florida for her plea and sentence. At her sentencing, which is scheduled for March 26, 2010, Mazorra faces a maximum penalty of 10 years in prison and a $250,000 fine.
The case was investigated by the Detroit offices of the FBI and HHS Office of Inspector General (HHS-OIG). The case is being prosecuted by Trial Attorneys John K. Neal and Benjamin D. Singer of the Criminal Division’s Fraud Section and by Special Assistant U.S. Attorney Thomas W. Beimers of the Eastern District of Michigan. The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.
Since the inception of Strike Force operations in March 2007 - Miami (Phase One), Los Angeles (Phase Two), Detroit (Phase Three), Houston (Phase Four), Brooklyn (Phase Five), Tampa (Phase Six) and Baton Rouge (Phase Seven) - the Strike Force has obtained indictments of more than 460 individuals and organizations that collectively have 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.
11 January 2010
U.S. Army Major Charged with Smuggling Cash from Iraq and Making False StatementsRead the Press Release
U.S. Army Major Charles E. Sublett, 46, of Huntsville, Ala., was arrested today on charges of bulk cash smuggling and making false statements to a federal agency.
Major Sublett was charged in an indictment, returned by a federal grand jury in Memphis, Tenn., on Jan. 5, 2010, and unsealed today following his arrest in Huntsville. According to the indictment, Major Sublett smuggled more than $100,000 in currency, concealed in a shipping package, into the United States from Iraq in January 2005. Major Sublett also allegedly failed to declare that he imported the money.
As alleged in the indictment, from August 2004 through February 2005, Major Sublett was deployed to Balad Regional Contracting Center on Logistical Support Area (LSA) Anaconda in Iraq. LSA Anaconda is a U.S. military installation that was established in approximately 2003 to support U.S. military operations in Iraq. According to the indictment, Major Sublett served as a contracting officer while deployed to LSA Anaconda. As a contracting officer, Major Sublett was responsible for, among other things, evaluating and supervising contracts with companies that provide goods and services to the U.S. Army.
According to the indictment, on approximately Jan. 11, 2005, Major Sublett sent a package from Balad, Iraq, to Killeen, Texas, which was seized by Customs and Border Protection officers in Memphis. The international air waybill for the package said it contained books, papers, a jewelry box and clothes with a total declared customs value of $140 but did not disclose the currency allegedly also contained in the package. According to the indictment, the package also contained $107,900 in U.S. currency and 17,120,000 in Iraqi dinar. Major Sublett allegedly failed to file a Currency or Monetary Instruments Transaction Report (CMIR) as required by federal law when transporting currency in amounts of more than $10,000 into or out of the United States.
The maximum penalty for each of the two charges contained in the indictment – bulk cash smuggling and false statements to a government agency – is five years in prison, and a $250,000 fine, to be followed by a term of up to three years of supervised release.
The indictment also contains a criminal forfeiture allegation. Specifically, if convicted of the bulk cash smuggling charge, Sublett would be ordered to forfeit the $107,900 and 17,120,000 Iraqi dinar he is alleged to have concealed in the package.
An indictment is merely an accusation, and the defendant is presumed innocent until and unless proven guilty at trial beyond a reasonable doubt.
This case is being prosecuted by Trial Attorneys Daniel A. Petalas and Justin V. Shur of the Criminal Division’s Public Integrity Section. This case is being investigated by Army Criminal Investigation Command; Defense Criminal Investigative Service; the FBI; Internal Revenue Service - Criminal Investigation; the Special Inspector General for Iraq Reconstruction; and U.S. Immigration and Customs Enforcement.
Indictment
Justice Department to Participate in Zoning Disability Casein Richmond Township, MichiganRead the Press Release
WASHINGTON – The Justice Department today filed a brief as a friend of the court in Sacred Heart Rehabilitation Center Inc. v. Richmond Township and Richmond Township Planning Commission, a civil rights case regarding the expansion of an addictive disorders treatment facility in Macomb County, Mich. The government’s brief supports a lawsuit filed by Sacred Heart Rehabilitation Center, which runs a nondenominational charitable services organization to serve indigent individuals with a range of addictive disorders, including alcoholism. The matter is being handled jointly by the Civil Rights Division and the U.S. Attorney’s Office for the Eastern District of Michigan.
In 2007, Sacred Heart applied for a building permit to renovate and expand its existing facility, and to erect a new building. The expansion would allow Sacred Heart to centralize its admission process and to house the Clearview Specialty Women and Children Program, which provides specialized rehabilitative residential care for women who need to bring their children with them into treatment, and pregnant women who have addiction problems and require specialized treatment. Richmond Township, Mich., denied Sacred Heart’s requested zoning permit on Sept. 19, 2007.
Sacred Heart and the United States argue that this denial is the result of unlawful discrimination against persons with disabilities. The township is seeking to have the case dismissed – arguing that the center has no right to seek protection of its civil rights in the federal courts. The United States’ brief argues that because the Americans with Disabilities Act (ADA), the Rehabilitation Act and the Fair Housing Amendments Act are all federal civil rights statutes, plaintiffs in such cases have a clear right to redress in the federal courts.
"The Americans with Disabilities Act ensures that zoning laws cannot be used to discriminate against individuals with disabilities," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "The Sacred Heart Rehabilitation Center should have access to the federal courts to make its case that Richmond Township’s actions inappropriately reinforces false stereotypes, myths and fears about persons with addiction disorders."
"Municipalities certainly have the right to enforce their zoning laws, but not in a way that illegally discriminates against people with disabilities," said Barbara McQuade, U.S. Attorney for the Eastern District of Michigan. "We will not hesitate to insure that the civil rights of persons with disabilities are protected, and we have weighed in on this case to assist the Court in interpreting key anti-discrimination statutes."
The full and fair enforcement of the ADA and its mandate to integrate individuals with disabilities is a major priority of the Civil Rights Division and the U.S. Attorney’s Office in the Eastern District of Michigan. The ADA protects individuals with disabilities from discrimination by public entities. People interested in finding out more about the ADA can call the Justice Department’s toll-free ADA Information Line at 1-800-514-0301 or 1-800-514-0383 (TTY), or access its ADA Web site at http://www.ada.gov.
Florida Man Sentenced to 90 Months in Prison for Extortion, Making Interstate Threats, Computer Fraud and Identity TheftRead the Press Release
A Florida man has been sentenced to 90 months in prison for making e-mail and telephone threats, including threats intended to cause a candidate for statewide office in Florida to drop out of an election, as well as hacking into e-mail accounts of individuals and companies, and using stolen identity information to commit computer crimes, announced Assistant Attorney General of the Criminal Division Lanny A. Breuer and U.S. Attorney for the Southern District of Ohio Carter M. Stewart.
Kyle J. Tschiegg, 39, of Sarasota, Fla., was sentenced on Jan. 7, 2010, in U.S. District Court in Columbus, Ohio, by Senior U.S. District Judge James L. Graham. Tschiegg was also sentenced to three years of supervised release following his prison term, and was ordered to pay restitution to victims who incurred financial losses responding to Tschiegg’s threats and computer intrusions. Tschiegg pleaded guilty on Sept. 4, 2009, to one count each of interstate transmission of threatening communications, interstate extortion, computer fraud and identity theft.
According to court documents, Tschiegg sent threats via e-mail and cell phone to a group of approximately 40 individuals and businesses in Ohio, Florida and elsewhere, from October 2007 until his arrest in February 2009. At one point, approximately 3,500 e-mail accounts were being copied on the threatening e-mails. Tschiegg admitted he used several methods to conceal his identity, including using his laptop computer to access the Internet through the unsecured wireless networks of his neighbors in Sarasota.
Also according to court documents, Tschiegg hacked into a Florida state legislator’s e-mail account in October 2008. According to court records, Tschiegg used personal information he found about the legislator on the Internet to reset the legislator’s password. Less than two weeks before the Nov. 4, 2008, election, Tschiegg admitted he sent two e-mails threatening to injure the legislator, the legislator’s family and supporters, unless the legislator withdrew from the race.
The charges arose after a six-month investigation, led by the FBI and with assistance from the Sarasota County, Fla., Sheriff’s Office. The case was prosecuted by Assistant U.S. Attorney Deborah A. Solove for the Southern District of Ohio and Trial Attorney Joseph E. Springsteen of the Criminal Division’s Computer Crime and Intellectual Property Section, with assistance from Assistant U.S. Attorney Laurel Moore of the U.S. Attorney’s Office for the Middle District of Florida.