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30 November 2009
Justice Department to Monitor Election in GeorgiaRead the Press Release
WASHINGTON – The Justice Department today announced that it will monitor polling place activities for compliance with the Voting Rights Act of 1965 during the Dec. 1, 2009, municipal run-off election in Union Point, Ga.
The Voting Rights Act prohibits discrimination in the election process on the basis of race. It also allows voters who have difficulty reading or who have a disability to receive assistance from persons of their choice, with the exception of their employers or union officials. Attorneys from the Justice Department’s Civil Rights Division will coordinate the federal activities and maintain contact with local election officials.
Each year, the Justice Department deploys hundreds of federal observers from the Office of Personnel Management, 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. More information about the Voting Rights Act and other federal voting laws is available on the Department of Justice Web site at http://www.usdoj.gov/crt/voting/index.htm.
Justice Department Requires Divestitures in Stericycle Inc.’s Acquisition of MedServe Inc.Read the Press Release
WASHINGTON – The Department of Justice announced today that it will require Stericycle Inc. to divest certain infectious waste collection and treatment services assets in order to proceed with its acquisition of MedServe Inc. The department said the transaction, as originally proposed, would substantially lessen competition in infectious waste collection and treatment services to hospitals and other critical healthcare facilities in Kansas, Missouri, Nebraska and Oklahoma, resulting in higher prices and reduced service.
The Department’s Antitrust Division, along with the attorneys general of the states of Missouri and Nebraska, filed a civil antitrust lawsuit today in U.S. District Court in Washington, D.C., to block the proposed transaction. At the same time, the department and the two attorneys general filed a proposed settlement that, if approved by the court, would resolve the competitive concerns alleged in the lawsuit.
"Without the divestitures required by the department, critical healthcare facilities in Kansas, Missouri, Nebraska and Oklahoma would have faced higher prices," said Christine A. Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.
According to the complaint, Stericycle and MedServe are the only two firms able to compete for customers that generate large quantities of infectious waste in Kansas, Missouri, Nebraska and Oklahoma.
Under the proposed settlement, Stericycle and MedServe must divest all of MedServe’s assets primarily used in the provision of infectious waste collection and treatment services to large customers in Kansas, Missouri, Nebraska and Oklahoma to a viable purchaser approved by the department. These assets include MedServe’s Newton, Kan., treatment facility, and its transfer stations in Kansas City, Kan., Oklahoma City, Omaha, Neb., and Booneville, Mo.
Stericycle is a Delaware corporation with its principal place of business in Lake Forest, Ill. Stericycle is a worldwide provider of infectious waste collection and treatment services, and the largest provider in the United States, with operations in nearly all of the contiguous 48 states. In 2008, its U.S. sales were approximately $858 million.
MedServe is a Delaware corporation with its principal place of business in Bellaire, Texas. MedServe is the second-largest provider of infectious waste collection and treatment services in the United States, with operations in 25 states. In 2008, MedServe had total revenues of about $35.6 million.
As required by the Tunney Act, the proposed settlement will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement during a 60-day comment period to Maribeth Petrizzi, Chief, Litigation II Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 8700, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the U.S. District Court for the District of Columbia may enter the proposed Final Judgment upon finding that it is in the public interest.
Justice Department Files Lawsuit Against MasTec Advanced Technologies to Enforce the Employment Rights of Army Reserve MemberRead the Press Release
WASHINGTON — The Justice Department today filed a lawsuit in federal court in West Virginia alleging that MasTec Advanced Technologies willfully violated the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) by discriminating against Eugene C. Burress, a U.S. Army Reserve member, on the basis of his military service and by failing to offer Burress an appropriate reemployment position when he returned from military service.
Under USERRA, an employer is prohibited from discriminating against an employee if the employee’s service or obligation for service in the uniformed services is a motivating factor in the employer’s action, unless the employer can prove that the action would have been taken in the absence of such service or obligation for service. In addition, and subject to certain limitations, USERRA requires that service members who leave their civilian jobs to serve in the military be reemployed promptly by their civilian employers in the same positions, or in positions comparable to the positions they would have held had their employment not been interrupted by military service.
The Justice Department’s complaint alleges that, in January 2008, Burress, then a field technician supervisor at MasTec’s Martinsburg, W.Va., office, was called to active duty in the U.S. Army, and that Burress notified his supervisor at MasTec of his upcoming military service. His supervisor previously had informed Burress that the site manager position at the office would be vacant soon and offered the position to Burress when it became available; Burress accepted. However, in October 2008, while Burress was engaged in military service, MasTec promoted another MasTec employee to site manager. Burress filed a complaint with the Labor Department’s Veterans’ Employment and Training Service, which investigated and attempted to resolve Burress’s USERRA complaint before referring it to the Justice Department. The Justice Department seeks back pay and other benefits Burress would have received had MasTec reemployed him as required by USERRA, as well as liquidated damages for MasTec’s willful violation of USERRA.
"The men and women who serve our country in uniform deserve to know that they will not face discrimination because of their sacrifice for our nation, and that they are not jeopardizing their civilian employment by serving in the military," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.
This is the 22nd USERRA lawsuit filed during 2009 by the Civil Rights Division on behalf of service members. Additional information about USERRA can be found on the Justice Department Web site: 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
Georgia Man Pleads Guilty to Transporting<br /> a Minor for Illegal Sexual ActivityRead the Press Release
Mack Gordon Harris Sr., 67, of Social Circle, Ga., pleaded guilty today to transporting a minor for illegal sexual activity.
Harris was indicted by a federal grand jury in Richmond, Va., on July 21, 2009. According to court documents, in June 2005, Harris began communicating with a Maryland girl, then 15, through a Christian online chat room. As they continued chatting during the next few months, Harris admitted that at times he suggested they engage in sexual intercourse; exposed himself on a computer webcam; urged her to send naked pictures; and engaged in "phone sex." Harris eventually visited the girl around the time that she turned 16, which is the age of consent in Maryland. Harris admitted that several times during his visit and after the girl’s sixteenth birthday, the two engaged in sexual intercourse.
Shortly afterward, Harris and the girl decided that he would take her to live with him in Georgia. Harris admitted that he instructed the girl to pack her belongings and leave farewell notes for her family. According to court documents, Harris picked up the girl in Maryland in December 2005 and began driving her to his home in Georgia. Harris admitted he told the girl that while travelling, she was not to speak with anybody, but if asked her age, she should respond that she was 25. During the journey, they stopped overnight at a hotel in Skippers, Va., where the age of consent is 18, and engaged in sexual intercourse.
Harris faces a maximum sentence of 30 years in prison, a fine of $250,000, and a lifetime of supervised release. Sentencing is scheduled for Feb. 24, 2010.
The case is being prosecuted by Trial Attorney Barak Cohen of the Criminal Division’s Child Exploitation and Obscenity Section and Assistant U.S. Attorney Elizabeth C. Wu of the Eastern District of Virginia. The case is being investigated by U.S. Postal Inspection Service and U.S. Immigration and Customs Enforcement.
27 November 2009
Federal Court Shuts Down Kansas City Tax PreparerRead the Press Release
WASHINGTON – A federal court in Kansas City, Kan., has permanently barred Carlos Cruz, also known as Carlos Ruano-Cruz, from preparing tax returns for others, the Justice Department announced today. The court found that Cruz’s business, Carlos Income Tax Services, prepared federal income tax returns for customers that unlawfully understated tax liabilities by under reporting income and claiming improper deductions for employee business expenses and nondeductible personal expenses. The court said Cruz ignored customers’ documents and prepared "result-based" tax returns "where the goal is to maximize refunds rather than accurately report his customers’ actual income...." According to the court, Cruz prepared returns at a local restaurant.
The court also found that Cruz, who prepared more than 13,000 returns in the past five years, advised one customer to fabricate a business with phony income in order to increase the customer’s earned income tax credit. The customer had to pay back tax, interest and a penalty when the IRS detected the inaccuracies. The Internal Revenue Service (IRS) audited at least 81 returns prepared by Cruz and found that 95 percent of them needed corrections. The court said the tax losses from Cruz’s misconduct between 2003 and 2007 may exceed $25 million.
John A. DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division, thanked Thomas Curteman, the Justice Department trial attorney who handled the case, and Roland Wallestad, the IRS revenue agent who conducted the investigation.
In the past decade, the Justice Department has obtained injunctions against more than 435 tax preparers and tax-fraud promoters. Information about these cases is available on the Justice Department Tax Division Web site .
25 November 2009
Justice Department Signs Agreement with the City of Poplarville, Mississippi, to Improve Civic Access for People with DisabilitiesRead the Press Release
WASHINGTON – The Justice Department today announced an agreement with the city of Poplarville, Miss., to improve access for persons with disabilities to its programs, services, activities and facilities. The agreement was reached under the department’s Project Civic Access initiative to bring localities into full compliance with the Americans with Disabilities Act (ADA). This agreement is the 173rd under Project Civic Access and the 12th this year.
"Access to public programs, activities and services is critical to ensuring that individuals with disabilities can participate fully in their communities and in civic life, and the ADA guarantees them that access," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "The department is pleased that city officials have made this commitment to great access for persons with disabilities."
The department’s agreement with the city of Poplarville provides that the city will:
- Make physical modifications to its facilities so that parking, routes into the buildings, entrances, public telephones, restrooms, service counters and drinking fountains are accessible to people with disabilities;
- Post, publish and distribute a notice to inform members of the public of the provisions of title II and their applicability to the city’s programs, services and activities;
- Adopt and implement a grievance procedure to deal with complaints of disability discrimination;
- Take steps to ensure that all appropriate employees are trained and practiced in using the Mississippi Relay Service to make and receive calls;
- Implement the sheriff department’s Policy on Effective Communication with People Who are Deaf or Hard of Hearing by providing interpreters and auxiliary aids that are necessary to ensure effective communication with individuals who are deaf or hard of hearing;
- Amend its employment policies, as necessary, to comply with the regulations of the U.S. Equal Employment Opportunity Commission implementing the employment provisions of title I of the ADA;
- Provide physically accessible polling places;
- Ensure equal access to its emergency management programs for persons with disabilities, including preparation, notification, response and clean up;
- Implement a plan for accessibility of sidewalks and curb cuts throughout the city; and
- Install signs at any inaccessible entrance to a facility directing users to an accessible entrance or to information about other accessible facilities.
Project Civic Access was initiated to ensure that people with disabilities have an equal opportunity to participate in civic life in their community. As part of the project, department investigators, attorneys and architects conduct on-site surveys of state and local government facilities and programs across the nation for the purpose of identifying modifications needed for compliance with ADA requirements. The agreements are tailored to address specific areas of concern where access to a government’s programs or facilities can be improved.
Poplarville is a small city in Pearl River County, Miss. One in every four residents of Poplarville has a disability and will benefit from the access improvements achieved because of today’s agreement.
People interested in finding out more about the ADA, today’s agreement with the City of Poplarville or the Justice Department’s Project Civic Access initiative may obtain this information on the ADA Web site at http://www.ada.gov or by calling the toll-free ADA Information Line at (800) 514-0301 or (800) 514-0383 (TDD).
Former Memphis Police Officer Convicted of Excessive ForceRead the Press Release
WASHINGTON – Isaac White, formerly an officer with the Memphis Police Department, pleaded guilty today in federal court in Memphis, Tenn., to using excessive force and causing bodily injury. White faces up to 10 years in prison for the civil rights violation.
White, 29, admitted in court that on Nov. 1, 2008, he struck a handcuffed arrestee twice in the head, violating the victim’s right to be free from excessive force. White further admitted that he caused his victim substantial pain and bruising.
"It is simply unacceptable for a police officer to beat up a handcuffed arrestee," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "A badge is a sacred trust, not a license to bully."
"The United States Attorney’s Office remains committed to protecting the public from violations of constitutional rights by law enforcement officers who abuse their authority and the public’s trust," said Lawrence J. Laurenzi, U.S. Attorney for the Western District of Tennessee.
"When a law enforcement officer violates the civil rights of another, he brings shame on the badge and all law enforcement officers," said Special Agent in Charge My Harrison of the FBI Memphis Field Office. "The FBI makes it a priority to bring a law enforcement officer who violates the constitution and the trust of the people to justice."
"Police officers must not betray the trust of our citizens. We take an oath to protect, serve and uphold the laws of the state of Tennessee. When we violate that oath we will be held accountable," said Memphis Police Director Larry A. Godwin. "As police director, it is my priority to see that this department will not tolerate criminal acts by its officers, and we will seek prosecution of any and all officers who choose to do so."
The Civil Rights Division is committed to the vigorous enforcement of every federal criminal civil rights statute, including those laws that prohibit the willful use of excessive force or other acts of misconduct by law enforcement officials.
This case was investigated by the FBI and the Memphis Police Department Sergeant Matt Whittington and Officer Paul Sherman. Assistant U.S. Attorney Steve Parker from the U.S. Attorney’s Office in Memphis and Trial Attorney Jonathan Skrmetti from the Civil Rights Division are prosecuting the case.
24 November 2009
Six Individuals Sentenced for <br /> Multi-Million Dollar E-Mail Stock Fraud SchemeRead the Press Release
Six individuals were sentenced today in federal court in Detroit for their roles in a wide-ranging international stock fraud scheme involving the illegal use of bulk commercial e-mails, or "spamming." The defendants were sentenced by U.S. District Judge Marianne O. Battani.
Frank Tribble, 42, of Bayside, N.Y., was sentenced to 51 months in prison for conspiring to commit wire fraud, mail fraud and to violate the CAN-SPAM Act, and also for committing wire fraud and engaging in money laundering. Tribble was also sentenced to five years of supervised release following his prison term and agreed to forfeit $500,000 to the United States.
Judy Devenow, 56, of East Lansing, Mich., was sentenced to 18 months in prison for conspiring to commit wire fraud, mail fraud and to violate the CAN-SPAM Act, and also committing a substantive violation of the CAN-SPAM Act. Devenow was also sentenced to three years of supervised release following her prison term and ordered to pay a $7,500 fine.
William Neil, 46, of Fresno, Calif., was sentenced to 35 months in prison for conspiring to violate the CAN-SPAM Act and committing a substantive violation of the CAN-SPAM Act. Neil was also sentenced to three years of supervised release following his prison term and agreed to forfeit $56,000 to the United States.
James Bragg, 40, of Sun Lakes, Ariz., was sentenced to 12 months and one day in prison for conspiring to commit wire fraud, mail fraud and to violate the CAN-SPAM Act, and also committing a substantive violation of the CAN-SPAM Act. Bragg was also sentenced to three years of supervised release following his prison term and agreed to forfeit $120,000 to the United States.
James Fite, 36, of Culver City, Calif., was sentenced to 12 months and one day in prison for conspiring to commit wire fraud, mail fraud and to violate the CAN-SPAM Act, committing a substantive violation of the CAN-SPAM Act and making a false statement to federal agents. Fite was also sentenced to three years of supervised release following his prison term and agreed to forfeit $20,000 to the United States.
David Patton, 49, of Centreville, Va., was sentenced to one day in prison for aiding and abetting Alan Ralsky and others in committing substantive violations of the CAN-SPAM Act. Patton was also sentenced to one year of supervised release following his prison term and was ordered to forfeit $50,100 to the United States, which was paid in full today. He also was ordered to pay a $3,000 fine.
According to court documents, from January 2004 through September 2005, Alan Ralsky, Scott Bradley, Devenow, John Bown, William Neil, Bragg, Fite, Tribble, How Wai John Hui and others engaged in a related set of conspiracies designed to use spam e-mails to manipulate thinly traded stocks and profit by trading in those stocks once their share prices increased after recipients of the spam e-mails traded in the stocks being promoted.
The defendants, with the exception of Patton, were indicted in the Eastern District of Michigan in December 2007. Tribble and Devenow pleaded guilty in October 2008. William Neil, Bragg and Fite pleaded guilty in June 2009. Patton pleaded guilty to a criminal information in the Eastern District of Michigan in July 2009.
Tribble planned and directed the stock trading carried out in furtherance of the conspiracy. Devenow served as a manager for the spam e-mail operation and also sent spam e-mails. William Neil, who was the chief operating officer of Internet services company GDC Layer One, served, created and maintained a computer network used to send e-mail in furtherance of the conspiracy. Bragg and Fite were contract mailers for the spam e-mail operation, and Patton created, marketed and sold to Ralsky specialized spamming software that the conspirators then used to send out millions of illegal spam e-mails.
According to court documents, many of the spam e-mails promoted thinly traded "pink sheet" stocks for U.S. companies owned and controlled by individuals in Hong Kong and China. The spam e-mails contained materially false and misleading information or omissions and were created and sent using software programs that made it difficult to trace them back to the conspirators. According to the indictment, the conspirators used wire communications, the U.S. mail and common carriers to perpetrate their frauds. The conspirators also engaged in money laundering involving millions of dollars generated by their manipulative stock trading.
According to the indictment, the defendants used various illegal methods in order to maximize the amount of spam that evaded spam-blocking devices and tricked recipients into opening, and acting on, the advertisements in the spam. These included using falsified "headers" in the e-mail messages, using proxy computers to relay the spam, using falsely registered domain names to send the spam, and also making misrepresentations in the advertising content of some of the underlying e-mail messages.
Anki Neil and Peter Severa are also named as defendants in the indictment returned in the Eastern District of Michigan and their cases are still pending. An indictment is merely an accusation and defendants are presumed innocent until and unless proven guilty at trial beyond a reasonable doubt.
Ralsky, Bradley, Hui and Bown were sentenced yesterday for their roles in the scheme. Ralsky was sentenced to 51 months in prison; Bradley was sentenced to 40 months in prison; Hui was sentenced to 51 months in prison; and Bown was sentenced to 32 months in prison. The four defendants were also sentenced to supervised release following their prison terms as well as ordered to forfeit various amounts and/or pay fines.
The charges arose after a three-year investigation, led by the FBI with assistance from the U.S. Postal Inspection Service and IRS-CI revealed a sophisticated and extensive spamming operation. The U.S. Securities and Exchange Commission’s Philadelphia Regional Office has provided significant ongoing assistance in this case. The case is being prosecuted by U.S. Attorney Terrence Berg and Trial Attorneys Thomas Dukes and Mona Sedky of the Criminal Division’s Computer Crime and Intellectual Property Section.
Four Indicted for Conspiring to Support Hizballah; <br /> Six Others Charged with Related CrimesRead the Press Release
Ten individuals were indicted today, charged with, among other things, conspiring to export weapons from Philadelphia to the Port of Latakia, Syria.
According to the indictment, Hassan Hodroj and Dib Hani Harb attempted to provide material support to Hizballah in the form of approximately 1,200 Colt M4 Carbines (machine guns). Harb and other defendants — including Moussa Ali Hamdan and Hasan Antar Karaki — were also charged with conspiring to provide material support to Hizballah in the form of proceeds from the sale of fraudulent passports, counterfeit money and stolen (genuine) money. In addition, Hamdan and several other defendants (listed below) were charged with several counts of transporting stolen goods, trafficking in counterfeit goods, and making false statements to government officials.
"The allegations contained in this complaint demonstrate how terrorist organizations rely on a variety of underlying criminal activities to fund and arm themselves. I applaud the many agents, analysts, and prosecutors who worked tirelessly to bring about these charges and arrests," said David Kris, Assistant Attorney General for National Security.
"This investigation demonstrates the dedication and cooperation of law enforcement agents from numerous agencies," said U.S. Attorney Michael L. Levy. "These cases show the breadth of criminal activity engaged in by those who oppose us. The crimes charged here range from the purchase of stolen and counterfeit goods, to the purchase of false visas and passports, to the purchase of weapons. I want to compliment the law enforcement agents, the Assistant U.S.Attorneys, and the attorneys in the National Security Division of the Department of Justice for their efforts."
According to a related criminal complaint that was also unsealed today, Moussa Ali Hamdan began purchasing purportedly stolen cellular telephones from a cooperating witness acting as an agent of the government (hereinafter "the CW") in or about late 2007. Over the next several months, Hamdan and other defendants — including Hamze El-Najjar, a/k/a "Hamze Al-Najjar," Moustafa Habib Kassem, Latif Kamel Hazime, a/k/a "Adanan," Alaa Allia Ahmed Mohamed, a.k.a. "Alaa Ahmed Mohamed Abouelnagaa," Maoda Kane, and Michael Katz — participated in the purchase and transportation of purportedly stolen goods on numerous occasions. These stolen goods included cellular telephones, laptop computers, Sony Play Station 2 systems and automobiles, which the conspirators caused to be transported to destinations outside Pennsylvania, including overseas.
At the same time, according to the complaint, the CW sold counterfeit goods — namely, counterfeit Nike® shoes and Mitchell & Ness® sports jerseys — to Hamdan and his associates, including defendants Hamze El-Najjar, Moustafa Habib Kassem, Alaa Allia Ahmed Mohamed, a.k.a "Alaa Ahmed Mohamed Abouelnagaa," Maodo Kane and Michael Katz.
The complaint details efforts by defendants Moussa Ali Hamdan, Dib Hani Harb, and Hasan Antar Karaki to sell the CW counterfeit United States currency for the purpose of raising funds for Hizballah. In total, the conspirators provided the CW with approximately $9,800 in counterfeit U.S. currency.
In this same vein, the complaint alleges that defendants Moussa Ali Hamdan, Dib Hani Harb and Hasan Antar Karaki generated additional funds for Hizballah by selling fraudulent passports. The CW and the defendants participated in the purchase of two fake passports — one from the United Kingdom and one from Canada — for the benefit of Hizballah.
Finally, the complaint alleges that defendant Dib Hani Harb worked with Hodroj in furtherance of a conspiracy to provide material support to Hizballah in the form of approximately 1,200 Colt M4 Carbines (machine guns).
"The FBI remains resolutely committed to working with our law enforcement partners to find and stop those individuals who commit crimes, such as those alleged today, which are intended to provide financial and other material support for those individuals and groups operating on behalf of designated foreign terrorist organizations," said Special Agent-in-Charge Janice K. Fedarcyk, of the Philadelphia Division of the FBI. "Today, through the well-coordinated effort of all involved agencies, a blow has been struck to Hizballah’s efforts to fund its terrorism activities."
"ICE will continue to work with its law enforcement partners to disrupt networks involved in the illegal sale and distribution of weapons and critical technologies," said U.S. Immigration and Customs Enforcement (ICE) Assistant Secretary John Morton. "Today’s arrests are a clear indication of the federal government’s commitment to keeping Americans safe."
Information regarding the defendants is below:
- Hassan Hodroj, of Beirut, Lebanon, date of birth unknown, faces a potential 15 years in prison if convicted.
- Dib Hani Harb, of Beirut, Lebanon, was born in 1978 and faces a potential 30 years in prison if convicted.
- Hasan Antar Karaki, of Beirut, Lebanon, was born in 1959 and faces a potential 15 years in prison if convicted.
- Moussa Ali Hamdan, of Brooklyn, New York, was born in 1972 and faces a potential 25 years in prison if convicted.
- Hassan El-Najjar, a.k.a "Hassan Al-Najjar," of Brooklyn, New York, was born in 1982 and faces a potential 10 years in prison if convicted.
- Moustafa Habib Kassem, of Staten Island, New York, was born in 1980 and faces a potential 10 years in prison if convicted.
- Latif Kamel Hazime, a.k.a "Adanan," of Margarita Island, Venezuela, and Dearborn, Mich., was born in 1980 and faces a potential five years in prison.
- Alaa Allia Ahmed Mohamed, a.k.a Alaa Ahmed Mohamed Abouelnagaa," of Brooklyn, New York, was born in 1966 and faces a potential five years in prison.
- Maodo Kane, of Bronx, N.Y., was born in 1971 and faces a potential five years in prison.
- Michael Katz, of Plainsboro, N.J., was born in 1942 and faces a potential five years in prison.
This case was investigated by the Federal Bureau of Investigation’s Joint Terrorism Task Force, the New Jersey State Police, U.S. Immigration and Customs Enforcement, the Internal Revenue Service, the U.S. Secret Service, Defense Criminal Investigative Service, the Philadelphia Police Department, the Department of Commerce, Customs and Border Protection, the Bureau of Alcohol, Tobacco, Firearms, and Explosives, the Federal Air Marshals, Pennsylvania State Police, and the Department of State.
It is being prosecuted by Assistant U.S. Attorneys Nancy Beam Winter and Stephen A. Miller, and National Security Division Counterterrorism Section Trial Attorney Jolie F. Zimmerman.
The public is reminded that an indictment is an allegation. Each defendant is presumed innocent unless and until proven guilty.
Federal Court Shuts Down Los Angeles Tax PreparerRead the Press Release
WASHINGTON - A federal court in Los Angeles has permanently barred a local tax preparer, Jacqueline Cornejo from preparing tax returns for others, the Justice Department announced today. Cornejo, who operated J.C. Income Tax Services in Los Angeles, agreed to the injunction order without admitting the allegations in the suit.
The government complaint in the civil injunction case alleged that Cornejo promoted a tax fraud scheme designed to siphon millions of dollars from the U.S. Treasury. Cornejo allegedly requested a total of $12.1 million in fraudulent refunds.
According to the complaint, Cornejo promoted a tax fraud arrangement known as the "redemption" or "OID redemption" scheme. Cornejo allegedly filed a series of false IRS forms, including tax returns, amended returns and IRS Forms 1099-OID to request fraudulent tax refunds based on phony claims of large income tax withholding. For one of her customers, Cornejo allegedly requested a $4.4 million dollar refund on a false tax return. The Internal Revenue Service (IRS) catches the vast majority of bogus redemption scheme tax returns and blocks the claimed refunds.
Cornejo’s case was one of seven lawsuits filed across the country last month against alleged redemption scheme promoters. Papers filed in those cases said the defendants prepared tax returns requesting a total of $562.4 million in bogus refunds. Altogether, according to the IRS, redemption scheme participants (including customers of the defendants in those seven lawsuits) have requested a total of $3.3 trillion in fraudulent refunds.
John A. DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division, thanked Grayson A. Hoffman, the Justice Department trial attorney who handled the case, and Shauna Henline, the IRS senior technical advisor who conducted the investigation.
In the past decade, the Justice Department’s Tax Division has obtained more than 435 injunctions against tax fraud promoters and tax return preparers. Information about these cases is available on the Justice Department’s Web site.
California Court Permanently Enjoins Developer of the “Derivium” “90% Loan” Tax SchemeRead the Press Release
WASHINGTON – A federal judge in San Francisco has barred Charles Cathcart of Tuxedo Park, N.Y., from promoting a complex tax scheme involving numerous entities located around the globe and sales of over $1.25 billion in securities, the Justice Department announced today. Judge Phyllis J. Hamilton of the U.S. District Court for the Northern District of California signed the permanent injunction order.
The judge entered the injunction based on an extensive record, including facts to which the parties stipulated after Cathcart advised the court on the first day of trial that he would not put on any evidence to refute the government’s evidence. The record indicated that Cathcart, a Ph.D. economist, developed a scheme called the "90% Loan Program" and promoted it throughout the United States through companies he controlled —including Derivium Capital LLC and Derivium USA.
The 90% Loan Program falsely claimed customers could exchange their appreciated stock for loan payments equal to 90% of the stocks’ value without paying income tax on their capital gains. It also purported to allow the tax-free return of those customers’ stocks at maturity if the customers repaid the "loans."
But in fact, the record shows, customers’ stocks were sold immediately, with 90% of the sale proceeds going to make the purported "loans" to the customers, and the other 10% being retained by the promoters. Customers were told the loans were made by independent third-party lenders, but in fact the supposed loans were made through sham companies that Cathcart created and controlled. The sham companies never functioned as genuine lenders, never held or maintained any assets or reserves, and were located throughout the world in such far-flung places as the Isle of Man, Ireland and Hong Kong.
The court record shows that Cathcart, through the 90% Loan Program, sold more than $1.25 billion worth of customers’ stock in some 3,100 transactions, leaving more than $100 million for himself and the other promoters after payment of 90% of the sale proceeds to customers as purported loans. The government complaint in the case alleged that the scheme cost the U.S. Treasury an estimated $230 million or more.
Taxpayers are required by federal law to report sales of stock on their income tax returns and pay tax on gains from the sale. Judge Hamilton previously ruled that Cathcart’s customers were not receiving loans, because the transactions were in fact sales. Thus, Cathcart’s representations to customers that they were receiving loans were false statements about the scheme’s tax benefits. The stipulated record established that Cathcart’s claims about tax benefits were featured prominently in marketing materials to induce customers to engage in the scheme. Cathcart stipulated that he knew or had reason to know these claims were false.
The record shows that Cathcart also falsely told customers that Derivium would "hedge" their transactions to insure the return of their stock at the end of the transactions should they want to pay off their "loans" and get the stock back. But instead of hedging the transactions, which would have required the purchase of expensive call options correlated with his customers’ securities, Cathcart simply funneled at least $45 million of the stock sale proceeds to companies that he owned and controlled with his son Scott Cathcart and another scheme promoter.
The same court earlier barred Scott Cathcart, and Yurij Debevc, Robert Nagy, Charles Hsin and Franklin Thomason from promoting the 90% Loan program.
"Injunctions are a key component of the Justice Department’s efforts to stop complex tax schemes that falsely claim to help wealthy taxpayers eliminate income tax on capital gains," said John DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division. "The Justice Department is committed to unraveling these schemes and revealing their true nature for judges to see."
Acting Assistant Attorney General DiCicco thanked Justice Department trial attorneys Nathan Clukey, Ellen Weis and Gregory Seador, who handled the case, and revenue agents Marie Allen and Judy Steiner of the Internal Revenue Service’s Small Business/Self-Employed Division, who conducted the investigation.
In the past decade the Justice Department has obtained injunctions against more than 435 tax-scheme promoters and tax preparers. Information about those cases is available on the Justice Department Web site.
23 November 2009
Two Former Tennessee Corrections Officers Plead Guilty to Civil Rights Violation and LyingRead the Press Release
WASHINGTON — Joshua Ryan Jones, 24, and Roger Forrester, 40, former corrections officers at the Northwest Correctional Complex in Tiptonville, Tenn., pleaded guilty today in federal court in Jackson, Tenn., to violating the civil rights of an inmate and then lying about it during state and federal investigations, the Justice Department announced today.
During their guilty pleas, Jones and Forrester admitted that on April 15, 2008, while working as a corrections officers at the Northwest Correctional Complex, they used unreasonable force when Jones repeatedly kicked and Forrester repeatedly punched a handcuffed inmate without provocation. Both defendants agreed that their assaults violated the inmate’s constitutional right to be free from cruel and unusual punishment by law enforcement officers. Additionally, Jones and Forrester admitted that they obstructed justice when they provided false information about the incident to federal investigators.
Jones and Forrester face a maximum sentence of six years in prison and a maximum fine of $350,000.
"Law enforcement officers are entrusted with great power so that they can protect public safety. Those who abuse the power they are granted by violating the civil rights of individuals under their supervision will be brought to justice," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.
Today’s plea resulted from the investigative work of the FBI and the Civil Rights Division’s Criminal Section. The case is being prosecuted by Civil Rights Division Trial Attorneys Jared Fishman and Chris Lomax.
Terror Charges Unsealed in Minneapolis Against Eight Men, <br /> Justice Department AnnouncesRead the Press Release
Terrorism charges have been unsealed today in the District of Minnesota against eight defendants. According to the charging documents, the offenses include providing financial support to those who traveled to Somalia to fight on behalf of al-Shabaab, a designated foreign terrorist organization; attending terrorist training camps operated by al-Shabaab; and fighting on behalf of al-Shabaab.
Thus far, 14 defendants have been charged in the District of Minnesota through indictments or criminal complaints that have been unsealed and brought in connection with an ongoing investigation into the recruitment of persons from U.S. communities to train with or fight on behalf of extremist groups in Somalia. Four of these defendants have previously pleaded guilty and await sentencing.
The charges were announced today by David Kris, Assistant Attorney General for National Security; B. Todd Jones, U.S. Attorney for the District of Minneapolis; and Ralph S. Boelter, Special Agent in Charge of the Minneapolis field office of the Federal Bureau of Investigation.
"The recruitment of young people from Minneapolis and other U.S. communities to fight for extremists in Somalia has been the focus of intense investigation for many months," Assistant Attorney General Kris said. "While the charges unsealed today underscore our progress to date, this investigation is ongoing. Those who sign up to fight or recruit for al-Shabaab’s terror network should be aware that they may well end up as defendants in the United States or casualties of the Somali conflict."
Background
According to court documents, between September 2007 and October 2009, approximately 20 young men, all but one of Somali descent, left the Minneapolis area and traveled to Somalia, where they trained with al-Shabaab, a designated terrorist organization. Many of them ultimately fought with al-Shabaab against Ethiopian forces, African Union troops, and the internationally-supported Transitional Federal Government (TFG).
Court documents also state that the first group of six men traveled to Somalia in December 2007. Prior to their departure, the six men, as well as others in the Minneapolis area, raised money for the trips and held meetings in which they made phone calls to alleged co-conspirators in Somalia.
Upon arriving in Somalia, the men from Minneapolis allegedly stayed at safe-houses in Somalia and attended an al-Shabaab training camp. The al-Shabaab training camp included dozens of other young ethnic Somalis from Somalia, elsewhere in Africa, Europe and the United States. Purportedly, the trainees were trained by, among others, Somali, Arab and Western instructors in the use of small arms, machine guns, rocket-propelled grenades and military-style tactics. Allegedly, the trainees also were indoctrinated with anti-Ethiopian, anti-American, anti-Israeli and anti-Western beliefs.
According to court documents, on Oct. 29, 2008, Shirwa Ahmed, one of the men who left Minnesota in December 2007 and attended the al-Shabaab training camp, took part in one of five simultaneous suicide attacks on targets in northern Somalia. The attacks appeared to have been coordinated. Shirwa Mohamud Ahmed, also known as "Shirwa," drove an explosive-laden Toyota truck into an office of the Puntland Intelligence Service in Bossasso, Puntland. Other targets included a second Puntland Intelligence Service Office in Bossasso, the Presidential Palace, the United Nations Development Program office and the Ethiopian Trade Mission in Hargeisa. Including the suicide bombers, approximately twenty people were killed in the attacks.
Today in Minnesota, U.S. Attorney B. Todd Jones said of these cases, "The sad reality is that the vibrant Somali community here in Minneapolis has lost many of its sons to fighting in Somalia. These young men have been recruited to fight in a foreign war by individuals and groups using violence against government troops and civilians. Those tempted to fight on behalf of or provide support to any designated terrorist group should know they will be prosecuted to the fullest extent of the law."
Joining U.S. Attorney B. Todd Jones was Ralph S. Boelter, Special Agent in Charge of the Minneapolis field office of the Federal Bureau of Investigation, who added, "It is through the sustained and dedicated efforts of the Minneapolis Joint Terrorism Task Force and the support of the Somali-American community that today we are able to disclose some of the significant progress we have achieved in this critical investigation. At the same time, I emphasize the sole focus of our efforts in this matter has been the criminal conduct of a small number of mainly Somali-American individuals and not the broader Somali-American community itself, which has consistently expressed deep concern about this pattern of recruitment activity in support of al-Shabaab."
Charging Documents Unsealed
The Justice Department announced that three charging documents were unsealed this morning in the District of Minnesota:
United States v. Mahamud Said Omar, 09-CR-242
On Aug. 20, 2009, a federal grand jury returned a five-count indictment charging Mahamud Said Omar with terrorism offenses. According to the indictment, from September 2007 through the present, Omar, who is a Somali citizen but was granted permanent U.S. resident status in 1994, conspired with others to provide financial assistance as well as personnel to terrorists and foreign terrorist organizations. On Nov. 8, 2009, law enforcement authorities in the Netherlands arrested Omar according to a provisional arrest warrant. The United States has filed its request for extradition. According to documents unsealed this morning, including affidavits in support of the United States’ request for extradition of Omar from the Netherlands, Omar provided money to young men to travel from Minneapolis to Somalia to train with and fight for al-Shabaab. Omar also allegedly visited an al-Shabaab safe-house and provided hundreds of dollars to fund the purchase of AK-47 rifles for men from Minneapolis.
Omar is in custody in the Netherlands.
United States v. Ahmed Ali Omar, Khalid Mohamud Abshir, Zakaria Maruf, Mohamed Abdullahi Hassan and Mustafa Ali Salat, 09-CR-50
On Aug. 20, 2009, a federal grand jury returned a second superseding indictment charging Ahmed Ali Omar, Khalid Abshir, Zakaria Maruf, Mohamed Hassan and Mustafa Salat with terrorism-related offenses. These men were charged in the summer of 2009 with conspiracy to provide material support to terrorists and foreign terrorist organizations; conspiracy to kill, kidnap, maim and injure people outside the United States; possessing and discharging a firearm during a crime of violence; and solicitation to commit a crime of violence. The indictments that detail the charges filed against these co-conspirators also were unsealed today.
None of the five defendants is in custody. All five are believed to be outside of the United States.
United States v. Cabdulaahi Ahmed Faarax
United States v. Abdiweli Yassin Isse
On Oct. 9, 2009, a criminal complaint was filed, charging Cabdulaahi Ahmed Faarax and Abdiweli Yassin Isse with conspiring to kill, kidnap, maim or injure persons outside the United States. The affidavit filed in support of the complaint states that in the fall of 2007, Faarax and others met at a Minneapolis mosque to telephone co-conspirators in Somalia to discuss the need for Minnesota-based co-conspirators to go to Somalia to fight the Ethiopians. The affidavit also alleges that later that fall, Faarax attended a meeting with co-conspirators at a Minneapolis residence, where he encouraged others to travel to Somalia to fight and told them how he had experienced true brotherhood while fighting a "jihad" in Somalia. Subsequently, Faarax was interviewed three times by authorities and each time denied fighting or knowing anyone who had fought in Somalia.
The criminal complaint states that Abdiweli Yassin Isse also encouraged others to travel to Somalia to fight the Ethiopians. He purportedly described at a gathering of co-conspirators his own plans to fight "jihad" against Ethiopians, and he raised money to buy airplane tickets for others to make the trip to Somalia for the same purpose. In raising that money, he allegedly misled community members into thinking they were contributing money to send young men to Saudi Arabia to study the Koran. The complaint that details the charges filed against these co-conspirators also was unsealed today.
Faarax and Isse are not in custody. Both men are believed to be outside of the United States.
Guilty Pleas
The Justice Department also announced that four residents of Minneapolis have entered guilty pleas in connection with this investigation; one resident of Minneapolis awaits trial on charges that he made false statements to the FBI, and one resident of Minneapolis was recently indicted on related charges.
United States v. Kamal Hassan, 09-CR-38
On Feb. 18, 2009, Kamal Said Hassan pleaded guilty to one count of providing material support to terrorists and one count of providing material support to a foreign terrorist organization, respectively. On Aug. 12, 2009, Hassan pleaded guilty to one count of making false statements to the FBI.
Hassan is in custody awaiting sentencing.
United States v. Abdifatah Yusuf Isse, 09-CR-50
United States v. Salah Osman Ahmed, 09-CR-50
On April 24, 2009, Abdifatah Yusuf Isse entered a guilty plea to one count of providing material support to terrorists. On July 28, 2009, Salah Osman Ahmed entered a guilty plea to one count of providing material support to terrorists.
Isse and Ahmed are in custody awaiting sentencing.
United States v. Adarus Abdulle Ali
On Nov. 2, 2009, Adarus Abdulle Ali pleaded guilty to an information charging him with one count of perjury for making false statements to a federal grand jury in December of 2008.
Ali has been released pending a sentencing hearing.
Additional Pending Cases
United States v. Abdow Munye Abdow
On Oct. 13, 2009, a federal grand jury returned a two-count indictment charging Abdow Munye Abdow with making false statements to the FBI. The indictment alleges that on Oct. 8, 2009, Abdow lied to FBI agents when he was questioned after returning to Minnesota from a road trip to southern California. Abdow purportedly told the agents only one other person traveled with him when, according to officials, four people accompanied him. In addition, Adbow allegedly told the agents he did not know how the rental car in which he rode had been financed when, according to officials, he had used his own debit card to pay for the car.
Abdow has been released pending trial.
United States v. Omer Abdi Mohamed
Mohamed has been released pending trial.
To date, the investigation into the recruitment of young men to join al-Shabaab and those supporting that recruiting effort has been conducted by the Federal Bureau of Investigation’s Joint Terrorism Task Force with the assistance and cooperation of the Dutch KLPD; the Dutch Ministry of Justice; Judith Friedman at the Justice Department’s Office of International Affairs; the U.S. Department of State; the embassies at Abu Dhabi, UAE; Sanaa, Yemen; and The Hague in the Netherlands; and the Department of Defense. The case is being prosecuted by W. Anders Folk, Assistant U.S. Attorney and William M. Narus, from the Justice Department’s Counterterrorism Section, with assistance having been provided by David Bitkower, formerly of the Counterterrorism Section and currently an Assistant U.S. Attorney in the Eastern District of New York.
An indictment is a determination by a grand jury that there is probable cause to believe that offenses have been committed by a defendant. A defendant, of course, is presumed innocent until he or she pleads guilty or is proven guilty at trial.
On Nov. 19, 2009, Omer Abdi Mohamed was arrested on charges that he conspired to provide material support to terrorists; that he provided material support to terrorists; and that he conspired to kill, kidnap, maim and injure persons outside the United States.Tennessee Man Sentenced to 14 Years in Prison for Burning Islamic CenterRead the Press Release
WASHINGTON – Senior Judge Robert L. Echols of the Middle District of Tennessee today sentenced Michael Corey Golden to 14 years and three months in prison and three years of supervised released for vandalizing and burning down the Islamic Center of Columbia, Tenn., the Justice Department announced. Golden pleaded guilty on Nov. 3, 2008, to destruction of religious property and to using fire to commit a felony.
Golden, 24, previously admitted to the court that he constructed Molotov cocktail explosive devices, ignited them and used them to destroy the mosque on Feb. 9, 2008. He further admitted that while he burned down the mosque, a co-defendant painted swastikas and the phrase "White Power" on the building’s walls. The other two defendants, Jonathan Edward Stone and Eric Ian Baker, previously pleaded guilty and are scheduled to be sentenced in December.
"The right to worship without fear of this kind of violent interference is among our most fundamental civil rights," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "We will aggressively prosecute anyone who seeks to intimidate or injure any congregation because of what they believe, how they worship or who they are."
"This type of crime strikes at the heart of our civil rights and religious freedoms in America. I am very pleased that through local, state and federal cooperation all defendants responsible for this vile attack have been brought to justice," said U.S. Attorney Edward M. Yarbrough for the Middle District of Tennessee.
"Every Muslim who saw the news photos with the Swastika painted on the burned out Islamic center was victimized by this attack. Today, they can clearly see that American law enforcement stands strongly with them to guarantee their freedoms to worship and assemble," said ATF Nashville Field Division Special Agent in Charge James M. Cavanaugh.
"The FBI is committed to protecting the civil rights of all people through the enforcement of federal civil rights statutes," said FBI Memphis Division Special Agent in Charge My Harrison. "The destruction of any place of worship will not be ignored and the FBI will make every effort to bring those who commit such heinous acts to justice."
This case was investigated by the FBI, the Bureau of Alcohol, Tobacco, Firearms and Explosives, Tennessee State Bomb and Arson, and the Columbia, Tenn., Police Department. Assistant U.S. Attorney Hal McDonough from the U.S. Attorney’s Office in Nashville and Trial Attorney Jonathan Skrmetti from the Civil Rights Division prosecuted the case.
Justice Department Sues Chicago Area Landlord for Refusing to Rent to African AmericansRead the Press Release
WASHINGTON – The United States has filed a lawsuit against Terence Flanagan, a Chicago area property owner and rental agent, alleging that he refused to rent properties he owned or controlled to African-Americans, in violation of the federal Fair Housing Act, the Justice Department announced.
The lawsuit, filed today in federal court in Chicago, alleges that Flanagan refused to rent a single-family house he owns in Orland Park, Ill., to Kamal Alex Majeid, who is African-American, because of his race. The lawsuit also alleges that Flanagan asked a white tester employed by the Justice Department whether her husband was African-American and admitted to her that he did not want to rent to African-Americans. The suit further alleges that Flanagan told this tester that he had numerous other rental properties in the Chicago area.
Testers are individuals who pose as applicants for housing and report on their interactions with housing providers to determine the providers’ compliance with fair housing laws. Since 1991, the Department has operated a Fair Housing Testing Program whereby it uses federal employees or contractors as testers to identify violations of the Fair Housing Act.
"Racial discrimination has no place in this nation, particularly when it stands in the way of an individual satisfying a basic need like housing," said Thomas E. Perez, Assistant Attorney General of the Civil Rights Division. "This lawsuit makes clear that such discrimination will not be tolerated, and we will use all tools at our disposal to root out unlawful discrimination against racial and ethnic minorities."
"We are committed to seeking out discrimination and acting forcefully to eliminate it in all its forms from the Chicago-area housing market," said Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois.
This lawsuit resulted from a complaint submitted to the Justice Department by the South Suburban Housing Center, a private suburban Chicago fair housing organization, after it was contacted by Majeid. Majeid filed a lawsuit against Flanagan in August. That lawsuit is currently pending in federal court before the Honorable Samuel Der-Yeghiayan. The United States’ complaint seeks a court order prohibiting future discrimination by the defendant, monetary damages for those harmed by the defendant’s actions and a civil penalty.
Individuals who may have information related to this lawsuit should contact the Justice Department toll-free at 1-800-896-7743, mail box number 93, or email the Justice Department at [email protected]. Fighting illegal housing discrimination is a top priority of the Justice Department. The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status. More information about the Civil Rights Division and the laws it enforces is available at http://www.justice.gov/crt. Individuals who believe that they may have been victims of housing discrimination can call the Housing Discrimination Tip Line at 1-800-896-7743, e-mail the Justice Department at [email protected], or contact HUD at 1-800-669-9777.
The complaint is an allegation of unlawful conduct. The allegations must be proven in federal court.
Former General Manager of Texas Business Arrested for Role in Alleged Scheme to Bribe Officials at Mexican State-Owned Electrical UtilityRead the Press Release
WASHINGTON – The former general manager of a Sugar Land, Texas-based business was arrested on Nov. 18, 2009, for his alleged role in a conspiracy to bribe Mexican government officials to secure contracts with the Comisión Federal de Electridad (CFE), a Mexican state-owned utility company, announced Lanny A. Breuer, Assistant Attorney General of the Criminal Division; Richard C. Powers, Special Agent-in-Charge of the FBI’s Houston Field Office; and Rodney E. Clarke, Special Agent-in-Charge of the Internal Revenue Service - Criminal Investigation’s (IRS-CI) Houston Field Office. In addition, a Mexican citizen has pleaded guilty for his role in the bribery scheme.
John Joseph O’Shea, 57, of Pleasanton, Calif., was charged in an 18-count indictment returned by a federal grand jury in the Southern District of Texas on Nov. 16, 2009, with conspiracy, violations of the Foreign Corrupt Practices Act (FCPA), international money laundering and falsification of records in a federal investigation. The indictment was unsealed upon his arrest. The indictment alleges that while acting as the general manager of a Texas business unit of a U.S. subsidiary of a Swiss corporation, O’Shea arranged and authorized payments to multiple officials at CFE in exchange for lucrative contracts. According to the indictment, the Texas unit’s primary business was to provide products and services to electrical utilities, many of them foreign state-owned utilities, for network management in power generation, transmission and distribution.
The indictment alleges that the Texas business unit managed by O’Shea contracted with a Mexican company to serve as its sales representative in Mexico, whereby the Mexican company received a percentage of the revenue generated from business with Mexican governmental utilities, including CFE. The Texas business unit, according to the indictment, received multiple contracts with CFE for goods and services related to CFE’s network while using the Mexican company as its sales representative. Fernando Maya Basurto, 47, of Mexico City, was a principal of the Mexican company, performing work for the Texas business unit on its contracts with CFE.
In December 1997, CFE awarded the Texas business unit a contract, known as the SITRACEN contract, to significantly upgrade the backbone of Mexico’s electrical network system. According to the indictment, the SITRACEN contract generated more than $44 million dollars in revenue for the Texas business unit. Then, in approximately October 2003, CFE awarded the Texas business unit a multi-year contract for maintenance and upgrades of the SITRACEN contract, referred to as the Evergreen contract.
For the Evergreen contract, the indictment alleges that O’Shea, Basurto, officials at CFE and others agreed that approximately 10 percent of the revenue the Texas business unit received from CFE would be returned to CFE officials as corrupt payments. The indictment alleges that the Evergreen contract, a sole source award, generated more than $37 million in revenue for the Texas business unit. The indictment alleges that it was also agreed that O’Shea would receive approximately one percent of the contract revenue as kickback payments. O’Shea, Basurto, and others allegedly used false invoices from Mexican companies as a basis to make international wire transfers that purported to be legitimate payments for “technical services” and “maintenance support services.” The indictment alleges these were actually corrupt payments and the companies did not do any work for the Texas business unit. O’Shea, Basurto and others allegedly also made additional “commission” payments to Basurto and his family that were further transferred to CFE officials. According to the indictment, in connection with the Evergreen contract, O’Shea authorized more than $900,000 in corrupt payments to CFE officials before an internal investigation by the Swiss corporation stopped the transfers. The Swiss corporation then voluntarily disclosed the payments to the Department of Justice and U.S. Securities and Exchange Commission (SEC) and said it is fully cooperating with their investigations.
In addition, the indictment alleges that O’Shea, Basurto and others engaged in a cover up after O’Shea was terminated from the Texas business unit, which included fabricating documents that purported to be evidence of a legitimate business relationship between the Texas business unit and the Mexican companies that provided the false invoices. According to the indictment, Basurto and O’Shea exchanged e-mails in which they discuss draft language for fake correspondence and a fake contract.
An indictment is merely an accusation, and O’Shea is presumed innocent until and unless proven guilty beyond a reasonable doubt.
The conspiracy count and the falsification of records in a federal investigation count each carry a maximum penalty of five years in prison and a fine of the greater of $250,000 or twice the value gained or lost. Each of the 12 FCPA counts carry a maximum penalty of five years in prison and a fine of the greater of $100,000 or twice the value gained or lost. The four international money laundering counts each carry a maximum penalty of 20 years in prison and a fine of the greater of $500,000 or twice the value of the property involved in the transaction. The indictment also gives notice of criminal forfeiture.
Basurto pleaded guilty on Nov. 16, 2009, before U.S. District Judge Lynn N. Hughes in Houston to a one-count information charging him for his role in the conspiracy. In his plea, Basurto admitted that while he acted as a sales representative for the Texas business unit, he conspired with others to make corrupt payments to CFE officials, helped launder the bribe monies, and engaged in a cover up to obstruct the investigations of the Department of Justice and the SEC. Basurto also admitted that he submitted false invoices and helped fabricate correspondence in contemplation of federal investigations into the bribery. As part of his plea agreement, Basurto has agreed to cooperate with the Department of Justice in its ongoing investigation.
Basurto was arrested in Dallas on April 25, 2009, on a criminal complaint charging him with conspiracy to structure transactions and structuring transactions to evade currency reporting requirements and subsequently detained. He was later indicted on the same charges on June 10, 2009.
The case was prosecuted by Trial Attorney Nicola J. Mrazek of the Criminal Division’s Fraud Section. The case was investigated by the FBI’s Houston Field Office and the IRS-CI Houston Field Office. The SEC provided substantial assistance and cooperation in this matter. The Department of Justice would also like to thank the Federal Republic of Germany for supplying evidence in connection with this investigation.
Indictment
Information
Detroit Spammer and Three Co-Conspirators Sentenced for <br /> Multi-Million Dollar E-Mail Stock Fraud SchemeRead the Press Release
Four individuals were sentenced today by U.S. District Judge Marianne O. Battani in federal court in Detroit for their roles in a wide-ranging international stock fraud scheme involving the illegal use of bulk commercial e-mails, or "spamming."
Alan M. Ralsky, 64, of West Bloomfield, Mich., and Scott Bradley, 48, also of West Bloomfield, were sentenced to 51 months and 40 months in prison, respectively, for conspiring to commit wire fraud, mail fraud, and to violate the CAN-SPAM Act, and also for committing wire fraud, engaging in money laundering and violating the CAN-SPAM Act. Ralsky and Bradley were also each sentenced to 5 years of supervised release following their respective prison terms, and were each ordered to forfeit $250,000 that the United States seized in December 2007.
How Wai John Hui, 51, a resident of Hong Kong and Canada, was sentenced to 51 months in prison for conspiring to commit wire fraud, mail fraud and to violate the CAN-SPAM Act, and also for committing wire fraud and engaging in money laundering. Hui was sentenced to 3 years of supervised release following his prison term, and agreed to forfeit $500,000 to the United States.
John S. Bown, 45, of Fresno, Calif., was sentenced to 32 months in prison for conspiring to commit wire fraud, mail fraud and to violate the CAN-SPAM Act, for conspiring to commit computer fraud by creating a botnet, and also for violating the CAN-SPAM Act. A botnet is a network of computers that have been infected by malicious software. Bown was sentenced to 3 years of supervised release following his prison term, and agreed to forfeit $120,000 to the United States.
"Today’s sentencing sends a powerful message to spammers whose goal is to manipulate financial transactions and the stock market through illegal e-mail advertisements," said Assistant Attorney General Lanny A. Breuer. "People who use fraudulent e-mails to drive up stock prices and reap illicit profits will be prosecuted, and they will face significant prison time."
"With today’s sentence of the self-proclaimed ‘Godfather of Spam,’ Alan Ralsky, and three others who played central roles in a complicated stock spam pump and dump scheme, the Court has made it clear that advancing fraud through abuse of the Internet will lead to several years in prison," said U.S. Attorney Terrence Berg for the Eastern District of Michigan. "I commend the FBI, the Postal Inspection Service, and the IRS Criminal Investigative Division for their determined and careful investigation in this case which lead to today’s result."
"Through this conspiracy Ralsky and the others were able to manipulate the stock market and maximize their profit. They flooded our e-mail boxes with unwanted spam e-mail and attempted to use a botnet to hijack our computers assist them in the scheme. Cyber crime investigations are a top priority of the FBI and we will continue to aggressively investigate those individuals who use and hide behind computers to commit various crimes," said Andrew G. Arena, Special Agent in Charge, FBI.
"In today’s competitive international business world, there will always be a select few who illegally manipulate the system for their own profit," said Maurice Aouate, Special Agent in Charge, Internal Revenue Service Criminal Investigation. "IRS-CI will continue to diligently follow the money and assist in the seizure and forfeiture of any ill-gotten gains from their illegal business practices."
"Today marks a victory for all who entrust their money to others within the U.S. economy," said Joseph A. Pirone, U.S. Postal Inspector in Charge. "Postal Inspectors have protected Americans from those who use the U.S. Mail for fraudulent purposes since the passage of the Mail Fraud Statute in 1872. The sentencing of Ralsky and Bradley demonstrates the Postal Inspection Service's continuing commitment to protect the public."
According to court documents, from January 2004 through September 2005, Ralsky, Bradley, Judy Devenow, Bown, William Neil, James Bragg, James Fite, Hui, Francis Tribble and others allegedly engaged in a related set of conspiracies designed to use spam e-mails to manipulate thinly traded stocks and profit by trading in those stocks once their share prices increased after recipients of the spam e-mails traded in the stocks being promoted.
Ralsky served as the chief executive officer and primary deal maker for the spam e-mail operation. Bradley, Ralsky’s son-in-law, served as the chief financial officer and director of operations for the spam e-mail operation. Bown, who was chief executive officer of an Internet services company, GDC Layer One, served as the chief technology officer for the spam e-mail operation. Hui, who was the CEO of China World Trade, served as the lead dealmaker representing the companies whose stocks were being promoted via spam e-mail.
According to court documents, many of the spam e-mails promoted thinly traded "pink sheet" stocks for U.S. companies owned and controlled by individuals in Hong Kong and China. The spam e-mails contained materially false and misleading information or omissions and were created and sent using software programs that made it difficult to trace them back to the conspirators. According to the indictment, the conspirators used wire communications, the U.S. mail and common carriers to perpetrate their frauds. The conspirators also engaged in money laundering involving millions of dollars generated by their manipulative stock trading.
According to the indictment, the defendants used various illegal methods in order to maximize the amount of spam that evaded spam-blocking devices and tricked recipients into opening, and acting on, the advertisements in the spam. These included using falsified "headers" in the e-mail messages, using proxy computers to relay the spam, using falsely registered domain names to send the spam, and also making misrepresentations in the advertising content of some of the underlying e-mail messages.
The defendants were indicted in the Eastern District of Michigan in December 2007. Ralsky, Bradley, Bown, William Neil, Bragg, and Fite pleaded guilty in June 2009 while Hui pleaded guilty in December 2008. Tribble and Devenow pleaded guilty in October 2008. Tribble, Devenow, William Neil, Bragg and Fite are scheduled to be sentenced tomorrow by Judge Battani.
Anki Neil and Peter Severa are also named as defendants in the indictment returned in the Eastern District of Michigan and their cases are still pending. An indictment is merely an accusation and defendants are presumed innocent until and unless proven guilty at trial beyond a reasonable doubt.
The charges arose after a three-year investigation, led by the FBI with assistance from the U.S. Postal Inspection Service and IRS-CI revealed a sophisticated and extensive spamming operation. The U.S. Securities and Exchange Commission’s Philadelphia Regional Office has provided significant ongoing assistance in this case. The case is being prosecuted by U.S. Attorney Terrence Berg and Assistant U.S. Attorney Julie Beck and Trial Attorneys Thomas Dukes and Mona Sedky of the Criminal Division’s Computer Crime and Intellectual Property Section.
Colombian National Pleads Guilty to Role in Defrauding<br /> the Export-Import Bank of the United States of More Than $1 MillionRead the Press Release
Febe Durango-Rueda, 52, a Colombian national, pleaded guilty on Nov. 20, 2009, to participating in a scheme to defraud the Export-Import Bank of the United States (Ex-Im Bank) of more than $1 million.
Durango pleaded guilty before Judge Richard W. Roberts in U.S. District Court in Washington to a one-count criminal information charging her with conspiracy to defraud the Ex-Im Bank and to commit mail fraud. Durango was arrested by special agents of the Ex-Im Bank Office of the Inspector General on May 4, 2009, at Miami International Airport while attempting to enter the United States. According to the court document, the Ex-Im Bank is an independent U.S. agency that assists in the export of U.S. goods and services to companies overseas, in part through guaranteeing loans to foreign purchasers of U.S. goods.
According to plea documents, Durango was the president of Droservicios Ltda., a Colombian medical services company. Durango admitted that she and others falsified financial statements that Droservicios submitted to the Ex-Im Bank in support of a loan guarantee for a deal worth more than $1.3 million.
Specifically, Durango and others applied for an Ex-Im Bank loan guarantee that purported to be for the purpose of increasing Droservicios’s leasing services of specialized medical equipment to public health institutions. According to the application, the specialized medical equipment was to include a CT scanner and mammography unit as well as other medical imaging equipment. Durango admitted that she and others then shipped medical equipment of a much lesser value than the specialized medical equipment that was the basis for the Ex-Im Bank guaranteed loan and fabricated invoices to fraudulently reflect that the specialized medical equipment was purchased and shipped. Durango admitted that she and others shared the difference in the loan amount and the purchase price of the less valuable medical equipment that was actually purchased and shipped. According to court documents, Durango and others then allowed the loan to default, triggering the Ex-Im Bank’s obligation to cover the debt. The Ex-Im Bank, without knowing of the fraud committed by Durango and others, paid more than $1.3 million to satisfy the guarantee.
Durango is scheduled to be sentenced on Feb. 4, 2010, and faces a maximum sentence of five years in prison and a $250,000 fine. According to the plea, Durango has agreed to pay $139,064 in forfeiture and make full restitution in the amount of $1,332,081.
The scheme was initially discovered by Ex-Im Bank staff in October 2006 and referred to the Ex-Im Bank Office of Inspector General in 2007 for further investigation. The case is being prosecuted by Trial Attorneys Nicole H. Sprinzen and Brigham Cannon of the Criminal Division's Fraud Section. The case is being investigated by the Ex-Im Bank, Office of Inspector General and the U.S. Postal Inspection Service.
Arrests Made in Case Involving Conspiracy to Procure Weapons, <br /> Including Anti-Aircraft MissilesRead the Press Release
Arrests were made today in a case involving a conspiracy to procure weapons, including anti-aircraft missiles.
A criminal complaint, unsealed today, charged Dani Nemr Tarraf with conspiring to acquire anti-aircraft missiles (FIM-92 Stingers) and conspiring to possess machine guns (approximately 10,000 Colt M4 Carbines). In addition, Tarraf and other defendants — including Douri Nemr Tarraf, Hassan Mohamad Komeiha, and Hussein Ali Asfour — were charged with conspiring to transport stolen goods. Dani Nemr Tarraf and Ali Fadel Yahfoufi were charged with conspiring to commit passport fraud.
"Keeping missiles, machine guns and other sensitive U.S. weapons technology from falling into the wrong hands is one of the Justice Department’s top priorities. I applaud the many agents, analysts and prosecutors who worked tirelessly to bring about these charges and arrests," said David Kris, Assistant Attorney General for National Security.
"This investigation demonstrates the dedication and cooperation of law enforcement agents from numerous agencies," said U.S. Attorney Michael L. Levy. "These cases show the breadth of criminal activity engaged in by those who oppose us. The crimes charged here range from the purchase of stolen and counterfeit goods, to the purchase of false visas and passports, to the purchase of weapons. I want to compliment the law enforcement agents, the Assistant United States Attorneys, and the attorneys in the National Security Division of the Department of Justice for their efforts."
According to the complaint, Hassan Mohamad Komeiha began purchasing purportedly stolen cellular telephones from a law enforcement officer acting in an undercover capacity (the "UC") in or about June 2007. Over the next several months, Komeiha and his co-conspirators [Dani Nemr Tarraf, Douri Nemr Tarraf, and Hussein Ali Asfour] purchased purportedly stolen goods from the UC, including cellular telephones, laptop computers, Sony Play Station 2 systems and automobiles.
The complaint also alleges that Dani Nemr Tarraf conspired to acquire anti-aircraft missiles and conspired to possess machine guns. According to the complaint, in or about mid-June 2009, Tarraf asked whether the UC could supply guided missiles and told the UC that he (Tarraf) wanted the UC to export approximately 10,000 "commando" machine guns [Colt M4 Carbines with short barrels] from the United States. On or about July 28, 2009, in Philadelphia, Tarraf paid the UC a deposit of approximately $20,000 toward the cost of purchasing FIM-92 Stinger missiles and approximately 10,000 Colt M4 Carbines and shipping these items outside the United States.
Finally, the complaint alleges that Dani Nemr Tarraf and his assistant, Ali Fadel Yahfoufi, conspired to commit passport fraud. In furtherance of their scheme, Yahfoufi provided passport photos of himself to the UC, Tarraf agreed to pay the UC to obtain a U.S. passport in Yahfoufi’s name, and Yahfoufi instructed the UC to submit false information to the U.S. government in a passport application.
"The FBI remains resolutely committed to working with our law enforcement partners to find and stop those individuals who commit crimes, such as those alleged today, in support of a broader intent to commit acts of terrorism against the United States," said Special Agent-in-Charge Janice K. Fedarcyk, of the Philadelphia Division of the FBI. "Today, through the well-coordinated effort of all involved agencies, dangerous weapons have been kept out of the hands of those who would turn those weapons against the United States."
"ICE will continue to work with its law enforcement partners to disrupt networks involved in the illegal sale and distribution of weapons and critical technologies," said U.S. Immigration and Customs Enforcement (ICE) Assistant Secretary John Morton. "Today’s arrests are a clear indication of the federal government’s commitment to keeping Americans safe."
Information regarding the defendants is below:
- Dani Nemr Tarraf, of Trnava, Slovakia, was born in 1971 and faces a potential maximum sentence of life imprisonment if convicted.
- Douri Nemr Tarraf, of Trnava, Slovakia, was born in 1973 and faces a potential maximum sentence of five years imprisonment if convicted.
- Hassan Mohamad Komeiha, of Lebanon and Dearborn, Mich., was born in 1970 and faces a potential maximum sentence of five years imprisonment if convicted.
- Hussein Ali Asfour, a/k/a "Alex," of Centreville, Ga., was born in 1976 and faces a potential maximum sentence of five years imprisonment if convicted.
- Ali Fadel Yahfoufi, of Trnava, Slovakia, was born in 1969 and faces a potential maximum sentence of five years in prison if convicted.
This case was investigated by the FBI’s Joint Terrorism Task Force, the New Jersey State Police, U.S. Immigration and Customs Enforcement, the Internal Revenue Service, the U.S. Secret Service, Defense Criminal Investigative Service, the Philadelphia Police Department, the Department of Commerce, Customs and Border Protection, the Bureau of Alcohol, Tobacco, Firearms, and Explosives, the Federal Air Marshals, Pennsylvania State Police, and the Department of State.
It is being prosecuted by Assistant U.S. Attorneys Nancy Beam Winter and Stephen A. Miller, and National Security Division Counter-terrorism Section Trial Attorney Jolie F. Zimmerman.
Arms Dealer Pleads Guilty to Conspiracy to Supply <br /> U.S. Fighter Jet Engines to IranRead the Press Release
Jacques Monsieur, a Belgian national and resident of France suspected of international arms dealing for decades, pleaded guilty today in U.S. District Court for the Southern District of Alabama to conspiracy to illegally export F-5 fighter jet engines and parts from the Untied States to Iran.
Monsieur along with Dara Fotouhi, aka Dara Fatouhi, an Iranian national currently living in France, was charged in a six-count indictment returned on Aug. 27, 2009, with conspiracy, money laundering, smuggling, as well as violations of the Arms Export Control Act (AECA) and the International Emergency Economic Powers Act (IEEPA). Monsieur was arrested by federal agents in August 2009 upon his arrival in New York. Fotouhi remains at large.
According to Monsieur’s factual proffer and the documents filed in court, Monsieur, along with his co-conspirator Fotouhi, are experienced arms dealers who have been actively working with the Iranian government to procure military items for the Iranian government. In February 2009, Monsieur contacted an undercover agent seeking engines for the F-5 (EIF) fighter jet and the C-130 military transport aircraft for export to Iran. Thereafter, Monsieur began having regular e-mail contact with the undercover agent regarding the requested F-5 engines and parts.
These engines, known as J85-21 models, are replacement engines for the F-5 fighter jet that was sold to Iran by the United States before the 1979 Iranian revolution. The engines and parts are designated as defense articles on the U.S. Munitions List and may not be exported from the United States without a license from the U.S. State Department. Additionally, these items may not be exported to Iran without a license from the U.S. Treasury Department due to the U.S. trade embargo on Iran.
In May 2009, an undercover agent met with Monsieur where Monsieur introduced Fotouhi as a business associate, and again discussed the illegal export of F-5 fighter jet engines from the United States to Iran. During this negotiation, Monsieur asked the undercover agent if he could obtain or use U.S. shipping or export authorization documents that falsely indicated that the end user of the items would be located in Colombia.
In June 2009, Monsieur sent an e-mail to the undercover agent and provided a purchase order for F-5 fighter jet parts from a front company for an organization known as Trast Aero Space, located in Kyrgyzstan. The order requested that the parts be located by the undercover agent and illegally exported to the United Arab Emirates for the transshipment to Iran. The following month, Monsieur contacted the undercover agent indicating that approximately $110,000 had been wired from Dubai to a bank account in Alabama as payment for the parts. He also indicated that a deposit of $300,000 would be forthcoming as a down payment for two F-5 fighter jet engines. In August 2009, Monsieur requested information from the undercover agent about his contact in Colombia for forwarding the aircraft parts from Colombia to the United Arab Emirates.
"Today’s plea underscores the threat posed by Iranian procurement networks and the international arms traffickers who help supply them," said David Kris, Assistant Attorney General for National Security. "I applaud the many agents from the U.S. Immigration and Customs Enforcement and the Defense Criminal Investigative Service who worked tirelessly to bring about this important case."
Eugene A. Seidel, Acting U.S. Attorney for the Southern District of Alabama said, "Today’s prosecution clearly shows that the United States will continue to be vigilant in cases dealing with arms traffickers and will relentlessly pursue every lead to shut down illegal arms transfer to Iran."
"We realize foreign governments actively seek our equipment for their own military development. Therefore, preventing the export of critical technologies and restricted munitions is of extreme concern to the Department of Defense because of the real possibility that our soldiers, sailors, airmen and Marines may have to face this material in the hands of our adversaries and thereby lose the advantage that U.S. technology is supposed to provide them," said Sharon E. Woods, Director, Defense Criminal Investigative Service. "Protecting American’s Warfighters through technology protection is a top priority for the Defense Criminal Investigative Service, the law enforcement arm of the DoD Inspector General, and a fundamental focus for our special agents."
"The guilty plea of Monsieur reflects the government’s commitment to ensuring that critical technologies and military-grade weapons not fall into the wrong hands," said U.S. Immigration and Customs Enforcement (ICE) Assistant Secretary John Morton. "ICE will continue bringing to bear its unique law enforcement authorities to investigate and enforce criminal violations of all U.S. export laws related to military items and controlled "dual-use" commodities."
Monsieur faces a maximum penalty of five years in prison and a $250,000.00 fine.
This case was investigated by the Department of Homeland Security’s U.S. Immigration and Customs Enforcement (ICE) and the Department of Defense’s Defense Criminal Investigative Service (DCIS). The prosecution is being handled by Assistant U.S. Attorney Gregory A. Bordenkircher of the U.S. Attorney’s Office for the Southern District of Alabama, with assistance from the Counterespionage Section of the Justice Department’s National Security Division.
Arizona Man Sentenced to Five Years in Prison for Mailing Child PornographyRead the Press Release
Robert Restuch, 70, of Bullhead City, Ariz., was sentenced today to five years in prison for mailing child pornography. Restuch was also sentenced by U.S. District Court Judge G. Murray Snow to serve a lifetime of supervised release following his prison term and ordered to pay a $5,000 fine.
On May 20, 2008, a Phoenix grand jury indicted Restuch on one count of mailing child pornography, one count of reproducing child pornography for distribution through the mails and one count of possession of child pornography. The charges arose after Restuch entered the U.S. Post Office in Bullhead City and mailed a box of CDs and DVDs that contained more than 600 images of child pornography, including images depicting children under the age of 12 years.
Restuch pleaded guilty on July 28, 2009, to one count of mailing child pornography. According to court documents, the investigation revealed that Restuch had downloaded child pornography files from the Internet, and copied the files onto the CDs and DVDs that he later mailed.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The case was prosecuted by Trial Attorney James Silver of CEOS, with assistance from Assistant U.S. Attorney Sharon K. Sexton of the District of Arizona. The U.S. Postal Inspection Service conducted the investigation.
20 November 2009
Tennessee Woman Barred from Preparing Federal Tax Returns for Others; Judge Issues Preliminary InjunctionRead the Press Release
WASHINGTON – A federal court today issued a preliminary injunction barring Karen Liane Miller of Nashville, Tenn., from preparing federal income tax returns for others. The court order found that Miller promotes a tax defier scheme that claims large fraudulent tax refunds for customers. The order, entered by U.S. District Judge Aleta A. Trauger, remains in effect while the lawsuit is pending. Violation of an injunction can result in civil and criminal sanctions, including fines and imprisonment.
The court found that Miller repeatedly prepared federal income tax returns claiming bogus refunds in "astonishing" amounts, based on a tax fraud scheme known as the "redemption" scheme. The court held that Miller prepared and filed 41 income tax returns for customers in 2009 claiming more than $8.3 million in fraudulent refunds. The court said that the redemption scheme is based on a frivolous theory that the federal government maintains secret accounts for its citizens, and that taxpayers can gain access to funds in those accounts by issuing IRS 1099-OID forms to their creditors.
The case against Miller is one of seven lawsuits the Justice Department filed across the nation in October, which seek permanent injunctions against tax preparers who allegedly promote the redemption scheme. The defendants in those cases allegedly prepared tax returns fraudulently requesting a total of $562.4 million in refunds. Under the scheme, participants file a series of false IRS forms, including tax returns, amended returns, and Forms 1099 (including Form 1099-OID) or Forms W-2, to request fraudulent tax refunds based on phony claims of large income tax withholding.
John A. DiCicco, Acting Assistant Attorney General for the Justice Department's Tax Division, thanked Brian Corcoran, the Justice Department trial attorney who handled the case and Shauna Henline, the Internal Revenue Service senior technical advisor who conducted the investigation.
In the past decade, the Justice Department’s Tax Division has obtained more than 430 injunctions against dishonest tax-return preparers and tax-fraud promoters. Information about these cases is available on the Justice Department Web site.
Indiana Man Sentenced to 20 Years in Prison for Transporting and Possessing Child PornographyRead the Press Release
WASHINGTON – William Travis Brown, 39, of Sellersburg, Ind., was sentenced today to 20 years in prison and lifetime supervised release to follow his prison term for transporting and possessing child pornography, announced Assistant Attorney General of the Criminal Division Lanny A. Breuer, U.S. Attorney for the Southern District of Indiana Timothy M. Morrison and Indianapolis Immigration and Customs Enforcement (ICE) Resident Agent in Charge Daniel T. Dill.
A federal jury in Indianapolis convicted Brown on July 23, 2009, of one count of transportation and one count of possession of child pornography. According to evidence presented during the four-day trial, investigators discovered more than 1,000 images and videos depicting the sexual abuse of minors. The images and videos were obtained through searches on March 20, 2007, of Brown’s rented house in Georgetown, Ind., and the seizure of a computer and CDs. In addition, evidence introduced at trial revealed that Brown used different Internet technologies to chat and trade the images with others online. Brown was tried before U.S. District Court Chief Judge David F. Hamilton.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The case against Brown was prosecuted by Assistant U.S. Attorney Steven D. DeBrota of the Southern District of Indiana and Trial Attorney Bonnie L. Kane of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS). The case was investigated by ICE, the Indiana State Police, CEOS’s High Tech Investigative Unit and the FBI.
Former Wyoming Highway Patrol Trooper Sentencedto 15 Years in Prison for Depriving Motorist of Civil Rights by KidnappingRead the Press Release
The Justice Department announced that U.S. District Judge Alan B. Johnson sentenced former Wyoming Highway Patrol Trooper Franklin Joseph Ryle Jr. to 15 years in prison today for depriving a man of his constitutional right to be free from unreasonable seizures by kidnapping the man and for using his firearm in relation to the crime.
Ryle had pleaded guilty to the crimes and admitted that while working on duty as a Highway Patrol trooper on the night of Jan. 8, 2009, he stopped a Wal-Mart truck with the intent to murder the driver and stage an accident with the truck that would either injure him or kill Ryle’s wife. As part of the scheme, Ryle intended to seek a monetary settlement from Wal-Mart.
"This officer abandoned his law enforcement role and engaged in a bizarre scheme to target innocent victims for his own personal gain. Officers who abuse their power in this way will be prosecuted to the fullest extent the law allows," said Assistant Attorney General Thomas E. Perez of the Civil Rights Division.
Ryle stopped the driver on an isolated stretch of Interstate 25, a few miles southeast of Douglas, Wyo. After collecting his license, Ryle falsely told the driver that there was a warrant for his arrest. Ryle arrested him, handcuffed him and locked him in the back seat of his patrol car in a cage designed to carry persons under arrest. Ryle drove away from the scene with his prisoner and into Douglas where he unsuccessfully sought help with his scheme from his unwitting wife and two law enforcement officer friends. Ultimately, Ryle released the driver after he determined that the scheme would fail due to the presence of GPS equipment in the truck.
The investigation was conducted by Wyoming Division of Criminal Investigation agents Mike Carlson and Darri Cregger, and FBI Special Agent Richard Fanelli. Civil Rights Division Trial Attorneys Edward Caspar and Christopher Lomax prosecuted this case for the United States. The Wyoming U.S. Attorney’s Office was recused from the matter.
Former State Department Official and Wife Plead Guilty in 30-Year Espionage ConspiracyRead the Press Release
WASHINGTON – A former State Department official and his wife have pleaded guilty to federal charges stemming from their roles in a 30-year conspiracy to provide classified U.S. national defense information to the Republic of Cuba.
The guilty pleas, which occurred today in U.S. District Court for the District of Columbia, were announced by David Kris, Assistant Attorney General for National Security; Channing D. Phillips, Acting U.S. Attorney for the District of Columbia; Joseph Persichini, Jr., Assistant Director for the FBI’s Washington Field Office; and Ambassador Eric J. Boswell, Assistant Secretary of State for Diplomatic Security.
At a hearing before Judge Reggie B. Walton, defendant Walter Kendall Myers, 72, aka "Agent 202," pleaded guilty to a three-count criminal information charging him with conspiracy to commit espionage and two counts of wire fraud. His wife, Gwendolyn Steingraber Myers, 71, aka "Agent 123," and "Agent E-634," pleaded guilty to a one-count criminal information charging her with conspiracy to gather and transmit national defense information.
As part of his plea agreement, Kendall Myers has agreed to serve a life prison sentence and to cooperate fully with the United States regarding any criminal activity and intelligence activity by him or others. As part of her plea agreement, Gwendolyn Myers has agreed to serve a sentence of between six and seven and a half years in prison and to cooperate fully with the United States.
Both defendants have agreed to the entry of a monetary judgment against them in the amount of $1,735,054. The assets that will be forfeited to the government towards satisfaction of that judgment include: an apartment in Washington, D.C., a 37-foot sailing yacht, a vehicle, and various bank and investment accounts.
"For the past thirty years, this couple betrayed America’s trust by covertly providing classified national defense information to the Cuban government. Today, they are being held accountable for their actions. These guilty pleas should serve notice that we remain vigilant in protecting our nation's secrets and in bringing to justice those who compromise them," said David Kris, Assistant Attorney General for National Security.
" Today’s guilty plea and impending sentence close the book on this couple’s contemptuous betrayal of our nation," said Acting U.S. Attorney Channing Phillips. "Thanks to a well-planned and executed counterintelligence investigation that included unprecedented cooperation among multiple U.S. agencies, the Myers’s serious transgressions of compromising our nation’s classified secrets will now be appropriately addressed with significant prison sentences. Others who would think to compromise and jeopardize our nation’s security should be forewarned."
"I want to thank the dedicated career investigators from the FBI and other members of the intelligence community who worked tirelessly to identify these spies. Espionage injures the country and these pleas today show the FBI will not rest in its effort to protect America," said Joseph Persichini, Jr., Assistant Director for the FBI's Washington Field Office.
Assistant Secretary of State for Diplomatic Security Eric J. Boswell stated, "Today’s guilty pleas are the culmination of an inter-agency effort to detect and aggressively pursue a serious breach in national security. The U.S. Department of State is committed to protecting our nation's secrets and bringing to justice those who betray America’s trust The Department’s Bureau of Diplomatic Security will continue to work closely with its law enforcement colleagues in the FBI and other agencies to uncover and prosecute those involved in espionage activities."
Background
Kendall and Gwendolyn Myers, residents of Washington, D.C., were arrested on criminal complaints on June 4, 2009. The following day, they were indicted in the District of Columbia for conspiracy to act as illegal agents of the Cuban government and to communicate classified information to the Cuban government. They were also charged with acting as illegal agents of the Cuban government and with wire fraud.
According to the plea agreements, factual proffers and other documents filed in court today by the United States:
Kendall Myers began working at the State Department in 1977 as a contract instructor at the Department’s Foreign Service Institute (FSI) in Arlington, Va. After living briefly with Gwendolyn in South Dakota, he returned to Washington, D.C., and resumed employment as an instructor with FSI. From 1988 to 1999, in addition to his FSI duties, he performed work for the State Department’s Bureau of Intelligence and Research (INR). He later worked full-time at the INR and, from July 2001 until his retirement in October 2007, was a senior intelligence analyst for Europe in INR where he specialized on European matters and had daily access to classified information through computer databases and otherwise. He received a Top Secret security clearance in 1985 and, in 1999, his clearance was upgraded to Top Secret / SCI.
Gwendolyn Myers moved to Washington, D.C., in 1980 and married Kendall Myers in May 1982. She later obtained employment with a local bank as an administrative analyst and later as a special assistant. Gwendolyn Myers was never granted a security clearance by the U.S. government.
Recruitment
In December 1978, while an employee of the State Department’s FSI, Kendall Myers traveled to Cuba after being invited by a Cuban government official who had made a presentation at FSI. That Cuban official was an intelligence officer for the Cuban Intelligence Service (CuIS). This trip provided CuIS with the opportunity to assess or develop Myers as a Cuban agent. Myers kept a diary of his two-week trip to Cuba in which he explicitly declared his affinity for Fidel Castro and the Cuban government. The diary was recovered by the FBI in the investigation.
In 1979, Kendall and Gwendolyn Myers were visited in South Dakota by the same Cuban intelligence officer who had invited Kendall Myers to Cuba. During the visit, the Cuban intelligence officer recruited both of them to be clandestine agents for Cuba, a role in which they served for the next 30 years. Their recruitment by CuIS as "paired" agents is consistent with CuIS’s past practice in the United States. Afterwards, CuIS directed Kendall Myers to pursue a job at the State Department or the CIA to gain access to classified information. Kendall Myers, accompanied by his wife, returned to Washington, D.C., where he pursued a position at the State Department.
During the time frame in which Kendall and Gwendolyn Myers were serving as clandestine agents for Cuba, the CuIS often communicated with its clandestine agents in the United States by broadcasting encrypted radio messages from Cuba on shortwave radio frequencies. Clandestine agents in the United States monitoring the frequency on shortwave radio could decode the messages using a decryption program provided by CuIS. Kendall and Gwendolyn Myers communicated with CuIS by this method. The shortwave radio they used to receive clandestine communications was purchased with money provided by CuIS. The shortwave radio was later recovered by the FBI.
Undercover Operation
According to the court documents, in April 2009, the FBI launched an undercover operation against the pair. Kendall and Gwendolyn Myers met four times with an undercover FBI source, on April 15, 16, and 30, and on June 4, 2009. The meetings were all video- and audio-taped.
During the meetings, Kendall and Gwendolyn Myers made a series of statements about their past activities on behalf of CuIS, including how they used code names and how they had transmitted information to their CuIS handlers through personal meetings, "dead drops," "hand-to-hand" passes, and in at least one case, the exchange of shopping carts in a grocery store. The couple also stated that they had traveled to meet Cuban agents in Trinidad and Tobago, Jamaica, Mexico, Brazil, Ecuador, Argentina and other locations.
When asked by the undercover FBI agent if he had ever transmitted information to CuIS that was classified higher than Secret, Kendall Myers replied, "oh yeah…oh yeah." He said he typically removed information from the State Department by memory or by taking notes, although he did take some classified documents home. Gwendolyn Myers admitted she would process the classified documents at home for delivery to their CuIS handlers. In the final meeting with the FBI source, Kendall Myers disclosed Top Secret national defense information related to sources and methods of gathering intelligence. He also admitted that he had previously disclosed the information to CuIS.
Corroboration
The admissions by Kendall and Gwendolyn Myers were corroborated by other evidence collected in the investigation. The FBI seized a shortwave radio in their apartment and confirmed overseas trips by the couple that corresponded to statements they made. The FBI also identified encrypted shortwave radio messages between CuIS and a handler for the couple that were broadcast in 1996 and 1997.
Furthermore, an analysis of Kendall Myers’ State Department computer revealed that, from August 22, 2006, until his retirement on Oct. 31, 2007, he viewed more than 200 intelligence reports concerning the subject of Cuba. Of these reports concerning Cuba, the majority was classified and marked Secret or Top Secret. The FBI also located handwritten notes by Kendall Myers reflecting the gathering and retention of Top Secret information which he intended to provide the CuIS, but never did.
Finally, since at least 1983 and until 2007, Kendall Myers made repeated false statements to government investigators responsible for conducting background investigations which determined his continued suitability for a Top Secret security clearance. By not disclosing his and his wife’s clandestine activity on behalf of CuIS and by making false statements to the State Department about their status as clandestine Cuban agents, he defrauded the United States whenever he received his government salary. Based on these false representations and promises, Kendall Myers obtained at least $1,735,054 in salary from the U.S. government for the benefit of him and his wife.
This investigation was conducted jointly by the FBI’s Washington Field Office and the State Department’s Bureau of Diplomatic Security. The prosecution is being handled by Assistant U.S. Attorney G. Michael Harvey, from the U.S. Attorney’s Office for the District of Columbia, and Senior Trial Attorney Clifford I. Rones, from the Counterespionage Section of the Justice Department’s National Security Division.
Federal Court Shuts Down Los Angeles Area Tax PreparerRead the Press Release
WASHINGTON - A federal court in Los Angeles has issued permanent injunctions barring a Torrance, Calif., tax preparer, Susan Guan and her company, SRN Financial Services Inc., from preparing tax returns for others, the Justice Department announced today. The defendants agreed to the injunction orders. The government complaint in the civil case alleged that Guan and SRN promoted a tax-fraud scheme designed to siphon millions of dollars from the U.S. Treasury. Guan allegedly requested a total of $4.5 million in fraudulent refunds.
According to the complaint, the defendants promoted a tax-fraud arrangement known as the "redemption" or "OID redemption" scheme. Guan and her firm allegedly filed a series of false IRS forms, including tax returns, amended returns, and IRS Forms 1099-OID to request fraudulent tax refunds based on phony claims of large income tax withholding. For one of her customers, Susan Guan allegedly requested an $851,786 fraudulent refund on a false amended tax return with 16 bogus Forms 1099-OID to support the refund request. The Internal Revenue Service (IRS) catches the vast majority of bogus redemption-scheme tax returns and blocks the claimed refunds.
Guan’s case was one of seven lawsuits filed across the country last month against alleged redemption scheme promoters. Papers filed in those cases said the defendants prepared tax returns requesting a total of $562.4 million in bogus refunds. Altogether, according to the IRS, redemption scheme participants (including customers of the defendants in those seven lawsuits) have requested a total of $3.3 trillion in fraudulent refunds.
John A. DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division, thanked Grayson A. Hoffman, the Justice Department trial attorney who handled the case, and Shauna Henline, the IRS senior technical advisor who conducted the investigation.
In the past decade, the Justice Department’s Tax Division has obtained more than 430 injunctions against tax fraud promoters and tax return preparers. Information about these cases is available on the Justice Department’s Web site.
19 November 2009
Twenty-six Charged in Nationwide Scheme to Defraud <br /> the FCC’s Video Relay Service ProgramRead the Press Release
Indictments were unsealed today against 26 people charged with engaging in a scheme to steal millions of dollars from the Federal Communications Commission’s (FCC) Video Relay Service (VRS) program, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, Assistant Director of the FBI’s Washington Field Office Joseph Persichini Jr., Deputy Chief Postal Inspector Zane Hill, and FCC Chief of Staff Edward Lazarus.
Arrests were made today by FBI agents and Postal Inspectors in New York, New Jersey, Florida, Texas, Pennsylvania, Arizona, Nevada, Oregon and Maryland, and were the result of a joint FBI, U.S. Postal Inspection Service (USPIS) and FCC Office of Inspector General (FCC-OIG) investigation into a nationwide scheme to defraud the FCC’s VRS program.
"The individuals charged in connection with today’s operation are alleged to have stolen tens of millions of dollars from an important government program that is intended to help deaf and hard-of-hearing Americans communicate with hearing persons," said Assistant Attorney General of the Criminal Division Lanny A. Breuer. "These defendants are alleged to have generated fraudulent call minutes by making it appear that deaf Americans were engaging in legitimate calls with hearing persons, when in reality, the defendants were simply attempting to steal money from an FCC program that is funded by every single American who pays their telephone bills. The Department of Justice will not stand by and let corporate executives and others line their pockets with money that should be used to help deaf Americans."
"Unfortunately, this remarkable service, designed to help those in need, also provided a growth opportunity for criminal activity that we believe has cost American consumers tens of millions of dollars," said Joseph Persichini, Jr., Assistant Director of the FBI’s Washington Field Office.
"When the U.S. Mail is used for the purposes of committing fraud, and in this case, a particularly insidious type of fraud, it’s the job of the Postal Inspection Service to aggressively investigate and ensure America’s confidence in the integrity of its postal system," said Deputy Chief Postal Inspector Zane M. Hill.
"Today’s events represent both a tragedy and an opportunity," said FCC Chief of Staff Edward Lazarus. "The tragedy is the unfortunate truth that a significant number of unscrupulous individuals, at great cost to the nation, have preyed on a very important program for delivering essential telecommunications services to persons with hearing disabilities. The ‘opportunity’ is the chance to reiterate our commitment to the VRS program and to follow through on efforts, already begun at the FCC, to safeguard the program against further waste, fraud, and abuse and to improve its delivery of VRS services to consumers."
The indictments allege that 26 individuals engaged in a scheme to defraud the FCC by submitting false and fraudulent claims for VRS calls, causing the FCC to reimburse the defendants at a rate of approximately $390 per hour. According to the indictments, VRS is an online video translation service that allows people with hearing disabilities to communicate with hearing individuals through the use of interpreters and Web cameras. A person with a hearing disability who wants to communicate with a hearing person can do so by contacting a VRS provider through an audio and video Internet connection. The VRS provider, in turn, employs a video interpreter to view and interpret the hearing disabled person’s signed conversation and relay the signed conversation orally to a hearing person. VRS is funded by fees assessed by telecommunications providers to telephone customers, and is provided at no cost to the VRS user.
The indictments charge owners and employees of the following seven companies with engaging in a scheme to defraud the FCC’s VRS program
- Viable Communications Inc., of Rockville, Md.;
- Master Communications LLC, of Las Vegas;
- KL Communications LLC, of Phoenix;
- Mascom LLC of Austin, Texas;
- 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.
Each of the indictments alleges that the defendants made, caused others to make, or processed fraudulent VRS calls that were then submitted to the FCC for reimbursement. These calls, often referred to as "r calls," "rest calls" or "run calls," served no purpose other than to generate call minutes that would be billed to the FCC’s VRS Fund.
In the first indictment, Viable Communications Inc. and four Viable executives have been charged with fraudulently generating VRS call minutes and obtaining reimbursements from the FCC for those calls. Viable owner and CEO John Yeh, 62, of Potomac, Md.; Viable Chief Operating Officer Joseph Yeh, 64, of Potomac; Viable Assistant Vice President Anthony Mowl, 25, of Rockville, Md.; and Viable Human Relations Director Donald Tropp, 25, of Rockville, have been charged in a six-count indictment with conspiracy to defraud the U.S. government and to submit false claims; submitting false claims; conspiracy to commit mail fraud; and mail fraud.
In the second indictment, Master Communications, KL Communications and Mascom owners and employees have been charged with generating fraudulent VRS minutes. According to the indictment, these companies operated VRS call centers for Viable that generated and processed a large volume of fraudulent VRS calls, which were then submitted to the FCC’s TRS Fund Administrator for reimbursement. Master Communications, KL Communications and Mascom owner and employee Kim E. Hawkins, 46, of Las Vegas; Master Communications employee and KL Communications owner and employee Larry Berke, 62, of Phoenix; KL Communications employee Dary Berke of Phoenix; KL Communications and Master Communications employee Lisa Goetz, 43, of Phoenix; and Mascom Marketing and Advertising Director David Simmons, 43, of Austin; have been charged in a six-count indictment with conspiracy to defraud the U.S. government and to submit false claims; submitting false claims; conspiracy to commit mail fraud; and mail fraud.
In the third indictment, DHIS owners and employees have been charged with generating and processing a large volume of fraudulent VRS calls. According to the indictment, DHIS operated VRS call centers for Viable that generated and processed fraudulent VRS calls. DHIS co-owners Irma Azrelyant, 47, of Basking Ridge, N.J., and Joshua Finkle, 41, of New York; DHIS video interpreter Natan Zfati, 31, of Brooklyn, N.Y.; DHIS bookkeeper Oksana Strusa, 35, of Jersey City, N.J.; DHIS video interpreter Alfia Iskandarova, 29, of Brooklyn; and DHIS video interpreter Hennadii Holovkin, 36, of Philadelphia; have been charged in a six-count indictment with conspiracy to defraud the U.S. government and to submit false claims; submitting false claims; conspiracy to commit mail fraud; and mail fraud.
In the fourth indictment, ICSD owners and employees have been charged with generating and processing a large volume of fraudulent VRS calls. According to the indictment, ICSD operated VRS call centers for Viable that generated and processed a large number of fraudulent VRS calls. The indictment also alleges that ICSD owners and employees engaged in sham "marketing calls" for the stated purpose of marketing VRS services, but for the alleged true purpose of fraudulently generating additional VRS minutes. ICSD co-owners Yosbel Buscaron, 25, and Lazaro Fernandez, 35, both of Hialeah, Fla.; ICSD call center manager Wanda Hutchinson, 35, of Pembroke Pines, Fla.; ICSD call center manager Jessica Bacallo, 23, of Miami; and ICSD marketing manager Kathleen Valle, 23, of Miami; have been charged in a six-count indictment with conspiracy to defraud the U.S. government and to submit false claims; submitting false claims; conspiracy to commit mail fraud; and mail fraud.
In the fifth indictment, defendants Benjamin Pena, Robert Z. Rubeck and Tamara Frankel have been charged with generating fraudulent VRS calls. According to that indictment, Pena was allegedly paid by Viable owner and CEO John Yeh to generate fraudulent VRS minutes. Also according to the indictment, Pena allegedly paid Rubeck and Frankel to make VRS calls for the purpose of generating those fraudulent minutes. Pena, 34, of Scottsdale, Ariz.; Rubeck, 34, of Surprise, Ariz.; and Frankel, 28, also of Surprise; have been charged in the six-count indictment with conspiracy to defraud the U.S. government and to submit false claims; submitting false claims; conspiracy to commit mail fraud; and mail fraud.
Deaf Studio 29 owners and employees have been charged in a sixth indictment with generating fraudulent VRS calls. According to the indictment, Marc Velasquez Verson, Ellen Thompson and Doris Martinez allegedly organized and paid employees to use a particular VRS provider to make run calls. That provider would pay the defendants approximately 20 to 25 percent of the money the provider received from the FCC for the calls generated by the defendants. Velasquez, 56, of Oswego, Ore.; Ellen Thompson, 43, of Lake Oswego, Ore.; and Doris Martinez, 51, also of Oswego; were charged in the six-count indictment with conspiracy to defraud the U.S. government and to submit false claims; submitting false claims; conspiracy to commit wire fraud; and wire fraud.
All of the indictments seek criminal forfeiture from each of the charged defendants.
An indictment is merely an accusation, and defendants are presumed innocent unless proven guilty.
These cases are being prosecuted by Assistant Chief Hank Bond Walther and Trial Attorney Brigham Cannon of the Criminal Division’s Fraud Section, with the investigative assistance of the FBI’s Washington Field Office, USPIS and FCC-OIG.
Statoil ASA Satisfies Obligations Under Deferred Prosecution Agreement <br /> and Foreign Bribery Charges Are DismissedRead the Press Release
After three years of satisfying obligations under a deferred prosecution agreement, the charges against Statoil ASA for violating the anti-bribery and accounting provisions of the Foreign Corrupt Practices Act (FCPA) have been dismissed with prejudice. Statoil is an international oil company headquartered in Norway and listed on the New York Stock Exchange.
"Three years of diligent efforts by Statoil to address past misconduct and serious compliance failures have led to the dismissal of foreign bribery charges against the company," said Assistant Attorney General Lanny A. Breuer. "Bribing foreign government officials and then attempting to disguise the payments cannot be standard operating procedure. Companies that have robust compliance programs risk far less than companies that take their chances on possible FCPA violations."
"This case shows that deferred prosecution agreements against corporations can work as an important middle ground between declining prosecution and obtaining the conviction of a corporation," said U.S. Attorney Prett Bharara. "The deferred prosecution in this case helped restore the integrity of Statoil's operations and preserve its financial viability while at the same time ensuring that it improved what was obviously a failed compliance and anti-corruption program."
On Oct. 13, 2006, the Department of Justice filed a criminal information charging that in 2001 and 2002, Statoil sought to expand its business internationally and focused specifically on Iran as a country in which to secure oil and gas development rights. At the time, Iran was awarding contracts for the development of the South Pars field, one of the world’s largest natural gas fields. In 2001, Statoil developed contacts with and began negotiating with an Iranian government official who could influence the award of oil and gas contracts in Iran. Statoil then entered into a "consulting contract" with an offshore intermediary company. The purpose of that "consulting contract" – which called for the payment of more than $15 million over 11 years – was to induce the Iranian official to use his influence to help Statoil obtain a contract to develop portions of the South Pars field, and to open doors to future Iranian oil and gas projects. Two bribe payments totaling more than $5 million were made by wire transfer, and Statoil was awarded a South Pars development contract that was expected to yield millions of dollars in profit. The criminal information charged that Statoil violated the FCPA by making the corrupt payments, and also committed securities fraud by falsifying its books and records in characterizing the bribe payments as "consulting fees."
According to the deferred prosecution agreement, Statoil acknowledged making the corrupt payments, agreed to pay a $10.5 million penalty, and agreed to the appointment of an independent compliance consultant for a three-year period to review and periodically report on the company’s compliance with the deferred prosecution agreement and to conduct a comprehensive review of the controls, policies and procedures of Statoil related to compliance with the FCPA. Under the terms of the deferred prosecution agreement, the criminal information was to remain pending until it was either dismissed or prosecuted in order to allow Statoil to demonstrate its good conduct.
The Department of Justice has received the final report of the compliance consultant and determined that Statoil has fully complied with all of its obligations under the deferred prosecution agreement, including the obligation to adopt the compliance-related recommendations of the compliance consultant. Accordingly, on Nov. 18, 2009, the Department filed a motion with the court to dismiss with prejudice the criminal information against Statoil. Yesterday, in federal court in Manhattan, U.S. District Judge Richard J. Holwell granted that motion and dismissed the charges.
This case was handled by Deputy Chief Mark F. Mendelsohn of the Fraud Section as well as Assistant U.S. Attorney Ray Lohier and former Assistant U.S. Attorney Deborah Landis of the Southern District of New York. Fraud Section Trial Attorney Joseph Capone also provided assistance on this case.
Nineteen Alleged Latin Kings Gang Members Indictedon Federal Racketeering Conspiracy ChargeRead the Press Release
A federal grand jury in Greenbelt, Md., has indicted 19 alleged members of the Almighty Latin King and Queen Nation (Latin Kings) for conspiracy to participate in a racketeering enterprise. The indictment was returned under seal yesterday and unsealed today upon the arrests of the defendants.
"Gangs, like the one charged in this indictment, may be relentless in protecting their turf, but we will be relentless in taking it back," said Assistant Attorney General Lanny A. Breuer. "As this case demonstrates, the Justice Department will use all of its authority – including the RICO statute and the federal conspiracy laws – to dismantle gangs, from the lowest-level members to the highest-ranking leaders. Working together with our partners in the U.S. Attorneys’ Offices, as well as other federal, state and local agencies, we will make our communities, our neighborhoods, and our children safer by prosecuting these gangs with resolve and determination."
"This case is part of a series of federal racketeering and conspiracy prosecutions in which federal, state and local agencies have joined to target leaders and key members of violent gangs operating in Maryland," said U.S. Attorney Rod J. Rosenstein. "Today’s indictment alleges that the Latin Kings gang is an organized criminal enterprise with leaders and members who commit violent crimes. Other federal racketeering cases are pending in Maryland against MS-13, Black Guerilla Family, PDL Bloods and TTP Bloods, and additional gang investigations are ongoing with the support of federal, state and local partners. We believe that this coordinated approach to gang prosecutions is contributing to the reduction in violent crime in Maryland."
"Today we executed the enforcement action on a very violent group of criminals who call themselves the Latin Kings," said ATF Deputy Director Kenneth Melson. "We dismantled a large part of the Latin Kings organization whose members allegedly used violence to secure the sanctity of their private society. We have made a serious impact on violent crime and gang violence. This case is a great example of the efforts of ATF and our law enforcement partners to fight violent crime nationwide."
According to the indictment, the defendants were members of the Latin Kings, a violent street gang with members operating in Maryland since at least 2007. The traditional power centers of the Latin Kings are predominantly located in the Chicago and New York metropolitan areas, with thousands of members scattered across the United States and overseas.
Members of the Latin Kings greet each other using a set of hand-signs, each intended to evoke the shape of a crown, according to the indictment. In addition, Latin Kings often greet one another by exclaiming "ADR" or "Amor De Rey," which means "King’s Love" in Spanish. The Latin Kings use symbols depicting three- or five-pointed crowns, lions and Inca- or Aztec-inspired artwork to demonstrate their affiliation. The colors associated with, and often worn by, the Latin Kings are black and gold.
At the local level, groups of Latin Kings are organized into "tribes." The indictment alleges that in the spring of 2007, Miguel Cruz and Erick Roman established the Maryland Latin Kings, calling the tribe the Royal Lion Tribe of Maryland. The indictment charges that from a date unknown to the present, the Latin Kings members conspired to commit attempted murders, robberies, witness tampering and arson to further their racketeering scheme.
For example, the indictment alleges that Latin Kings members stored guns for Erick Roman, and gathered materials for a firebombing ordered by Roman. Gang members allegedly hunted for rival MS-13 members to shoot; kicked and stabbed a suspected MS-13 member near the Marylander Condominiums in Langley Park, Md., in December 2007; and in January 2009, fired shots at MS-13 members at a night club in Queens, N.Y. Latin Kings members allegedly robbed the home of a drug dealer at the Marylander Condominiums and a prostitute at a motel in Laurel, Md.; assaulted and stabbed two victims in Wheaton, Md.; agreed to murder a security guard at an apartment complex near the Marylander Condominiums; and burglarized a gun shop. In the summer of 2009, Francisco Ortiz, Leuri Read and other alleged members attempted to murder a victim by beating him with a wooden object and by stabbing him.
Gang members also allegedly attempted to shoot a victim in the leg for wanting to leave the gang; beat alleged fellow member Joseph Deleon and held another at gunpoint, slicing him with a knife, as punishment for violating Latin Kings rules; created a hit list containing names of Maryland Latin Kings members; and agreed to run background checks on new members and members under investigation. Ortiz, Read, Remy Heath and Brandon Smith allegedly agreed in January 2009 to kill a female gang member for "snitching" on Latin Kings members who had just been sentenced in federal court in Maryland for possession of an unregistered destructive device.
Latin Kings members communicate with members of their own tribe and with members across the country through the Internet and telephone. In October 2008, a member ordered all other members to take down any pictures of "hammers {guns} and knives," on their MySpace pages, due to his belief that the police wanted "to do RICO" on the members. Another member cautioned against talking about shooting people over the telephone.
The indictment charges the following defendants with conspiracy to participate in the racketeering activities of the Latin Kings:
Erick Roman, a/k/a "Erick Javier Sierra," "Malian-T," and "King Malian-T," age 33;
Miguel Cruz, a/k/a "Skibee" and "King Skibee," age 44;
Matthew Aguilar, a/k/a "Mateo" and "King Mateo," age 24;
Miguel Castillo, a/k/a "Colombia" and "King Colombia", age 22;
Joseph Deleon, a/k/a "Spirit" and "King Spirit," age 28;
Andres Echevarria, a/k/a "B-Boy" and "King B-Boy," age 22;
Remy Heath, a/k/a "Remy," "King Remy" and "King Mello," age 25;
Jorge Kilgore, a/k/a "Murda" and King Murda," age 20;
Erick Martinez, a/k/a "Eazie" and "King Eazie," age 19;
Melvin Carlos Nolasco, a/k/a "Joker" and "King Joker," age 22;
Senni Nolasco-Rodriguez, a/k/a "Cano" and "King Cano," age 20;
Francisco Ortiz, a/k/a "Francis Gabriel Ortis," "Pone" and "King Pone," age 25;
Roddy E. Paredes Jr., a/k/a "Guate," "King Guate" and "Walter," age 27;
Leuri Read, a/k/a "Kampana" and "King Kampana," age 21;
Alejandro Ivan Rodriguez, a/k/a "Sombra" and "King Sombra," age 32;
Nelson Santos, a/k/a "Nelly" and "King Nelly," age 26;
Chinua Shepperdson, a/k/a "Nu," "NuNu" and "King Nu," age 27;
Brandon Smith, a/k/a "Little One" and "King Little One," age 25; and
Hugo Soto-Moran, a/k/a "Vision" and "King Vision," age 22.
The defendants face a maximum sentence of life in prison. The defendants are scheduled to have their initial appearance in U.S. District Court in Greenbelt today starting at 11:00 a.m. One defendant, Remy Heath, is a fugitive.
An indictment is not a finding of guilt. An individual charged by indictment is presumed innocent unless and until proven guilty.
The case is being prosecuted by Assistant U.S. Attorneys Emily Glatfelter and David Salem, and Trial Attorney Lara M. Peirce of the Criminal Division’s Gang Unit. The case is being investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives; U.S. Immigration and Customs Enforcement; the Montgomery County Police Department; Montgomery County State’s Attorney Office; the Prince George’s County Police Department; Prince George’s County State’s Attorney Office; the New York City Police Department; the Gaithersburg Police Department; the Montgomery County Sheriff’s Office; the Prince George’s County Sheriff’s Office; the Maryland National Capital Park Police - Prince George’s County Division; the Maryland State Police; the U.S. Secret Service; and the Internal Revenue Service - Criminal Investigation.
Latin Kings Indictment
Justice Department Recovers $2.4 Billion in False Claims Cases in Fiscal Year 2009; More Than $24 Billion Since 1986Read the Press Release
WASHINGTON - The United States secured $2.4 billion in settlements and judgments in cases involving fraud against the government in the fiscal year ending Sept. 30, 2009, the Justice Department announced today. This represents the second largest annual recovery of civil fraud claims in history, and brings total recoveries since 1986, when Congress substantially strengthened the civil False Claims Act, to more than $24 billion.
"Rooting out fraud and safeguarding taxpayers from illegal conduct are among the Justice Department’s highest priorities," said Tony West, the Assistant Attorney General for the Civil Division. "I applaud the dedication of the public servants who investigate and prosecute fraud, and the courage of the many private citizens who risk their careers by reporting fraud."
Assistant Attorney General West continued, "The cases that the department pursued this year illustrate the government’s commitment to maintaining the integrity of the health care system, ensuring that members of our military and law enforcement community are safe, and protecting consumers from fraudulent schemes. The extraordinary success of this public-private partnership goes far beyond the $2.4 billion recovered to additional billions saved through deterrence and vigilance."
Assistant Attorney General West also commended the substantial efforts of the federal and state agencies that investigate and support these matters. "We are grateful for the dedication of other federal agencies and the state attorneys general and Medicaid Fraud Control Units. This cooperation allows us to bring all of our resources to bear in combating fraud against both the federal and state governments."
The government’s partnership with private citizens in the fight against fraud was cemented in 1986, when Congress amended the False Claims Act, the United States’ primary tool against government fraud. The amendments strengthened the act by, among other things, revising the statute’s qui tam provisions, which were intended to encourage whistleblowers to come forward with allegations of fraud. The 1986 amendments reduced the barriers to citizens suing on behalf of the government and increased the incentives to filing such suits. Assistant Attorney General West paid tribute to the amendments’ sponsors, Senator Charles Grassley and Representative Howard L. Berman. "Without Congress’ support in enacting this important legislation," the Assistant Attorney General explained, "recovering the billions of taxpayer dollars lost through fraud since 1986 would not have been possible."
Assistant Attorney General West further expressed his gratitude to Senators Grassley and Patrick J. Leahy and Representative Berman for their support of the Fraud Enforcement and Recovery Act of 2009, which made additional improvements to the False Claims Act and other fraud statutes. Noting that several courts had narrowed the scope of the False Claims Act, the Assistant Attorney General stated, "The 2009 amendments clarify the act and give the Justice Department a powerful tool in its efforts to pursue those who cause losses to the United States and harm to taxpayers."
Of the $2.4 billion in settlements and judgments obtained in fiscal year 2009, nearly $2 billion was recovered in lawsuits filed under the False Claims Act’s qui tam provisions. These provisions authorize private persons, known as "relators," to file suit on behalf of the United States against those who have falsely or fraudulently claimed federal funds. Such cases run the gamut of federally funded programs, from Medicare and Medicaid to defense and other government procurement contracts, federally insured mortgage and other federal housing programs, disaster assistance loans, agricultural subsidies and more. Persons who knowingly make false claims for federal funds are liable for three times the government’s loss plus a civil penalty of $5,500 to $11,000 for each claim. Relators recover 15 to 25 percent of the proceeds of a successful suit if the United States intervenes in the qui tam action, and up to 30 percent if the United States declines and the relator pursues the action alone. In fiscal year 2009, relators were awarded $255 million. (This figure does not include relator shares awarded after Sept. 30, 2009.)
Fiscal year 2009 settlements include two records, both triggered by qui tam suits. In a record settlement of federal Medicaid claims, the state of New York and New York City agreed to pay the United States $540 million. And in a record settlement in a General Services Administration defective pricing case, NetApp Inc. and NetApp U.S. Public Sector Inc. paid the government $128.7 million.
A top priority for this administration is fighting health care fraud. On May 20, 2009, the Attorney General and the Secretary of the Department of Health and Human Services (HHS) announced the creation of a new interagency task force, the Health Care Fraud Prevention and Enforcement Team (HEAT), to increase coordination and optimize criminal and civil enforcement. These efforts not only protect the Medicare Trust Fund for seniors and the Medicaid program for the country’s neediest citizens, they result in higher quality health care at a more reasonable price.
In fiscal year 2009, health care fraud recoveries reached $1.6 billion, two-thirds of the year’s total. The Department of Health and Human Services reaped the biggest recoveries, largely attributable to its Medicare and Medicaid programs. Recoveries were also made by the Office of Personnel Management, which administers the Federal Employees Health Benefits Program, the Department of Defense for its TRICARE insurance program and the Department of Veterans Affairs, among others.
The largest health care recoveries came from the pharmaceutical and medical device industries, which accounted for $866.7 million in settlements, including Aventis Pharmaceuticals Inc., Bayer HealthCare LLC, Eli Lilly & Company and Quest Diagnostics Inc. and its subsidiary, Nichols Institute Diagnostics Inc. In addition to federal recoveries, these pharmaceutical and medical device fraud cases returned $402 million to state Medicaid programs.
The Civil Division’s investigation of the pharmaceutical industry is part of a department-wide effort. The Civil Division is pursuing allegations of a variety of schemes, including "off-label" marketing, which is the illegal promotion of drugs or devices that are billed to Medicare and other federal health care programs for uses that were neither found safe and effective by the Food and Drug Administration (FDA) nor supported by the medical literature; paying kickbacks to physicians, wholesalers and pharmacies to induce drug or device purchases; establishing inflated drug prices knowing that federal health care programs use these prices to reimburse providers, then marketing the "spread" between the federal reimbursement and the provider’s lower cost to induce drug purchases; and knowingly failing to report the company’s true "best price" for a drug in order to reduce rebates owed to the Medicaid program.
Procurement fraud accounted for a quarter of fiscal year 2009 recoveries with $608.4 million in settlements and judgments, including $422 million attributable to Department of Defense contracts. Of that amount, $59 million related to contracts in support of the wars in Iraq and Afghanistan, including two settlements with The Boeing Company totaling $27 million and a $26.3 million settlement with APL Limited. This brings settlements and judgments in procurement fraud cases involving the wars in Southwest Asia to a total of $76 million, with many matters still pending.
18 November 2009
Rhode Island Couple Sentenced to Prison for Tax EvasionRead the Press Release
WASHINGTON - Husband and wife, Albert Martin and Lorraine Martin of Woonsocket, R.I., were sentenced to prison today for committing tax evasion and conspiring to defraud the United States, the Justice Department and Internal Revenue Service (IRS) announced. Chief Judge Mary M. Lisi of the District of Rhode Island sentenced Albert Martin to 51 months in prison and three years of supervised release. The judge sentenced Lorraine Martin to one year and one day in prison and three years of supervised release. In addition to the prison terms, Judge Lisi ordered Albert and Lorraine Martin to pay restitution to the U.S. Treasury in the amount of $463,988.
In March 2009, a federal jury in Providence convicted the Martins and co-defendant Bruce Lapierre of conspiracy to defraud the United States and two counts each of tax evasion. According to the indictment and evidence introduced during the trial, Lapierre and Albert Martin owned and operated a Woonsocket-based machine shop from which they earned substantial income. From 1997 to 2004, the defendants engaged in an elaborate scheme to conceal from the IRS income that they earned through Classic Machine, and thus avoid paying taxes on that income. Rather than open business accounts for depositing business receipts and income, they allegedly used Lorraine Martin’s personal account to conceal business receipts, as well as an anonymous "private" banking service designed to conceal income from the IRS.
The evidence also showed that the defendants, in order to further conceal their assets and income from the IRS, used multiple business names, such as Banner Technologies, Circle Machine, Preferred Enterprises and Royal Enterprises, to conduct the machine shop business. The defendants also made extensive use of cash and money orders. For example, they allegedly cashed checks under $10,000 in order to avoid federal Currency Transaction Reports, which are required for currency transactions of $10,000 or more.
In October 2009, Judge Lisi sentenced Lapierre to 51 months in prison for his role in the scheme.
Acting Assistant Attorney General John A. DiCicco thanked the U.S. Attorney’s Office for the District of Rhode Island for their assistance in the prosecution of the case. Acting Assistant Attorney General DiCicco commended the IRS Special Agents who investigated the case, as well as Tax Division Trial Attorneys John Kane and Jorge Almonte who prosecuted the case.
Occupational Therapist and Patient Recruiter Plead Guilty <br /> in Detroit-Based Medicare Fraud SchemesRead the Press Release
Detroit resident Jaquita Lovelace and Miami resident Timothy Pierce have pleaded guilty in U.S. District Court in Detroit to participating in conspiracies to defraud the Medicare program.
Pierce, 42, pleaded guilty to conspiracy to commit health care fraud today before U.S. District Judge Denise Page Hood, and Lovelace, 30, pleaded guilty to conspiracy to commit health care fraud on Tuesday, Nov. 17, 2009, before U.S. District Judge Sean F. Cox.
In her plea, Lovelace, a licensed occupational therapist, admitted that she began working in approximately September 2005 as a contract therapist for co-conspirator Suresh Chand, who entered a guilty plea in the same case in September. Chand owned and controlled several companies operating in the Detroit area that purported to provide physical and occupational therapy services to Medicare beneficiaries. Lovelace admitted that she, Chand and others created fictitious therapy files appearing to document occupational therapy services provided to Medicare beneficiaries, when in fact no such services had been provided. According to court documents, the fictitious services reflected in the files were billed to Medicare through sham Medicare providers controlled by Chand and other co-conspirators.
Lovelace admitted that her role in creating the fictitious therapy files was to sign documents and progress notes indicating she had provided occupational therapy services to particular Medicare beneficiaries, when in fact she had not. Lovelace was paid between $90 and $110 by Chand per file that she falsified in this manner. Lovelace also admitted that in the course of the scheme charged in the indictment, she signed approximately 544 fictitious occupational therapy files, falsely indicating she had provided occupational therapy services to Medicare beneficiaries. Lovelace admitted she knew that the files she helped falsify were used to justify fraudulent billings to Medicare.
In addition, Lovelace admitted that between approximately September 2005 and October 2006, Chand and his co-conspirators submitted claims to the Medicare program totaling approximately $2,176,000 for files that were falsified by Lovelace. Medicare actually paid approximately $1,088,000 on those claims. Lovelace admitted that throughout the conspiracy, she was fully aware that Medicare was being billed for occupational therapy services she had falsely indicated she had performed.
In his plea today, Pierce admitted that he was hired in March 2006 to recruit, drive and pay kickbacks to Medicare beneficiaries to induce them to go to Dearborn Medical Rehabilitation Center (DMRC), a Dearborn, Mich., infusion clinic. The beneficiaries Pierce admitted to recruiting were paid to sign paperwork indicating that they had received infusions and injections of specialty medications that they did not in fact receive.
Pierce admitted that DMRC routinely billed the Medicare program for services that were medically unnecessary or were never provided. The primary owners and operators of DMRC, co-conspirators of Pierce, purchased only a small fraction of the medications that the clinic billed the Medicare program for providing. Patients were prescribed medications at the clinic based not on medical need, but instead based on which medications were likely to generate Medicare reimbursements.
The cases are being prosecuted by Senior Trial Attorney John K. Neal of the Criminal Division’s Fraud Section and by Special Assistant U.S. Attorney Thomas W. Beimers of the Eastern District of Michigan. The FBI and 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 the inception of Strike Force operations in March 2007 – Miami (Phase One), Los Angeles (Phase Two), Detroit (Phase Three), and Houston (Phase Four) – the Strike Force has obtained indictments of more than 331 individuals and organizations that collectively have billed the Medicare program for more than $720 million. 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.
Each of the Strike Force teams across the separate phases are led by a federal prosecutor from the Criminal Division’s Fraud Section or the U.S. Attorney’s Office. Each team has an agent from the FBI and HHS-OIG.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team, go to: www.stopmedicarefraud.gov
New Jersey Hospital to Pay $3 Million<br /> to Resolve Allegations of Medicare FraudRead the Press Release
WASHINGTON – The United States has entered into a settlement with a New Jersey hospital and filed a motion to intervene in a lawsuit against a New York hospital involving allegations that the hospitals defrauded Medicare, the Justice Department announced today.
The United States settled for $3.02 million, plus interest, with Trinitas Regional Medical Center in Elizabeth, N.J. The United States is also seeking to intervene in a lawsuit brought against Brookhaven Memorial Hospital in East Patchogue, N.Y.
Both of the hospitals are defendants in a suit brought by a whistleblower, Tony Kite, in 2005. The lawsuit involved allegations that the hospitals fraudulently inflated their charges to Medicare patients to obtain enhanced reimbursement from Medicare.
In addition to its standard payment system, Medicare provides supplemental reimbursement, called "outlier payments," to hospitals and other health care providers in cases where the cost of care is unusually high. Congress enacted the supplemental outlier payments system to ensure that hospitals possess the incentive to treat inpatients whose care requires unusually high costs. The lawsuit alleged that the hospitals inflated their charges to obtain supplemental outlier payments for cases that were not extraordinarily costly and for which outlier payments should not have been paid.
"As today’s actions demonstrate, the Department of Justice is committed to pursuing those who defraud Medicare and drive up the cost of health care," said Assistant Attorney General Tony West, head of the Justice Department’s Civil Division. Mr. West noted that the settlement and intervention announced today were the result of the collaborative efforts of the Civil Division of the Department of Justice, the U.S. Attorney’s Office for the District of New Jersey, the Office of Inspector General of the Department of Health and Human Services, the Centers for Medicare and Medicaid Services, and the Federal Bureau of Investigation.
"This office is determined to protect the integrity of the Medicare system for the citizens of New Jersey and of the United States," said U.S. Attorney Paul J. Fishman.
Mr. Kite brought his suit under the qui tam or whistleblower provisions of the False Claims Act, which permit private citizens with knowledge of fraud against the government to bring a lawsuit on behalf of the United States and to share in any recovery. Under the civil settlements announced today, Mr. Kite will receive roughly $679,000, plus interest, out of the total recovery against Trinitas Regional Medial Center.
Former Kentucky Jail Supervisor Sentenced on Charges Related to Abuse of DetaineesRead the Press Release
WASHINGTON – Thomas E. Perez, Assistant Attorney General for the Civil Rights Division, announced today that Kristine Lafoe, a former lieutenant and supervisor at the Lexington-Fayette County Detention Center (FCDC), was sentenced in federal court for her role in covering up systematic detainee abuse. Lafoe was sentenced in Lexington, Ken., by Federal Judge Karen K. Caldwell, to serve one year in prison and two years of supervised release.
Lafoe pleaded guilty on May 14, 2009, to a charge of conspiring to obstruct justice for her role in concealing abuses at FCDC. According to the plea proceeding and documents filed in court, Lafoe, who supervised the midnight intake shift at the FCDC, admitted that between January and October 2006, she instructed officers under her command to falsify reports by using inaccurate language to describe uses of force, so that the physical abuse of detainees would sound innocuous and justifiable. As a supervisor, Lafoe then reviewed these false reports and submitted them to her supervisors, knowing that the reports would conceal and cover up detainee abuse and would obstruct any federal investigations of the abuse. Lafoe admitted that her actions allowed officers under her command to continue abusing detainees with impunity.
"Law enforcement officers who abuse their power undermine public safety and the public trust, and they make the work of law enforcement all the more difficult," said Assistant Attorney General Perez. "As we’ve shown in this case, we will vigorously prosecute officers who engage in acts of criminal misconduct."
The defendant’s conviction resulted from the investigative work of the FBI’s Louisville Division and the Civil Rights Division. The case was prosecuted by division attorneys Jared Fishman and Benjamin Hawk.
17 November 2009
President Obama Establishes Interagency Financial Fraud Enforcement Task ForceRead the Press Release
WASHINGTON – Attorney General Eric Holder, Treasury Secretary Tim Geithner, Housing and Urban Development (HUD) Secretary Shaun Donovan, and Securities and Exchange Commission (SEC) Chairwoman Mary Schapiro today announced that President Barack Obama has established by Executive Order an interagency Financial Fraud Enforcement Task Force to strengthen efforts to combat financial crime. The Department of Justice will lead the task force and the Department of Treasury, HUD and the SEC will serve on the steering committee. The task force’s leadership, along with representatives from a broad range of federal agencies, regulatory authorities and inspectors general, will work with state and local partners to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, address discrimination in the lending and financial markets and recover proceeds for victims.
The task force, which replaces the Corporate Fraud Task Force established in 2002, will build upon efforts already underway to combat mortgage, securities and corporate fraud by increasing coordination and fully utilizing the resources and expertise of the government’s law enforcement and regulatory apparatus. The attorney general will convene the first meeting of the Task Force in the next 30 days.
"This task force’s mission is not just to hold accountable those who helped bring about the last financial meltdown, but to prevent another meltdown from happening," Attorney General Eric Holder said. "We will be relentless in our investigation of corporate and financial wrongdoing, and will not hesitate to bring charges, where appropriate, for criminal misconduct on the part of businesses and business executives."
"Through the Financial Fraud Task Force, we are making clear that the Obama Administration is going to act aggressively and proactively in a coordinated effort to combat financial fraud," said Treasury Secretary Geithner. "It’s not enough to prosecute fraud only after it’s become widespread. We can’t wait for problems to peak before we respond. We’re seeking comprehensive financial reform to create a more stable, safer financial system and stepping up our enforcement strategy. Doing so will help to stop emerging trends in financial fraud before they’re able to cause extensive, system-wide damage to our economy."
"To give American families the protection and peace-of-mind they need, it’s clear the federal response must be as interconnected and multi-dimensional as the challenges we face," said HUD Secretary Shaun Donovan. "No one agency is going to be able to stop financial fraud. This Task force will build upon many of the inter-agency collaborations already underway to protect consumers and restore confidence."
"Many financial frauds are complicated puzzles that require painstaking efforts to piece together. By formally coordinating our efforts, we will be better able to identify the pieces, assemble the puzzle and put an end to the fraud," said SEC Chairman Mary Schapiro.
The task force is composed of senior-level officials from the following departments, agencies and offices:
- the Department of Justice;
- the Department of the Treasury;
- the Department of Commerce;
- the Department of Labor;
- the Department of Housing and Urban Development;
- the Department of Education;
- the Department of Homeland Security;
- the Securities and Exchange Commission;
- the Commodity Futures Trading Commission;
- the Federal Trade Commission;
- the Federal Deposit Insurance Corporation;
- the Board of Governors of the Federal Reserve System;
- the Federal Housing Finance Agency;
- the Office of Thrift Supervision;
- the Office of the Comptroller of the Currency;
- the Small Business Administration;
- the Federal Bureau of Investigation;
- the Social Security Administration;
- the Internal Revenue Service, Criminal Investigations;
- the Financial Crimes Enforcement Network;
- the United States Postal Inspection Service;
- the United States Secret Service;
- the United States Immigration and Customs Enforcement;
- relevant Offices of Inspectors General and related Federal entities, including without limitation the Office of the Inspector General for the Department of Housing and Urban Development, the Recovery Accountability and Transparency Board and the Office of the Special Inspector General for the Troubled Asset Relief Program; and
- such other executive branch departments, agencies, or offices as the President may, from time to time, designate or that the Attorney General may invite.
In addition, the attorney general will invite representatives of the National Association of Attorneys General, the National District Attorneys Association and other state, local, tribal and territorial representatives to participate in the task force through its Enforcement Committee.
Read the Executive Order
Mexican Citizen Sentenced to 121 Months in Prisonfor Her Participation in an Organization That Forced Young Mexican Women into Sexual Slavery in New YorkRead the Press Release
WASHINGTON – Consuelo Carreto Valencia, a member of the Carreto family sex trafficking ring that operated between Mexico and Queens, N.Y., was sentenced to 121 months in prison for benefitting financially from her participation in the organization, which transported young Mexican women to the United States and forced them into prostitution. The sentencing proceeding was held today before U.S. District Judge Frederic Block at the U.S. Courthouse in Brooklyn, N.Y.
The sentence was announced by Thomas E. Perez, Assistant Attorney General for the Civil Rights Division, U.S. Department of Justice; Benton J. Campbell, U.S. Attorney for the Eastern District of New York; and John Morton, Assistant Secretary, Immigration and Customs Enforcement, Department of Homeland Security (ICE).
From 1991 through 2004, Carreto Valencia served as a manager in her family’s sex trafficking operation based in Tenancingo, Tlaxcala, Mexico. She and her sons, Josue Flores Carreto and Gerardo Flores Carreto, and others, recruited young, uneducated women and girls from impoverished areas of Mexico and used or approved of a combination of deception, fraud, threats and physical violence – including rape and coerced abortion – to force them to prostitute themselves in brothels throughout the New York City metropolitan area, including Queens and Brooklyn. Carreto Valencia and her family made hundreds of thousands of dollars in prostitution profits, while the victims, who had been separated from their families in Mexico, received next to nothing.
At her guilty plea hearing on July 22, 2008, Carreto Valencia admitted that while living in Mexico, she received wire transfers of money from New York, fully aware that they were the proceeds of acts of prostitution performed by women who had been recruited and smuggled into the United States by her sons and others. She also admitted that she knew that the young women had been forced into prostitution in the United States.
"The victims in this case were robbed of their freedom, their dignity and their human rights. This case should send a clear message to those who abuse the rights of innocent individuals for their own profit that the federal government will be there to bring the perpetrators to justice," said Assistant Attorney General Perez.
"It is unconscionable in this day and age that there are persons who would hold other human beings in conditions of servitude and force them into lives of prostitution in order to line their own pockets," stated U.S. Attorney Campbell. "As this case demonstrates, sex traffickers operating from abroad should be on notice that they will find no refuge from reach of United States law enforcement." Mr. Campbell extended his grateful appreciation to the agencies and individuals in the United States and abroad who assisted in the investigation.
"Even as Carreto Valencia heads to prison, there are still criminals coercing and trafficking young women and children into prostitution," said ICE Assistant Secretary Morton. "This case attests to the commitment of ICE and its law enforcement partners to insure that there is no safe haven for those who seek to endanger and dehumanize innocent women and children."
Previously, in April 2006, Josue Flores Carreto, Gerardo Flores Carreto and co-defendant Daniel Perez Alonso were sentenced to terms of 50, 50 and 25 years in prison, respectively, following their guilty pleas in April 2005. Carreto Valencia was extradited to the United States from Mexico in January 2007 to face the charges against her.
The government’s case is being prosecuted by Assistant U.S. Attorney Monica E. Ryan and Hilary Axam, Acting Director of the Human Trafficking Prosecution Unit of the U.S. Department of Justice Civil Rights Division.
The case was investigated by Special Agents from the ICE New York Office with assistance provided by ICE Special Agents from the New Jersey and Mexico City offices; the New York City Police Department; the State Department’s Office to Monitor and Combat Trafficking in Persons; officials at the U.S. Embassy in Mexico City; and officials of the Mexican Prosecutor General of the Republic.
Justice Department Requires Divestitures in Cameron International Corp.’s Acquisition of NATCO Group Inc.Read the Press Release
WASHINGTON — The Department of Justice announced today that it will require Cameron International Corp. to divest certain assets used in the production and sale of desalters for use in the oil refining industry in order to proceed with its acquisition of NATCO Group Inc., currently valued at approximately $980 million. The Department said that the deal as originally proposed would substantially lessen competition in the manufacture of refinery desalters in the United States, resulting in higher prices and reduced quality, service and innovation. The Department said that the divestitures also remedy the harm to competition caused by Cameron’s 2005 acquisition of certain assets from Howe Baker Engineers Ltd.
The Department’s Antitrust Division filed a civil lawsuit today in U.S. District Court for the District of Columbia to block the proposed acquisition of NATCO by Cameron and to remedy the loss to competition created by Cameron’s 2005 acquisition of certain assets of Howe Baker. At the same time, the Department filed a proposed settlement that, if approved by the court, would resolve the competitive concern alleged in the lawsuit.
Refinery desalters are used to remove salt from crude oil at the oil refining stage of production. Desalting is a critical initial stage of the refining process. Currently, Cameron and NATCO, a recent entrant, are each other’s closest competitor for a significant set of refinery customers in the United States.
According to the complaint, Cameron’s $8.25 million acquisition of the Howe Baker assets in 2005 reduced from two to one the number of sellers of refinery desalters in the United States. Under the proposed settlement, Cameron will divest the desalter and dehydrator assets purchased from Howe Baker (the EDGE business), and all related tangible and intangible assets. It will also divest a non-exclusive license to certain NATCO technology related to refinery desalters, which utilizes dual frequency transformers. This dual frequency license may be used worldwide for the development, production, sale, and service of refinery desalters using this technology.
"These divestitures are necessary to preserve the benefits of competition for refinery customers in the United States," said Christine A. Varney, Assistant Attorney General in charge of the Department’s Antitrust Division.
Cameron is incorporated in Delaware with its principal place of business in Houston. Cameron is a worldwide provider of products, systems and services used to the oil, gas and process industries. Cameron is the leading U.S. supplier of customized refinery desalters. Cameron had U.S. sales of approximately $10 million for desalters in 2008.
NATCO is also incorporated in Delaware with its principal place of business in Houston. NATCO is a worldwide provider of equipment, systems and services used to separate oil, gas and water in oil and gas production and refinery facilities around the world. After Cameron, NATCO is currently the most significant U.S. supplier of refinery desalters. NATCO had U.S. sales of approximately $10.5 million for desalters in 2008.
As required by the Tunney Act, the proposed settlement will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement during a 60-day comment period to Maribeth Petrizzi, Chief, Litigation II Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 8700, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the U.S. District Court for the District of Columbia may enter the proposed Final Judgment upon finding that it is in the public interest.
Justice Department & IRS Announce Results of UBS Settlement & Unprecedented Response in Voluntary Tax Disclosure ProgramRead the Press Release
WASHINGTON – Deputy Attorney General David W. Ogden released the following statement regarding the announcement today by the Department of Justice and the Internal Revenue (IRS) regarding the results arising from previous settlements of civil and criminal cases against Swiss banking giant UBS AG. The Justice Department and IRS announced that over 14,700 taxpayers have come forward to report previously-undisclosed foreign bank accounts under the voluntary disclosure program the IRS implemented following the settlement. This figure represents almost double the initial numbers the IRS announced in October and dwarfs the number of voluntary disclosures received in 2008.
"The Department of Justice is pleased with the extraordinary results achieved from this landmark settlement," said Deputy Attorney General Ogden. "The message to American taxpayers is clear: the era of bank secrecy and hidden assets is over. We will continue to work closely with the IRS and our international partners to ensure that our tax laws are enforced fully and fairly, and that the rule of law is vindicated. We congratulate the IRS and the Department’s Tax Division, as well as our partners in the Swiss government, for this achievement."These voluntary disclosures, while extremely significant, are but one more step in the IRS and the Department’s efforts to hold those U.S. taxpayers who have undisclosed foreign accounts responsible for their actions. These efforts began in February 2009, with UBS AG’s agreement to enter into a groundbreaking deferred prosecution agreement, admitting guilt on charges of conspiring to defraud the United States by impeding the IRS. As part of the agreement, UBS immediately provided the United States with the identities of, and account information for, a number of U.S. UBS customers and paid $780 million in fines, penalties, interest, and restitution. The Department's Tax Division worked hand-in-hand with the U.S. Attorney's office in the Southern District of Florida to obtain these unprecedented results.
To date, the Justice Department has successfully prosecuted six U.S. customers of UBS whose information was provided pursuant to the Deferred Prosecution Agreement, and is conducting investigations of dozens of other UBS customers.
In addition to the deferred prosecution agreement, in August of this year, the IRS, the Justice Department, UBS and the Swiss Government, entered into a similarly landmark agreement, in the John Doe summons action, whereby the IRS was to receive thousands of additional undisclosed UBS accounts.
These criminal and civil efforts have, for the first time, breached Swiss bank secrecy and prevented taxpayers from hiding from the IRS regardless of the cross border nature of their accounts. Within the United States, there has been an unprecedented increase in the number of taxpayers who have come forward to voluntarily disclose the existence of their foreign bank accounts and agree to pay tens of millions of dollars to the treasury.
The Department of Justice and IRS also made public the criteria set out in the settlement reached in the civil John Doe summons suit against UBS, which governed the selection of account holders to be identified as part of the settlement. The criteria cover accounts of various amounts and types, including bank-only accounts, custody accounts in which securities or other investment assets were held and offshore company nominee accounts through which an individual indirectly held beneficial ownership. These criteria allow the IRS and the Justice Department to target the most egregious foreign account holders.Bexar County, Texas, Corrections Officer Indicted on Civil Rights ChargesRead the Press Release
WASHINGTON – Daniel Melgoza, a Bexar County, Texas, Corrections Officer, was charged today in a four-count federal indictment with violating the civil rights of two detainees and obstructing justice. The charges stem from two December 2004 incidents in which Melgoza, 54, of San Antonio, allegedly assaulted inmates at the Bexar County Detention Center by kicking and striking them. The indictment also charges Melgoza with obstructing justice by providing false statements about the assaults.
An indictment is a formal accusation of criminal conduct, not evidence of guilt. The defendants are presumed innocent unless and until proven guilty.
If convicted, the defendant faces maximum penalties of 10 years imprisonment on each of the civil rights charges and 20 years imprisonment on each of the obstruction charges.
This case was investigated by Special Agent Mirella Rodriguez of the San Antonio Division of the FBI with assistance from the Bexar County Sheriff’s Offiice, and is being prosecuted by Civil Rights Division Trial Attorney Christopher Lomax and Special Litigation Counsel Jeffrey Blumberg.
16 November 2009
U.S. Joins False Claims Act Lawsuit Against Kuwait-Based Companies That Supplied Food to U.S. Troops in Middle EastRead the Press Release
The United States has joined a whistleblower suit against Public Warehousing Company (PWC), The Sultan Center Food Products Company (TSC), and PWC’s chief executive officer, Tarek Abbul Aziz Sultan Al-Essa, the Justice Department announced today.
The lawsuit, which was filed in the U.S. District Court for the Northern District of Georgia, alleges that since 2003, defendants have violated the False Claims Act by presenting or causing others to present false claims for payment under PWC’s multi-billion contracts with the Defense Logistics Agency to supply food for U.S. service members serving in Kuwait, Iraq and Jordan. The complaint alleges that defendants knowingly overcharged the United States for locally available fresh fruits and vegetables that PWC purchased through TSC. The complaint also alleges that PWC failed to disclose and pass through rebates and discounts it obtained from its U.S.-based suppliers, as required by its contracts.
The case was initially filed under seal by Kamal Mustafa Al-Sultan, the owner of a Kuwaiti company that originally partnered with PWC to submit a proposal on the food supply contracts. The case remained under seal to permit the United States to investigate the allegations and determine whether it would join the lawsuit. Under the False Claims Act, the United States may recover three times the amount of its losses, plus civil penalties.
"We will not tolerate fraudulent practices from those tasked with providing the highest quality support to the men and women who serve in our armed forces," said Tony West, Assistant Attorney General for the Civil Division. "Those who do business with the government must act fairly and in accordance with the law. As this case illustrates, the Department of Justice will investigate and pursue allegations of fraud against contractors and subcontractors, whether they are foreign or domestic."
"The decision to join in this civil lawsuit follows a multi-year probe into abuses in Middle East subsistence prime vendor contracts," said Acting U.S. Attorney F. Gentry Shelnutt. "This Office and the Department of Justice will spare no effort in investigating those persons and companies, regardless of location, who seek to defraud the United States."
The U.S. Attorney’s Office for the Northern District of Georgia also announced today that a grand jury returned a six-count indictment against Public Warehousing Company, also known as Agility, in connection with its prime vendor contracts.
Assistant Attorney General West and Acting U.S. Attorney Shelnutt thanked the joint investigation team, which includes Special Agents with Defense Criminal Investigative Service; the Federal Bureau of Investigation; and U.S. Army Criminal Investigation Command (Army CID), auditors from the Defense Contract Audit Agency, and the Department of Defense, Office of the Inspector General, for the investigation of this defense procurement fraud matter.
New Jersey Man Sentenced on International <br /> Sex Tourism and Child Pornography ChargesRead the Press Release
Wayne Nelson Corliss, 60, of Union City, N.J., was sentenced to 235 months in prison today in Newark, N.J., on three charges of traveling in foreign commerce with the intent to engage in illicit sexual conduct and a single count each of producing and possessing child pornography.
Corliss was also sentenced today by U.S. District Judge Joseph A. Greenaway to lifetime supervised release to follow his prison term, and was ordered to pay a $5,000 fine. He will be required to register as a sex offender.
Corliss was identified in May 2008 after INTERPOL made a global appeal for any information that could identify a then-unknown male. In that appeal, INTERPOL released a photo to media outlets around the world depicting an individual later identified as Corliss. The likeness in the image distributed by INTERPOL had been cropped from photos depicting Corliss sexually abusing young children in Southeast Asia. As reported by INTERPOL at that time, the images, which were distributed on the Internet, captured the abuse of children as young as six-years-old, and were originally discovered by police in Norway. Within 48 hours of INTERPOL’s global appeal, special agents of the U.S. Immigration and Customs Enforcement (ICE) field offices in Newark and Washington, D.C., coordinating with INTERPOL, the U.S. Attorney’s Office for the District of New Jersey and the Criminal Division’s Child Exploitation & Obscenity Section (CEOS), identified, located and arrested Corliss. He has been in custody since his arrest.
Corliss pleaded guilty on Oct. 28, 2008. In his plea, Corliss admitted he traveled to Thailand each year from 2000 to 2002. In each instance, he admitted, he traveled with the intent to sexually abuse children, paid for unfettered access to children, brought items to facilitate their sexual abuse and actually sexually abused children. Corliss also admitted to sexually abusing children in 2002 in Thailand for the purpose of photographing and videotaping the activity. In addition, Corliss admitted to storing and possessing images of child pornography on his home computers at the time of his arrest in 2008.
Corliss and two other U.S. sex tourists, Burgess Lee Burgess and Mitchell Kent Jackson, allegedly communicated with and were afforded sexual access to children in Thailand by John Wrenshall. Wrenshall was extradited from the United Kingdom and awaits trial in New Jersey on sex tourism and child pornography charges. According to the indictment, Wrenshall had ready access to young Thai boys, some as young as four-years-old, at his Thailand home and provided Corliss, Burgess, Jackson and others with sexual access to those children in exchange for money. Burgess, 45, and Jackson, 32, pleaded guilty on Nov. 6, 2009, in the Southern District of Alabama and were each sentenced to 78 months in prison.
This case was investigated by ICE. The prosecution was handled by Assistant U.S. Attorney Lee Vartan of the U.S. Attorney’s Office for the District of New Jersey and Trial Attorney Michael Yoon of CEOS.
INTERPOL and ICE are partners in the Virtual Global Task Force, an international alliance of law enforcement committed to keeping children safe from child predators.
Justice Department Signs Agreement with Fargo, North Dakota, to Ensure Civic Access for People with DisabilitiesRead the Press Release
WASHINGTON- The Justice Department today announced an agreement with the City of Fargo, N.D., to improve access to civic life for persons with disabilities. The agreement was reached under "Project Civic Access," a Justice Department initiative to bring state and local governments into compliance with the Americans with Disabilities Act (ADA). This agreement is the 172nd entered into under the Project Civic Access initiative and the 11th this year.
Project Civic Access was initiated to ensure that individuals with disabilities have an equal opportunity to participate in civic life. As part of the project, department investigators, attorneys and architects survey state and local government facilities and programs throughout the country to identify modifications necessary to comply with ADA requirements. Depending on the circumstances in each community, the agreements address specific areas where access must be improved.
"Individuals with disabilities have the right to expect the same access to civic services and facilities as everyone else. It is the responsibility of public officials to ensure that right is protected," said Assistant Attorney General Thomas E. Perez of the Civil Rights Division. "I commend City officials for making this commitment to provide equal access to City programs, activities, and services for all of its residents."
Under the agreement announced today, the city of Fargo will take several steps to improve access for individuals with disabilities, such as:
- Making physical modifications to its facilities so that parking, routes into the buildings, entrances, public telephones, restrooms, service counters and drinking fountains are accessible to persons with disabilities;
- Posting, publishing and distributing a notice to inform members of the public of the provisions of the ADA and their applicability to the city’s programs, services and activities;
- Adopting a grievance procedure to deal with complaints of disability discrimination;
- Amending its employment policies, as necessary, to comply with the regulations of the U.S. Equal Employment Opportunity Commission implementing the Americans with Disabilities Act;
- Implementing a plan that will provide accessible sidewalks and curb ramps throughout Fargo;
- Ensuring that the city’s official Web site is accessible to persons with disabilities, including individuals who are blind or have low vision;
- Providing information for interested persons with disabilities concerning the existence and location of the city’s accessible services, activities and programs; and
- Installing signs at any inaccessible entrance to a city facility directing members of the public to an accessible entrance or to information about other accessible facilities where services can be obtained.
Today’s agreement was reached under Title II of the ADA, which prohibits discrimination against individuals with disabilities by state and local governments. The agreement will remain in effect for three years. The department will monitor compliance with the agreement until required actions have been completed.
People interested in finding out more about the ADA, today’s agreement with the City of Fargo or the Department’s Project Civic Access initiative may find this information on the ADA website at http://www.ada.gov or may call the toll-free ADA Information Line at (800) 514-0301 or (800) 514-0383 (TTY).
Environment and Natural Resources Division Celebrates 100th AnniversaryRead the Press Release
WASHINGTON—Attorney General Eric Holder, Assistant Attorney General Ignacia S. Moreno and hundreds of current and past employees celebrated the 100th anniversary of the Environment and Natural Resources Division today.
“The history of the Environment and Natural Resources Division reminds us of the importance of our nation’s public lands and natural resources to the development of this country, and the important role of the division in protecting these resources for future generations,” said Attorney General Holder. “Just as your predecessors in the division helped to preserve public lands and resources for us, your work helps to ensure and preserve a healthier environment for generations to come.”
“On this day it is especially appropriate to acknowledge the division’s career employees, who are the heart and soul of the division. You have my greatest respect and admiration and I am thrilled to return to the division to work with you once again,” said Ignacia S. Moreno, Assistant Attorney General for Environment and Natural Resources Division. “We find ourselves at an important juncture in our nation’s history. The challenges we face are significant but I am confident that together we can continue to advance the division’s mission and meet those challenges.”
The division was created on Nov. 16, 1909, when Attorney General George Wickersham signed a two-page order creating “The Public Lands Division.” He assigned all cases concerning “enforcement of the Public Land Law” including Indian rights cases to the new division, and transferred a staff of nine—six attorneys and three stenographers—to carry out those responsibilities.
As the nation grew and developed, so did the responsibilities of the division and its name changed to the “Environment and Natural Resources Division” to better reflect those responsibilities. Today, the division, which is organized into nine sections, has offices in Washington; Anchorage, Alaska; Boston; Denver; Sacramento, Calif.; San Francisco and Seattle, and a staff of over 600 people. It currently has over 6,000 active cases, and has represented virtually every federal agency in courts all over the United States and its territories and possessions. The cases reflect every aspect of environmental litigation from acquiring lands for national parks, working for cleaner air and water, helping to assure military readiness and protecting wildlife.
Additionally, the Environment and Natural Resources Division welcomed its 33rd Assistant Attorney General today as Ignacia S. Moreno was sworn in by Attorney General Holder. John C. Cruden has served for the past 10 months as the Division’s Acting Assistant Attorney General.
More information about the Environment and Natural Resources Division can be found on its centennial Web site at http://www.justice.gov/enrd/Anniversary/index.html. The division home page is found at http://www.justice.gov/enrd/index.html.
Australian Man Pleads Guilty to Conspiring to Solicit Kickbacks in Connection with Government Contract in AfghanistanRead the Press Release
WASHINGTON - An Australian man pleaded guilty today for his role in a scheme to solicit kickbacks in connection with the award of a private security services subcontract to protect U.S. government personnel and contractors in Afghanistan, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, Assistant Attorney General Christine A. Varney of the Antitrust Division and U.S. Attorney Neil H. MacBride of the Eastern District of Virginia.
Scott Anthony Walker, 36, of Australia, pleaded guilty today before U.S. District Court Judge Gerald Bruce Lee in the Eastern District of Virginia to one count of conspiracy to solicit a kickback. Walker was arrested in the United States on Nov. 11, 2009.
According to court documents, the U.S. Agency for International Development (USAID) is the principal federal U.S. agency that extends assistance to countries recovering from disaster, trying to escape poverty and engaging in democratic reforms. The agency works to support long-term and equitable economic growth and advance U.S. foreign policy objectives.
In August 2006, USAID awarded a $1.4 billion contract known as the Afghanistan Infrastructure Rehabilitation Project (the AIRP contract). The AIRP contract required the award of numerous subcontracts, including for the provision of security services to protect AIRP workers. According to court documents, from at least February 2009 until he was terminated in June 2009, Walker worked in Kabul, Afghanistan, as a country security coordinator for the AIRP prime contractor. Walker admitted that he conspired with Bryan Lee Burrows and others to solicit kickbacks from private security vendors in return for favorable treatment for those potential bidders for one or more subcontracts. According to court documents, the subcontracts provided for private security services to protect USAID personnel and contractors in Afghanistan operating under the AIRP contract.
Burrows pleaded guilty on Sept. 2, 2009, to one count of conspiracy to solicit a kickback. Sentencing of Burrows is currently scheduled for Dec. 18, 2009.
The conspiracy charge carries a maximum penalty of five years in prison and a maximum fine of $250,000. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum. Sentencing for Walker has been scheduled for Feb. 5, 2010.
The case is being prosecuted by Trial Attorney Bradford Geyer of the Criminal Division’s Fraud Section, Trial Attorneys Kimberly A. Justice and Joseph Muoio of the Antitrust Division’s Philadelphia Field Office and Assistant U.S. Attorney Timothy D. Belevetz of the U.S. Attorney’s Office for the Eastern District of Virginia. The investigation is being conducted by USAID’s Office of Inspector General as well as members of the National Procurement Fraud Task Force and the International Contract Corruption Task Force (ICCTF).
The National Procurement Fraud Task Force, created in October 2006 by the Department of Justice, was designed to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in government contracting activity for national security and other government programs. The ICCTF is a joint law enforcement agency task force that seeks to detect, investigate and dismantle corruption and contract fraud resulting from U.S. Overseas Contingency Operations, including in Afghanistan, Iraq and Kuwait.
Arizona Man Sentenced to Two Years in Prison for Travel <br /> with Intent to Engage in Sex with MinorsRead the Press Release
Richard Hendryx, 79, of Morristown, Ariz., was sentenced today to two years in prison and lifetime supervised release to follow his prison term for travel with intent to engage in sex with minors.
Hendryx was charged on May 6, 2008, with one count of travel with intent to engage in a sexual act with a minor and two counts of distribution of child pornography. The charges were brought after Hendryx arrived at a prearranged meeting spot and paid to go on what he believed to be a tour of Mexico that would offer him an opportunity to have sex with two boys under the age of 11. In reality, the tour was an undercover operation run by U.S. Immigration and Customs Enforcement (ICE).
Hendryx pleaded guilty to the charge against him on Dec. 29, 2008. As part of his plea agreement, Hendryx admitted to arranging and paying to be taken to Mexico in order to have sex with two boys aged eight and 10 years.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The case was prosecuted by Trial Attorney James Silver of CEOS, with assistance from Senior Litigation Counsel Vincent Q. Kirby and Assistant U.S. Attorney Sharon K. Sexton of the District of Arizona. ICE conducted the investigation.
13 November 2009
Virginia Resident Pleads Guilty to Bribing <br /> Panamanian Officials for Maritime ContractRead the Press Release
WASHINGTON – Charles Paul Edward Jumet of Fluvanna County, Va., pleaded guilty today in connection with his role in a conspiracy to pay bribes to Panamanian government officials to secure a maritime contract, announced Assistant Attorney General of the Criminal Division Lanny A. Breuer, U.S. Attorney for the Eastern District of Virginia Neil H. MacBride, Joseph Persichini Jr., Assistant Director-in-Charge of the FBI’s Washington Field Office, Jennifer Smith Love, Special Agent-in-Charge of the FBI’s Richmond Field Office and James A. Dinkins, Special Agent-in-Charge of U.S. Immigration and Customs Enforcement’s (ICE) Office of Investigation, Washington.
Jumet, 53, pleaded guilty before U.S. Magistrate Judge Dennis W. Dohnal in Richmond, Va., to a two-count information charging him with conspiring to make corrupt payments to foreign government officials for the purpose of securing business for Ports Engineering Consultants Corporation (PECC) in violation of the Foreign Corrupt Practices Act (FCPA); and making a false statement.
PECC, a company incorporated under the laws of Panama, was affiliated with Overman Associates, an engineering firm based in Virginia Beach, Va. According to Jumet’s plea, PECC was created so Jumet, Overman Associates and others could corruptly obtain a maritime contract from the Panamanian government.
According to court documents, Jumet was involved in a conspiracy to pay money secretly to Panamanian government officials for awarding PECC contracts to maintain lighthouses and buoys along Panama’s waterway. In December 1997, the Panamanian government awarded PECC a no-bid, 20-year concession to perform these duties. In exchange for the concession, Jumet and others authorized corrupt payments to the Panamanian government officials.
In 2000, Panama’s Comptroller General’s Office suspended the contract while it investigated the government’s decision to award PECC a contract without soliciting any bids from other firms. In 2003, the Panama government resumed making payments to PECC.
In connection with his guilty plea, Jumet admitted that from at least 1997 through approximately July 2003, he and others conspired to make corrupt payments totaling more than $200,000 to the former administrator and deputy administrator of Panama’s National Maritime Ports Authority and to a former, high-ranking elected executive official of the Republic of Panama.
In his guilty plea, Jumet also admitted that he knowingly made a false statement to federal agents about a December 1997 "dividend" check payable to the bearer in the amount of $18,000, which was endorsed and deposited into an account belonging to the former, high-ranking elected executive official. Jumet admitted that he had falsely claimed that this "dividend" check was a donation for the high-ranking official’s re-election campaign. Jumet also admitted that the "dividend" check was in fact given to the former official as a corrupt payment for allowing PECC to receive the contract from the Panamanian government.
As part of his plea agreement, Jumet has agreed to cooperate with the Department of Justice in its ongoing investigation. The conspiracy count carries a maximum penalty of five years in prison and a fine of the greater of $250,000 or twice the gross gain or loss from the scheme. The false statement count carries a maximum penalty of five years in prison and a fine of $250,000. Sentencing is scheduled for Feb. 12, 2010.
The case was prosecuted by Trial Attorney Rina Tucker Harris of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Michael S. Dry of the U.S. Attorney’s Office for the Eastern District of Virginia. The case was investigated by the FBI’s Washington Field Office, the FBI’s Richmond Field Office and ICE’s Office of Investigation, Richmond and Washington.
Two Individuals Sentenced to Prison for Offering to Bribe U.S. Army Contracting Official in AfghanistanRead the Press Release
WASHINGTON – Rohullah Farooqi Lodin and Hashmatullah Farooqi were each sentenced today in Alexandria, Va., to four years in prison for their roles in a scheme to offer $1 million in bribes to a U.S. Army contracting official in Afghanistan, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Neil H. MacBride of the Eastern District of Virginia.
U.S. District Court Judge Liam O’Grady also sentenced Lodin, 48, from Irvine, Calif., and Farooqi, 38, from New York City, to each serve three years of supervised release following their prison term and ordered each to pay a $30,000 fine. Lodin and Farooqi, both dual Afghan/U.S. citizens, each pleaded guilty on Aug. 7, 2009, to one count of offering to bribe a public official.
The U.S. Army in Afghanistan is responsible for the Commander’s Emergency Response Program (CERP), which enables U.S. Army commanders in Afghanistan to use U.S. monies to fund humanitarian relief and reconstruction projects, including road construction, in that country. According to court documents, in 2009, the U.S. Army solicited bids from contractors to design and build a road in Logar Province, Afghanistan (the Logar Road Contract). The U.S. Army received numerous bids on the Logar Road Contract, including $18 million bids each from National General Construction Company (NGCC) and Hamed Lais Group (Hamed Lais), both general contracting firms in Afghanistan that Lodin and Farooqi claimed to represent.
Lodin and Farooqi admitted that on at least four occasions in May 2009, they met with an Army captain who was the public official responsible for managing the CERP in Logar Province. Lodin and Farooqi admitted they told the Army captain that they represented NGCC and Hamed Lais and were interested in securing the Logar Road Contract. Lodin and Farooqi admitted they offered the Army captain $1 million in bribes if he agreed to assist in disqualifying lower bidders on the Logar Road Contract and influence the award of the contract to NGCC and Hamed Lais.
Lodin and Farooqi admitted they stated they had political connections, and that to facilitate the award of the Logar Road Contract to NGCC and Hamed Lais, they could arrange for the blacklisting of lower priced bidders currently ranked ahead of their bid. Lodin and Farooqi admitted they had numerous conversations with the Army captain and discussed the following options for paying him to influence the award of the Logar Road Contract: they stated they could wire the Army captain $1 million through Dubai or Bangkok to a bank account; they offered to pay the Army captain $500,000 out of the first payment under the contract and $500,000 at the conclusion of the contract; and they offered to pay the Army captain $200,000 of the $1 million in cash before the award of the contract.
The case is being prosecuted by Special Assistant U.S. Attorney Steve A. Linick, Deputy Chief of the Criminal Division’s Fraud Section, and Fraud Section Trial Attorney James J. Graham. The investigation is being conducted by the FBI; the U.S. Army Criminal Investigative Division; the Special Inspector General for Afghanistan Reconstruction (SIGAR); the Defense Criminal Investigative Service; and members of the National Procurement Fraud Task Force and the International Contract Corruption Task Force (ICCTF).
The National Procurement Fraud Task Force, created in October 2006 by the Department of Justice, was designed to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in government contracting activity for national security and other government programs. The ICCTF is a joint law enforcement agency task force that seeks to detect, investigate and dismantle corruption and contract fraud resulting from U.S. Overseas Contingency Operations, including in Afghanistan, Iraq and Kuwait.
Justice Department and USDA Set Dates for Workshops to Explore<br /> Competition and Regulatory Issues in the Agriculture IndustryRead the Press Release
WASHINGTON – The Department of Justice and the U.S. Department of Agriculture (USDA) announced today the dates and locations of joint public workshops that will explore competition and regulatory issues in the agriculture industry. The workshops, which were first announced by Attorney General Eric Holder and Agriculture Secretary Tom Vilsack on Aug. 5, 2009, are the first joint Department of Justice/USDA workshops ever to be held to discuss competition and regulatory issues in the agriculture industry. The all-day workshops, which will begin in March 2010, will be held in Alabama, Colorado, Iowa, Washington, D.C. and Wisconsin.
The goals of the workshops are to promote dialogue among interested parties and foster learning with respect to the appropriate legal and economic analyses of these issues, as well as to listen to and learn from parties with experience in the agriculture sector.
The current schedule for the workshops is as follows:
March 12, 2010 – Issues of Concern to Farmers – Ankeny, Iowa
This event will serve as an introduction to the series of workshops, but also will focus specifically on issues facing crop farmers. Specific areas of focus may include seed technology, vertical integration, market transparency and buyer power.
FFA Enrichment Center
1055 Southwest Prairie Trail Parkway
Ankeny, Iowa
May 21, 2010– Poultry Industry – Normal, Ala.
Specific areas of focus may include production contracts in the poultry industry, concentration and buyer power.
Alabama A&M University
Auditorium, James I. Dawson Cooperative Extension Building
4900 Meridian St.
Normal, Ala.
June 7, 2010– Dairy Industry – Madison, Wisc.
Specific areas of focus may include concentration, marketplace transparency and vertical integration in the dairy industry.
University of Wisconsin
Great Hall, Memorial Union
800 Langdon St.
Madison, Wisc.
Aug. 26, 2010– Livestock Industry – Fort Collins, Colo.
Specific areas of focus will address beef, hog and other animal sectors and may include enforcement of the Packers and Stockyards Act and concentration.
Colorado State University
Fort Collins, Colo.
Dec. 8, 2010– Margins – Washington, D.C.
This workshop will look at the discrepancies between the prices received by farmers and the prices paid by consumers. As a concluding event, discussions from previous workshops will be incorporated into the analysis of agriculture markets nationally.
U.S. Department of Agriculture
Jefferson Auditorium
1400 Independence Ave., S.W.
Washington, D.C.
Each workshop may feature keynote speakers, general expert panels, and break-out panels that will address more narrowly-focused issues. At each workshop, the public will have an opportunity to ask questions and provide comments.
The attendance and participation of the public is encouraged throughout the series of workshops. With the goals of generating further dialogue and understanding the issues, the workshops will involve farmers, ranchers, processors, consumer groups, agribusinesses, government officials and academics. This collection of stakeholders will create a forum for discussion and will ensure various industry perspectives.
The Department of Justice and USDA are also asking for comments in advance of the workshops. Interested parties should submit written comments in both paper and electronic form to the Department of Justice no later than Dec. 31, 2009. All comments received will be publicly posted. Two paper copies should be addressed to the Legal Policy Section, Antitrust Division, U.S. Department of Justice, 450 5th Street, NW, Suite 11700, Washington, D.C. 20001. The electronic version of each comment should be submitted to [email protected].
Additional updates and information, including agendas and speakers, will be posted on the Antitrust Division’s events website at www.justice.gov/atr/events.htm.
Former Congressman William J. Jefferson Sentenced <br /> to 13 Years in Prison for Bribery and Other ChargesRead the Press Release
Former U.S. Congressman William J. Jefferson, 62, of New Orleans, La., was sentenced today to 13 years in prison, followed by three years of supervised release, for using his office to corruptly solicit bribes. Jefferson was also ordered to forfeit more than $470,000.
"The court’s sentence today reaffirms the principle that all people – no matter what their title or position – are equal before the law," said Principal Deputy Assistant Attorney General Mythili Raman. "In a stunning betrayal of the public’s trust, former Congressman Jefferson repeatedly used his public office for private gain. The lengthy prison sentence imposed on Mr. Jefferson today is a stark reminder to all public officials that the consequences of accepting bribes can and will be severe."
"This sentence should be a clear signal that our society will not tolerate bribery; it’s not just another cost of doing business in government," said Neil H. MacBride, U.S. Attorney for the Eastern District of Virginia. "Mr. Jefferson’s repeated attempts to sell his office caused significant damage to the public’s trust in our elected leaders. This sentence will begin to repair that damage and to restore that trust."
On Aug. 5, 2009, Jefferson was convicted by a federal jury in Alexandria, Va., of 11 charged counts, including conspiracy to commit bribery, honest services wire fraud and to violate the Foreign Corrupt Practices Act (FCPA), as well as substantive convictions of bribery, honest services by wire fraud and a violation of the Racketeer Influenced Corrupt Organization Act. Jefferson was acquitted on three counts of honest services wire fraud, an obstruction of justice charge and of violating the Foreign Corrupt Practices Act.
According to evidence at trial, from August 2000 to August 2005, Jefferson used his position as an elected member of the U.S. House of Representatives to corruptly seek, solicit and direct that things of value be paid to himself and his family members in exchange for his performance of official acts to advance the interests of people and businesses who offered him the bribes. The things of value, according to evidence at trial, included hundreds of thousands of dollars worth of bribes in the form of payments from monthly fees or retainers, consulting fees, percentage shares of revenues and profits, flat fees for items sold and stock ownership in the companies seeking his official assistance.
Evidence at trial showed that Jefferson performed a wide range of official acts in return for things of value, including leading official business delegations to Africa, corresponding with U.S. and foreign government officials, and utilizing congressional staff members to promote businesses and businesspersons. The business ventures that Jefferson sought to promote included telecommunications deals in Nigeria, Ghana and elsewhere; oil concessions in Equatorial Guinea; satellite transmission contracts in Botswana, Equatorial Guinea and the Republic of Congo; and development of different plants and facilities in Nigeria.
Others involved in this scheme included Vernon L. Jackson, a Louisville, Ky., businessman, and Brett M. Pfeffer, a former congressional staff member for Jefferson. Both men pleaded guilty to charges of conspiracy to commit bribery and the payment of bribes to a public official and were sentenced to 87 months and 96 months in prison, respectively.
This case was prosecuted by Assistant U.S. Attorneys Mark D. Lytle and Rebeca H. Bellows of the Eastern District of Virginia and Assistant Chief Charles E. Duross of the Criminal Division’s Fraud Section. The case was investigated by the FBI’s Washington Field Office, with assistance of the Financial Crimes Enforcement Network.
Florida Man Sentenced to 87 Months for <br /> Receiving Child PornographyRead the Press Release
WASHINGTON - Jeffrey Robert Libman, 42, of Fort Lauderdale, Fla., was sentenced to 87 months in prison today for receiving child pornography, Assistant Attorney General of the Criminal Division Lanny A. Breuer and Acting U.S. Attorney for the Southern District of Florida Jeffrey H. Sloman announced.
Libman was also sentenced by U.S. District Judge Cecilia Altonaga to lifetime supervised release, following his prison term. He was indicted by a grand jury in the Southern District of Florida on April 28, 2009, for child pornography offenses. He pleaded guilty to one count of receipt of child pornography on Sept. 8, 2009. As part of his plea agreement, Libman admitted he received images that depict prepubescent children and children engaged in sadistic or masochistic conduct.
Libman was first identified by the U.S. Postal Inspection Service (USPIS) and the FBI during an investigation of Webe Web Corp., a Florida-based company. According to court documents, during the execution of a search warrant at Libman's residence in Fort Lauderdale, USPIS and FBI seized large volumes of computer media.
Libman, Marc Evan Greenberg and Webe Web Corp. were also indicted in November 2006 in a separate case in the Northern District of Alabama for conspiracy to produce images of child pornography and transportation of images of child pornography. That case is still pending.
An indictment is merely an allegation. Defendants are presumed innocent until and unless proven guilty in a court of law.
The case was prosecuted by Assistant Deputy Chief Alexandra R. Gelber and Trial Attorney Elizabeth M. Yusi of the Criminal Division’s Child Exploitation and Obscenity Section and Assistant U.S. Attorney A. Marie Villafaña of the Southern District of Florida. The case was investigated by USPIS, the FBI and the CEOS’ High Technology Investigative Unit.