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15 September 2009
Former Indiana Water Treatment Plant Superintendent Sentenced to Prison for Falsifying ReportsRead the Press Release
WASHINGTON — The former superintendent of a wastewater treatment facility in Rochester, Ind., was sentenced today in U.S. District Court in South Bend, Ind., to serve one year in prison for falsifying discharge monitoring reports that concealed violations of the Clean Water Act, the Justice Department announced.
Herbert L. Corn was sentenced to one year in prison on each of five counts to be served concurrently. Following the prison sentence, Corn was ordered to serve one year of supervised release, which includes three months of home detention, on each count to run concurrently.
On June 16, 2009, Corn pleaded guilty to a five-count felony information charging him with making false statements in discharge monitoring reports submitted to the Indiana Department of Environmental Management (IDEM). Corn admitted that from September 2004 and continuing through May 2007, he submitted at least five reports containing false data for treated water that was discharged from the Rochester Plant into Mill Creek, a tributary of the Tippecanoe River. He served as the former superintendent of the Rochester plant where he worked from 1986 until 2008.
"Today’s prison sentence sends a strong reminder to those who hold the public’s trust to provide accurate information in the course of their responsibilities," said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. "The prosecution in this case demonstrates the coordinated collaboration of federal, state and local officials to investigate and prosecute those violating the nation’s environmental laws."
"Accurate information about pollution discharged from the treatment plant is essential in order to protect both the citizens of Rochester and their environment," said Randall Ashe, Special Agent in Charge of EPA-Criminal Investigation Division. "Violators who submit false reports or bogus data undermine those efforts and they will be vigorously prosecuted."
"Certified wastewater operators are entrusted with the public health and must be held fully accountable to fulfill their duties, including honest and accurate reporting," said IDEM Commissioner Thomas Easterly. "IDEM inspectors work hard to identify and correct problems, and coordinate with our state and federal partners to ensure the protection of Hoosiers and our environment. We thank the staff of the U.S. Attorney’s Office, the U.S. Department of Justice, and the U.S. EPA’s criminal enforcement division in Chicago for their help in this case."
Under the federal Clean Water Act, which is administered and enforced by IDEM as well as the U.S. Environmental Protection Agency (EPA), before discharging the waste water it collects to Mill Creek, the Rochester plant must treat the water to meet concentration limits on certain pollutants as set forth in its permit. Three pollutants in the permit that have concentration limits are Escherichia Coli bacteria (E. Coli), Ammonia NH3-N and Carbonaceous Biological Oxygen Demand-5 (CBOD-5). The discharge of pollutants above the concentration limits for these pollutants is a violation of the permit and the Clean Water Act. The Rochester Plant is required to report and certify the results of its discharge sampling on a monthly basis to IDEM.
At sentencing, the court found that Corn made as many as 55 separate falsifications in reports from September 2004 and continuing through May 2007, in which he reported levels on discharge reports that purported levels of E. Coli, Ammonia NH3-N and CBOD-5 that were in compliance with the permit concentration limits, even though Corn knew that the levels were actually higher. Those reports were then submitted to IDEM. In addition, the court found that Corn’s conduct in falsifying discharge reports pre-dated September 2004, although the exact dates and times are unknown.
In addition to being superintendent of the Rochester plant, Corn possessed a state of Indiana Class III license as a waste water treatment operator. Corn also held the position of president of the Indiana Water Environment Association, a sewage industry trade group, and had received several awards for environmental achievements related to sewage treatment. In addition, Corn has taught courses on waste water treatment. As a result of the offense conduct, Corn’s Class III license has been revoked by IDEM.
The criminal charges arose from a criminal investigation jointly undertaken by the Criminal Investigation Division of the EPA and the IDEM Office of Criminal Investigation, which are part of the Northern District of Indiana Environmental Crimes Task Force. Members of the task force include:
- U.S. Attorney’s Office for the Northern District of Indiana
- Environmental Crimes Section of the Department of Justice
- EPA—Criminal Investigation Division
- Department of Homeland Security—U.S. Coast Guard Investigative Service
- Federal Bureau of Investigation
- U.S. Fish and Wildlife Service
- U.S. Department of Transportation—Office of Inspector General
- U.S. Department of Labor—Office of Inspector General
- Indiana Department of Environmental Management—Office of Criminal Investigations
- Indiana Department of Natural Resources—Law Enforcement Division
- Indiana Attorney General’s Office
- Indiana State Police
The Task Force encourages citizens in the Northern District of Indiana to report environmental crimes to 312-886-9872 or at the Web site http://www.epa.gov/compliance/complaints/index.html.
The case was prosecuted by Assistant U.S. Attorney Toi Denise Houston, Special Assistant U.S. Attorney David P. Mucha and Environmental Crimes Section Trial Attorney Gary N. Donner.
Corrections Officers and Former Inmate <br /> Indicted on Federal Civil Rights ChargesRead the Press Release
WASHINGTON – The Justice Department today announced that a federal grand jury in Miami returned a three-count indictment on Sept. 11, 2009, charging former Dade Correctional Institution (DCI) officers Cordell J. White and Christopher W. Bonnet, current DCI Sergeant Obe D. L’Bert, and former DCI inmate Larry T. Williams with violating, and conspiring to violate, the civil rights of other inmates at DCI.
The indictment alleges that on Oct. 26, 2008, defendants L’Bert and White arranged for defendant-inmate Williams, aka Monster, to assault another inmate, identified in the indictment as D.T. L’Bert and White allegedly moved D.T. to Williams’s cell and waited outside of the cell while Williams assaulted and injured D.T. The indictment further alleges that on Nov. 1, 2007, defendants White and Bonnet arranged for Williams to assault another inmate, identified in the indictment as F.H., then escorted Williams to F.H’s cell and waited outside of the cell while Williams assaulted and injured F.H.
An indictment is merely an accusation, and the defendants are presumed innocent unless proven guilty. If convicted, each defendant faces a maximum penalty of ten years in prison on each of the three felony civil rights charges.
This case was investigated by the FBI and the Florida State Department of Corrections, Inspector General’s Office; and is being prosecuted by Assistant U.S. Attorney Susan Osborne of the U.S. Attorney’s Office for the Southern District of Florida and Trial Attorney Edward Chung of the Civil Rights Division.
California Court Bars Four Men from Promoting<br /> Alleged Stock-Loan Tax Fraud SchemeRead the Press Release
WASHINGTON – A federal judge in San Francisco has issued permanent injunctions barring four individuals from promoting what a government lawsuit describes as a complex tax-fraud scheme involving several entities located around the globe, the Justice Department announced today. U.S. District Judge Phyllis J. Hamilton signed the injunction orders against Yurij Debevc and Robert Nagy, both of South Carolina; Charles Hsin of New York; and Franklin Thomason of Jilin, China. Debevc, Nagy, Hsin and Thomason agreed to the injunctions without admitting the government’s allegations against them.
The government complaint filed in the case alleges that these four men and other defendants promoted a so-called "90% Stock Loan" program, using entities located in the United States, Hong Kong and the Isle of Man, that falsely purported to enable customers to contribute appreciated stocks or other securities in exchange for payments equal to 90% of the securities’ value without paying income tax on capital gains. Through this scheme, also known as the "Derivium" scheme, named after one of the companies involved, customers were allegedly told that they could avoid income tax because the transaction was a loan rather than a sale. But in fact, the government alleges, customers’ securities were actually sold to raise the funds to pay the customers. According to the complaint, the defendants sold the scheme to approximately 1,700 customers nationwide, in transactions totaling over $1 billion. The complaint alleges that the scheme cost the U.S. Treasury an estimated $230 million or more.
The same court barred another defendant, Scott Cathcart, from promoting the 90% loan program last year, after he agreed to a permanent injunction without admitting the government’s allegations. The government’s request for injunctions against the other defendants, including Charles Cathcart, Scott’s father, remains pending with trial scheduled for Nov. 16, 2009.
"Promoter injunctions are a vital part of the Justice Department’s efforts to stop complex tax schemes that purport to help wealthy taxpayers eliminate income tax on gains," said John DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division. He thanked Justice Department trial attorneys Nathan Clukey and Ellen Weis, 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.
The Justice Department has obtained injunctions against more than 425 tax-scheme promoters and tax preparers since 2001. Information about those cases is available on the Justice Department Web site.
14 September 2009
Justice Department to Monitor Elections<br /> in Massachusetts and New YorkRead the Press Release
WASHINGTON - The Justice Department today announced that it will monitor the Sept. 15, 2009, municipal elections in Springfield, Mass., and Newburgh, N.Y., to ensure compliance with the Voting Rights Act of 1965.
Federal observers will be assigned to monitor polling place activities in Springfield and Newburgh. The observers will watch and record activities during voting hours at polling locations. Civil Rights Division attorneys 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. In 2008, for example, 1,060 federal observers and 344 Department personnel were sent to monitor 114 elections in 76 jurisdictions in 24 states.
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 Commemorates Fifteen Years <br /> of the Violence Against Women ActRead the Press Release
The Department of Justice today commemorated the 15th anniversary of the Violence Against Women Act (VAWA), which was signed into law on September 13, 1994. This critical legislation was created in recognition of the severity of the crimes associated with domestic violence, sexual assault and stalking. The anniversary also marks 15 years since the creation of the Department’s Office on Violence Against Women (OVW), which administers financial and technical assistance to communities around the country to facilitate the creation of programs, policies and practices aimed at ending domestic and dating violence, sexual assault and stalking
"We’ve made tremendous progress since the Violence Against Women Act first passed in 1994, but we have much more to do. We cannot rest. It will take all of us to fulfill the promise to end domestic violence and sexual assault," said Vice President Joe Biden, the author of the landmark Violence Against Women Act.
"The Violence Against Women Act forever changed the way this nation meets our responsibility to survivors of domestic violence and sexual assault. It has been an essential building block in the Justice Department’s work to end violence against women," said Attorney General Eric Holder. "It is only in working together that we can make a difference and save lives, and the Justice Department will continue to take every possible step to enforce laws protecting victims of violence and to provide resources to aid victim service providers."
"Without a doubt, VAWA would never have happened without the steadfast commitment and work of the countless advocates, coalitions and community partners who worked tirelessly for federal legislation to mark the importance of the issue and provide vital resources," said Catherine Pierce, Acting Director of OVW. "In the past 15 years, countless lives have been saved, the voices of survivors have been heard, families have been protected, and the criminal justice community has been trained on the complex responses to domestic violence, sexual assault, dating violence and stalking."
The anniversary marks the start of a year-long anniversary effort to raise public awareness on issues around violence against women, to reinforce and build coalitions among federal, state, local and tribal law enforcement and victim services communities, and to reinforce the goal of ending domestic and dating violence, sexual assault and stalking for men, women and children across the country.
In recognition of the severity of the crimes associated with gender-motivated violence, Congress passed VAWA as part of the Violent Crime Control and Law Enforcement Act of 1994. VAWA is comprehensive legislative designed to end violence against women through criminal penalties, federal grant programs, and research and was reauthorized in 2000 and 2005. Since the passage of VAWA, there has been a paradigm shift in how the issue of violence against women is addressed in communities throughout the nation.
OVW was created to specifically implement VAWA and subsequent legislation. Currently, OVW administers two formula grant programs and 17 discretionary grant programs, all of which were established under VAWA and subsequent legislation. The office has also maintained a 15-year partnership with state, local and tribal governments, coalitions, law enforcement, prosecutors, judges and court personnel, victim advocates, health care providers and national organizations.
Every day, VAWA funding makes a difference in how communities across America help victims and hold offenders accountable. For example, subgrantees receiving funding awarded by states through OVW’s STOP Violence Against Women Formula Grant Program reported that, in calendar year 2007:
- More than 505,000 victims were served;
- Over 1,201,000 services were provided to victims; and
- More than 4,700 individuals were arrested for violations of protection orders.
Film Executive and Spouse Found Guilty of Paying Bribes<br /> to a Senior Thai Tourism Official to Obtain Lucrative ContractsRead the Press Release
Gerald Green and Patricia Green, Los Angeles-area film executives, were found guilty late last Friday of conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and money laundering laws of the United States, as well as substantive violations of the FCPA and U.S. money laundering laws in relation to a sophisticated bribery scheme that enabled the defendants to obtain a series of Thai government contracts, including valuable contracts to manage and operate Thailand’s yearly film festival.
Patricia Green was also found guilty of falsely subscribing U.S. income tax returns in connection with this scheme. The Greens were found guilty by a federal jury in the Central District of California on Friday, Sept. 11, 2009, after a two-and-a-half week trial.
"As these convictions demonstrate, the Department of Justice will not waiver in its fight against corruption, whether perpetrated within our borders or abroad," said Assistant Attorney General Breuer. "The FCPA is a powerful tool that the Department will continue to use in an effort to stop individuals like the Greens who seek to further their own business interests through bribes paid to foreign officials."
Gerald Green, 77, and Patricia Green, 52, both of West Hollywood, Calif., were charged on March 11, 2009, in a second superseding indictment with paying kickbacks to the former governor of the Tourism Authority of Thailand (TAT) in exchange for receiving contracts to manage and operate Thailand’s yearly "Bangkok International Film Festival," as well as contracts to provide an elite tourism "privilege card" marketed to wealthy foreigners.
Specifically, according to the superseding indictment, the Greens paid approximately $1.8 million in bribes to the former governor through numerous bank accounts in Singapore, the United Kingdom and the Isle of Jersey in the name of the former governor’s daughter and a friend of the former governor. The contracts received by the Greens resulted in more than $13.5 million in revenue to businesses they owned.
The Greens were charged in count one of the second superseding indictment with conspiracy to violate the FCPA and money laundering laws of the United States. Counts two through 10 charged the defendants with individual acts in violation of the FCPA. Counts 11 through 17 charged the defendants with individual acts in violation of money laundering laws of the United States. Count 19 charged defendant Gerald Green with obstruction of justice and counts 20 and 21 charged Patricia Green with falsely subscribing a U.S. Income Tax Return, commonly known as Form 1120, knowing that the false and overstated figure included the bribes to the former governor, described as "commissions."
The U.S. dismissed count 18 of the superseding indictment, a substantive money laundering count, prior to the case going to the jury. The jury was unable to reach a verdict on count 19, the obstruction of justice count against Gerald Green.
Evidence introduced at trial showed that beginning in 2002 and continuing into 2007, the Greens conspired with others to bribe the former governor of the TAT in order to get the lucrative film festival contracts as well as other TAT contracts. As a result of the then governor’s position at the TAT, the former governor was able to influence the awarding of these contracts.
Trial evidence also showed that in furtherance of the conspiracy, the Greens used different business entities, some with dummy business addresses and telephone numbers, in their dealings with the TAT in order to hide the large amount of money the Greens were being paid under the contracts. Moreover, the trial evidence showed that the Greens disguised the bribes as "sales commission" payments and made the payments for the benefit of the former governor through the foreign bank accounts of intermediaries, including bank accounts in the name of the former governor’s daughter and friend.
The conspiracy and FCPA charges each carry a maximum penalty of five years in prison, and each of the money laundering counts carries a maximum penalty of up to 20 years in prison. The false subscription of a U.S. income tax return carries a maximum penalty of three years in prison and a fine of not more than $100,000. Sentencing has been set for Dec. 17, 2009, before the Honorable George Wu in the Central District of California.
This case was prosecuted by Senior Trial Attorney Jonathan E. Lopez of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Bruce Searby of the Central District of California, with significant assistance from Fraud Section contract Attorney Allan J. Medina. The case was investigated by the FBI’s Los Angeles Field Office and the IRS-Criminal Investigation Division, Los Angeles Field Office. Substantial assistance was also provided by the Criminal Division’s Office of International Affairs, in particular Christopher P. Sonderby, the Department of Justice Attaché and Intellectual Property Law Enforcement Coordinator – Asia; FBI Legal Attaché Daniel Kelly in Bangkok; and Fraud Section Paralegal Oneika Duncan.
11 September 2009
Three Individuals Indicted for Roles in Conspiracy Schemes Involving Two U.S. Environmental Protection Agency Superfund Sites in New JerseyRead the Press Release
WASHINGTON — A Newark grand jury indicted three individuals for their participation in fraud and kickback conspiracies related to contracts at a U.S. Environmental Protection Agency (EPA)-designated Superfund site, Federal Creosote, located in Manville, N.J., the Department of Justice announced today. One individual is also charged with participating in a bid-rigging conspiracy and additional fraud and kickback conspiracies at Federal Creosote and another EPA-designated Superfund site, Diamond Alkali, located in Newark, N.J.
The 12-count indictment, originally filed under seal on Aug. 31, 2009, was unsealed today in the U.S. District Court of New Jersey. The indictment charges Gordon D. McDonald, a former project manager for a prime contractor, with engaging in separate kickback and fraud conspiracies with sub-contractors John A. Bennett and James E. Haas Jr. at Federal Creosote. McDonald was arrested on Sept. 8, 2009, in Berlin, N.J. Bennett is a former chief executive officer of sub-contractor Bennett Environmental Inc. (BEI), a Canadian-based company that treats and disposes of contaminated soil. Haas, who was arrested in Vincentown, N.J., on Sept. 10, 2009, is a former representative of a subcontractor that provides common backfill, a type of soil material used to refill an excavation. McDonald, Bennett and Haas are also charged with committing fraud against the United States.
In addition, McDonald is charged with engaging in a bid-rigging conspiracy and separate kickback and fraud conspiracies with two other sub-contractors at Federal Creosote and Diamond Alkali, the Department said. He is also charged with one count of international money laundering, two tax violations and obstruction of justice. The various charged conspiracies took place at different time periods from approximately December 2000 until approximately April 2007.
As a part of the charged conspiracies, McDonald and other co-conspirators at his company, accepted kickbacks from Bennett, Haas and another sub-contractor, the owner of J.M.J. Environmental Inc. (JMJ), in exchange for the award of sub-contracts at Federal Creosote. JMJ is a wastewater treatment and chemical supply company. Bennett, Haas and the owner of JMJ fraudulently inflated their bid prices for sub-contracts to include the amount of the kickbacks paid to McDonald and his co-conspirators. According to the indictment, McDonald also provided Bennett and his co-conspirators at BEI with the bid prices of their competitors, which allowed them to submit the highest possible bid prices and still be awarded the sub-contracts.
The indictment charges that McDonald also accepted kickbacks in exchange for the award of sub-contracts at the Diamond Alkali site from the owner of JMJ and the co-owner of National Industrial Supply LLC (NIS). NIS is a supplier of industrial pipes, valves and fittings located in Middlesex, N.J.
According to the indictment, McDonald also participated in a conspiracy with the owner of JMJ and other co-conspirators to rig bids and allocate sub-contracts for wastewater treatment supplies and services at Federal Creosote.
The clean-up at the Federal Creosote site is partly funded by the EPA. Under an interagency agreement between the EPA and the U.S. Army Corps of Engineers, prime contractors oversaw the removal, treatment and disposal of contaminated soil, as well as other operations at the Federal Creosote site.
The charges announced today resulted from an ongoing investigation that is being conducted by the Antitrust Division’s New York Field Office, the EPA Office of Inspector General and the Internal Revenue Service Criminal Investigation. Seven individuals and three companies have already pleaded guilty as part of this investigation.
The fraud conspiracies that McDonald, Bennett and Haas are charged with carry a maximum penalty of five years in prison, three years of supervised release and a $250,000 fine. The fraud charges that McDonald, Bennett and Haas are charged with carry a maximum penalty of 10 years in prison, three years of supervised release and a $1 million fine. The kickback charge that McDonald is charged with carries a maximum penalty of 10 years in prison, three years supervised release and a $250,000 fine. The bid-rigging charge that McDonald is charged with carries a maximum penalty of three years in prison and a $350,000 fine for a violation occurring before June 22, 2004, and a maximum penalty of 10 years in prison and a $1 million fine for a violation occurring after June 22, 2004. The obstruction of justice charge that McDonald is charged with carries a maximum penalty of 20 years in prison, five years supervised release and a $250,000 fine. The maximum fines for each of these offenses may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
The international money laundering conspiracy that McDonald is charged with carries a maximum penalty of 20 years in prison, five years of supervised release and a $500,000 fine, or twice the value of the funds involved in the transportation, transmission or transfer, whichever is greater. The tax violations that McDonald is charged with carry a maximum penalty of three years in prison, one year of supervised release and a $100,000 fine per count.
Today’s charges reflect the Department’s commitment to protecting U.S. taxpayers from procurement fraud through its creation of the National Procurement Fraud Task Force. The National Procurement Fraud Initiative, announced in October 2006, is designed to promote the early detection, prosecution and prevention of procurement fraud associated with the increase in contracting activity for national security and other government programs.
Anyone with information concerning bid rigging, kickbacks, tax offenses or fraud relating to sub-contracts awarded at the Federal Creosote or Diamond Alkali sites should contact the Antitrust Division’s New York Field Office at 212-264-9308.
International Hacker Pleads Guilty for Massive Hacks of U.S. Retail NetworksRead the Press Release
WASHINGTON – An international computer hacker pleaded guilty today to multiple charges relating to hacking activity and credit card fraud, announced Assistant Attorney General of the Criminal Division Lanny A. Breuer, Acting U.S. Attorney for the District of Massachusetts Michael Loucks, U.S. Attorney for the Eastern District of New York Benton J. Campbell and Director of the U.S. Secret Service Mark Sullivan. More than 40 million credit and debit card numbers were stolen from major U.S. retailers as a result of the hacking activity.
Albert Gonzalez, 28, of Miami, pleaded guilty today to 19 counts of conspiracy, computer fraud, wire fraud, access device fraud and aggravated identity theft relating to hacks into numerous major U.S. retailers including TJX Companies, BJ’s Wholesale Club, OfficeMax, Boston Market, Barnes & Noble and Sports Authority. Gonzalez was indicted in August 2008 in the District of Massachusetts on charges related to these hacks.
Gonzalez also pleaded guilty to one count of conspiracy to commit wire fraud relating to hacks into the Dave & Buster’s restaurant chain, which were the subject of a May 2008 indictment in the Eastern District of New York. The pleas in both cases were entered before U.S. District Court Judge Patti B. Saris in federal court in Boston.
"Consumers must be able to trust that the credit and debit cards they use everyday in thousands of stores around the world are safe from unlawful access," said Assistant Attorney General Lanny A. Breuer of the Criminal Division. "Working together with U.S. Attorneys’ Offices around the country and with the invaluable support of law enforcement agencies, we will continue our efforts to identify and prosecute hacking and credit card fraud."
"The investigation and prosecution of identity theft is a top priority of the Department," said Acting U.S. Attorney for the District of Massachusetts Michael Loucks. "In the past 10 years there has been a dramatic growth in the transfer and storage of credit and debit card data on computer networks. It is thus compellingly important that we work hard to investigate and prosecute the theft of personal identity data that citizens entrust to computer networks every day."
"Computer hacking and identity theft pose serious risks to our commercial, personal and financial security," stated U.S. Attorney for the Eastern District of New York Benton J. Campbell. "Hackers, including those who commit their crimes from abroad, will find no refuge from the reach of U.S. criminal justice – they will be found, prosecuted and convicted."
"Technology has forever changed the way we do business, virtually erasing geographic boundaries," said U.S. Secret Service Director Mark Sullivan. "However, this case demonstrates that even in the cyber world, there is no such thing as anonymity. The Secret Service, in conjunction with its many law enforcement partners across the United States and around the world, continues to successfully combat these crimes by adapting our investigative methodologies. We realize our success in this investigation is due in part to the cooperation of these partners in more than a dozen international law enforcement agencies."
According to the indictments to which Gonzalez pleaded guilty, he and his co-conspirators broke into retail credit card payment systems through a series of sophisticated techniques, including "wardriving" and installation of sniffer programs to capture credit and debit card numbers used at these retail stores. Wardriving involves driving around in a car with a laptop computer looking for accessible wireless computer networks of retailers. Using these techniques, Gonzalez and his co-conspirators were able to steal more than 40 million credit and debit card numbers from retailers. Also according to the indictments, Gonzalez and his co-conspirators sold the numbers to others for their fraudulent use and engaged in ATM fraud by encoding the data on the magnetic stripes of blank cards and withdrawing tens of thousands of dollars at a time from ATMs. According to the indictments, Gonzalez and his co-conspirators concealed and laundered their fraud proceeds by using anonymous Internet-based currencies both within the United States and abroad, and by channeling funds through bank accounts in Eastern Europe.
Based on the terms of the Boston plea agreement, Gonzalez faces a minimum of 15 years and a maximum of 25 years in prison. Based on the New York plea agreement, Gonzalez faces up to 20 years in prison, which the parties have agreed should run concurrently. He also faces a fine of up to twice the pecuniary gain, twice the victims’ pecuniary loss or $250,000, whichever is greatest, per count for the Boston case and a maximum fine of $250,000 for the New York case. Gonzalez also agreed to an order of restitution for the loss suffered by his victims, and forfeiture of more than $2.7 million as well as multiple items of real estate and personal property, including a condo in Miami, a 2006 BMW 330i, a Tiffany diamond ring and Rolex watches. Included in the forfeited currency is more than $1 million in cash, which Gonzalez had buried in a container in his backyard. Sentencing is scheduled for Dec. 8, 2009.
Gonzalez remains under indictment for charges brought in August 2009 by the U.S. Attorney’s Office for the District of New Jersey of conspiring to hack into computer networks supporting major U.S. retail and financial organizations and steal credit and debit card numbers from those entities. Among the corporate victims named in that indictment are Heartland Payment Systems, a New Jersey-based card payment processor; 7-Eleven Inc., a Texas-based nationwide convenience store chain; and Hannaford Brothers Co. Inc., a Maine-based supermarket chain. Charges in that case remain pending. An indictment is merely an allegation and defendants are presumed innocent until and unless proven guilty in court. While Gonzalez has pleaded guilty to the Boston and New York charges, he has not pleaded guilty to charges pending in New Jersey and remains presumed innocent of those charges.
The Boston case is being prosecuted by Assistant U.S. Attorneys Stephen Heymann and Donald Cabell of the District of Massachusetts. The New York case is being prosecuted by Assistant U.S. Attorney William Campos of the Eastern District of New York, and Senior Counsel Kimberly Kiefer Peretti and Trial Attorney Evan Williams of the Criminal Division’s Computer Crime and Intellectual Property Section. All of these cases are being investigated by the U.S. Secret Service.
10 September 2009
Phoenix Attorney and Accountant Charged<br /> in Offshore Tax Shelter SchemeRead the Press Release
WASHINGTON – Steven W. Allen, an attorney who operated a legal practice in Mesa, Ariz., and Allen P. Goodmansen, a certified public accountant who operated an accounting practice in Mesa, were indicted Wednesday for conspiracy to defraud the Internal Revenue Service (IRS) and for aiding in the filing of false income tax returns for clients of an offshore tax shelter scheme, the Justice Department and IRS announced. Goodmansen was also charged with knowingly filing a false personal income tax return for tax year 2002.
According to the indictment, from at least 1997 through 2004, Allen, Goodmansen and others participated in a scheme to help clients unlawfully evade the payment of income taxes. Allen set up a series of three offshore trusts for at least eight clients, including Goodmansen and an IRS undercover agent. These trusts were designed to help hide the clients’ income. Allen helped clients hide their ownership of businesses and assets, and income on which they should have paid taxes, by directing the clients to title their businesses or assets in the name of their foreign trust. Allen charged clients between $10,000 and $30,000, to set up the trust package.
The indictment further alleges that, at Allen’s direction, Goodmansen and an unindicted co-conspirator prepared false trust tax returns that fraudulently reported the clients’ income as though the income belonged to the trusts. Goodmansen also prepared personal tax returns for some of the individual clients that omitted the income that had been concealed through the foreign trusts. To conceal the scheme’s origination in Arizona, Allen mailed the false trust tax returns to the IRS from outside the United States. Goodmansen personally used the scheme in 2002 to hide income he earned that should have been reported on his personal income tax return.
Allen was charged with conspiracy and seven counts of aiding or assisting in the filing of a false tax return. If convicted, he faces a maximum sentence of 26 years in prison. Goodmansen was charged with conspiracy, filing a false tax return, and three counts of aiding or assisting in the filing of a false tax return. If convicted, he faces a maximum sentence of 17 years in prison.
An indictment is merely a formal charge by the grand jury. Each defendant is presumed innocent unless and until proven guilty in U.S. District Court.
This case is being prosecuted by Tax Division trial attorneys Monica B. Edelstein and Michael J. Romano and is being investigated by the IRS, Criminal Investigation Division, Phoenix. Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at http://www.usdoj.gov/tax.
Pennsylvania Businessman Pleads Guilty and Is Sentenced<br /> in Puerto Rico Corruption CaseRead the Press Release
Dr. Candido Negron Mella pleaded guilty and was sentenced today for his participation in a corruption scheme involving the 2000 Resident Commissioner campaign of a former governor of Puerto Rico. Negron Mella, 42, pleaded guilty to conspiracy to violate the Federal Election Campaign Act. He was sentenced to five months in prison and seven months home detention, and was ordered to pay a $14,000 fine by U.S. District Court Judge Robert F. Kelly in U.S. District Court for the Eastern District of Pennsylvania, where the case was transferred from the District of Puerto Rico for plea and sentencing. Former Puerto Rico Governor Aníbal Acevedo Vilá and Luisa Inclán Bird, a legal advisor for the San Juan Resident Commissioner office when Acevedo Vilá served as Resident Commissioner, were acquitted on March 20, 2009, of all criminal charges related to the scheme.
According to court documents, Negron Mella was a partner in a company that had a professional relationship with a large Medicaid dental provider in the United States that was interested in obtaining a direct dental agreement with the Commonwealth of Puerto Rico. In order to assist that provider in obtaining a contract in Puerto Rico, Negron Mella, along with a co-conspirator, agreed to raise contributions for the campaign of the then-Resident Commissioner to the U.S. House of Representatives for the Commonwealth of Puerto Rico. Negron Mella admitted he hoped that contributing to the political campaigns would enable him to obtain access to the government of Puerto Rico to promote his business interests.
According to court documents, Negron Mella learned in 2001 that the Resident Commissioner campaign committee was carrying a $150,000 campaign debt. Negron Mella admitted that he was aware he would not be able to retire the entire campaign debt through legal means due to federal laws limiting individual contributions. Therefore, Negron Mella admitted that he and a co-conspirator agreed to use conduit contributions, and requested that their employees, friend and relatives make contributions to the campaign in exchange for reimbursing those employees, friends and relatives for the full amount of their contributions.
Negron Mella and a co-conspirator contributed approximately $39,000 in conduit contributions to the Resident Commissioner campaign committee in 2003, according to court documents. Negron Mella admitted he directly solicited at least $14,000 of the $39,000 in conduit contributions. Negron Mella also admitted that at the time he and his co-conspirator made the conduit contributions to the campaign committee, he knew that the legal limit for federal campaigns was $2,000. In addition, Negron Mella admitted that when he and his co-conspirator made the conduit contributions to the campaign committee, Negron Mella had already contributed the maximum amount allowed by law to the campaign committee, and that he made these conduit contributions in excess of that legal limit knowing he could no longer contribute to the campaign.
Including Negron Mella’s guilty plea, 10 defendants have pleaded guilty in the corruption investigation in the District of Puerto Rico.
This case was prosecuted by First Assistant U.S. Attorney María A. Domínguez and Assistant U.S. Attorneys Ernesto López, Timothy Henwood and Jacqueline Novas of the District of Puerto Rico, and Trial Attorneys Peter M. Koski and Ethan H. Levisohn of the Criminal Division’s Public Integrity Section, which is headed by Chief William M. Welch, II. The case was investigated by the FBI and IRS, with assistance and cooperation from the Office of the Comptroller of Puerto Rico.
Four Men Sentenced to a Combined 293 Months in Prison for Election Night AssaultsRead the Press Release
WASHINGTON – The Justice Department announced that four men who committed three hate crime assaults in response to President Barack Obama’s election victory were sentenced today by U.S. District Judge Carol B. Amon in federal court in Brooklyn, N.Y. Ralph Nicoletti, 19, was sentenced to 108 months in prison; Bryan Garaventa, 18, was sentenced to 60 months; Michael Contreras, 19, was sentenced to 55 months; and Brian Carranza, 21, was sentenced to 70 months.
On Nov. 4, 2008, following the announcement of President Obama’s victory in the presidential election, the defendants set out to assault African-Americans in Staten Island, N.Y, because they believed the victims had voted for the President. Nicoletti drove the group to the Park Hill section of Staten Island, a predominantly African-American neighborhood, where they encountered an African-American teenager and assaulted him. Nicoletti struck the teenager with a metal pipe and Garaventa hit him with a collapsible police baton. Nicoletti then drove to the Port Richmond section of Staten Island, where the defendants assaulted an unidentified African- American man, knocking him to the ground.
The third assault was against an individual whom the defendants mistakenly believed was African-American. The plan was for Contreras to hit the victim with the police baton as the defendants drove by him. Instead, Nicoletti deliberately drove his car into the victim’s body. The victim was thrown onto the hood of the car and hit the front windshield, smashing it. The victim was seriously injured and remained in a coma for several weeks after the attack.
"It is appalling that such hateful acts of racially motivated violence continue to persist in our nation. These sentences should remind those inspired to violence by hate that they will be brought to justice," said Acting Assistant Attorney General Loretta King for the Civil Rights Division. "We applaud the prosecutors and law enforcement agencies that participated in this investigation and prosecution. The Civil Rights Division will remain vigilant in our efforts to combat hate crimes that tear at the very fabric of our great nation and seek to undermine the progress we’ve made in advancing civil rights for all."
"The significant sentences imposed by the court reflect the seriousness of the defendants’ shocking and deplorable conduct," stated Benton J. Campbell, U.S. Attorney for the Eastern District of New York. "These sentences send a clear message that those who engage in racially motivated violence that seeks to deprive individuals of their fundamental right to vote will be punished. We are grateful for our partnership with the Department of Justice Civil Rights Division, the FBI and the New York City Police Department in this matter, and I also wish to thank the Richmond County District Attorney’s Office for its assistance."
"By their own admission these defendants, motivated by racial hatred and a desire to punish those they believed had voted for Barack Obama, participated in violent attacks that nearly killed one of their victims,"said FBI Assistant Director-in-Charge Joseph M. Demarest Jr. of the New York Field Office. "Free exercise of the right to vote is a cornerstone of our democracy, and a fundamental civil right that the FBI will always safeguard vigorously."
The government’s case is being prosecuted by Civil Rights Division Special Litigation Counsel Kristy L. Parker and Assistant U.S. Attorneys Pamela K. Chen and Margo K. Brodie for the Eastern District of New York.
Former Global Director of Security for Stanford Financial Group Indicted for Obstructing a Federal InvestigationRead the Press Release
Thomas Raffanello, a former global director of security at the Fort Lauderdale, Fla., office of Stanford Financial Group (SFG), has been charged today in a three-count superseding indictment with conspiracy to obstruct a U.S. Securities and Exchange Commission (SEC) proceeding and to destroy documents in a federal investigation; obstruction of a proceeding before the SEC; and destruction of records in a federal investigation.
The initial indictment in the case was unsealed by the U.S. District Court for the Southern District of Florida on June 19, 2009, and charged Bruce Perraud, 42, of Weston, Fla., a former global security specialist at the Fort Lauderdale SFG office, with one count of destruction of records in a federal investigation. In addition to charging Raffanello, 61, of Coral Gables, Fla., today’s superseding indictment charges Perraud with an additional count of conspiracy as well as one count of obstruction of a proceeding before the SEC.
Raffanello and Perraud are scheduled to make their initial appearances at the U.S. District Court in Fort Lauderdale at 11 a.m. ET on Friday, Sept. 11, 2009.
According to court documents, SFG, headquartered in Houston, was the parent company of numerous affiliated financial services entities, including the Stanford International Bank Ltd. (SIBL). According to the superseding indictment, SIBL, an offshore SFG bank affiliate located in St. John’s, Antigua, allegedly lured U.S. investors to buy into its certificates of deposit (CDs) by touting high investment returns not available through domestic banks.
SIBL is alleged to have misrepresented that it held $8 billion in client funds that had been invested primarily in its CDs. The SEC filed a complaint in the U.S. District Court for the Northern District of Texas against SIBL and its affiliated entities on Feb. 16, 2009, in which it alleged that the SIBL CD program was the mechanism by which the principals of SIBL orchestrated a "massive, ongoing fraud." Also on Feb. 16, 2009, a receiver was appointed to assume exclusive control of all SFG-related entities in order to protect SIBL assets from potential waste and depletion by SIBL’s principals.
The U.S. District Court for the Northern District of Texas additionally issued an order instructing that all SFG and SIBL employees preserve all company documents and records, protecting them from destruction.
The indictment alleges that the receiver sent an e-mail on Feb. 17, 2009, to all SFG employees describing the contents of the court order mandating document and record preservation. It is alleged that the e-mail further instructed SFG employees that they had been ordered to preserve "any and all documents, notes and records," and that they may not "hide, destroy or alter any document or electronic record relating to the company."
According to the allegations in the superseding indictment, Perraud placed a telephone call to Raffanello on Feb. 17, 2009, in which he discussed the court order mandating the preservation of documents. Six days later, on Feb. 23, 2009, the indictment alleges Raffanello directed that the documents housed at SFG’s Fort Lauderdale office be shredded. Perraud allegedly contacted a commercial shredding company on that same day and requested that it destroy a large quantity of SFG documents at the Fort Lauderdale office, in violation of the Feb. 16 court order.
The indictment alleges that a representative of the commercial shredding company arrived at SFG’s Fort Lauderdale offices on Feb. 25, 2009, where he was met by Perraud. Perraud then allegedly supervised as a 95-gallon bin was packed with documents and was hauled to the shredder’s vehicle, where its contents were shredded. The indictment also alleges that many more documents and records were brought to the shredding truck for destruction.
In a related case, SFG corporate officers Robert Allen Stanford, Laura Pendergest-Holt, Gilberto Lopez and Mark Kuhrt, as well as Leroy King, a former Antiguan bank regulator, were each charged in an indictment unsealed on June 19, 2009, in the Southern District of Texas with conspiracy to commit mail, wire and securities fraud; wire fraud; mail fraud; and conspiracy to commit money laundering stemming from an alleged massive investment fraud scheme involving CDs held by SIBL. Stanford, Pendergest-Holt and King were also charged with conspiracy to obstruct an SEC investigation and obstruction of an SEC investigation.
In another related case, James Davis, SFG’s former chief financial officer, pleaded guilty on Aug. 27, 2009, in the Southern District of Texas to conspiracy to commit mail, wire and securities fraud; mail fraud; and conspiracy to obstruct a proceeding of the SEC. Davis was initially charged in a criminal information filed with the court on June 18, 2009.
The case is being investigated by the FBI’s Houston Field Office and the U.S. Postal Inspection Service. It is being prosecuted by Fraud Section Senior Litigation Counsel Jack Patrick and Trial Attorney Matthew Klecka of the Criminal Division’s Fraud Section.
Indictment
9 September 2009
U.S. Citizen Arraigned on Charges of International Sex TourismRead the Press Release
Richard David Mitchell was arraigned yesterday on sex tourism charges in the U.S. District Court for the District of Hawaii, after being deported from Cambodia.
Mitchell, 61, a U.S. citizen and resident of Hawaii, was charged in a criminal complaint filed on Aug. 26, 2009, in U.S. District Court for the District of Hawaii with engaging in illicit sexual conduct in a foreign place. According to the affidavit filed in support of the complaint, witnesses reported seeing Mitchell engaging in sex acts with a female child on the curbside of a street in Phnom Penh, Cambodia, in August 2008. Mitchell was initially arrested in August 2008 by the Cambodian National Police on local charges related to the same incident.
Mitchell returned to Hawaii on Sept. 5, 2009, following his removal from Cambodia. Upon his arrival at Honolulu International Airport, he was taken into custody by U.S. Immigration and Customs Enforcement (ICE) agents. At yesterday’s hearing, U.S. Magistrate Judge Barry Kurren ordered Mitchell held without bond pending a detention hearing.
Mitchell is the fourth American arrested by ICE in the past two weeks for sexually exploiting minors in Cambodia. On Aug. 31, 2009, three Americans were taken into custody by ICE at Los Angeles International Airport following their removal from Cambodia on sex tourism charges. The four cases are the result of unprecedented cooperation among U.S. authorities, the Cambodian government and non-governmental organizations to target American sex tourists in Cambodia.
Mitchell faces up to 30 years in prison and a fine of up to $250,000 if convicted of the charges.
Charges in a criminal complaint are merely accusations, and a defendant is presumed innocent unless and until proven guilty.
The case is being prosecuted by Assistant U.S. Attorney Amy Olson of the U.S. Attorney’s Office for the District of Hawaii and Trial Attorney Anitha Ibrahim of the Criminal Division’s Child Exploitation and Obscenity Section. The case was investigated by ICE.
Philadelphia Man Sentenced to Life in Prison for Advertising, Transporting, Receiving <br /> and Possessing Child PornographyRead the Press Release
Robert P. Merz was sentenced to life in prison today for advertising, transporting, receiving and possessing child pornography.
Merz, 45, of Philadelphia, was charged in a third superseding indictment on Oct. 23, 2008. He was convicted of all charges following a three-day trial before U.S. District Judge Juan R. Sanchez in May 2009. Merz had two prior Pennsylvania state convictions for the molestation of two young girls on separate occasions, making him eligible for the life sentence.
Evidence presented at trial established that Merz’s home was searched in February 2007, and computers, DVDs and CDs were seized. Trial evidence showed that upon review of the seized materials, investigators discovered hundreds of thousands of images and videos depicting the sexual abuse of minors as young as toddlers. Some of the images depicted violent sexual acts being committed against the victims.
In addition, evidence introduced at trial revealed that Merz used numerous online technologies to receive and transport the images. Investigators testified at trial that Merz created and administered an online group that was dedicated to trading images and videos depicting the sexual abuse of minors. The private online group had members from around the world who were handpicked by Merz. The investigators testified that the group could only be accessed using a password and was established not only to trade images and videos of minors, but also so members could talk about their common sexual interest in children.
This online group was identified through Operation "Joint Hammer," the U.S. component of "Operation Koala," an ongoing operation involving 28 countries targeting transnational rings of child pornographers that was initiated by Europol and Eurojust.
The case was investigated by the FBI and the U.S. Postal Inspection Service. It is being prosecuted by Assistant U.S. Attorneys Roberta Benjamin and Kevin Brenner of the U.S. Attorney’s Office for the Eastern District of Pennsylvania and Trial Attorney Steve Grocki of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS). Computer forensics in the case were performed by CEOS’ High Technology Investigative Unit.
Husband and Wife Co-owners of Subcontracting Company Plead Guilty to Contract Fraud Related to Afghanistan RebuildingRead the Press Release
Delmar Dwayne Spier, the chief executive officer and managing director of United States Protection and Investigations, LLC (USPI), today pleaded guilty in U.S. District Court for the District of Columbia to conspiracy, major fraud and wire fraud arising from an alleged scheme to defraud the United States; and his wife, Barbara Edens Spier, the president and owner of USPI, pleaded guilty to conspiracy to defraud the United States in connection with U.S.-sponsored rebuilding efforts in Afghanistan.
According to court documents, USPI, a Houston-based security firm, was a subcontractor for the U.S. Agency for International Development (USAID) based on a USAID contract with the Louis Berger Group Inc. (LBGI) as part of the Rehabilitation of Economic Facilities Program (REFS Program). The REFS Program was developed by USAID to provide a broad range of assistance to the people of Afghanistan. Under the USAID contract with LBGI, LBGI constructed a variety of infrastructure improvements, including electrical facilities, health facilities, schools and irrigation systems. USPI provided security at many LBGI construction sites.
According to court documents, the USPI subcontract was a cost-reimbursement contract, which required LBGI and ultimately USAID to reimburse USPI for all incurred expenses and pay USPI a fee equivalent to a percentage of its incurred expenses.
Delmar Dwayne Spier, 73, of Houston, admitted in his plea before U.S. District Judge Rosemary M. Collyer today that from June 2003 through July 2007, he defrauded the United States by obtaining reimbursement for inflated expenses purportedly incurred by USPI for rental vehicles, fuel and security personnel. Delmar Dwayne Spier and Barbara Edens Spier, 60, also of Houston, admitted before Judge Collyer today that they conspired with USPI employees to fabricate invoices from fictitious companies to obtain reimbursement from LBGI and ultimately from USAID to cover USPI’s inflated expenses.
The Spiers’ plea agreements require them to forfeit $3 million in proceeds that can be traced to the fraud. The conspiracy charge carries a maximum sentence of five years in prison and a $250,000 fine. The charge of wire fraud carries a maximum sentence of 20 years in prison and a $250,000 fine. The charge of major fraud carries a maximum sentence of 10 years and a $1 million fine. Sentencing has not yet been scheduled for either defendant.
Delmar Dwayne Spier and Barbara Edens Spier were initially indicted, along with former USPI employees William Felix Dupre and Behzad Mehr, on Sept. 30, 2008. Dupre is scheduled to go to trial on Dec. 10, 2009.
The investigation of this case was conducted by the USAID Office of the Inspector General, the FBI, 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.
This case is being prosecuted by Trial Attorney Jennifer R. Taylor of the Criminal Division's Fraud Section and Assistant U.S. Attorney David J. Gorman of the U.S. Attorney’s Office for the District of Columbia.
Four Members of Alleged Internet Music Piracy Group Charged <br /> with Copyright Infringement ConspiracyRead the Press Release
Four individuals were indicted today by a federal grand jury in the Eastern District of Virginia with conspiracy to commit copyright infringement for allegedly obtaining and illegally releasing copyrighted music.
Adil R. Cassim, 29, of Granada Hills, Calif.; Bennie Glover, 35, of Shelby, N.C.; Matthew D. Chow, 28, of Missouri City, Texas; and Edward L. Mohan, II, 46, of Baltimore, were charged in the one-count indictment with being high-level members of the music piracy group known as "Rabid Neurosis" or "RNS," which operated from at least 1999 to 2007. According to the indictment, the defendants, led by Cassim for a period of time, allegedly conspired to illegally upload to RNS thousands of copyright protected music files, which were often subsequently reproduced and distributed hundreds of thousands of times.
According to the indictment, RNS was a "first-provider" or "release group" for pirated music and other content to the Internet. Once a group obtains and prepares infringing digital copies of copyrighted works, the copies can then be distributed in a matter of hours to secure computer servers throughout the world. According to the indictment, RNS members were granted access to massive libraries of pirated music, video games, software and movies by gaining a reputation for providing previously unavailable pirated materials. The indictment alleges that t he supply of pre-release music was often provided by music industry insiders, such as employees of compact disc (CD) manufacturing plants, radio stations and retailers, who typically receive advance copies of music prior to its commercial release.
The indictment also alleges that members of RNS, including Glover, illegally procured some of the music the group illegally released before its commercial release date from a CD manufacturing plant in North Carolina. Other members of RNS, including Mohan and Chow, allegedly purchased CDs from retail stores shortly after their commercial release and posted them to the Internet before other piracy groups were able to do so.
If convicted, defendants face a maximum sentence of five years in prison, a $250,000 fine and three years of supervised release, as well as possible orders of restitution.
In addition to the four defendants charged in the indictment, two additional individuals allegedly involved with the group were each charged by criminal information with one count of conspiracy to commit copyright infringement: Patrick L. Saunders, 30, of Brooklyn, N.Y., was charged on Aug. 14, 2009; and James A. Dockery, 39, of Mooresboro, N.C., was charged Sept. 8, 2009. Saunders pleaded guilty on Sept. 8, 2009, before U.S. District Court Judge Gerald B. Lee in the Eastern District of Virginia and is scheduled to be sentenced on Dec. 4, 2009, at 9:00 a.m.
The case is part of a multi-year federal investigation of organized piracy groups responsible for the illegal distribution of significant amounts of copyrighted movies, software, games and music through the Internet. The investigation of music piracy groups was led by agents from the FBI’s Washington Field Office-Northern Virginia Resident Agency.
The case is being prosecuted by Assistant U.S. Attorney Jay V. Prabhu of the Eastern District of Virginia and Trial Attorney Tyler G. Newby of the Criminal Division’s Computer Crime and Intellectual Property Section.
An indictment is merely a formal charge by the grand jury. Each defendant is presumed innocent of such charges unless and until proven guilty in federal court.
Indictment
8 September 2009
Maryland Man Sentenced on Federal Sex Trafficking ChargeRead the Press Release
WASHINGTON – The Justice Department announced today defendant Paul Raymond Green was sentenced late last week to 52 months in prison and three years of supervised release for his role in a scheme to prostitute minor females.
Green, 23, previously pleaded guilty to conspiracy to commit sex trafficking. Green admitted that he, through his co-conspirator, arranged on two separate occasions in 2007 to provide minor victims to an acquaintance who paid to have sex with the victims. On both occasions, cigarettes dipped in phencyclidine liquid known as PCP, called "dippers" or "wets," were available in the hotel room where the girls were brought to have sex. Green also sold cocaine to that same individual.
"The defendant in this case took an active role in prostituting young girls, violating their civil rights in order to facilitate his drug sales," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "This type of crime is beyond despicable, and the Justice Department remains committed to prosecuting such cases."
"Anyone who pays for or profits from sex with a child should be on notice that Maryland's human trafficking task force is committed to a policy of zero tolerance for child prostitution," said U.S. Attorney Rod J. Rosenstein for the District of Maryland.
Acting Assistant Attorney General King and U.S. Attorney Rosenstein commend the FBI and the Montgomery County Police Department for their work in this cooperative investigation and prosecution. Assistant U.S. Attorney Solette Magnelli and Civil Rights Division Human Trafficking Prosecution Unit attorney Jim Felte are prosecuting this case for the Government.
This case was investigated by the Maryland Human Trafficking Task Force, created in 2007 to discover and rescue victims while identifying and prosecuting offenders. For more information about the Task Force, please visit http://www.usdoj.gov/usao/md/Human-Trafficking/.
Justice Department Lawsuit Charges Atlanta Condominiumwith Discrimination Against Families with ChildrenRead the Press Release
WASHINGTON – The Justice Department today filed a lawsuit against an Atlanta condominium association, as well as the owner of a unit and the real estate agent who sold it, for violating the Fair Housing Act by discriminating against families with children.
The lawsuit, filed in U.S. District Court for the Northern District of Georgia, charges that the Georgian Manor Condominium Association maintained policies discouraging families with children from living in the Georgian Manor complex, located at 3648 Peachtree Road in Atlanta. It also charges that the owner of a unit in the complex refused to sell to families with children and that the real estate agents hired to sell the unit, Jennifer Sherrouse and Harry Norman Realtors, publicized the restriction.
"Housing discrimination against families with children has been illegal for more than 20 years, but remains a persistent problem across the country" said Loretta King, Acting Assistant Attorney General for the Justice Department’s Civil Rights Division. "We will continue to prosecute discrimination against families with children."
This lawsuit arose as a result of a complaint filed with the U.S. Department of Housing and Urban Development (HUD) by a fair housing group. The group encountered language in a real-estate listing for Georgian Manor stating "No pets or children." After an investigation of the complaint, HUD issued a charge of discrimination and the defendants elected to have the case heard in federal court.
"Real estate advertising stating 'No children' is prohibited by federal protections for families with children. Together, HUD and the Justice Department will vigorously enforce the law," stated John Trasviña, HUD Assistant Secretary for Fair Housing & Equal Opportunity. "This lawsuit serves to educate the real estate professionals and landlords about the rights and responsibilities under the federal Fair Housing Act."
The lawsuit seeks a court order prohibiting future discrimination by the defendants, monetary damages for the complainants and a civil penalty. It also seeks monetary damages for other persons harmed by the defendants’ actions.
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.usdoj.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.
Former Tennessee Deputy Sheriff Sentenced<br /> for Using Excessive ForceRead the Press Release
WASHINGTON – Adam S. Pretti, a former deputy with the Shelby County, Tenn., Sheriff’s Office, was sentenced today in federal court in Memphis to 18 months in prison and two years of supervised release for using excessive force during an encounter with a citizen. Pretti was also ordered to pay a $4,000 fine and a $100 special assessment.
Pretti pleaded guilty on April 9, 2009, to unnecessarily striking in the head a man he encountered outside a residence in Cordova, Tenn., while conducting an investigation in March or April 2006. Pretti acknowledged that he abused his authority as a law enforcement officer and agreed that his conduct violated federal law and the constitutional rights of the man he struck.
"The Civil Rights Division will continue to investigate and prosecute rogue police officers who abuse the rights of those they are sworn to protect and serve," said Acting Assistant Attorney General Loretta King for the Civil Rights Division.
"The sentence should serve as a reminder and message to those law enforcement officers who violate the protections of the Fourth Amendment that their actions are unacceptable, they will be prosecuted and they will serve time," added Lawrence J. Laurenzi, U.S. Attorney for the Western District of Tennessee. "The U.S. Attorney’s Office continues to make such cases a priority."
The case was investigated by the Tarnished Blue Task Force, a multiagency task force led by the FBI and staffed with investigators from its Memphis Field Office, the Shelby County Sheriff’s Office and the Memphis Police Department. The case was prosecuted by Assistant U.S. Attorney Joseph Murphy for the Western District of Tennessee and Trial Attorney Erin Aslan of the Justice Department’s Civil Rights Division.
Florida Man Pleads Guilty to Receiving Child PornographyRead the Press Release
Jeffrey Robert Libman, 42, of Fort Lauderdale, Fla., pleaded guilty in Miami today to one count of receiving child pornography.
Libman was indicted by a grand jury in the Southern District of Florida on April 28, 2009, for receiving, possessing and distributing child pornography. In his plea agreement, Libman admitted he received images that depict prepubescent children and children engaged in sadistic or masochistic conduct. At his sentencing, which is scheduled for Nov. 13, 2009, Libman faces a maximum term of 20 years in prison.
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, USPIS and FBI agents seized large volumes of computer media during the execution of a search warrant at Libman’s residence in Fort Lauderdale.
Libman, Marc Evan Greenberg and Webe Web Corporation were 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.
The case is being prosecuted by Assistant Deputy Chief Alexandra R. Gelber and Trial Attorney Elizabeth M. Yusi of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) and Assistant U.S. Attorney A. Marie Villafaña of the Southern District of Florida. The case is being investigated by USPIS, the FBI and CEOS’ High Tech Investigative Unit.
Federal Court Shuts Down California Tax PreparerRead the Press Release
WASHINGTON — A federal judge in Sacramento, Calif., has barred Placerville, Calif.-based Teresa Marty and her business, Advanced Financial Services, LLC, from acting as a federal tax return preparer, the Justice Department announced today. U.S. District Court Judge Frank C. Damrell, Jr., of the Eastern District of California entered the preliminary injunction order, which adopted an earlier recommendation of U.S. Magistrate Judge Edmund F. Brennan.
The court found that in 2008 and 2009 Marty prepared and filed fraudulent tax returns with fabricated amounts of federal taxes withheld. According to the court, this false reporting of tax withholding led to fraudulent refund claims in amounts as large as $2.7 million per customer. The court also found that to support those fraudulent refund claims, Marty prepared and filed false IRS1099 forms.
The court stated that the IRS had identified approximately 110 returns that Marty prepared and filed that use false 1099 forms to generate fraudulent refund claims. The court also noted that the scheme Marty employed appeared to be part of a growing trend among tax protesters to file frivolous tax returns and 1099 forms in an attempt to escape their federal tax obligations and to fraudulently obtain money from the U.S. Treasury.
In addition to barring Marty from preparing federal tax returns, the court ordered her to provide to the United States a complete customer list and to notify her customers of the court’s order. More information about the case is available in an earlier Justice Department press release.
In the past decade the Justice Department has obtained injunctions against more than 420 tax preparers and tax-fraud promoters. Information about these cases is available on the Justice Department website.
Department of Justice Will Not Challenge Proposed Conduct<br /> of Less-Than-Truckload Freight Transportation Joint VentureRead the Press Release
WASHINGTON – The Department of Justice announced today that it will not challenge a proposal by seven regional less-than-truckload (LTL) freight transportation companies to bid jointly and engage in other collaborative activity as part of their nationwide LTL truck transportation services joint venture. Based on representations made by the applicants, the Department said that the proposed conduct is not likely to reduce competition in regional LTL truck transportation markets and could enhance competition in the long haul LTL market.
The regional LTL carriers that comprise the Reliance Network joint venture are: Averitt Express Inc.; DATS Trucking Inc.; Lakeville Motor Express Inc.; Land Air Express of New England; Pitt Ohio Express; Canadian Freightways; and Epic Express.
The carriers have represented that each serves a distinct geographic region in North America with insignificant overlap among their respective operations. They further represented that each carrier faces significant competition in the regions in which they operate and that, collectively, the carriers would account for less than 20 percent of the LTL freight transportation business in these regional markets, and far less than 20 percent of a nationwide LTL freight transportation market.
The Reliance Network carriers requested a business review letter from the Antitrust Division expressing its enforcement intentions with respect to a proposal to engage in collaborative activity, including collective rate-making for multi-regional shipments and territorial restrictions. The carriers represent that the proposal would allow them to offer "seamless" nationwide LTL freight transportation services and respond to shipping opportunities that originate from multiple regions by sharing key information and internal systems. To achieve these efficiencies, the carriers represent that they will combine information technology, operations, sales and marketing efforts, and administration. Each member carrier will continue to operate its regional LTL business independently and will retain the right to withdraw unilaterally from the joint venture.
Under the Department’s business review procedure, an organization may submit a proposed action to the Antitrust Division and receive a statement as to whether the Division currently intends to challenge the action under the antitrust laws.
A file containing the business review request and the Department’s response may be examined in the Antitrust Documents Group of the Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 1010, Washington, D.C. 20530. After a 30-day waiting period, the documents supporting the business review will be added to the file, unless a basis for their exclusion for reasons of confidentiality has been established under the Business Review Procedure.
4 September 2009
Justice Department to Monitor Election in OhioRead the Press Release
WASHINGTON – The Justice Department today announced that during the Sept. 8, 2009, municipal election in Cleveland, Ohio, it will monitor polling place activities for compliance with the Voting Rights Act of 1965. Attorneys from the 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. In calendar year 2008, for example, 1,060 federal observers and 344 Department personnel were sent to monitor 114 elections in 76 jurisdictions in 24 states.
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.
Former Ft. Campbell Soldier Sentenced to Life in Prison <br /> After Conviction on Charges Related to Deaths of Iraqi CiviliansRead the Press Release
WASHINGTON – A former Ft. Campbell, Ky., soldier was sentenced today by U.S. District Judge Thomas B. Russell to life in prison after being convicted on May 7, 2009, of charges arising out of the rape of a 14-year-old Iraqi girl and the murder of the girl and her family, Assistant Attorney General Lanny A. Breuer of the Criminal Division and Acting U.S. Attorney Candace G. Hill of the Western District of Kentucky announced today.
Steven D. Green, 24, was convicted by a federal jury in Louisville, Ky., on all charged counts, including premeditated murder, aggravated sexual abuse, felony murder, conspiracy to commit murder, conspiracy to commit aggravated sexual abuse, use of firearms during the commission of violent crimes and obstruction of justice. The jury that convicted Green said it was unable to reach a unanimous verdict on whether the defendant should be sentenced to death. Because the jury did not unanimously reach a decision on the death penalty, the court sentenced Green to life in prison. Green was indicted by a federal grand jury on Nov. 2, 2006.
Green was charged with the crimes following an incident that occurred on March 12, 2006, in and around Mahmoudiyah, Iraq. According to evidence presented at trial, while manning a military checkpoint, Green and other fellow soldiers discussed raping and killing Iraqis. Trial evidence showed that Green and others then took off their uniforms, put on black clothing, left their post and forced their way into the nearby home of the Al-Janabi family. Evidence presented at trial proved that Green then took the mother, father and six-year-old into a bedroom where he shot and killed them. In the living room, Green and the other soldiers raped the 14-year-old and then Green repeatedly shot her in the face and set her body on fire. Green then tried to blow up the house, according to trial evidence, after which the soldiers returned to their checkpoint. After committing the rape and murders, trial testimony revealed that Green bragged to others that the experience was "awesome."
"While the scars from these tragic crimes, including the senseless murder of four innocent Iraqi civilians, cannot be erased by the jury’s conviction and sentence of Steven Green, we sincerely hope the victims’ family may find some solace in the United States’ commitment to justice in this case," said Assistant Attorney General Lanny A. Breuer of the Criminal Division. "The defendant’s brutal actions detailed at trial are an affront to the rule of law and stand in stark contrast to the admirable conduct of the brave men and women of the U.S. armed forces who serve our country with honor."
" Steven Green’s conviction and sentence are the culmination of the hard work, professionalism and dedication of the trial attorneys Marisa Ford, Jim Lesousky, and Brian Skaret, and of the agents of the FBI and the Army’s Criminal Investigative Division. I am proud that the U.S. Attorney’s Office for the Western District of Kentucky could play a major role in bringing this case to justice, particularly on behalf of the surviving victims of these crimes," said Acting U.S. Attorney Candace G. Hill. "The jury’s conviction and sentence reflect the shocking nature of these crimes. The honorable service in Iraq of thousands of this country’s armed forces should not be tarnished by this shameful event."
"Fortunately, the brutal and senseless crimes perpetrated in this case are uncommon on the battlefield, but nevertheless, important to investigate and to prosecute," said Assistant Director Kevin L. Perkins of the FBI Criminal Investigative Division. "The FBI remains committed to working with our military law enforcement partners to uncover any such crimes occurring domestically or abroad."
"We sincerely hope that today’s sentencing helps to bring the loved ones of this Iraqi family some semblance of closure and comfort after this horrific and senseless act," said Brigadier General Rodney Johnson, the Commanding General of the U.S. Army Criminal Investigation Command. "Our agents worked tirelessly and shoulder to shoulder with the FBI and the attorneys. The sentencing is a true testament to our commitment and dedication to bring anyone who commits a crime while serving in the U.S. military to justice, regardless of the circumstances."
Green was discharged from the U.S. Army in May 2006 and was prosecuted in U.S. District Court under the Military Extraterritorial Jurisdiction Act (MEJA), a statute that gives U.S. courts jurisdiction to prosecute crimes committed outside the United States by, among others, persons who served with the armed forces but who are no longer subject to military prosecution. Green’s co-conspirators were prosecuted by military authorities under the Uniform Code of Military Justice. Green, formerly stationed at Ft. Campbell and deployed to Iraq while serving with the 101st Airborne Division of the U.S. Army, was arrested by the FBI on June 30, 2006, on federal charges of murder and rape based on MEJA.
The case was investigated by the FBI and the U.S. Army Criminal Investigation Division. The case was prosecuted by Assistant U.S. Attorneys Marisa Ford and Jim Lesousky of the U.S. Attorney’s Office in the Western District of Kentucky and Trial Attorney Brian Skaret of the Criminal Division’s Domestic Security Section.
Department of Justice Will Not Challenge Hospitals’ Joint Purchasing AgreementRead the Press Release
WASHINGTON —The Department of Justice announced today that it will not challenge a proposal by Memorial Health Inc. (Memorial), and St. Joseph’s/Candler Health System (St. Joseph’s/Candler) to enter an exclusive joint purchasing agreement with respect to the purchase of certain medical and surgical supplies. The Department said that the proposed joint purchasing agreement may yield volume discounts and reduced transaction costs for the hospitals and ultimately could result in lower costs and increased hospital services for consumers.
Under the proposed agreement, Memorial and St. Joseph’s/Candler would jointly evaluate medical and surgical products, designate suppliers and negotiate prices and other terms with them.
Memorial and St. Joseph’s/Candler are 501(c)(3) non-profit organizations that own acute tertiary care hospitals in Savannah, Ga., that serve Southeast Georgia and the low-country area of South Carolina. Memorial owns and operates the Memorial Health University Medical Center. St. Joseph’s/Candler owns and operates St. Joseph’s Hospital and Candler Hospital.
The Department determined that the proposal meets the requirements of the antitrust safety zone set forth in Statement 7 of the Department’s and Federal Trade Commission’s Statements of Antitrust Enforcement Policy in Health Care. The safety zone requires that the cost of all products purchased through the joint purchasing agreement account for less than 20 percent of the total revenue of all products and services sold by each participant in the agreement. It also requires that products purchased through the joint purchasing agreement from a given supplier account for less than 35 percent of that suppliers’ sale of those products in the relevant market. Memorial and St. Joseph’s/Candler represented that they will abide by these limitations.
Under the Department’s business review procedure, an organization may submit a proposed action to the Antitrust Division and receive a statement as to whether the Division currently intends to challenge the action under the antitrust laws.
A file containing the business review request and the Department’s response may be examined in the Antitrust Documents Group of the Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 1010, Washington, D.C. 20530. After a 30-day waiting period, the documents supporting the business review will be added to the file, unless a basis for their exclusion for reasons of confidentiality has been established under the Business Review Procedure.
3 September 2009
Liberian Ocean Shipping Company Admits Falsifying Oil Discharge Record BooksRead the Press Release
WASHINGTON—A Liberian-incorporated shipping company pleaded guilty today in federal court in Trenton, N.J., to failing to keep accurate oily water discharge records and using falsified records to conceal the discharge at sea of untreated bilge from one of its cargo ships, the Justice Department announced.
Dalnave Navigation Inc., a Liberian company with offices in Athens, Greece, was sentenced by U.S. District Judge Peter G. Sheridan immediately after the guilty plea to pay a fine of $1 million, the maximum fine allowable for the two counts to which the company pleaded guilty.
Additionally, the company agreed to pay a $350,000 community service payment to the congressionally-established National Fish and Wildlife Foundation to be used specifically for the protection, scientific study and restoration of marine and aquatic resources in the District of New Jersey or its off-shore coastal region.
On Tuesday, the chief engineer and second engineers aboard the Dalnave vessel M/V Myron N were sentenced by Judge Sheridan to three months of probation with the condition that they serve one month in a community corrections facility. Panagiotis Stamatakis, the chief engineer, and Dimitrios Papadakis, the second engineer, both of Greece, pleaded guilty on July 16, 2009, to using falsified records that concealed improper discharges of untreated bilge waste from the M/V Myron N.
"Today’s plea and the sentences handed down in this case send a clear message that failure to comply with environmental laws and lying to authorities to cover up pollution while at sea has consequences," said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. "The Justice Department will continue to prosecute these cases as long as crewmembers and companies continue to violate pollution laws."
"Shipping companies need to know that the cost of polluting our oceans will be steep, bad for business and bad for their crews," said Ralph J. Marra Jr., Acting U.S. Attorney for the District of New Jersey. "At the same time, we are pleased that the company seeks to make amends with a significant criminal fine and a community service payment that directly benefits the New Jersey coastal environment."
"The Coast Guard is committed to working with the maritime industry and federal, state, and local law enforcement partners, to protect the U.S. maritime environment from individuals who pollute our waters," said Rear Admiral Joseph L. Nimmich, Commander of the First Coast Guard District in Boston. "When these violations occur, the Coast Guard will work with our partners to ensure that the violators are held accountable under the law."
"Congress passed the Act to Prevent Pollution from Ships to prevent the oceans and waterways from being used as dumping grounds for waste oil," said William Lometti, Special Agent-in-Charge of EPA’s criminal enforcement office in New York. "We will continue to work closely with our counterparts to vigorously prosecute those who try to conceal these illegal acts."
Engine room operations on board large oceangoing vessels such as the M/V Myron N generate large amounts of waste oil and oil-contaminated bilge waste. International and U.S. law prohibit the discharge of waste containing more than 15 parts per million of oil and without onboard treatment by an oily water separator – a required pollution prevention device. Law also requires that all overboard discharges be recorded in an oil record book, a required log which is regularly inspected by the U.S. Coast Guard.
The government’s investigation began in September 2008, when Coast Guard inspectors conducted an examination of the M/V Myron N, following the ship’s arrival in Gravesend Anchorage, N.Y. and subsequently in the Port of Newark, N.J. The inspections uncovered evidence that crew members had installed pipes to bypass the ship’s pollution control system and pump untreated bilge directly into the ocean. At their guilty pleas, Stamatakis and Papadakis admitted that they knowingly failed to record those discharges in the ship’s official oil record books and presented the false record books to the Coast Guard.
A joint factual statement between the government and Dalnave Navigation describing those and other facts was entered in court today as the basis for the company’s guilty plea.
The case was investigated by the U.S. Coast Guard, Coast Guard Investigative Service and the U.S. Environmental Protection Agency, Criminal Investigation Division. It was prosecuted by Assistant U.S. Attorney Kathleen P. O’Leary of the U.S. Attorney’s Office for the District of New Jersey, Special Assistant U.S. Attorney Christopher P. Mooradian of the U.S. Coast Guard First District Legal Office, and Trial Attorney Gary N. Donner of the Justice Department’s Environmental Crimes Section.
Justice Department Files Lawsuit Against Ventura County, California, <br /> to Enforce Employment Rights Under the ADARead the Press Release
WASHINGTON – The Justice Department today filed a lawsuit in federal court in Los Angeles charging Ventura County, Calif., with discrimination in its employment practices by refusing to hire a qualified applicant because she is deaf.
The applicant for a children’s social services position was given high ratings during her initial interview where the questions were standardized and job-related. Following a second interview conducted by different staff whose questions focused on the applicant’s deafness, she was not hired. At the time of her application, she had worked in the same capacity for Los Angeles County for more than eight years and had excelled in her position.
"The Americans with Disabilities Act was enacted to protect individuals with disabilities from exactly this kind of discrimination. The ADA prohibits employers from making hiring decisions based on stereotypes and unfounded assumptions about how a deaf employee will perform the job, or about the costs involved in providing reasonable accommodations for a deaf employee," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "The Civil Rights Division is committed to protecting the promise of equal employment opportunities for all individuals with disabilities."
Title I of the ADA prohibits employers, such as Ventura County, from discriminating against a qualified individual on the basis of disability in regard to job application procedures; the hiring, advancement or discharge of employees; employee compensation; job training; and other terms, conditions and privileges of employment. An employer may not deny employment opportunities to a job applicant or employee who is otherwise qualified if the denial is based on the need to make reasonable accommodations for the applicant or employee.
Those interested in finding out more about federal disability rights statutes can call the Justice Department’s toll-free ADA Information Line at (800) 514-0301 or (800) 514-0383 (TDD), or access the ADA Web site at www.ada.gov.
Former Pacific Consolidated Industries LP Executive Pleads Guilty in Connection with <br /> Bribes Paid to U.K. Ministry of Defense OfficialRead the Press Release
The former director of sales and marketing for Pacific Consolidated Industries LP (PCI) pleaded guilty today to charges related to the bribery of a U.K. Ministry of Defense (UK-MOD) official in order to obtain lucrative equipment contracts with the U.K. Royal Air Force, in violation of the Foreign Corrupt Practices Act (FCPA).
Leo Winston Smith, 73, of Chula Vista, Calif., pleaded guilty today before Judge Andrew J. Guilford in U.S. District Court in Santa Ana, Calif. Smith pleaded guilty to a two-count superseding information charging him with conspiracy to violate the FCPA in connection with the illicit payment of bribes for the benefit of a UK-MOD official in exchange for obtaining and retaining lucrative contracts for PCI, and with corruptly obstructing and impeding the due administration of the internal revenue laws. The UK-MOD official pleaded guilty in the United Kingdom to accepting more than $300,000 in bribes from PCI and was sentenced to two years in prison.
According to court documents, PCI was a private company headquartered in Santa Ana that manufactured air separation units (ASUs), nitrogen concentration trolleys (NCTs) and other equipment for defense departments throughout the world. ASUs and NCTs generate oxygen and nitrogen in remote, extreme and confined locations for aircraft support and military hospitals. As director of sales and marketing, Smith’s main responsibility was to obtain business from and negotiate contracts with various domestic and international clients, including the U.K. Royal Air Force.
According to the plea agreement, Smith, along with the president of PCI, created a sham marketing agreement between PCI and a relative of the UK-MOD official to facilitate the payment of bribes. According to the plea agreement, more than $70,000 in bribe payments was made using this arrangement. Smith admitted that in return for the payments, PCI obtained UK-MOD contracts. In addition, Smith admitted that he under-reported income on his 2003 tax return and that he failed to file a 2003 tax return for his company, Design Smith Inc.
"Bribery cannot be viewed as standard operating procedure when representatives from U.S. companies seek contracts abroad," said Assistant Attorney General for the Criminal Division Lanny A. Breuer. "As demonstrated by this case, the Department will hold accountable corporate representatives who solicit and make bribe payments to foreign government officials."
"Over the decades, U.S. businesses have been credited with many advancements in the global market; the fostering of corrupt business relationships is not one of them," said Salvador Hernandez, Assistant Director in Charge of the FBI in Los Angeles. "This activity not only gives unfair competitive advantage to the company involved, it casts a shadow on the thousands of American businesses that operate legitimately abroad. The FBI, with its partners, will continue to actively search for - and counter - these corrupting influences."
"U.S. companies, as well as their officers, directors, and agents who engage in illegal activity for their financial benefit, will be held accountable," said Eileen C. Mayer, Chief of Internal Revenue Service - Criminal Investigation (IRS-CI). "We are steadfast in our determination to combat domestic and international tax fraud, corruption and money laundering, and will continue our efforts to ensure the integrity of our tax system worldwide."
An evidentiary hearing related to sentencing is scheduled for Dec. 15, 2009. Smith is scheduled to be sentenced on Dec. 18, 2009. Smith faces a maximum penalty of eight years in prison.
In 2003, after the conduct alleged in court documents occurred, PCI was acquired by a group of investors and re-named Pacific Consolidated Industries LLC (PCI LLC). PCI LLC referred the matter to the Department of Justice and cooperated in the government’s investigation.
On May 8, 2008, Martin Eric Self, a U.S. citizen and a partial owner and former president of PCI, pleaded guilty to a two-count information charging him with violating the FCPA in connection with the illicit payment of more than $70,000 in bribes for the benefit of the UK-MOD official in exchange for obtaining and retaining lucrative contracts for PCI. He was sentenced on Nov. 17, 2008, to two years of probation.
The criminal case is being prosecuted by Senior Trial Attorney Jonathan E. Lopez and Trial Attorney Nicola J. Mrazek of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Jennifer Waier from the U.S. Attorney’s Office for the Central District of California. The Criminal Division’s Office of International Affairs provided assistance in the case. British authorities also provided significant assistance in this matter. The case was investigated by agents of the FBI’s Los Angeles Field Office at the Santa Ana Resident Agency and the IRS-CI Los Angeles Field Office.
Former Inspectors of New York Defense Contractor Plead Guilty to Accepting Bribes on Department of Defense ContractsRead the Press Release
WASHINGTON — Two former Department of Defense contractors who worked as inspectors at the U.S. Army installation at Ft. Hamilton in Brooklyn, N.Y., pleaded guilty for seeking and receiving bribes in connection with the award and performance of contracts to move and store military household goods, the Department of Justice announced today. Today’s charges are the first to arise from an ongoing investigation into the moving and storage of military household goods between New York and New Jersey and other states or overseas military installations.
According to the charges filed today in the U.S. District Court in Brooklyn, N.Y., Darryl Jay Johnson and Henry Maldonado sought and received cash and valuables from companies doing business with the Ft. Hamilton Transportation Office from at least as early as September 2003 until at least September 2008. In exchange for those bribes, they were influenced in the award of contracts to those companies. The former inspectors have pleaded guilty to one count each of bribery.
The bribery charge carries a maximum sentence of 15 years in prison and a fine of $250,000. The maximum fine may be increased to twice the gain derived from the crime, twice the loss suffered by the victims of the crime or three times the monetary equivalent of the valuables received, if any of those amounts is greater than the statutory maximum fine.
The investigation is being conducted by the Antitrust Division’s National Criminal Enforcement Section and the Defense Criminal Investigative Service in Melville, N.Y.
Today’s charges reflect the Department’s commitment to protecting U.S. taxpayers from procurement fraud through its creation of the National Procurement Fraud Task Force. The National Procurement Fraud Initiative, announced in October 2006, is designed to promote the early detection, prosecution and prevention of procurement fraud associated with the increase in contracting activity for national security and other government programs.
Anyone with information concerning bid rigging or other anti-competitive conduct regarding Department of Defense contracts for the transportation and storage of military household goods is urged to call the National Criminal Enforcement Section of the Antitrust Division at 202-307-6694 or the New York Resident Agency of the Defense Criminal Investigative Service at 631-420-4307.
2 September 2009
United States Transfers More Than $750,000 in Forfeited Funds to Government of PeruRead the Press Release
More than $750,000 in forfeited funds from an embezzlement scheme by a Peruvian military officer have been transferred to the government of Peru.
The forfeited funds were taken from the private account of Marco Antonio Rodriguez Huerta, a former Peruvian Army General, who was also on the board of directors of the Peruvian Military and Police Pension Fund in 1996. According to court documents, by abusing those positions, Rodriguez Huerta was able to divert funds intended for use as retirement benefits for retired military and police officers into fraudulent real estate investments. These diverted funds were then transferred into the private accounts of Rodriguez Huerta and other high officials of the Peruvian government. According to court documents, Rodriguez Huerta and his associates utilized banking institutions in the United States to hide their illicit profits from the Peruvian government. For these crimes and other illegal activities, Rodriguez Huerta was arrested and convicted by Peruvian authorities in 2002, and sentenced to 15 years in prison in Peru.
"As today’s action demonstrates, the Department of Justice will not allow U.S. financial institutions to be used as repositories for hidden criminal proceeds from abroad," said Assistant Attorney General Lanny A. Breuer. "The return of funds to Peru can now rightly benefit retired military and police officers in that country."
"With our many international ties, the Southern District of Florida is a valuable resource for foreign investment and commerce. When those connections are used for wrongdoing, they will be ferreted out. This case serves as an excellent example of such an instance. The results are a testament to the cooperation of the Peruvian and U.S. governments as well as the law enforcement agencies that joined together in this investigation," said Jeffrey H. Sloman, Acting U.S. Attorney for the Southern District of Florida.
"The United States will not be a hiding place for criminals’ illicit profits and assets," said John Morton, Department of Homeland Security Assistant Secretary for ICE. "ICE is committed to investigate, identify and seize the goods foreign nationals have obtained through illegal activities. In this case, ICE special agents in Miami were able to confiscate hundreds of thousands of dollars embezzled from the Peruvian government and concealed in private accounts in the United States. We are pleased to return these funds to the Peruvian government."
In August 2004, the Peruvian government requested ICE assistance in identifying Rodriguez Huerta’s assets in the United States which resulted in ICE agents in Miami initiating an asset forfeiture investigation. In December 2004, the U.S. government filed a civil complaint in the Southern District of Florida, and seized three bank accounts under the control of Rodriguez Huerta. Subsequently, the U.S. District Court for the Southern District of Florida issued a final order of forfeiture of these seized funds in 2005.
In May 2008, the government of Peru submitted a petition for remission of the forfeited funds to the U.S. Department of Justice. As a result of the cooperation between the governments of Peru and the United States, the Criminal Division’s Asset Forfeiture and Money Laundering Section (AFMLS) has approved the repatriation of more than $750,000 to the Peruvian government and the Peruvian pension fund.
AFMLS, the Criminal Division’s Office of International Affairs and the U.S. Attorney’s Office for the Southern District of Florida worked jointly with the ICE Office of Investigations in Miami, the ICE Office of International Affairs, the Department of the Treasury Executive Office for Asset Forfeiture and the Government of Peru to pursue the transfer of funds.
Tampa Judge Shuts Down Florida Tax PreparerRead the Press Release
WASHINGTON – A federal judge in Tampa, Fla., has permanently barred a Spring Hill, Fla., tax preparer from preparing federal tax returns, the Justice Department announced today. U.S. District Court Judge James D. Whittemore of the Middle District of Florida entered the permanent injunction order against Gerard Mirabella, who consented to it.
According to the Justice Department complaint in the case, Mirabella prepared federal income tax returns claiming false deductions for medical expenses, charitable contributions, non-existent businesses and other items. The tax loss from Mirabella’s conduct was alleged to be as high as $1.7 million. The complaint also alleged that Mirabella falsely told customers that he was a former IRS employee and that the returns he prepared were "pre-audited" by the IRS.
D. Patrick Mullarkey, the Acting Deputy Assistant Attorney General of the Justice Department's Tax Division, thanked Justice Department trial attorney Dorotha M. Ocker, who handled the case, and Holly Shields, a revenue agent with the Internal Revenue Service’s Small Business/Self Employed Division, who handled the investigation.
In the past decade the Justice Department has obtained injunctions against more than 420 tax preparers and tax fraud promoters. Information about these cases is available on the Justice Department’s Tax Division Web site.
Oklahoma Man Pleads Guilty to Conspiring to Solicit Kickbacks in Connection with Government Contract in AfghanistanRead the Press Release
WASHINGTON — An Oklahoma 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 Dana J. Boente for the Eastern District of Virginia.
Bryan Lee Burrows, 42, of Wagoner, Okla., pleaded guilty today before U.S. District Court Judge Leonie M. Brinkema in the Eastern District of Virginia to one count of conspiracy to solicit a kickback.
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 approximately February 2009 through May 2009, Burrows was employed in Kabul, Afghanistan, by Civilian Police International, a Virginia-based company that provides law enforcement training internationally. Burrows admitted that he conspired with others to solicit kickbacks from private security vendors in return for favorable treatment for those potential bidders in connection with the award of 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.
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. A sentencing date has yet to be scheduled by the court.
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.
Justice Department Announces Largest Health Care Fraud Settlement in Its HistoryRead the Press Release
WASHINGTON – American pharmaceutical giant Pfizer Inc. and its subsidiary Pharmacia & Upjohn Company Inc. (hereinafter together "Pfizer") have agreed to pay $2.3 billion, the largest health care fraud settlement in the history of the Department of Justice, to resolve criminal and civil liability arising from the illegal promotion of certain pharmaceutical products, the Justice Department announced today.
Pharmacia & Upjohn Company has agreed to plead guilty to a felony violation of the Food, Drug and Cosmetic Act for misbranding Bextra with the intent to defraud or mislead. Bextra is an anti-inflammatory drug that Pfizer pulled from the market in 2005. Under the provisions of the Food, Drug and Cosmetic Act, a company must specify the intended uses of a product in its new drug application to FDA. Once approved, the drug may not be marketed or promoted for so-called "off-label" uses – i.e., any use not specified in an application and approved by FDA. Pfizer promoted the sale of Bextra for several uses and dosages that the FDA specifically declined to approve due to safety concerns. The company will pay a criminal fine of $1.195 billion, the largest criminal fine ever imposed in the United States for any matter. Pharmacia & Upjohn will also forfeit $105 million, for a total criminal resolution of $1.3 billion.
In addition, Pfizer has agreed to pay $1 billion to resolve allegations under the civil False Claims Act that the company illegally promoted four drugs – Bextra; Geodon, an anti-psychotic drug; Zyvox, an antibiotic; and Lyrica, an anti-epileptic drug – and caused false claims to be submitted to government health care programs for uses that were not medically accepted indications and therefore not covered by those programs. The civil settlement also resolves allegations that Pfizer paid kickbacks to health care providers to induce them to prescribe these, as well as other, drugs. The federal share of the civil settlement is $668,514,830 and the state Medicaid share of the civil settlement is $331,485,170. This is the largest civil fraud settlement in history against a pharmaceutical company.
As part of the settlement, Pfizer also has agreed to enter into an expansive corporate integrity agreement with the Office of Inspector General of the Department of Health and Human Services. That agreement provides for procedures and reviews to be put in place to avoid and promptly detect conduct similar to that which gave rise to this matter.
Whistleblower lawsuits filed under the qui tam provisions of the False Claims Act that are pending in the District of Massachusetts, the Eastern District of Pennsylvania and the Eastern District of Kentucky triggered this investigation. As a part of today’s resolution, six whistleblowers will receive payments totaling more than $102 million from the federal share of the civil recovery.
The U.S. Attorney’s offices for the District of Massachusetts, the Eastern District of Pennsylvania, and the Eastern District of Kentucky, and the Civil Division of the Department of Justice handled these cases. The U.S. Attorney’s Office for the District of Massachusetts led the criminal investigation of Bextra. The investigation was conducted by the Office of Inspector General for the Department of Health and Human Services (HHS), the FBI, the Defense Criminal Investigative Service (DCIS), the Office of Criminal Investigations for the Food and Drug Administration (FDA), the Veterans’ Administration’s (VA) Office of Criminal Investigations, the Office of the Inspector General for the Office of Personnel Management (OPM), the Office of the Inspector General for the United States Postal Service (USPS), the National Association of Medicaid Fraud Control Units and the offices of various state Attorneys General.
"Today’s landmark settlement is an example of the Department of Justice’s ongoing and intensive efforts to protect the American public and recover funds for the federal treasury and the public from those who seek to earn a profit through fraud. It shows one of the many ways in which federal government, in partnership with its state and local allies, can help the American people at a time when budgets are tight and health care costs are increasing," said Associate Attorney General Tom Perrelli. "This settlement is a testament to the type of broad, coordinated effort among federal agencies and with our state and local partners that is at the core of the Department of Justice’s approach to law enforcement."
"This historic settlement will return nearly $1 billion to Medicare, Medicaid, and other government insurance programs, securing their future for the Americans who depend on these programs,"said Kathleen Sebelius, Secretary of Department of Health and Human Services"The Department of Health and Human Services will continue to seek opportunities to work with its government partners to prosecute fraud wherever we can find it. But we will also look for new ways to prevent fraud before it happens. Health care is too important to let a single dollar go to waste."
"Illegal conduct and fraud by pharmaceutical companies puts the public health at risk, corrupts medical decisions by health care providers, and costs the government billions of dollars," said Tony West, Assistant Attorney General for the Civil Division. "This civil settlement and plea agreement by Pfizer represent yet another example of what penalties will be faced when a pharmaceutical company puts profits ahead of patient welfare."
"The size and seriousness of this resolution, including the huge criminal fine of $1.3 billion, reflect the seriousness and scope of Pfizer’s crimes," said Mike Loucks, acting U.S. Attorney for the District of Massachusetts. "Pfizer violated the law over an extensive time period. Furthermore, at the very same time Pfizer was in our office negotiating and resolving the allegations of criminal conduct by its then newly acquired subsidiary, Warner-Lambert, Pfizer was itself in its other operations violating those very same laws. Today’s enormous fine demonstrates that such blatant and continued disregard of the law will not be tolerated."
"Although these types of investigations are often long and complicated and require many resources to achieve positive results, the FBI will not be deterred from continuing to ensure that pharmaceutical companies conduct business in a lawful manner," said Kevin Perkins, FBI Assistant Director, Criminal Investigative Division.
"This resolution protects the FDA in its vital mission of ensuring that drugs are safe and effective. When manufacturers undermine the FDA’s rules, they interfere with a doctor’s judgment and can put patient health at risk," commented Michael L. Levy, U.S. Attorney for the Eastern District of Pennsylvania. "The public trusts companies to market their drugs for uses that FDA has approved, and trusts that doctors are using independent judgment. Federal health dollars should only be spent on treatment decisions untainted by misinformation from manufacturers concerned with the bottom line."
"This settlement demonstrates the ongoing efforts to pursue violations of the False Claims Act and recover taxpayer dollars for the Medicare and Medicaid programs," noted Jim Zerhusen, U.S. Attorney for the Eastern District of Kentucky.
"This historic settlement emphasizes the government’s commitment to corporate and individual accountability and to transparency throughout the pharmaceutical industry," said Daniel R. Levinson, Inspector General of the United States Department of Health and Human Services. "The corporate integrity agreement requires senior Pfizer executives and board members to complete annual compliance certifications and opens Pfizer to more public scrutiny by requiring it to make detailed disclosures on its Web site. We expect this agreement to increase integrity in the marketing of pharmaceuticals."
"The off-label promotion of pharmaceutical drugs by Pfizer significantly impacted the integrity of TRICARE, the Department of Defense’s healthcare system," said Sharon Woods, Director, Defense Criminal Investigative Service. "This illegal activity increases patients’ costs, threatens their safety and negatively affects the delivery of healthcare services to the over nine million military members, retirees and their families who rely on this system. Today’s charges and settlement demonstrate the ongoing commitment of the Defense Criminal Investigative Service and its law enforcement partners to investigate and prosecute those that abuse the government’s healthcare programs at the expense of the taxpayers and patients."
"Federal employees deserve health care providers and suppliers, including drug manufacturers, that meet the highest standards of ethical and professional behavior," said Patrick E. McFarland, Inspector General of the U.S. Office of Personnel Management. "Today’s settlement reminds the pharmaceutical industry that it must observe those standards and reflects the commitment of federal law enforcement organizations to pursue improper and illegal conduct that places health care consumers at risk."
"Health care fraud has a significant financial impact on the Postal Service. This case alone impacted more than 10,000 postal employees on workers’ compensation who were treated with these drugs," said Joseph Finn, Special Agent in Charge for the Postal Service’s Office of Inspector General. "Last year the Postal Service paid more than $1 billion in workers’ compensation benefits to postal employees injured on the job."
International Arms Dealer Arrested for Conspiracy<br /> to Supply 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, has been arrested on charges alleging that he conspired to illegally export F-5 fighter jet engines and parts from the United States to Iran. Monsieur is scheduled to have his arraignment today in federal court in Mobile, Alabama.
A six-count indictment returned on Aug. 27, 2009, in the Southern District of Alabama charging Monsieur, 56, and co-defendant Dara Fotouhi, aka Dara Fatouhi, 54, an Iranian national currently living in France, 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 last Friday upon his arrival in New York. Fotouhi remains at large. The charge of conspiracy carries a potential sentence of five years in prison, while smuggling carries a potential 10-year prison term, AECA carries a potential 10-year prison term, money laundering carries a potential 20-year prison term and IEEPA carries a potential 20-year prison term.
According to the indictment and an affidavit filed in the case, defendants Monsieur and Fotouhi are experienced arms dealers who have been actively working with the Iranian government to procure military items for the Iranian government.
The indictment alleges that in February 2009, Monsieur contacted an undercover agent seeking engines for the F-5 (EIF) fighter jet or the C-130 military transport aircraft for export to Iran. Thereafter, Monsieur began having regular e-mail contact with the undercover agent regarding 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.
According to the indictment, in March 2009, Monsieur met with the undercover agent in Paris, where Monsieur again requested engines and parts for the F-5 fighter jet. In May 2009, an undercover agent met with Monsieur in London, where Monsieur introduced Dara 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, the defendants allegedly 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, according to the indictment, 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 transshipment to Iran.
The following month, Monsieur allegedly 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, the indictment alleges.
"The facts alleged in this indictment underscore the global reach of Iranian procurement networks and the international arms traffickers who help supply them. This case also highlights the importance of keeping restricted U.S. weapons technology out of their grasp," said Deputy Attorney General Ogden. "I applaud the many agents, analysts and prosecutors who worked tirelessly to bring about this important arrest."
Acting U.S. Attorney Eugene A. Seidel said, "The investigation and prosecution of cases such as this one will have a significant deterrent impact on illegal arms trafficking and will enhance our national security. Foreign governments and illegal arms dealers should know that there are no ‘safe harbors’ for this type of commerce. We all owe a debt of gratitude to the dedicated investigators, agency analysts, and prosecutors who helped bring about the arrest and indictment of the defendant."
"Those who seek to illegally send dangerous weapons to Iran will never quite know whether the ‘merchant’ they’re dealing with is actually the long arm of the law," said John Morton, the Department of Homeland Security Assistant Secretary for ICE. "ICE is committed to combating the flow of arms and sensitive technologies abroad and will utilize all of its resources to do so."
"Safeguarding our military equipment and technology is vital to our nation's defense and the protection of our war fighters," said Director Sharon Woods, Director of the Defense Criminal Investigative Service. "We know that foreign governments are actively seeking our equipment for their own military development. Thwarting these efforts is a top priority of the DCIS. I applaud the agents and prosecutors who worked tirelessly to bring about this result."
This investigation was conducted 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.
An indictment is a formal accusation and is not proof of guilt. Defendants are presumed innocent until and unless they are found guilty.
Fraudulent Tax Return Preparer Sentenced to PrisonRead the Press Release
WASHINGTON - Tax preparer Lawrence Sperling, was sentenced to 33 months in prison today by Judge Deborah Chasanow in Greenbelt, Md., for preparing false tax returns for clients, the Justice Department and Internal Revenue Service (IRS) announced.
In April 2009, Sperling pleaded guilty to one count of aiding and assisting in the preparation and presentation of a false tax return. According to the plea agreement and court records, Sperling is a former attorney (now disbarred), who owned and operated a tax preparation business in Silver Spring, Md., that operated under several names, including American Tax Service, American Tax Institute, JAMAR LLC and American Tax Professional Associates Inc.
According to court records, Sperling prepared individual income tax returns for his clients, along with related schedules and attachments. From approximately January 2002 through at least May 2003, Sperling prepared tax returns for his clients that contained fraudulent items that he knew were greater than that to which the taxpayer was entitled. These false items included medial expenses, charitable contributions, miscellaneous employment-related expenses, and child care credits. Sperling conceded that his practice of preparing false tax returns resulted in a tax loss to the United States of $804,335.
According to the plea agreement, Sperling also impeded the IRS with respect to his individual taxes. Beginning in 1988, Sperling failed to file tax returns for eleven years. In 2001, the IRS penalized Sperling and fined him $10,000 for "willful or reckless understatement of taxpayer’s tax liability" with respect to his tax preparation business. The IRS sent him more than two dozen notices of taxes and penalties due and other warning letters. Beginning in at least 1998, Sperling used a nominee to file the tax returns for his clients and to collect his preparation fees. The nominee held these funds and made disbursements to Sperling or others at Sperling’s request. Sperling never reported or paid taxes on these funds, although he used a portion of them to pay business expenses. As a result, Sperling caused a tax loss of $130,847. The total tax loss related to all of his conduct is $935,183.
Acting Deputy Assistant Attorney General Ronald A. Cimino thanked the IRS-Criminal Investigation special agents who investigated the case, as well as Tax Division trial attorneys Jerrod Patterson, Shawn Noud, and Tino Lisella, who prosecuted the case.
Four Arkansas Men Convicted of Civil Rights Charges in Cross Burning ConspiracyRead the Press Release
WASHINGTON – The Justice Department announced that Jacob A. Wingo, Richard W. Robbins, Clayton D. Morrison and Darren E. McKim pleaded guilty today and yesterday to conspiring to drive a woman and her children from their home in Donaldson, Ark., because they associated with African Americans. A fifth defendant, Dustin Nix, 21, pleaded guilty to similar charges in July 2009.
All defendants pleaded guilty in federal court in Hot Springs, Ark., to civil rights charges and charges of making a false statement to a federal law enforcement officer. Each admitted and pleaded guilty to a felony civil rights charge for conspiring with each other to force a woman and her young children from their home by threats and intimidation because she associated with African Americans. Wingo and Morrison also pleaded guilty to an additional civil rights charge related to their direct involvement in an attempt to burn a cross at the victims’ home to intimidate the victims into leaving. All four defendants also pleaded guilty to a related charge of lying to agents of the FBI in an attempt to cover their conduct.
"The defendants used a despicable and unmistakable symbol of hatred, the burning cross, to intimidate a young family because the family associated with African Americans," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "The Civil Rights Division will continue to prosecute this type of illegal, hateful behavior to the fullest extent of the law."
As part of the conspiracy, Wingo, 20, admitted to building a cross, transporting it to the victims' home, and attempting to set it on fire. Morrison admitted to helping to prepare the cross and accompanying Wingo and Nix to the victims’ home to burn the cross. McKim and Robbins, 42, admitted to encouraging Wingo and Nix to build the cross and burn it, as well as driving to the victims' home on a separate occasion to threaten and intimidate them. McKim also admitted to providing materials to Wingo and Nix for them to build the cross.
Wingo and Morrison, 29, face a total of 25 years in prison and a fine of up to $750,000. Robbins and McKim face a total of 15 years in prison and a fine of up to $50,000. The defendants will be sentenced at a later date.
Special Agents from the FBI’s Little Rock Field Office investigated this matter. The case was prosecuted by Special Litigation Counsel Gerard Hogan and Trial Attorney Benjamin Hawk of the Civil Rights Division of the Justice Department, with the assistance of Assistant U.S. Attorney Matthew Quinn for the Western District of Arkansas.
Detroit Clinic Manager Pleads Guilty in Medicare Fraud SchemeRead the Press Release
Denver resident Lil Vargas-Arias pleaded guilty today in U.S. District Court in Detroit to participating in a conspiracy to defraud the Medicare program.
Vargas-Arias, 46, pleaded guilty to one count of conspiracy to commit health care fraud before U.S. District Judge Gerald Rosen. At her sentencing, which is scheduled for Feb. 11, 2010, Vargas-Arias faces a statutory maximum of 10 years in prison and a $250,000 fine.
In her guilty plea, Vargas-Arias admitted that in approximately September 2006, she was hired by the owners of Sacred Hope Medical Center Inc. (Sacred Hope), to manage the clinic on a day-to-day basis. Sacred Hope was a Southfield, Mich., facility that purported to specialize in providing injection and infusion therapy services to Medicare patients. Vargas-Arias admitted to helping to obtain a lease for the premises used by the clinic, and to hiring a co-conspirator physician, purportedly to treat patients at the clinic.
Vargas-Arias admitted in her guilty plea that during the time Sacred Hope was open, the clinic routinely billed the Medicare program for services that were medically unnecessary or were never provided. Vargas-Arias admitted she was aware that the clinic had purchased only a small fraction of the medications that the clinic billed the Medicare program for providing. Vargas-Arias also admitted that patients were prescribed medications at the clinic based not on medical need, but on what medications were likely to generate Medicare reimbursements. Vargas-Arias, along with clinic owner Jose Rosario, who pleaded guilty in the same case on Aug. 18, 2009, admitted to helping falsify medical files maintained by the clinic to make the treatments purportedly being given there appear legitimate, when in fact they were not.
Vargas-Arias admitted that Medicare beneficiaries were not referred to Sacred Hope by their primary care physicians, or for any other legitimate medical purpose, but rather were recruited to come to the clinic through the payment of kickbacks. In exchange for those kickbacks, Vargas-Arias admitted, the Medicare beneficiaries would visit the clinic and sign documents indicating that they had received the services billed to Medicare. Kickbacks came in the form of cash and prescriptions for narcotic drugs. Vargas-Arias admitted to knowing that co-conspirator Arnaldo Rosario, who also pleaded guilty in the same case on Aug. 18, 2009, oversaw and facilitated the payment of cash kickbacks to the Medicare beneficiaries.
Vargas-Arias also admitted that beginning in approximately November 2006, she assisted the owners of another purported infusion clinic, Xpress Center Inc. (XPC), to defraud Medicare. XPC was located in Livonia, Mich. Vargas-Arias admitted to hiring the physician at XPC, and instructed the operators of XPC as to how best to create fictitious patient files to cover up fraudulent billings to Medicare. As at Sacred Hope, Vargas-Arias admitted she was fully aware that the clinic routinely billed the Medicare program for services that were medically unnecessary and, in many instances were never provided. As at Sacred Hope, Vargas-Arias admitted to being fully aware that the purpose of the clinic was not to provide legitimate health care to patients, but rather to defraud the Medicare program.
Vargas-Arias also admitted that between approximately September of 2006 and March 2007, she and her co-conspirators caused the submission of approximately $6,577,899 in false and fraudulent claims to the Medicare program for services purportedly provided at Sacred Hope and XPC. Medicare paid approximately $4,931,428 on those claims.
The case is being prosecuted by Trial Attorneys John K. Neal and Benjamin D. Singer of the Criminal Division’s Fraud Section and by Special Assistant U.S. Attorney Thomas W. Beimers of the Eastern District of Michigan. The 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 300 individuals and organizations that collectively have billed the Medicare program for more than $680 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 HEAT team, go to: www.stopmedicarefraud.gov.
1 September 2009
President of Missouri Pesticide Company Sentenced for Environmental CrimesRead the Press Release
WASHINGTON—William Garvey, the president of HPI Products Inc., a pesticide company based in St. Joseph, Mo., was sentenced today in federal court in Kansas City, Mo., for violations of the Clean Water Act and hazardous waste storage laws related to the company’s pesticide production, the Justice Department announced.
Garvey was sentenced to serve six months in prison, six months of home confinement and was ordered to pay a $100,000 fine for having disposed of pesticide waste water down the sewers of the city of St. Joseph. Sentencing for the company was delayed by the court.
Garvey pleaded guilty on Jan. 27, 2009, to a felony violation of the Clean Water Act for disposing of the pesticide waste. The company pleaded guilty on the same day to the same violation of the Clean Water Act as well as a felony violation of the hazardous waste storage laws.
According to court documents, HPI Products maintained warehouses at various locations in St. Joseph where it stored wastes from its operations for years without notifying the proper regulatory agencies. Many of the stored wastes were considered hazardous based upon their ingredients or their characteristics. In addition, HPI employees under Garvey’s supervision disposed of waste waters from the production of pesticides down floor drains and into the city of St. Joseph’s sewers for several years without permit.
"Compliance with our regulatory requirements is essential if we are to protect the environment," said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. "This company and its president obtained an economic advantage over its competitors by violating the law and placing the environment and the public safety at risk. That is unacceptable."
"By routinely violating federal safeguards for nearly 20 years, this company threatened the environment and put at risk the health and safety of the community," said Matt Whitworth, Acting U.S. Attorney for the Western District of Missouri. "When doing ‘business as usual’ means breaking the law, we will prosecute the offenders and hold them accountable for their actions."
In a related case, Hans Nielsen, vice president of HPI Products, pleaded guilty yesterday to two counts of violating federal pesticides law designed to provide proper regulatory oversight and prevent improper storage of pesticides.
HPI began production of pesticides in 1980 at 417 S. 4th Street in St. Joseph. From the beginning HPI would wash its waste waters from pesticide production down floor drains and into the city’s sewers. HPI expanded its operations to 424 S. 8th Street in 1986. It eventually relocated and consolidated its operations to 222 Sylvanie Street in 1990. Its practice of using the city’s sewer system for disposal continued at all locations until EPA and Missouri Department of Natural Resources (MDNR) inspections in 2007.
In addition the two former HPI facilities and three other locations in St. Joseph were used as warehouses to store pesticides and process waste it didn't dump into sewers. The pesticides and wastes were left for years in unmaintained buildings without the proper notification to state and federal authorities.
When authorities did discover the warehouses many of the containers were found to have leaked or spilled onto the warehouse floors and ground underneath the warehouses. Samples taken at the storage facilities indicated many of the containers held hazardous wastes. The buildings have been cleaned up by HPI under an EPA order. Further investigation of pollution of the soil around the building is pending.
The investigation was conducted by the EPA Criminal Investigation Division and MDNR. The case is being prosecuted by the Justice Department’s Environmental Crimes Section with the U.S. Attorney’s Office for the Western District of Missouri.
31 August 2009
Vice President of Missouri Pesticide CompanyPleads Guilty to Environmental CrimesRead the Press Release
WASHINGTON—The vice president of a Missouri pesticide company, HPI Products Inc., pleaded guilty today in federal court in Kansas City, Mo., for violating a federal pesticides law designed to provide proper regulatory oversight and prevent improper storage of pesticides, the Justice Department announced.
Hans Nielsen pleaded guilty before U.S. District Judge Sarah Hays for the Western District of Missouri to two criminal misdemeanor counts for violating sections of the Federal Insecticide, Fungicide and Rodenticide Act, also known as FIFRA. According to the charges, Nielsen did not notify the state or federal regulatory agencies of the illegal storage of pesticides and failed to maintain records of the storage. For more than twenty years, HPI Products stored pesticides and its wastes in various warehouses in St. Joseph, Mo., without notifying state and federal regulatory agencies.
"The failure to properly notify authorities of the pesticide storage prevented the oversight and safeguards needed to monitor stored pesticides," said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. "This failure could have led to a potentially dangerous situation for first responders, who, in the event of an emergency, need proper information to assesses the hazards and determine the proper actions to contain leaks or fires."
Nielsen faces up to 12 months in prison and a fine of up to the greater of $100,000 or twice the amount of either the gain realized by the defendant or the loss caused by the defendant.
Today’s plea is related to felony guilty pleas entered by HPI Products Inc., and its president, William Garvey. Garvey pleaded guilty to a felony violation of the Clean Water Act for disposing pesticide waste down the sewers of the city of St. Joseph. The company pleaded guilty to the same violation of the Clean Water Act as well as a felony violation of the hazardous waste storage laws. Garvey and the company are scheduled to be sentenced on Sept.1, 2009, by U.S. District Court Judge Howard F. Sachs.
The investigation was conducted by the Environmental Protection Agency Criminal Investigation Division. The case is being prosecuted by the Justice Department’s Environmental Crimes Section with assistance from the Western District of Missouri U.S. Attorney’s Office.
U.S. Court Rejects Efforts by Schering-Plough Corporation to Repatriate $690 Million in Offshore Earnings Without Paying TaxesRead the Press Release
WASHINGTON - A federal court in Newark, N.J., denied Schering-Plough Corp. a $473 million refund in connection with two transactions in which Schering-Plough sought to avoid taxation on $690 million in profits it repatriated from offshore subsidiaries into the United States.
In 1991 and 1992, Schering-Plough entered into Strippable Increasing Principal Swaps (STRIPS) transactions created by its financial advisor, Merrill Lynch. These transactions involved interest rate swap agreements with most of the receive legs assigned to Schering-Plough's controlled Swiss subsidiaries. The transactions were designed to bring previously untaxed profits made by Schering-Plough's foreign subsidiaries into the United States without paying the tax owed on repatriation.
Judge Katherine S. Hayden found Schering-Plough owed tax because the STRIP transactions' form–a purported sale of the stream of income payments under the swaps–was inconsistent with the substance–a loan from the subsidiaries to Schering-Plough that triggered taxation–and as a result, Schering-Plough was not entitled to the tax treatment it sought. The court found in the alternative that the transactions lacked economic substance, did not have a genuine business purpose, and were designed to avoid tax. The opinion noted that the internal revenue code does not leave room for corporate taxpayers to avoid their obligations.
"This victory for the United States should serve as another warning to taxpayers of all sizes and sophistication who consider attempting to circumvent the federal tax laws and their duty to pay their fair share," said D. Patrick Mullarkey, the Acting Deputy Assistant Attorney General of the Justice Department’s Tax Division.
Mr. Mullarkey thanked the Tax Division trial attorneys who tried the case: David Katinsky, Dara Oliphant, and Lisa Bellamy and former Tax Division Senior Litigation Counsel Richard Jacobus.
Opinion (PDF)
Justice Department Seeks Removal of Detroit-Area Man<br /> Who Shot Jews While Serving as Nazi PolicemanRead the Press Release
The Department of Justice has initiated removal proceedings against a Troy, Mich., resident based on his participation in violent acts of persecution while serving as an armed member of the Nazi-sponsored Ukrainian Auxiliary Police (UAP) in occupied L’viv, Ukraine, during World War II.
The charging document, filed Aug. 27, 2009, in U.S. Immigration Court in Detroit, alleges that John (originally Iwan) Kalymon served as a member of the UAP from at least May 1942 to March 1944; that he personally shot Jews while serving, killing at least one; and that he participated in violent anti-Jewish operations in which Jews were forcibly deported to be murdered in gas chambers and to serve as slave laborers.
"These charges once again demonstrate the resolve of the Department of Justice to deny safe haven in this country to human rights violators, no matter how long ago they committed their heinous acts," said Assistant Attorney General Lanny A. Breuer. "The ultimate removal of John Kalymon will close a very painful chapter and provide a measure of justice to his victims and their families."
As the government established in prior federal court litigation that resulted in a court order revoking Kalymon’s naturalized U.S. citizenship, during the German occupation of L’viv, which had been part of Poland before the war, Nazi German forces assisted by the UAP confined more than 100,000 Jews to a ghetto in the city and carried out periodic operations to reduce the ghetto’s population. In these violent operations, German forces and the UAP rounded up Jews, beating and shooting those who showed any sign of resistance, and sent most of them to be murdered in the gas chambers at the Belzec extermination center. Some were shot or selected to be worked to death in forced labor camps.
Kalymon, 88, admitted in court proceedings that he fled with retreating German forces in 1944. He immigrated to the United States from Germany in May 1949, concealing his UAP service from U.S. immigration officials and obtained U.S. citizenship in Detroit in October 1955. A federal judge in Detroit revoked his citizenship in March 2007, concluding that Kalymon assisted in the wartime persecution of Jews by, "taking part in sweeps of the ghetto during periodic reduction actions; manning cordon posts around the city to prevent Jews from escaping before and during such actions; and hunting for Jews who attempted to hide or flee." The court noted that World War II-era documents, including a handwritten Aug. 14, 1942, report prepared by Kalymon in which he accounted to his UAP superiors for ammunition he had expended that day in shooting Jews, proved that Kalymon personally killed at least one Jew and wounded at least one other. The actions were part of the so-called "Great Operation," which resulted in the removal of 40,000 Jews from the L’viv Ghetto in August 1942.
"With the active assistance of collaborators like John Kalymon, the Nazis annihilated some 100,000 innocent Jewish men, women and children in L’viv," noted Eli M. Rosenbaum, Director of the Criminal Division’s Office of Special Operations (OSI). "Participants in such crimes have forfeited any right to enjoy the precious privilege of U.S. citizenship or to continue residing in the United States."
The proceedings to denaturalize Kalymon were initiated in 2004 by OSI and the U.S. Attorney’s Office in Detroit. The case is a result of OSI’s ongoing efforts to identify, investigate and take legal action against former participants in Nazi crimes of persecution who reside in the United States. Since OSI began operations in 1979, it has won cases against 107 individuals who participated in Nazi-sponsored persecution. In addition, more than 180 suspected participants in Nazi crimes who sought to enter the United States in recent years have been blocked from doing so as a result of OSI’s "Watchlist" program, which is enforced in cooperation with the Departments of State and Homeland Security.
The removal case against Kalymon is being litigated by OSI Senior Trial Attorney William H. Kenety. The Detroit office of U.S. Immigration and Customs Enforcement has provided assistance. Members of the public are reminded that the charging document contains only allegations and that the government will be required to prove its case before an immigration judge.
Arizona Man Sentenced for Selling Bald Eagle FeathersRead the Press Release
WASHINGTON – Cedric E. Salabye of Dilkon, Ariz., was sentenced Friday in federal court in Phoenix for selling 11 bald eagle tail feathers, the Justice Department announced today. Salabye pleaded guilty on April 23, 2009, to one count of a federal indictment charging him with selling eagle feathers in violation of the Bald and Golden Eagle Protection Act. Judge David G. Campbell of the U.S. District Court for the District of Arizona sentenced Salabye to five years of probation, six months of home confinement and 150 hours of community service.
At the time Salabye committed the violation in 2006, the bald eagle was listed as threatened under the Endangered Species Act. The bald eagle was removed from protection under the federal Endangered Species Act in 2007. However, two other federal laws still provide protection for the bald eagle—the Bald and Golden Eagle Protection Act and the Migratory Bird Treaty Act.
Eagles and other protected migratory birds are viewed as sacred in many Native American cultures and the feathers of the birds are central to religious and spiritual Native American customs. By law, enrolled members of federally recognized Native American tribes are entitled to obtain permits to possess eagle parts for religious purposes, but federal law strictly prohibits the sale of bald and golden eagles or their feathers and parts under any circumstance. The U.S. Fish and Wildlife Service operates the National Eagle Repository, which collects eagles that die naturally, by accident or other means, to supply enrolled members of federally recognized tribes with eagle parts for religious use.
"The buying and selling of the feathers of bald eagles, our nation’s symbol, is illegal and those who choose to ignore those laws will be prosecuted," said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division.
The case was investigated by the U.S. Fish and Wildlife Service’s Office of Law Enforcement and the Navajo Nation Department of Fish and Wildlife. The case was prosecuted by the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division.
28 August 2009
United States Transfers Two Guantanamo Bay Detainees<br /> to the Government of PortugalRead the Press Release
The Department of Justice today announced that two Syrian nationals have been transferred from the detention facility at Guantanamo Bay to the control of the government of Portugal.
As directed by the President’s Jan. 22, 2009 Executive Order, the interagency Guantanamo Review Task Force conducted a comprehensive review of these cases. As a result of that review, the detainees were approved for transfer from Guantanamo Bay. On Aug. 6, 2009, in accordance with Congressionally-mandated reporting requirements, the Administration informed Congress of its intent to transfer these two detainees.
The transfers were carried out under an arrangement between the United States and the government of Portugal. The United States has coordinated with the government of Portugal to ensure the transfers take place under appropriate security measures and will continue to consult with the government of Portugal regarding these detainees.
Since 2002, more than 540 detainees have departed Guantanamo for other countries including Albania, Algeria, Afghanistan, Australia, Bangladesh, Bahrain, Belgium, Bermuda, Chad, Denmark, Egypt, France, Iran, Iraq, Jordan, Kuwait, Libya, Maldives, Mauritania, Morocco, Pakistan, Portugal, Russia, Saudi Arabia, Spain, Sweden, Sudan, Tajikistan, Turkey, Uganda, United Kingdom and Yemen.
Three Men Charged in Human Trafficking Conspiracy for <br /> Exploiting Thai Farm Workers in HawaiiRead the Press Release
WASHINGTON – The Justice Department announced the indictment of Alec Souphone Sou and Mike Mankone Sou, owners of Aloun Farm in Hawaii, and Thai labor recruiter William Khoo late yesterday for engaging in a conspiracy to commit forced labor and visa fraud. The charges arise from the defendants’ alleged scheme to coerce the labor and services of Thai nationals brought by the defendants to Hawaii to work under the federal agricultural guest worker program. Both Sou defendants are also charged with conspiring to commit document servitude.
The charges set forth in an indictment are merely accusations and the defendant is presumed innocent until proven guilty. If convicted, Alec and Mike Sou each face maximum sentences of 15 years in prison and William Khoo faces a maximum of 10 years in prison.
Alec Sou, Mike Sou and William Khoo conspired and devised a scheme to obtain the labor of 44 Thai nationals by enticing them to come to Aloun Farms in Hawaii with false promises of lucrative jobs, and then maintaining their labor at the farm through threats of serious economic harm, according to the indictment. They arranged for the Thai workers to pay high recruitment fees, which were financed by debts secured with the workers’ family property and homes. Significant portions of these fees went to the defendants themselves, as alleged in the indictment. After arrival at Aloun Farms, the Sou defendants confiscated the Thai nationals’ passports and failed to honor the employment contracts. The Sou defendants maintained the Thai nationals’ labor by threatening to send them back to Thailand, where they would face serious economic harms created by the debts. The indictment also charges that the defendants engaged in a visa fraud conspiracy by making false representations in documents filed to obtain employment-based visas.
This case is being investigated by the FBI and the U.S. Department of Homeland Security Immigration and Customs Enforcement. This case is being prosecuted by trial attorneys Susan French and Kevonne Small of the Criminal Section of the Civil Rights Division.
Three Gang Members Sentenced in Drug Conspiracy <br /> and for Related ChargesRead the Press Release
Three members of the violent gang known as the Almighty Latin King and Queen Nation (ALKQN)were sentenced today for their participation in narcotics and weapons trafficking.
Hiluterio Chavez, aka "Zeus," 33, of Chicago, was sentenced today to 87 months in prison by U.S. District Judge Sam R. Cummings of the Northern District of Texas, Lubbock Division. Chavez pleaded guilty on May 14, 2009, to a superseding indictment charging him with being a convicted felon in possession of firearms, possession of stolen firearms and conspiring to engage in the business of dealing in firearms.
Guerrero Olivas, aka "Screech," 26, of Big Spring, Texas, was sentenced today to 210 months in prison by Judge Cummings. Olivas pleaded guilty on May 29, 2009, to a superseding indictment charging him with conspiring to distribute and possess with intent to distribute five kilograms or more of cocaine and 100 kilograms or more of marijuana.
Eliseo Perez, aka "Wicked," 28, of Mission, Texas, was sentenced today to 188 months in prison by Judge Cummings. Perez pleaded guilty on May 14, 2009, to a superseding indictment charging him with conspiring to distribute and possess with intent to distribute five kilograms or more of cocaine and 100 kilograms or more of marijuana.
According to documents filed in court, Olivas and Perez admitted that they were members of a conspiracy that included Luis Nava, aka "Flaco"; Jose Robledo Nava, aka "Chino"; Reynaldo Nava, aka "Rat"; Robert Allen Ramirez, aka "Nesyo"; Marie Chavez, aka "Shorty"; Carol Ann Rivas Nava; Cecily Dominique Juarez; Jesus Martinez, aka "Solid"; David Hellums, aka "Cutthroat"; James Johnathan Cole, aka "Blitz;"; Eduardo Daniel Mares, aka "Pitt;" Gabriel Lee Gonzales; Michael Conde, aka "Psycho"; John Guzman, and others, and that from 2001 until December 2008, they directly or indirectly agreed to distribute, and possess with intent to distribute, cocaine and marijuana.
Olivas and Perez admitted that the overall scope of the conspiracy involved at least five kilograms of cocaine and 100 kilograms of marijuana. Olivas and Perez further admitted that they and their co-defendants intentionally and knowingly possessed with the intent to distribute cocaine and marijuana and distributed cocaine and marijuana to others. According to the indictment, they acquired the cocaine and marijuana from Mexico and brought it to the South Texas region, where it was packaged, stored, and transported to Big Spring, Lubbock and Midland for further distribution.
During part of the time of the conspiracy, in mid-July 2005, defendant Hiluterio Chavez conspired with others to deal in firearms. Chavez admitted that he organized, managed, and arranged for the acquisition of firearms throughout the Northern District of Texas, and that he would transport firearms within the Northern District of Texas. Court documents filed in the case indicate that the defendants illegally transported and trafficked the firearms throughout Texas with the intent to transport them to the Chicago area.
In addition to these three defendants, 10 defendants have also pleaded guilty and are yet to be sentenced. One defendant, Luis Nava, aka "Flaco," withdrew his guilty plea today and will proceed to trial by court order. Five remaining defendants, including Jose Robledo Nava, the alleged ALKQN leader in Texas, are pending trial. Jose Robledo Nava, along with James Johnathan Cole, Robert Allen Ramirez, Gabriel Lee Gonzales and Eduardo Daniel Mares, are charged in the indictment with the May 4, 2008, murders of Valerie Garcia and Michael Cardona in Big Spring.
An indictment is merely an allegation. Defendants are presumed innocent until and unless proven guilty in a court of law.
The case is being investigated by the National Gang Targeting, Enforcement, and Coordinating Center (Gang TECC); the Organized Crime Drug Enforcement Task Force (OCDETF); the Midland and El Paso U.S. Attorney’s Offices; the U.S. Drug Enforcement Administration; the FBI; U.S. Immigration and Customs Enforcement; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the El Paso Intelligence Center; U.S. Customs and Border Protection; the U.S. Marshals Service; the Texas Department of Public Safety; the police departments of Lubbock, Midland, Houston, San Antonio and Big Spring, Texas; the Lubbock County Sheriff’s Office; and the Howard County District Attorney’s Office.
Trial Attorneys Cody L. Skipper and Joseph A. Cooley of the Criminal Division’s Gang Unit and Assistant U.S. Attorney Jeffrey R. Haag of the Lubbock U.S. Attorney’s Office are prosecuting the case.
Son of Imprisoned Spy Pleads Guilty to Two Counts of Federal IndictmentRead the Press Release
Nathaniel James Nicholson, 25, of Eugene, Oregon, appeared before U.S. District Judge Anna J. Brown and pled guilty to the crimes of conspiracy to act as an agent of a foreign government and conspiracy to commit money laundering. The maximum penalties for those crimes are five years in prison and a fine of $250,000, and 20 years in prison and a fine of $500,000, respectively. Judge Brown scheduled sentencing on January 25, 2010.
Nicholson’s father, Harold J. Nicholson, a former Central Intelligence Agency (CIA) employee, is serving a 283-month sentence at the Federal Correctional Institution (FCI) in Sheridan, Oregon, for a 1997 conviction of conspiracy to commit espionage. The government alleges that defendant Harold J. Nicholson, working through his son Nathaniel J. Nicholson, received cash proceeds for his past espionage activities from agents of the Russian Federation between 2006 and 2008.
Nathaniel J. Nicholson, who has been on pre-trial release, admitted in his plea that he met with his father, Harold J. Nicholson at the prison in Sheridan on several occasions. At these meetings, he received information and directions from his father regarding his contact with agents of the Russian Federation. Defendant admitted he traveled to several locations outside the United States, met with agents of the Russian Federation, and received money in return. Nicholson admitted to receiving instructions from an agent of the Russian Federation to obtain information from his father Harold J. Nicholson. After collecting money from the Russian Federation, he disbursed the money to family members as directed by Harold J. Nicholson.
In entering his plea of guilty, defendant admitted the funds he received from the Russian Federation were proceeds of his father’s past espionage activities. Defendant further admitted traveling to the following international locations and returning to Portland, Oregon with funds received from the Russian Federation:
- Defendant returned to Portland, Oregon on December 17, 2006 from Mexico City, Mexico with approximately $10,000 he received from an agent of the Russian Federation.
- Defendant returned to Portland, Oregon on July 12, 2007 from Mexico City, Mexico with approximately $9,080 received from an agent of the Russian Federation.
- Defendant returned to Portland, Oregon on December 13, 2007 from Lima, Peru with approximately $7,013 received from an agent of the Russian Federation.
- Defendant returned to Portland, Oregon on December 14, 2008 from Cyprus carrying approximately $9,500 received from an agent of the Russian Federation.
As part of the plea, the defendant agreed to forfeit the $9,500 seized by the Federal Bureau of Investigation (FBI) on December 15, 2008 upon his return from Cyprus. Additionally, as part of the plea, he has agreed to testify on behalf of the government about his conduct involving his father and the Russian Federation between 2006 and 2008.
"In his guilty plea today, Nathaniel Nicholson acknowledged his role in the ongoing conspiracy with his father to collect money from the Russian Federation for his father’s past espionage activity," stated Acting U.S. Attorney Robinson. "His plea and his agreement to provide truthful testimony show his willingness to accept responsibility for his actions."
"Nathaniel Nicholson traveled the globe to collect money from and pass information to Russian agents on behalf of his imprisoned father, one of the highest-ranking CIA officials ever convicted of espionage. By doing so, Nathanial joined his father's long-running criminal scheme to provide information to Russia for financial gain. I applaud the many agents, analysts and prosecutors whose tireless efforts helped bring about this guilty plea," said David Kris, Assistant Attorney General for National Security.
"Despite imprisonment, convicted spy Harold Nicholson was able to profit from his previous acts of espionage by continuing to collect money from the Russian Federation through his son, Nathaniel James Nicholson," said Executive Assistant Director Arthur M. Cummings, II, of the FBI National Security Division. "Today’s plea comes only after countless hours of dedicated effort by FBI investigators and analysts in Portland working with our partners to uncover the Nicholsons’ activities and once again disrupt their acts to profit from providing information to the Russian Federation."
The Federal Bureau of Investigation and the Federal Bureau of Prisons (BOP) investigated this case. Assistant U. S. Attorneys Pamala Holsinger and Ethan Knight are prosecuting this case. Trial Attorney Patrick Murphy of the Counterespionage Section of the Justice Department’s National Security Division is also assisting.
Madhatta Haipe Extradited to U.S. for 1995 Hostage Taking Involving U.S. and Philippine CitizensRead the Press Release
Madhatta Haipe, a citizen of the Philippines, has been extradited from the Philippines to face trial in the District of Columbia for various crimes relating to the hostage taking of U.S. and Philippine citizens in 1995. Haipe was arrested Aug. 27 upon his arrival in the United States and is expected to make his initial appearance this afternoon in federal court in the District of Columbia to face a seven-count indictment filed on November 8, 2000.
The extradition, which was announced by David Kris, Assistant Attorney General for National Security; Channing Phillips, Acting U.S. Attorney for the District of Columbia, and Charlene B. Thornton, Special Agent in Charge of the FBI Honolulu Field Office, culminates a long term investigation.
The indictment alleges that defendant Madhatta Haipe, also known as Commander Haipe, led a group of armed individuals on Dec. 27, 1995 in the kidnapping of 16 individuals, including four U.S. citizens, in the rugged area around Trankini Falls, Mindanao Island, in the Philippines.
Haipe, who was a Professor of Islamic Studies at Mindanao State University, and his well-armed group of unidentified co-conspirators allegedly made threats to kill all the hostages if any of them attempted to escape. It is alleged that the group had numerous weapons, including automatic weapons.
The hostages, which included children, were threatened with weapons, forced to march through the jungle, and robbed of their valuables. The hostages were taken by force. Some were struck with rifle butts and all had rope tied around their hands or neck. Several hostages were released to facilitate the payment of the ransom. Those released were threatened that the other hostages would be killed if there was any military action taken against the hostage takers in an effort to free the hostages.
Between Dec. 27 and Dec. 31, 1995, the hostages were released as the kidnappers allegedly collected ransoms of one million pesos (about US $38,000 in 1995) and 500,000 pesos (about US $19,000 in 1995).
"With this extradition, we hope to finally bring justice for the U.S. and Philippine victims who were held hostage and repeatedly threatened with death during this crime," said David Kris, Assistant Attorney General for National Security. "I commend the FBI, the Justice Department prosecutors and the authorities in the Philippines who never stopped pursuing this matter on behalf of the victims."
Channing Phillips, Acting U.S. Attorney for the District of Columbia, said, "We will continue to use the full extent of our terrorism laws to prosecute those who take Americans hostage overseas. The pursuit of justice on behalf of hostage-taking victims remains one of our top priorities."
"The FBI Honolulu Division has investigated this matter in close coordination with the Philippine authorities for approximately 15 years," said Charlene Thornton, Special Agent in Charge of the FBI in Honolulu. "Through this international cooperation, we finally anticipate bringing to justice those who harm our U.S. citizens abroad despite the time and distance."
Presented to the U.S. District Court in Washington, D.C. by a federal grand jury in November 2000, the seven-count indictment charges Haipe with hostage taking, using firearms during a crime of violence and conspiracy, for which maximum prison sentences range between five years and life imprisonment.
The Department of Justice and the FBI, working with their partners in the Philippines have vigorously pursued this case for years. The investigation was conducted by FBI Honolulu Field Office, with substantial assistance from the Philippines Department of Justice, the Philippine National Police, the National Bureau of Investigation, and the Philippine Department of Foreign Affairs.
The prosecution is being handled by Assistant U.S. Attorneys Gregg Maisel and Anthony Asuncion of the U.S. Attorney’s Office for the District of Columbia, as well as Trial Attorney T. J. Reardon, III, of the Counterterrorism Section of the Justice Department’s National Security Division.
The public is reminded that an indictment is an accusation and a defendant is presumed innocent until proven guilty.
27 August 2009
United States & Illinois File Clean Air Act Lawsuit Against Midwest GenerationRead the Press Release
WASHINGTON—The United States and the state of Illinois have filed a civil complaint against Midwest Generation LLC, alleging that the company violated, and continues to violate, the Clean Air Act, announced the Justice Department, U.S. Environmental Protection Agency (EPA) and the Illinois Attorney General’s office.
The complaint alleges that Midwest Generation made major modifications to its coal-fired power plants in Illinois without also installing and operating required pollution control equipment. As a result, Midwest Generation’s six Illinois power plants, which have a combined capacity of more than 6,000 megawatts, are illegally emitting massive amounts of sulfur dioxide, nitrogen oxide and particulate matter. The complaint also alleges that emissions from Midwest Generation violated opacity and particulate matter limits.
The lawsuit, filed by the Justice Department on behalf of the EPA and the state of Illinois Attorney General’s Office, asks the court to order Midwest Generation to install and operate state-of-the-art air pollution control technology to substantially reduce emissions from the Midwest Generation power plants. The United States and the state of Illinois also seek civil penalties up to the maximum amount authorized by law, as well as actions by Midwest Generation to mitigate the adverse public health and environmental effects caused by the violations.
"The excess illegal emissions resulting from the violations alleged in the complaint are sufficient to cause serious harm to human health and the environment. Today’s federal court filing is the first step in this litigation and it demonstrates our commitment to ensuring compliance with environmental laws in the energy sector," said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division.
"EPA’s first priority is to protect the health of the people who live near these six plants and are most exposed to their pollution," said EPA Region 5 Acting Administrator Bharat Mathur. "Today's filing is a significant step toward improving the air quality not only of the communities in the shadow of these plants but for those downwind of their emissions as well."
"I am very concerned about the negative health effects that these aging plants have on the people who live in the communities where the Midwest Gen facilities are located," said Attorney General Lisa Madigan. "All Midwest Generation power plants must comply with the Clear Air Act and the Illinois Environmental Protection Act to safeguard public health and the environment."
Coal-fired power plants collectively produce more pollution than any other source in the United States. Emissions from coal-fired power plants cause detrimental health effects, including heart attacks, respiratory disease and premature mortality.
To combat these adverse effects, the EPA and the Justice Department are pursuing a national initiative, targeting electric utilities whose coal-fired power plants violate the law. The suit was filed in the U.S. District Court for the Northern District of Illinois.
Stanford Financial Group CFO Pleads Guilty to Charges Related to <br /> $7 Billion Scheme to Defraud InvestorsRead the Press Release
James M. Davis, 60, the former chief financial officer of Houston-based Stanford Financial Group (SFG), pleaded guilty today to fraud and obstruction charges related to a $7 billion scheme to defraud investors.
Davis was charged in a criminal information, filed on June 18, 2009, with conspiracy to commit mail, wire and securities fraud; mail fraud; and conspiracy to obstruct a U.S. Securities and Exchange Commission (SEC) investigation. The criminal information also seeks forfeiture of up to $1 billion in fraud proceeds.
According to the plea documents, Davis admitted that as part of the scheme, he and his co-conspirators defrauded investors who purchased approximately $7 billion in certificates of deposit (CDs) administered by Stanford International Bank Ltd. (SIBL), an offshore bank located on the island of Antigua. Davis further admitted that he and his co-conspirators misused and misappropriated most of those investor assets, including by diverting more than $1.6 billion into undisclosed personal loans to a co-conspirator, while misrepresenting to investors SIBL’s financial condition, its investment strategy and the extent of its regulatory oversight by Antiguan authorities.
According to the plea documents, Davis and his co-conspirators began in 1990 to make false entries into the general ledgers of SIBL relating to revenues and revenue balances. Despite this false reporting, Davis and his co-conspirators promoted SIBL’s investments as being "well-managed, safe and secure" and touted in SIBL’s annual reports false year-by-year percentage and dollar increases in the purported value of SIBL’s earnings, revenue and assets.
Davis further admitted in the plea documents that he and his co-conspirators used bogus revenue numbers for each year to generate the desired "Return on Investment" that was reported to investors. These "reverse engineered" numbers were developed using a secret instruction sheet that Davis admitted was provided to employees in SFG’s accounting group with instructions on to how to make changes to the spreadsheets to generate the false adjusted revenue figures.
Davis also admitted in the plea documents that in order to effectuate the scheme, misrepresentations were made to investors about who managed SIBL’s entire non-cash portfolio of assets. Specifically, Davis admitted that 80 percent of SIBL’s portfolio, internally referred to as "Tier III," was not managed by global money managers, as was represented to investors, but was actually made up of illiquid investments. These included at least $2 billion in personal loans to a co-conspirator, which were disguised as investments, and overvalued real and personal property, including interests in real estate that SIBL had acquired in 2008 for approximately $65 million, but was ultimately valued on SIBL’s books at $3.2 billion. Davis admitted that none of these facts were disclosed to investors.
According to the plea documents, Davis admitted that he and his co-conspirators promoted the sale of SIBL CDs by representing to SIBL CD investors that SIBL’s operations and financial condition were being scrutinized by Antigua’s bank regulator, the Financial Services Regulatory Commission (FSRC). Davis also admitted that he knew these statements to be false, because he and his co-conspirators had funneled bribe payments to a bank regulator, who is also an accused co-conspirator, in order to ensure that Antiguan regulators would not properly examine the financial statements of SIBL.
Also according to the plea documents, from 2005 through February of 2009, Davis admitted that he and his co-conspirators made a number of misrepresentations to the SEC in order to impair and impede the SEC’s investigation.
Davis has also agreed to the entry of a preliminary order of forfeiture in the amount of $1 billion.
In related cases, Robert Allen Stanford, chairman of SFG; Laura Pendergest-Holt, the chief investment officer of SFG; Gilberto Lopez, SFG’s chief accounting officer; Mark Kuhrt SFG’s global controller; and Leroy King, the administrator and chief executive officer of the FSRC, were indicted on June 18, 2009, on fraud and obstruction charges related to the scheme. Each are charged with conspiracy to commit mail, wire and securities fraud; wire fraud; mail fraud; and conspiracy to commit money laundering. In addition, Stanford, Pendergest-Holt and King are charged with conspiracy to obstruct an SEC investigation and obstruction of an SEC investigation. A trial date has not been set.
Also, on June 19, 2009, the U.S. District Court for the Southern District of Florida unsealed an indictment charging Bruce Perraud, a former SFG global security specialist at SFG’s Ft. Lauderdale, Fla., office, with one count of destruction of records in a federal investigation. Perraud is scheduled to stand trial on Sept. 21, 2009.
An indictment is merely an allegation. Defendants are presumed innocent until and unless proven guilty in a court of law.
The case is being investigated by the FBI’s Houston Field Office, Internal Revenue Service - Criminal Investigation and the U.S. Postal Inspection Service. The case is being prosecuted by individuals from the Criminal Division’s Fraud Section, including Paul E. Pelletier, Principal Deputy Chief; Jack Patrick, Senior Litigation Counsel; Matthew Klecka, Trial Attorney; and Allan Medina, Fraud Section Law Clerk, as well as Gregg Costa, Assistant U.S. Attorney for the Southern District of Texas.
The Criminal Division’s Asset Forfeiture and Money Laundering Section continues to assist the trial team by working with our foreign counterparts to facilitate the freezing of assets in the United Kingdom, Canada, Switzerland and other countries. The Criminal Division’s Office of International Affairs and the U.S. Attorney’s Office for the Southern District of Florida also continue to provide assistance in this matter.
North Carolina Doctor Convicted of Tax CrimesRead the Press Release
WASHINGTON – Rodney K. Justin, a medical doctor from Woodleaf, N.C., was convicted yesterday of obstructing the internal revenue laws and of failing to file tax returns for several years, the Justice Department and Internal Revenue Service (IRS) announced. After trial in Winston-Salem, N.C., a federal jury convicted Justin of four felony counts of corruptly obstructing the administration of the internal revenue laws by sending fake financial instruments called "Bills of Exchange" to the Secretary of the Treasury in Washington, D.C., in purported payment of over $350,000 in taxes. The jury also convicted Justin of willful failure to file returns for the tax years 2001 through 2004.
According to the indictment and evidence presented at trial, Justin had not filed a valid tax return since 1997. However, Justin earned in excess of $200,000 each year from 2001 through 2004. Justin sent letters and bogus returns to the IRS advancing false and frivolous tax defier claims purporting to set forth reasons why he was not required to pay taxes. The IRS repeatedly warned Justin that his positions were frivolous and advised him of his legal duty to file returns and pay taxes.
According to the indictment and evidence presented at trial, from 1998 through early 2004, Justin was a client at Guiding Light of God Ministries, also known as American Rights Litigators (ARL), formerly of Mount Dora, Fla. The evidence showed that Justin purchased the four fictitious "Bills of Exchange" he submitted in purported payment of income taxes from ARL.
Chief Judge James A. Beaty, Jr., scheduled sentencing for Feb. 18, 2010. Justin faces a maximum sentence of 16 years in prison and a maximum fine of $1.4 million.
Acting Assistant Attorney General John A. DiCicco of the Justice Department’s Tax Division commended the IRS special agents who investigated the case, as well as Assistant U.S. Attorney Frank Chut of the U.S. Attorney’s Office for the Middle District of North Carolina and Tax Division trial attorney Jeffrey McLellan who prosecuted the case.
In August 2004, a federal district judge permanently enjoined ARL and two of its promoters from the sale of a nationwide tax scam. In April 2008, a federal court in Florida sentenced two promoters of ARL, as well as ARL client Wesley Snipes, to prison for tax offenses. In September 2008, five promoters of ARL were indicted for tax fraud.
More information about the Justice Department’s Tax Division, including its tax enforcement efforts against ARL and its customers, may be found at http://www.usdoj.gov/tax.