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27 August 2009
Justice Department Settles Race Discrimination Allegations Against Davie, Florida, Apartment ComplexRead the Press Release
WASHINGTON – The Justice Department today announced an agreement with the owner of College Square Apartments, in Davie, Fla., to settle allegations of discrimination against African Americans. Under the consent decree, approved today in U.S. District Court in Miami, the defendants must pay a total of up to $140,000 to victims of discrimination and a civil penalty of $74,000 to the government.
The lawsuit, filed in August 2008 and later amended, alleged that the property manager at the time, Don Murroni, acting under the direction of Craig Forman, the president and sole shareholder of C.F. Enterprises, falsely told African Americans that no apartments were available and discouraged African Americans from applying. Murroni also allegedly offered to waive the application fee or other costs for white applicants, and told white testers that a selling point of College Square Apartments was the absence of black tenants. The allegations were based on evidence obtained through the Department’s fair housing testing unit, where individuals present as potential renters to gather information about possible discriminatory practices. Today’s settlement resolves the government’s claims against C.F. Enterprises and Craig Forman.
"This type of housing discrimination undercuts decades of progress in our nation’s efforts to ensure equal rights for all Americans. The fair housing testing program enables the Justice Department to aggressively root out blatant discrimination. Housing providers who break fair housing laws should view this case as a reminder that they will be sued," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division.
"Eradicating such discriminatory practices from the South Florida area is of the utmost importance. They are a scourge on our community, and will not be tolerated," said Acting U.S. Attorney Jeffery H. Sloman for the Southern District of Florida.
The settlement requires C.F. Enterprises and Forman to implement and publicize a nondiscrimination policy and provide periodic reports to the Justice Department. It also requires these defendants and their employees to undergo training on the requirements of the Fair Housing Act, which prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability. Individuals who believe that they may have been victims of housing discrimination at College Square Apartments should call the Department at 1-800-896-7743 extension 992.
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, email the Justice Department at [email protected] or contact the U.S. Department of Housing and Urban Development at 1-800-669-9777.
Former New York State Supreme Court Justice Thomas J. Spargo<br /> Convicted of Attempted Extortion and BriberyRead the Press Release
Former New York State Supreme Court Justice Thomas J. Spargo was convicted today by a federal jury in Albany, N.Y., of attempted extortion and soliciting a bribe.
Spargo, 66, was convicted following a three-day jury trial. Evidenced introduced at trial showed that on Nov. 13, 2003, Spargo solicited a $10,000 payment from an attorney with cases pending before him in Ulster County, while Spargo was serving as a state supreme court justice. The trial evidence showed that when the attorney declined to pay the money, Spargo increased the pressure by a second solicitation communicated through an associate. According to evidence presented at trial, on Dec. 19, 2003, Spargo directly told the attorney in a telephone conversation that he and another judge close to him had been assigned to handle cases in Ulster County, including the attorney’s personal divorce case. According to the evidence at trial, the attorney felt that if he did not pay the money, both the cases handled by his law firm and his personal divorce proceeding would be in jeopardy.
"It is a sad day indeed when a judge breaks the laws that he is sworn to enforce," said Assistant Attorney General Lanny A. Breuer. "The Criminal Division’s Public Integrity Section will continue in its singular mission to hold accountable wayward public officials who violate the law and the trust that has been placed in them."
"Judges are supposed to serve the people who elected them, not their own self-interests. What Mr. Spargo did is nothing more than old fashioned extortion," said FBI Special Agent in Charge John F. Pikus.
The maximum statutory penalty for the charge of soliciting a bribe is 10 years in prison and the maximum penalty for the charge of attempted extortion is 20 years. Spargo also faces a maximum fine of $250,000 for each count on which he was convicted.
This case is being prosecuted by Senior Trial Attorney Richard C. Pilger and Trial Attorney M. Kendall Day of the Public Integrity Section, which is headed by Chief William M. Welch II. The case was investigated by the FBI’s Albany Division.
26 August 2009
Spokane, Washington, Man Indicted on Civil Rights Charges<br /> Related to Threats to Reproductive Health Services ClinicRead the Press Release
WASHINGTON – Loretta King, Acting Assistant Attorney General for the Justice Department’s Civil Rights Division, announced today that a federal grand jury in Denver has charged Donald Hertz with transmitting a threat in interstate commerce and with violating the Freedom of Access to Clinic Entrances (FACE) Act for allegedly threatening an employee of a Colorado abortion clinic. The FACE Act makes it a federal crime to injure, intimidate or interfere with, by force or threat of force, employees of a facility that provides reproductive health services.
The grand jury alleged in a two-count indictment that on June 23, 2009, Hertz, 70, of Spokane, Wash., contacted an employee of the Boulder Abortion Clinic and communicated a threat to the life of the family members of an employee of the clinic. The indictment also alleges the defendant intended to intimidate and interfere with employees of the facility because they were providing reproductive health services.
An indictment is merely an accusation and the defendant is presumed innocent unless proven guilty. If convicted, Hertz faces a maximum prison sentence of up to six years and a fine of up to $350,000.
The case was investigated by special agents from the Denver and Spokane Divisions of the FBI and deputies from the United States Marshals Service. The case is being prosecuted by the Civil Rights Division of the Justice Department with the assistance of the U.S. Attorney’s Office for the District of Colorado.
Sixth Person Pleads Guilty to<br /> Illegally Accessing Confidential Passport FilesRead the Press Release
A sixth individual pleaded guilty today to illegally accessing numerous confidential passport application files. Karal Busch, 28, of District Heights, Md., pleaded guilty before U.S. Magistrate Judge Alan Kay in the District of Columbia to a one-count criminal information charging her with unauthorized computer access. Busch is scheduled to be sentenced on Dec. 15, 2009.
According to court documents, Busch worked fulltime for the State Department as a citizens services specialist in the Office of Children’s Issues from June 2003 through July 2006. In pleading guilty, Busch admitted that she had access to official State Department computer databases in the regular course of her employment, including the Passport Information Electronic Records System (PIERS), which contains all imaged passport applications dating back to 1994. The imaged passport applications on PIERS contain, among other things, a photograph of the passport applicant as well as certain personal information including the applicant’s full name, date and place of birth, current address, telephone numbers, parent information, spouse’s name and emergency contact information. These confidential files are protected by the Privacy Act of 1974, and access by State Department employees is strictly limited to official government duties.
In pleading guilty, Busch admitted that between March 4, 2004, and June 1, 2006, she logged onto the PIERS database and viewed the passport applications of more than 65 celebrities and their families, actors, professional athletes, musicians, models and other individuals identified in the press. Busch admitted that she had no official government reason to access and view these passport applications, but that her sole purpose in accessing and viewing these passport applications was idle curiosity.
Busch is the sixth current or former State Department employee to plead guilty in this continuing investigation. On Sept. 22, 2008, Lawrence C. Yontz, a former Foreign Service Officer and intelligence analyst, pleaded guilty to unlawfully accessing nearly 200 confidential passport files. Yontz was sentenced on Dec. 19, 2008, to 12 months of probation and ordered to perform 50 hours of community service. On Jan. 14, 2009, Dwayne F. Cross, a former administrative assistant and contract specialist, pleaded guilty to unlawfully accessing more than 150 confidential passport files. On March 23, 2009, Cross was sentenced to 12 months of probation and ordered to perform 100 hours of community service. On Jan. 27, 2009, Gerald R. Lueders, a former Foreign Service Officer, watch officer and recruitment coordinator, pleaded guilty to unlawfully accessing more than 50 confidential passport files. Lueders was sentenced on July 8, 2009, to one year of probation and ordered to pay a $5,000 fine. On July 10, 2009, William A. Celey, a file assistant, pleaded guilty to unlawfully accessing more than 75 confidential passport files. Celey is scheduled to be sentenced on Oct. 23, 2009. On Aug. 17, 2009, Kevin M. Young, a contact representative, pleaded guilty to unlawfully accessing more than 125 confidential passport files. Young is scheduled to be sentenced on Dec. 9, 2009.
These cases are being prosecuted by Trial Attorney Armando O. Bonilla of the Criminal Division’s Public Integrity Section, headed by Section Chief William M. Welch II. The cases are being investigated by the State Department Office of Inspector General.
More Than $5 Million in Awards <br /> to Washington Tribal CommunitiesRead the Press Release
Following their tour of the Tulalip Reservation, Deputy Attorney General David W. Ogden and Associate Attorney General Tom Perrelli today announced that more than $5 million has been awarded to tribal communities in Washington. The Department of Justice awarded more than $2.16 million in Recovery Act funds to three Washington Tribal Governments by the Office on Violence Against Women (OVW) and more than $3.3 million in FY2009 Community Oriented Policing Services (COPS) grants to 16 Washington tribal law enforcement agencies.
"The Department of Justice is well aware that Indian Country is struggling with complex law enforcement issues involving violent crime, violence against women and crimes against children, and that tribal communities are doing what they can with limited resources," said Deputy Attorney General Ogden. "We stand here as partners in this fight and are pleased to demonstrate our commitment with these grants for tribal communities in the State of Washington."
"Among the things that make me feel confident about this administration’s focus on Indian Country is that much of this money was specifically designated within the American Recovery and Reinvestment Act," said Associate Attorney General Perrelli. "These funds will have an immediate impact on the quality of services offered to survivors and their children by providing advocacy and support services for those who need to be kept safe in emergency situations, and for victims who choose to leave their abusive relationships."
The Justice Department officials were in Seattle for the first of two working sessions with tribal leadership and law enforcement experts leading up to the Attorney General’s Tribal Nations Listening Conference, part of an ongoing Justice Department initiative to increase engagement, coordination and action on tribal justice in Indian Country.
The grants will help combat violence against women in tribal communities and will support efforts by tribal police to reduce crime and disorder, and to enhance the services that they provide.
Recovery Act Violence Against Women Grants
The landmark American Recovery and Reinvestment Act of 2009 (Recovery Act), signed into law by President Obama, provides the Justice Department’s Office on Violence Against Women with $20.8 million for the Indian Tribal Governments Program to decrease the number of violent crimes committed against Indian women, help Indian tribes use their independent authority to respond to crimes of violence against Indian women and make sure that people who commit violent crimes against Indian women are held responsible for their actions. Today, the Department of Justice awarded more than $2.16 million in Recovery Act funds to three Washington Tribal Governments. The award period is 36 months:
The Tulalip Tribes of Washington has been awarded $899,999 to renovate a tribal facility for use as the Legacy of Healing Advocacy Center and Safe House. The funding will support the creation of five full-time jobs, including a manager who will oversee the program and four new Residential Aides. The tribe will also hire a contractor for building and security renovations and a consultant to work with staff to develop shelter program operating policies and procedures. The tribe will implement staff and volunteer training and community outreach and education, as well as provide ongoing education and support groups for Safe House and Transitional Housing clients.
The Squaxin Island Tribe will receive $633,968 through its Northwest Indian Treatment Center in Washington to increase the number and quality of wrap-around services provided to women who have experienced domestic violence. The tribe will hire a Domestic Violence Resource Coordinator for post-treatment case management, resource coordination and outreach, coordinating with WomenSpirit Coalition to provide training and transitional housing assistance for victims of domestic violence, dating violence, sexual assault or stalking.
The Swinomish Indian Community, in Skagit County, will receive $633,703 to establish an educational assistance program and shelter/safe house for victims of domestic violence, dating violence, sexual assault and stalking. The project will improve services available to help Indian women who are victims of domestic violence, dating violence, sexual assault and stalking, develop and enhance effective plans for the tribal government to reduce violent crimes against Indian women and keep them safe and strengthen tribal criminal justice system’s ability to get involved with stopping violence against Indian women.
FY2009 Community Oriented Policing Services (COPS) Grants
Today’s COPS grants were awarded under the Tribal Resources Grant Program (TRGP), which is administered by the Justice Department’s Office of Community Oriented Policing Services. The grants can be used to hire new officers, purchase crime-fighting technology systems and basic law enforcement equipment and can also be used to procure training and technical assistance. Today, the Department awarded more than $3.3 million to 16 Washington tribal law enforcement agencies to support efforts by tribal police to reduce crime and disorder and to enhance the services that they provide.
A number of tribal police departments in Washington received specific funding to hire new officers, for a total of more than $1.3 million to hire 7 new officers:
Grant Recipients Grant Amount Tulalip Tribes of Washington $423,170 (2 officers) Sauk-Suiattle Police Department $184,637 (1 officer) Chehalis Tribal Police Department $170,342 (1 officer) Spokane Tribe of Indians $198,213 (1 officer) Nooksack Indian Tribe $185,826 (1 officer) Port Gamble S'Klallam Indian Tribe $179,759 (1 officer)Ten tribal police departments also received more than $2 million for equipment and training:
Grant Recipients Grant Amount Makah Tribal Council $193,430 Chehalis Tribal Police Department $183,870 Nisqually Indian Tribe $152,100 Suquamish Tribe $199,900 Lower Elwha Klallum Tribe Police Department $185,000 Snoqualmie Tribal Police Services $119,701 Skokomish Indian Nation $200,000 Squaxin Island Tribe $198,895 Upper Skagit Indian Tribe $172,300 Yakama Nation Police Department $400,000The grants announced today are part of a broader federal initiative to bolster the capacity of tribal law enforcement agencies. All federally recognized tribes with established police departments were eligible to apply for funding.
Justice Department Files Lawsuit AllegingDisability-Based Housing Discrimination Against Idaho Condominium DeveloperRead the Press Release
WASHINGTON – The Justice Department today filed a lawsuit against the developer of the Riverwalk Condominiums, a condominium apartment complex in Post Falls, Idaho, for violating the Fair Housing Act by constructing apartments that do not have required accessibility for individuals with disabilities.
The lawsuit, filed in federal court in Idaho, charges that Riverwalk Condominiums LLC, the developer of the 36-unit condominium complex on Greensferry Road, failed to comply with the Fair Housing Act accessibility provisions which apply to 18 ground-floor units. Among other things, the complaint alleges that the public and common use areas are not accessible to people with disabilities; the routes to some units are not accessible; some kitchens and bathrooms are not fully usable by people in wheelchairs; and electrical outlets and environmental controls are mounted too high or too low for access by people in wheelchairs. The lawsuit also alleges that the defendants’ conduct constitutes a pattern or practice of discrimination or a denial of rights to a group of persons.
"Architectural barriers can be as big an obstacle to the housing rights of people with disabilities as an outright refusal to rent to them," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "Access to housing is a civil right, and the Justice Department is committed to correcting such violations of the Fair Housing Act."
"The Fair Housing Act expects that persons with disabilities have full access to their homes," said John Trasviña, Assistant Secretary for Fair Housing and Equal Opportunity for the U.S. Department of Housing and Urban Development. "Landlords should understand that the law is clear – it’s illegal to deny a person living with disabilities access to housing of their choice."
The lawsuit arose from complaints filed with the U.S. Department of Housing and Urban Development (HUD) by an apartment seeker and by the Intermountain Fair Housing Council, a private, non-profit fair housing organization based in Boise, Idaho. After investigating the complaints, HUD issued a charge of discrimination. After the complainants named in HUD’s charge elected to have the case heard in federal court, HUD referred the case to the Justice Department.
The lawsuit seeks monetary damages for those harmed by the defendants’ actions, civil penalties and a court order requiring correction of the violations. This complaint is an allegation of unlawful conduct. The allegations must still be proven in federal court. In order to ensure that the corrections can be made, the complaint names the complex’s condominium association as a necessary party for relief under the Federal Rules of Civil Procedure. There is no allegation that the condominium association violated the law.
The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status. Individuals who may have information related to this lawsuit should contact the Justice Department toll free at 1-800-896-7743 or email the Department at [email protected]. Individuals who believe that they may have been victims of housing discrimination elsewhere can call the Housing Discrimination Tip Line, 1-800-896-7743, email the Justice Department at [email protected] or contact HUD at 1-800-669-9777.
Fighting illegal housing discrimination is a top priority of the Justice Department. Visit the Civil Rights Division’s Web site at http://www.usdoj.gov/crt for more information about the laws it enforces.
Indiana Man Indicted for Cross BurningRead the Press Release
WASHINGTON – The Justice Department announced that Bruce Mikulyuk, of Mishawaka, Ind., has been indicted by a federal grand jury for charges stemming from a cross burning in September 2007. Mikulyuk made his first court appearance today in South Bend, Ind. A trial has been scheduled for Nov. 3, 2009.
Mikulyuk was charged with one count of interfering with the housing rights of another and one count of using fire in the commission of a felony. According to the indictment, Mikulyuk burned a cross at the home of an African American man and white woman and returned later with a knife and made threats.
The charges set forth in an indictment are merely accusations and the defendant is presumed innocent until proven guilty. If convicted, he faces a maximum punishment of 20 years in prison and a $500,000 fine.
FBI Special Agents Rick Miller and Arthur Grist investigated this case. The case will be prosecuted by Trial Attorney Betsy Biffl from the Civil Rights Division of the Justice Department.
Former Texas Correctional Officer Sentenced to 2 Years<br /> in Prison for Providing False Statements in Civil Rights CaseRead the Press Release
WASHINGTON – Eugene Morris, a former correctional officer with the Texas Department of Criminal Justice, was sentenced today in federal court in Houston for providing a false statement related to a federal civil rights investigation, the Justice Department announced. Morris was sentenced to two years in prison and two years of supervised release.
A federal jury in Houston found Morris guilty on May 21, 2008, of providing false information in an official report relating to the alleged assault of a prison inmate under his supervision. The evidence at trial focused on a physical altercation between Morris and an inmate in which the inmate suffered a fractured skull and brain injuries. Morris was convicted of falsely asserting in his report that the victim’s injuries were caused when the victim’s head unintentionally hit the floor during the struggle. Morris was charged with causing the victim’s injuries by kicking the inmate in the head while the inmate lay on the ground with his hands behind his back; however, the jury found Morris not guilty of a civil rights violation based on these allegations.
"We take any allegations of assaults by law enforcement officers very seriously, and we investigate them thoroughly. Officers who provide false statements to cover up this type of conduct are breaking the law, and they will be prosecuted," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division.
This case was investigated by the FBI and the Office of the Inspector General for the Texas Department of Criminal Justice. Assistant U.S. Attorney Ruben Perez and Trial Attorney Edward Caspar from the Civil Rights Division prosecuted the case.
The Civil Rights Division is committed to the vigorous enforcement of every federal criminal civil rights statute, including those laws that prohibit the willful use of excessive force or other acts of misconduct by law enforcement or other government officials.
Former Sand and Gravel Subcontractor Sentenced to<br /> 5 Years in Prison After Conspiracy and Bribery Conviction<br /> in Connection with a Levee Reconstruction ProjectRead the Press Release
WASHINGTON — A former sand and gravel subcontractor was sentenced today to serve five years in prison and to pay a $5,000 criminal fine by U.S. District Judge Carl J. Barbier after being convicted by a federal jury of conspiracy and bribery in connection with a $16 million hurricane protection project for the reconstruction a New Orleans levee, the Department of Justice announced today. The project involved the Lake Cataouatche Levee, which is south of New Orleans.
Durwanda Elizabeth Morgan Heinrich was found guilty on April 1, 2009, of conspiracy and bribery. The conduct centered on Heinrich’s offer to pay Kern Carver Bernard Wilson and Raul Miranda, former contract employees of the U.S. Army Corps of Engineers in exchange for their attempt to steer a dirt, sand and gravel subcontract on the levee project to her. Heinrich planned to use part of the proceeds from the subcontract to pay the bribes. A jury found both Heinrich and Wilson guilty in the charged conspiracy and bribery. The court sentenced Wilson on Aug. 5, 2009, to serve 70 months in jail and to pay a $15,000 criminal fine. Miranda pleaded guilty on Sept. 12, 2007, to agreeing to accept the bribe and awaits sentencing.
This sentencing is the result of an ongoing investigation of fraud in the procurement of levee reconstruction contracts let by the Corps of Engineers. The investigation is being conducted by the Antitrust Division’s Dallas Field Office, the U.S. Attorney’s Office for the Eastern District of Louisiana, the Vicksburg Fraud Resident Agency of the U.S. Army Criminal Investigation Command and the Department of Defense’s Criminal Investigative Service through the Disaster Fraud Task Force.
In September 2005, the Hurricane Katrina Fraud Task Force, now the Disaster Fraud Task Force, was created to deter, investigate and prosecute disaster-related federal crimes. To date, the Task Force has charged 1301 defendants in 1216 cases.
Anyone with information concerning anticompetitive conduct, fraud or other allegations of illegal activity concerning hurricane-related projects is urged to call the Disaster Fraud Hotline at 866-720-5721, the Antitrust Division’s Dallas Field Office at 214-661-8600, or the Division’s Atlanta Field Office at 404-331-7100.
Detroit Area Physical Therapist Pleads Guilty to Causing More Than $1.6 Million <br /> in Fraudulent Medicare BillingRead the Press Release
Detroit area physical therapist Jay Jha, 45, pleaded guilty today to participating in a conspiracy to defraud the Medicare program of approximately $18.3 million. Jha, of Troy, Mich., pleaded guilty to one count of conspiracy to commit health care fraud before U.S. District Judge Gerald Rosen. At sentencing, scheduled for Dec. 16, 2009, Jha faces a maximum penalty of 10 years in prison and a $250,000 fine.
According to information contained in plea documents, Jha, a physical therapist licensed in the state of Michigan, began working in approximately February 2003 as a contract therapist for a co-conspirator. The co-conspirator owned and controlled several companies operating in the Detroit area that purported to provide physical and occupational therapy services to Medicare beneficiaries. Jha admitted that he, the co-conspirator, and others created fictitious therapy files appearing to document physical and occupational therapy services provided to Medicare beneficiaries, when in fact no such services had been provided. According to court documents, the fictitious services reflected in the files were billed to Medicare through sham Medicare providers controlled by co-conspirators.
In order to create the fictitious therapy files, Jha acknowledged that his co-conspirators paid cash kickbacks and other inducements to Medicare beneficiaries, in exchange for the beneficiaries’ Medicare numbers and signatures on documents falsely indicating that they had received physical or occupational therapy. Jha admitted that he was one of the licensed physical or occupational therapists from whom the co-conspirator obtained signatures on fictitious "progress notes" and other documents in the therapy files, falsely indicating that the therapists had provided therapy services to the Medicare beneficiaries on those dates.
During the course of the scheme, Jha admitted he signed approximately 336 fictitious physical therapy files indicating that he had provided physical therapy services to Medicare beneficiaries, when in fact he had not. Jha admitted that he was paid between $90 and $110 for each file that he falsified. Between approximately February 2003 and December 2005, Jha admitted that he falsified physical therapy files that supported claims to the Medicare program totaling approximately $1,680,000. Medicare actually paid approximately $772,800 on those claims. Jha admitted that, throughout the conspiracy, he was fully aware that Medicare was being billed for physical therapy services that he falsely indicated he had performed.
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 more than 293 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
25 August 2009
Tennessee Demolition and Salvage Companies Indicted for Clean Air Act Violations and Defrauding the United StatesRead the Press Release
WASHINGTON— Two demolition and salvage companies and three of their respective owners and supervisors were indicted today by a federal grand jury in Chattanooga, Tenn., the Justice Department announced.
The indictment describes a year-long scheme in which the former Standard Coosa Thatcher plant in Chattanooga was illegally demolished while still containing large amounts of asbestos. The indictment goes on to allege that any asbestos that was removed from the plant prior to demolition was removed illegally, scattered in open debris piles, and left exposed to the elements in the vicinity. The indictment also alleges the efforts owners and supervisors made to cover up their illegal activities by falsifying documents and lying to federal authorities.
The eleven-count indictment charges the defendants with conspiracy to defraud the United States and to violate the Clean Air Act. The two companies and three individuals are also charged with violating the Clean Air Act’s "work-practice standards" intended to prevent releases of asbestos, making false statements to special agents of the U.S. Environmental Protection Agency (EPA), and obstructing justice.
The companies and individuals who have been indicted are:
- Watkins Street Project LLC, Chattanooga, Tenn., a land-holding and salvage company
- Mathis Construction Inc., Chattanooga, Tenn., a demolition company
- Donald Fillers, an owner of Watkins Street Project LLC
- James Mathis, an owner of Mathis Construction Inc.
- David Wood, a supervisor for Watkins Street Project LLC
The conspiracy and substantive Clean Air Act, and false statements counts of the indictment each carry a maximum possible term of five years in prison and a fine of $250,000, twice the gross gain or twice the gross loss to a victim. The obstruction of justice count of the indictment carries a maximum possible term of 20 years in prison and similar fines.
Asbestos has been determined to cause lung cancer, asbestosis and mesothelioma, an invariably fatal disease. The Environmental Protection Agency has determined that there is no safe level of exposure to asbestos.
The allegations in the indictment are mere accusations and all persons are presumed innocent until and unless proven guilty beyond a reasonable doubt in a court of law.
This case is being investigated by special agents of the EPA and investigators with Chattanooga-Hamilton County Air Pollution Control Bureau. The case is being prosecuted by Assistant U.S. Attorney Matthew T. Morris and Todd W. Gleason of the Justice Department’s Environmental Crimes Section.
Former Department of Defense Contractor Sentenced for Participation in Scheme <br /> to Steal Fuel from U.S. Army in IraqRead the Press Release
Lee William Dubois, a former Department of Defense (DoD) contractor, was sentenced today to three years in prison for his participation in a scheme to steal fuel worth approximately $39.6 million from the U.S. Army in Iraq.
Dubois, 32, of Lexington, S.C., was sentenced today by U.S. District Court Judge Gerald Bruce Lee in the Eastern District of Virginia. Dubois had pleaded guilty to a one-count information charging him with theft of government property on Oct. 7, 2008. In connection with his plea, Dubois testified at the trial of his co-conspirator, Robert Jeffery, who was convicted by a jury on Aug. 11, 2009. Dubois also repaid to the U.S. government $450,000 that represented the illicit proceeds of the scheme.
In his plea, Dubois admitted that between July 2007 and May 2008, he and his co-conspirators, purportedly representing DoD contractors in Iraq, used fraudulently-obtained documents to enter the Victory Bulk Fuel Point (VBFP) in Camp Liberty, Iraq, and presented false fuel authorization forms to steal aviation and diesel fuel from the VBFP for subsequent sale on the black market. According to plea documents, the United States owns and operates the VBFP in support of Operation Iraqi Freedom. The VBFP supplies aviation and diesel fuel to both military units and U.S. government contractors operating in and around the VBFP. To retrieve and transport the stolen fuel from the VBFP, Dubois admitted he and his co-conspirators employed approximately 10 individuals to serve as drivers and escorts of the trucks containing the stolen fuel. These individuals were able to enter the VBFP illegally by using government-issued common access cards.
Dubois admitted he obtained the cards by falsely representing to the U.S. Army that the drivers and escorts were employees of a DoD contractor, when, in fact, they were not employed by any government contractors. In addition, Dubois admitted he went to the VBFP and presented false documents authorizing his co-conspirators to draw fuel. Dubois also admitted that for two months during the scheme, he served as the lead escort for the stolen fuel. According to information contained in the plea documents, during the course of the scheme, Dubois and his co-conspirators stole approximately 10 million gallons of fuel worth approximately $39.6 million. Dubois received at least $450,000 in personal profits from the subsequent sale of the fuel on the black market.
In related cases, Robert Jeffery was convicted on Aug. 11, 2009, after a two-day jury trial, of one count of conspiracy and one count of theft of government property for his role in the fuel theft. Robert Young and Michel Jamil each pleaded guilty to participating in the same scheme. The evidence at trial showed that Jeffery served as an escort for the fuel trucks and retrieved hundreds of thousands of gallons of fuel from the VBFP. Sentencing for Jeffery is scheduled for December 11, 2009.
Young, 56, a former captain in the U.S. Army, pleaded guilty on July 24, 2009. In his guilty plea, Young admitted that between October 2007 and May 2008, he and his co-conspirators used fraudulently-obtained documents to enter the VBFP and presented false fuel authorization forms to steal aviation and diesel fuel from the VBFP for subsequent sale on the black market. As a result of the scheme, Young received approximately $1 million in personal profits. Sentencing for Young is scheduled for Oct. 30, 2009.
Jamil, 59, pleaded guilty on July 27, 2009, with his role in the scheme. Jamil admitted that in March 2007, he and two of his co-conspirators arranged for the creation of a false Memorandum for Record (MFR) authorizing individuals to draw fuel from VBFP, purportedly on behalf of a company serving as a contractor to the U.S. government. Jamil admitted that he and his co-conspirators used this false MFR and others to steal large quantities of fuel from the U.S. Army for subsequent sale on the Iraqi black market. As a result of the scheme, Jamil admitted he received between $75,000 and $87,500 in profits. Sentencing is scheduled for Nov. 13, 2009.
The case is being prosecuted by Special Assistant U.S. Attorney Steve Linick, Deputy Chief of the Criminal Division’s Fraud Section, and Fraud Section Trial Attorneys Andrew Gentin and Brigham Cannon. The investigation of this case was conducted by the U.S. Army Criminal Investigation Command, the Defense Criminal Investigative Service, the Washington Field Office of the FBI and members of the National Procurement Fraud Task Force and the International Contract Corruption Task Force (ICCTF).
The National Procurement Fraud Task Force, created in October 2006 by the Department of Justice, was designed to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in government contracting activity for national security and other government programs. The ICCTF is a joint law enforcement agency task force that seeks to detect, investigate and dismantle corruption and contract fraud resulting from U.S. Overseas Contingency Operations, including in Afghanistan, Iraq and Kuwait.
Five Arrested in Houston Sex Trafficking CaseRead the Press Release
Four men and one woman have been arrested on charges of conspiracy and sex trafficking of children, as well as forcing and coercing adults to engage in commercial sex acts.
The charges against the six total defendants represent the single-largest domestic sex trafficking case ever prosecuted in the Southern District of Texas.
"The protection of the innocent and the most vulnerable among us is one of the most important obligations of law enforcement," said Assistant Attorney General of the Criminal Division Lanny A. Breuer. "Sex trafficking, especially the trafficking of children, is unconscionable, and federal law enforcement is working closely with state and local authorities to fight this most reprehensible sort of exploitation."
"It is a horrible reflection on our society when adults prey on the vulnerabilities of children and reduce them to indentured sex slaves," said U.S. Attorney for the Southern District of Texas Tim Johnson. "Whenever and wherever offenses of such a depraved nature occur, our law enforcement community will respond with the sum of our collective prosecutorial resources."
Five of the six defendants were arrested late Monday, Aug. 24, 2009, and early Tuesday, Aug. 25, 2009, in a coordinated effort between federal and local law enforcement with warrants issued following the return of a sealed indictment by a Houston grand jury on Aug. 4, 2009.
The indictment unsealed today charges John Butler, 47; William Hornbeak, 34; Jamine Lake, 27; Andre McDaniels, 39; Kristen Land, 28; all of Houston, and Ronnie Presley, 35, formerly of Houston and currently of Tulsa, Okla., with conspiracy to traffic women and children for the purposes of commercialized sex; sex trafficking of children; sex trafficking by force, fraud and coercion; transportation of minors; transportation; and coercion and enticement.
Upon conviction, each count of sex trafficking and transportation of minors carries a maximum sentence of life in prison. Each count of transportation carries up to 10 years in prison, charges for coercion and enticement carry up to 20 years in prison and conspiracy carries up to five years in prison. All charges carry up to a $250,000 fine.
Butler, Hornbeak, Lake, McDaniels and Land were arrested in Houston. The government will ask the court to hold all the defendants in federal custody without bond pending trial. Presley is a fugitive and a warrant remains outstanding for his arrest. Anyone with information about Presley’s whereabouts is encouraged to contact their local FBI field office, or the Houston FBI Field Office at (713)-693-5000.
According to the unsealed indictment, the defendants allegedly operated commercialized sex businesses often disguised as modeling studios, health spas, massage parlors and bikini bars in Houston, and used sexually oriented publications and Web sites to advertise their illicit business. The criminal enterprise allegedly transported women and minors to and from the Houston area and had ties to Kansas, Nevada, Arizona and Florida. Women and minors as young as 16 were allegedly enticed and coerced into prostitution and were routinely beaten and threatened. The defendants allegedly collected any proceeds the women and minors received as a result of "dates," rendering them dependent upon the defendants for basic necessities.
An indictment is a formal accusation of criminal conduct, not evidence. A defendant is presumed innocent unless convicted through due process of law.
"The defendants are charged with transporting and threatening young women with violence in order to force them into prostitution," Texas Attorney General Greg Abbot said. "A concerted, cooperative effort by state and federal law enforcement is cracking down on the horrific crime of human trafficking – and those who profit from it."
The investigation leading to the charges was conducted by the FBI’s Innocence Lost Task Force and the Houston Police Department as part of the Innocence Lost National Initiative. A joint effort of the FBI, the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) and the National Center for Missing and Exploited Children, the initiative was founded in June 2003 to address criminal enterprises involving the domestic sex trafficking of children. At least one minor was rescued during the course of the investigation. Other minors and several adults have been returned to their families.
"From low-tech methods such as prostituting minors at truck stops, to high-tech methods such as internet advertising, our children are being used as commodities for sale or trade," FBI Special Agent-in-Charge Richard C. Powers said. "Here in Houston we have established unprecedented cooperation among law enforcement agencies that are working together to link cases, make arrests, and rescue children being sold on our streets. We will not allow our city to be a safe haven for this unconscionable activity. If you hear about it, if you suspect it, report it."
The case is being prosecuted by Assistant U.S. Attorney Sherri Zack and Special Assistant U.S. Attorney Angela Goodwin of the Southern District of Texas and of the Texas Attorney General’s Office and Trial Attorney Michael Yoon of CEOS.
Indictment
Federal Court Permanently Bars Texas Man <br /> from Preparing Tax ReturnsRead the Press Release
WASHINGTON - The Justice Department announced today that a federal judge in Dallas has permanently barred Lennon Madzima from preparing federal tax returns for others. The court found Madzima repeatedly understated his customers’ income tax liabilities "by negligently and willfully claiming frivolous and meritless federal fuel tax credits that had no realistic possibility of being sustained on the merits" and "by negligently and willfully inflating or fabricating telephone excise tax refund credits." Madzima’s false claims for federal fuel tax credits have appeared on over 1,100 returns and totaled over $1 million. Fraudulently claiming the fuel tax credit is one of the IRS’s Dirty Dozen tax scams for 2009.
The permanent injunction order requires Madzima to give the Justice Department a list of his customers’ names, Social Security numbers, addresses, and telephone numbers.
In the past year, the Justice Department has obtained injunctions shutting down several tax preparers who allegedly claimed bogus fuel credits.
Acting Assistant Attorney General John DiCicco thanked Justice Department trial attorney Daniel Applegate, who handled the case, as well as Shauna Henline of the IRS’s Small Business/Self Employed Division who investigated it.
Over the past decade, the Justice Department has obtained injunctions against more than 420 tax preparers and ax-fraud promoters. Information about these cases is available on the Justice Department website.
Epson Imaging Devices Agrees to Plead Guilty and Pay $26 Million Fine<br /> for Participating in LCD Price-Fixing ConspiracyRead the Press Release
WASHINGTON – Japanese electronics manufacturer Epson Imaging Devices Corporation (Epson) agreed to plead guilty and pay a $26 million criminal fine for its role in a conspiracy to fix prices in the sale of Thin Film Transistor-Liquid Crystal Display panels (TFT-LCD) sold to Motorola Inc., the Department of Justice announced today.
According to a one-count felony charge filed today in U.S. District Court in San Francisco, Epson, a subsidiary of Seiko Epson Corporation, participated in a conspiracy to fix the prices of TFT-LCD panels sold to Motorola for use in Razr mobile phones from the fall of 2005 to the middle of 2006. According to the plea agreement, which is subject to court approval, Epson has agreed to cooperate with the Department’s ongoing antitrust investigation.
TFT-LCD panels are used in computer monitors and notebooks, televisions, mobile phones and other electronic devices. In 2006, the worldwide market for TFT-LCD panels was approximately $70 billion. Epson, based in Japan, was known as Sanyo Epson Imaging Devices Corporation during the conspiracy.
Epson is charged with carrying out the conspiracy by agreeing, during bilateral meetings, conversations and communications with unnamed co-conspirators in Japan, to charge prices of TFT-LCD to be sold to Motorola at certain predetermined levels. Epson issued price quotations in accordance with the agreements reached and exchanged information on sales of TFT-LCD sold to Motorola, for the purpose of monitoring and enforcing adherence to the agreed-upon prices.
Today’s charge is the result of a joint investigation into the TFT-LCD industry by the Department of Justice Antitrust Division’s San Francisco Field Office and the Federal Bureau of Investigation in San Francisco. Previously in this investigation, on Dec. 15, 2008, LG Display Co. pleaded guilty to participating in a worldwide conspiracy to fix the price for TFT-LCD panels and was sentenced to pay a $400 million criminal fine. On Dec. 16, 2008, Sharp Corp. pleaded guilty to participating in three separate conspiracies to fix the prices of TFT-LCD panels sold to Dell, Apple Computer Inc. and Motorola Inc. and was sentenced to pay a $120 million criminal fine. On Jan. 14, 2009, Chunghwa Picture Tubes Ltd. pleaded guilty to participating in the same worldwide conspiracy as LG, and was sentenced to pay a $65 million criminal fine. On May 22, 2009, Hitachi Displays Ltd. pleaded guilty to participating in a conspiracy to fix the prices of TFT-LCD panels sold to Dell Inc. for use in desktop monitors and notebook computers from April 1, 2001, to March 31, 2004, and was sentenced to pay a $31 million criminal fine. Additionally, nine executives have been charged to date in the Department’s ongoing investigation.
Anyone with information concerning illegal conduct in the TFT-LCD industry is urged to call the Antitrust Division’s San Francisco Field Office at 415-436-6660.
Covenant Medical Center to Pay U.S. $4.5 Million<br /> to Resolve False Claims Act AllegationsRead the Press Release
WASHINGTON – Covenant Medical Center in Waterloo, Iowa has agreed to pay the United States $4.5 million to resolve allegations that it violated the False Claims Act, the Department of Justice announced today.
This settlement resolves allegations that Covenant submitted false claims to Medicare by having financial relationships with five physicians that violated the Stark Law. The Stark Law prohibits a hospital from profiting from referrals of patients made by a physician with whom the hospital has an improper compensation arrangement. An arrangement is improper if a physician is paid above fair market value for their services and that compensation is not commercially reasonable. The Stark Law is intended to ensure that physicians' medical judgments are not compromised by improper financial incentives and are based solely on the best interests of the patient.
The United States alleged that Covenant violated the Stark Law by paying commercially unreasonable compensation, far above fair market value, to five employed physicians who referred their patients to Covenant for treatment. These physicians were among the highest paid hospital-employed physicians not just in Iowa, but in the entire United States.
Tony West, Assistant Attorney General for the Department of Justice's Civil Division, stated, "Health care providers must act in the best interests of their patients. The Justice Department will protect patients by pursuing hospitals that have improper financial relationships with physicians."
"This payment is the largest ever related to claims of health care fraud in the Northern District of Iowa," said U.S. Attorney Matt M. Dummermuth of the Northern District of Iowa. "We are actively working with our investigative partners to ensure Medicare funds are properly spent, and we will continue to aggressively pursue all types of fraud in order to protect federal health care dollars."
The Justice Department's Civil Division and the United States Attorney's Office for the Northern District of Iowa jointly handled this case. The Office of the Inspector General, Department of Health and Human Services provided investigative assistance.
24 August 2009
United States Transfers Guantanamo Bay Detainee to AfghanistanRead the Press Release
The Department of Justice today announced that Mohammed Jawad, a native of Afghanistan, has been transferred from the detention facility at Guantanamo Bay to Afghanistan.
On July 30, 2009, consistent with the U.S. government’s notice that it would no longer treat Jawad as detainable under the Authorization for Use of Military Force, a federal court ordered the U.S. government to release him from detention at Guantanamo Bay. On Aug. 6, 2009, in accordance with Congressionally-mandated reporting requirements, the administration informed Congress of its intent to transfer Jawad.
Jawad’s transfer was carried out under an arrangement between the United States and the government of Afghanistan. The United States has coordinated closely with the government of Afghanistan to ensure the transfer takes place under appropriate security measures and will continue to consult with the Afghan government regarding Jawad.
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, Russia, Saudi Arabia, Spain, Sweden, Sudan, Tajikistan, Turkey, Uganda, United Kingdom and Yemen.
Special Task Force on Interrogations and Transfer Policies <br /> Issues Its Recommendations to the PresidentRead the Press Release
Attorney General Eric Holder today announced that the Special Task Force on Interrogations and Transfer Policies, which was created pursuant to Executive Order 13491 on Jan. 22, 2009, has proposed that the Obama Administration establish a specialized interrogation group to bring together officials from law enforcement, the U.S. Intelligence Community and the Department of Defense to conduct interrogations in a manner that will strengthen national security consistent with the rule of law.
The Task Force also made policy recommendations with respect to scenarios in which the United States moves or facilitates the movement of a person from one country to another or from U.S. custody to the custody of another country to ensure that U.S. practices in such transfers comply with U.S. law, policy and international obligations and do not result in the transfer of individuals to face torture.
"The new policies proposed by the Task Force will allow us to draw the best personnel from across the government to conduct interrogations that will yield valuable intelligence and strengthen our national security," said Attorney General Holder. "There is no tension between strengthening our national security and meeting our commitment to the rule of law, and these new policies will accomplish both."
Interrogations
After extensively consulting with representatives of the Armed Forces, the relevant agencies in the Intelligence Community, and some of the nation’s most experienced and skilled interrogators, the Task Force concluded that the Army Field Manual provides appropriate guidance on interrogation for military interrogators and that no additional or different guidance was necessary for other agencies. These conclusions rested on the Task Force’s unanimous assessment, including that of the Intelligence Community, that the practices and techniques identified by the Army Field Manual or currently used by law enforcement provide adequate and effective means of conducting interrogations.
The Task Force concluded, however, that the United States could improve its ability to interrogate the most dangerous terrorists by forming a specialized interrogation group, or High-Value Detainee Interrogation Group (HIG), that would bring together the most effective and experienced interrogators and support personnel from across the Intelligence Community, the Department of Defense and law enforcement. The creation of the HIG would build upon a proposal developed by the Intelligence Science Board.
To accomplish that goal, the Task Force recommended that the HIG should coordinate the deployment of mobile teams of experienced interrogators, analysts, subject matter experts and linguists to conduct interrogations of high-value terrorists if the United States obtains the ability to interrogate them. The primary goal of this elite interrogation group would be gathering intelligence to prevent terrorist attacks and otherwise to protect national security. Advance planning and interagency coordination prior to interrogations would also allow the United States, where appropriate, to preserve the option of gathering information to be used in potential criminal investigations and prosecutions.
The Task Force recommended that the specialized interrogation group be administratively housed within the Federal Bureau of Investigation, with its principal function being intelligence gathering, rather than law enforcement. Moreover, the Task Force recommended that the group be subject to policy guidance and oversight coordinated by the National Security Council.
The Task Force also recommended that this specialized interrogation group develop a set of best practices and disseminate these for training purposes among agencies that conduct interrogations. In addition, the Task Force recommended that a scientific research program for interrogation be established to study the comparative effectiveness of interrogation approaches and techniques, with the goal of identifying the existing techniques that are most effective and developing new lawful techniques to improve intelligence interrogations.
Transfers
The Task Force also made policy recommendations with respect to scenarios in which the United States moves or facilitates the movement of a person from one country to another or from U.S. custody to the custody of another country to ensure that U.S. practices in such transfers comply with U.S. law, policy and international obligations and do not result in the transfer of individuals to face torture. In keeping with the broad language of the Executive Order, the Task Force considered seven types of transfers conducted by the U.S. government: extradition, transfers pursuant to immigration proceedings, transfers pursuant to the Geneva Conventions, transfers from Guantanamo Bay, military transfers within or from Afghanistan, military transfers within or from Iraq, and transfers pursuant to intelligence authorities.
When the United States transfers individuals to other countries, it may rely on assurances from the receiving country. The Task Force made several recommendations aimed at clarifying and strengthening U.S. procedures for obtaining and evaluating those assurances. These included a recommendation that the State Department be involved in evaluating assurances in all cases and a recommendation that the Inspector Generals of the Departments of State, Defense and Homeland Security prepare annually a coordinated report on transfers conducted by each of their agencies in reliance on assurances.
The Task Force also made several recommendations aimed at improving the United States’ ability to monitor the treatment of individuals transferred to other countries. These include a recommendation that agencies obtaining assurances from foreign countries insist on a monitoring mechanism, or otherwise establish a monitoring mechanism, to ensure consistent, private access to the individual who has been transferred, with minimal advance notice to the detaining government.
The Task Force also made a series of recommendations that are specific to immigration proceedings and military transfer scenarios. In addition, the Task Force made classified recommendations that are designed to ensure that, should the Intelligence Community participate in or otherwise support a transfer, any affected individuals are subjected to proper treatment.
Background Information
The Task Force on Interrogations and Transfer Policies is chaired by the Attorney General, with the Director of National Intelligence and the Secretary of Defense serving as Co-Vice-Chairs. Other members of the Task Force are the Secretaries of State and Homeland Security, the Director of the Central Intelligence Agency, the Chairman of the Joint Chiefs of Staff. Each of these officials appointed senior-level representatives to serve on a working-level task force to complete the work of the Executive Order.
The Executive Order directed the Task Force to study and evaluate "whether the interrogation practices and techniques in Army Field Manual 2-22.3, when employed by departments and agencies outside the military, provide an appropriate means of acquiring the intelligence necessary to protect the Nation, and, if warranted, to recommend any additional or different guidance for other departments or agencies."
The Task Force was also directed to study and evaluate "the practices of transferring individuals to other nations in order to ensure that such practices comply with the domestic laws, international obligations, and policies of the United States and do not result in the transfer of individuals to other nations to face torture or otherwise for the purpose, or with the effect, of undermining or circumventing the commitments or obligations of the United States to ensure the humane treatment of individuals in its custody and control."
B. Todd Jones to Chair Attorney General’s Advisory CommitteeRead the Press Release
Attorney General Eric Holder has appointed U.S. Attorney for the District of Minnesota B. Todd Jones to chair the Attorney General’s Advisory Committee (AGAC) of U.S. Attorneys. Jones served as U.S. Attorney for the District of Minnesota from 1998-2001 and has previously served as a member, vice chair and chair of the AGAC (1999-2001).
"U.S. Attorney Jones is a dynamic leader who will bring a wealth of expertise to the Committee as we work together to further the Department’s efforts to preserve our nation’s national security, reduce crime, preserve our environment, protect the rights of each and every one of us, and bring fairness back into the marketplace," Attorney General Holder said.
H. Marshall Jarrett, Director of the Executive Office for United States Attorneys, added that, "Todd Jones is a seasoned prosecutor whose vision and guidance will be invaluable to the Committee in leading this distinguished group of United States Attorneys."
Jones was confirmed as the U.S. Attorney for the District of Minnesota on Aug. 7, 2009. Prior to his appointment, Jones served as a partner with Robins, Kaplan, Miller & Ciresi (2001-2009); partner with Greene Espel, PLLP (2001; 1994-997); presidentially-appointed U.S. Attorney for the District of Minnesota (1998-2001); First Assistant U.S. Attorney for the District of Minnesota (1997-1998); and Assistant U.S. Attorney (1992-1994). Jones is a graduate of University of Minnesota Law School.
The AGAC, created in 1973, provides advice and counsel to the Attorney General on a wide array of policy, management and operational issues affecting U.S. Attorneys Offices throughout the country. It also represents the voice of U.S. Attorneys in the decision-making process at the Department.
21 August 2009
Former UBS Banker Sentenced to 40 Months for Aiding<br /> Billionaire American Evade TaxesRead the Press Release
MIAMI – Former UBS banker, Bradley Birkenfeld of Weymouth, Mass., has been sentenced to 40 months incarceration by Judge William J. Zloch in Fort Lauderdale, Fla. On June 19, 2008, Birkenfeld pleaded guilty to conspiring to defraud the United States, the Justice Department announced today.
According to court documents and statements made in court today, Birkenfeld worked as a private banker in Geneva, Switzerland, for UBS AG, one of the country’s largest banks. While at UBS, Birkenfeld assisted an American billionaire real estate developer evade paying $7.2 million in taxes by assisting the developer conceal $200 million of assets hidden offshore in Switzerland and Liechtenstein. While at UBS, Birkenfeld routinely traveled to and had contacts within the United States in an effort to assist wealthy Americans conceal their ownership in assets held offshore and therefore evade the payment of taxes on the income generated on the money hidden offshore.
In order to assist wealthy Americans who concealed assets at UBS in Switzerland, Birkenfeld admitted that he and others advised U.S. clients to place cash and valuables in Swiss safety deposit boxes; purchase jewels, artwork and luxury items using the funds in their Swiss bank account while overseas; misrepresent the receipt of funds from the Swiss bank account in the United States as loans from the Swiss bank; destroy all off-shore banking records existing in the United States; utilize Swiss bank credit cards that they claimed could not be discovered by United States authorities; and file false U.S. individual income tax returns that omitted income earned by their clients and fraudulently misrepresented that their clients did not have an interest in and signature authority over accounts held offshore.
In February 2009, UBS entered into a deferred prosecution agreement and the bank admitted to helping U.S. taxpayers hide accounts from the Internal Revenue Service (IRS). As part of their agreement, UBS provided the United States government with the identities of, and account information for, certain United States customers of UBS’s cross-border business. The deferred prosecution agreement paragraph 13 stated that the United States would be seeking enforcement of a civil "John Doe" summons seeking records for United States persons who maintained accounts with UBS in Switzerland. On Aug. 19, 2009, the civil matter was resolved and UBS agreed to produce the identities and account information of 4,450 additional UBS customers who are believed to have violated United States law.
"To those taxpayers who have illegally hidden their income in foreign bank accounts and to those who have illegally helped clients hide income and assets, today's sentencing serves as notice: come in and completely come clean," said John A. DiCicco, Acting Assistant Attorney General of the Justice Department’s Tax Division. "A failure or delay in doing so until after the Government has discovered the wrongdoing, even if there is then cooperation, has serious consequences."
"Those who have stashed money offshore should not take comfort in the fact that the UBS investigation seems to have reached criminal and civil resolutions," said Jeffrey H. Sloman, Acting U.S. Attorney for the Southern District of Florida. "New leads and additional evidence are being uncovered each day. We are committed to pursuing these new leads and to developing additional cases against those who assist Americans evade their income tax obligations."
Acting Assistant Attorney General John DiCicco and Acting U.S. Attorney Jeffrey H. Sloman commended the investigative efforts of the IRS agents involved in this case. The prosecution is being handled by Senior Litigation Counsel Kevin M. Downing and Trial Attorney Michael P. Ben’Ary of the Tax Division, and Assistant U.S. Attorney Jeffrey A. Neiman.
"Mr. Birkenfeld admitted his role in advising wealthy U.S. clients to take various actions to conceal their assets at UBS in Switzerland from the US Government," said Eileen Mayer, Chief, IRS Criminal Investigation. "Today, he is paying the price for that role. Clients as well as promoters of international tax fraud are under the watchful scrutiny of the IRS. For anyone with hidden offshore assets, the IRS wants to send a clear message. There is still time – although the clock is ticking - to come in and get right with the government."
United States citizens who have an interest in, or signature or other authority over, a financial account in a foreign country with assets in excess of $10,000 are required to disclose the existence of such account on Schedule B, Part III of their individual income tax return.
Additionally, American citizens must file a Report of Foreign Bank and Financial Accounts (FBAR) with the U.S. Treasury, disclosing any financial account in a foreign country with assets in excess of $10,000 for which they have a financial interest in or signature authority, or other authority over.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at http://www.usdoj.gov/tax/.
A copy of this press release may be found on the Web site of the U.S. Attorney’s Office for the Southern District of Florida at www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the U.S. District Court for the Southern District of Florida at www.flsd.uscourts.gov or http://pacer.flsd.uscourts.gov.
Former Military Contractor Sentenced for Participating in Scheme to Steal Large Quantities of Fuel from U.S. Army in AfghanistanRead the Press Release
WASHINGTON - Raschad L. "Sean" Lewis, a former fuel section employee of Kellogg Brown and Root Inc. (KBR) assigned to Bagram Airfield in Afghanistan, was sentenced today to 84 months in prison for his role in a bribery and a fuel diversion scheme, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Dana J. Boente for the Eastern District of Virginia. U.S. District Court Judge Leonie M. Brinkema also ordered Lewis to pay $891,000 in restitution and serve three years of supervised release.
Lewis was convicted by a federal jury on June 17, 2009, of conspiracy, false writing, bribery of a public official and false claims. According to court documents, KBR had a contract to provide support services to the U.S. Army at Bagram Airfield, including unloading truckloads of jet fuel delivered by drivers hired by Red Star Enterprises Limited (Red Star). Evidence at trial proved that between May and September 2006, Lewis and other KBR employees conspired to accept payments from drivers, who in fact were selling their fuel to parties outside the airfield, in return for providing the drivers with documents to deliver to Red Star falsely showing that the truckloads of fuel had been delivered to the airfield. According to evidence presented in court, more than 48 truckloads of fuel were diverted for sale outside the airfield between May and September 2006, valued at more than $800,000.
In related cases, former KBR employee Wallace A. Ward pleaded guilty to conspiracy on Jan. 25, 2008, and was sentenced on April 11, 2008, to 26 months in prison. Another former KBR employee, James N. Sellman, pleaded guilty to conspiracy on Feb. 7, 2008, and was sentenced on May 9, 2008, to 26 months in prison.
The case is being prosecuted by Assistant U.S. Attorney Jack Hanly of the U.S. Attorney’s Office for the Eastern District of Virginia and Trial Attorney James Graham of the Criminal Division’s Fraud Section. The case was investigated by the U.S. Army Criminal Investigative Division in Virginia and Afghanistan, and the Defense Criminal Investigative Service in Virginia. The Defense Energy Support Center’s Office of the General Counsel in Fort Belvoir, Va., also provided assistance.
In October 2006, the National Procurement Fraud Task Force was formed 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 National Procurement Fraud Task Force, chaired by Assistant Attorney General Breuer, includes the U.S. Attorneys’ Offices, the FBI, the U.S. Inspectors General community and a number of other federal law enforcement agencies. This case, as well as other cases brought by members of the Task Force, demonstrates the Department of Justice’s commitment to helping ensure the integrity of the government procurement process.
Former Government Official Indicted on Public Corruption Charges Related to Ongoing Abramoff InvestigationRead the Press Release
WASHINGTON - A former Congressional staffer and chief of staff in two federal agencies was indicted today by a federal grand jury in the District of Columbia on public corruption charges, the Justice Department announced.
The five-count indictment charges Horace M. Cooper, 44, of Lorton, Va., with one count of conspiracy, one count of fraudulent concealment, two counts of false statements, and one count of obstruction of an official proceeding. U.S. Magistrate Judge Alan Kay today issued a criminal summons directing Cooper to make an initial appearance in U.S. District Court for the District of Columbia on Wednesday, Sept. 9, 2009, at 1:45 p.m.
According to the indictment, Cooper was employed from approximately 1994 to late 2001 as a staffer for a member of the U.S. House of Representatives. From approximately late 2001 to December 2002, Cooper served as the chief of staff for Voice of America (VOA), an executive branch agency of the U.S. government and subsequently from December 2002 through approximately August 2005, he served as chief of staff for the Employment Standards Administration of the U.S. Department of Labor.
The indictment alleges that from approximately December 2001 to May 2005, while he worked at VOA and then at the Department of Labor, Cooper conspired with Jack A. Abramoff, a former Washington, D.C., lobbyist, and others, to defraud the United States of his honest services and of its right to have federal executive branch business conducted without improper influence. The indictment also alleges that Cooper, Abramoff and others conspired to give and receive things of value to influence or reward Cooper for official acts as a federal executive branch employee.
Specifically, the indictment alleges that during this time, Cooper solicited and received from Abramoff and his colleagues thousands of dollars worth of tickets to sporting events and concerts; that Cooper and his companions allegedly received free or discounted meals and drinks on dozens of occasions at a restaurant controlled by Abramoff; and that Cooper, at Abramoff’s invitation and expense, allegedly hosted a Super Bowl party for his friends at another restaurant Abramoff controlled. The indictment also alleges that Cooper, rewarded and influenced by the tickets and meals solicited and received from Abramoff and his associates, agreed to use his official positions at VOA and the Department of Labor to advance Abramoff’s interests and those of his clients. In addition, the indictment alleges that from approximately 1998 to 2000, Cooper received from Abramoff and his colleagues thousands of dollars worth of tickets to concerts and sporting events while Cooper was serving as a Congressional staffer.
The indictment also charges Cooper with concealing his relationship with Abramoff, Abramoff’s colleagues and clients and the public by, among other things, failing to report certain gifts received from Abramoff on his annual financial disclosure forms, as he was required to do as a high-level official in both the legislative and executive branches of the U.S. government. In addition, the indictment charges Cooper with making false statements on his 2003 and 2004 Executive Branch Public Financial Disclosure Reports. Specifically, the indictment alleges that Cooper reported he had received no gifts from a single source with an aggregate value of more than $260 during those years, when allegedly he had received from Abramoff many tickets to concerts and sporting events that required disclosure.
Finally, the indictment charges Cooper with obstructing a grand jury investigation by making false statements to federal law enforcement officials and to the grand jury, and by providing investigators with certain documents that he maintained proved his statements regarding alleged free meals were true, when allegedly he knew that they did not.
If convicted, Cooper faces a maximum sentence of five years in prison for conspiracy; five years in prison for fraudulent concealment; five years in prison for each of two false statement counts; and 20 years in prison for obstruction of justice. If convicted, Cooper also faces a maximum fine of $250,000.
To date, 20 individuals, including lobbyists and public officials, have pleaded guilty, been convicted at trial, or are awaiting trial in connection with the ongoing investigation into the activities of Abramoff and his associates. Abramoff pleaded guilty in January 2006 to conspiracy to commit honest services fraud, honest services fraud and tax evasion. Abramoff was sentenced in September 2008 to 48 months in prison and is cooperating in the investigation.
This case is being prosecuted by Trial Attorneys Matthew L. Stennes and Marc E. Levin of the Criminal Division’s Public Integrity Section, headed by Chief William M. Welch II. The case is being investigated by the FBI’s Washington Field Office and the Office of the Inspector General for the U.S. Department of Labor.
An indictment is merely an accusation. All defendants are presumed innocent until proven guilty at trial beyond a reasonable doubt.
Indictment
Boca Raton Man Convicted of Securities Fraud, Tax FraudRead the Press Release
WASHINGTON - Donald Platten of Boca Raton, Fla., was convicted today of conspiracy, securities fraud and tax charges following a jury trial before Judge Donald Middlebrooks in West Palm Beach, Fla., the Justice Department and Internal Revenue Service (IRS) announced.
In December 2008, Platten was indicted on 17 charges, including conspiracy to commit securities fraud, securities fraud, conspiracy to commit wire fraud and impeding the internal revenue laws. He was convicted on the conspiracy to commit securities fraud count, 6 of the 14 securities fraud counts, conspiracy to commit wire fraud and impeding the internal revenue laws.
According to the indictment and evidence introduced at trial, Platten was the president of Harvard Learning Centers Inc., a Florida corporation also located in Boca Raton. Harvard Learning changed its name several times and claimed to be involved in several different business ventures. From 2004 to 2007, Platten caused Harvard Learning to issue stock to his wife, his sister, his ex-sister-in-law and his limousine driver, supposedly as repayment of promissory notes, even though Platten knew that the promissory notes were fraudulent and the company did not owe these individuals the money reflected on the promissory notes. In this manner, Platten caused Harvard Learning to issue stock to repay his own obligations and to enrich himself, his relatives and others. Platten also caused a subsidiary of Harvard Learning to pay the personal expenses of himself, his wife, his mother, his sister and his teenage son.
According to the indictment and evidence introduced at trial, Platten failed to file corporate federal tax returns for Harvard Learning for the years 2004 through 2007 and failed to file his personal federal tax returns for the years 2004 and 2005. For the year 2006, Platten failed to report on his personal tax return the income that he received as a result of Harvard Learning’s stock issuances and payment of his personal expenses.
According to the indictment and evidence introduced at trial, Platten caused his limousine driver to purchase the house and obtain a mortgage by providing false information about his income and assets in order to conceal Platten’s ownership of a house in Boca Raton. The day after he purchased the house, Platten caused his limousine driver to execute a quit claim deed transferring his interest in the property to Platten's wife.
Judge Middlebrooks scheduled sentencing for Oct. 30, 2009, at 10:30 a.m. Platten faces a maximum sentence of 133 years in prison and a maximum fine of $30.75 million.
John A. DiCicco, Acting Assistant Attorney General of the Justice Department’s Tax Division, commended the IRS Criminal Investigation and the Food and Drug Administration Office of Criminal Investigations agents who investigated the case as well, Tax Division Trial Attorneys Steven D. Grimberg, Gregory R. Bockin and Kenneth C. Vert, who prosecuted the case. Acting Assistant Attorney General DiCicco also thanked the U.S. Attorney’s Office for the Southern District of Florida for their assistance in successfully prosecuting this matter.
20 August 2009
Tyson Fresh Meats Inc., to Pay More Than $2 Million for Discharges from Nebraska PlantRead the Press Release
WASHINGTON—Tyson Fresh Meats, Inc., the world’s largest supplier of premium beef and pork, has agreed to pay a $2,026,500 civil penalty to settle allegations that it violated terms of a 2002 consent decree and a federally-issued pollution discharge permit at its meat processing facility in Dakota City, Neb., the Justice Department and U.S. Environmental Protection Agency (EPA) announced today.
In April 2002, Tyson Fresh Meats, known as IBP Inc., until May 2003, entered into a consent decree with the federal government and the Nebraska Department of Environmental Quality to bring wastewater discharges at its facility into compliance with state and federal law. Tyson discharges an average of five million gallons of treated effluent from its Dakota City facility into the Missouri River each day.
The 2002 consent decree required IBP to complete a supplemental environmental project, specifically a $2.9 million nitrification system that was intended to reduce the amount of ammonia in its wastewater discharges to the Missouri River.
The 2002 consent decree also provided that once the installation of the nitrification system was complete, the United States would begin to enforce certain limits of a new National Pollution Discharge Elimination System (NPDES) permit relating to toxicity and ammonia levels in the facilities treated wastewater discharge.
According to a filing made today in U.S. District Court in Omaha, the government alleges that from July 2003 through March 2004, Tyson failed to properly operate the nitrification system as required by the 2002 consent decree, and as a result, had numerous discharges of fecal coliform and nitrites in violation of its 2002 NPDES permit. Specifically, nitrites in the discharge caused high levels of toxicity to aquatic life in the Missouri River.
"This penalty serves as an example that we take violations of these agreements seriously and we will take appropriate steps to ensure that their provisions are followed," said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division.
"We expect companies to live up to their settlement obligations, and when they don't, they can expect that EPA will take action to assure compliance," said William Rice, Acting Regional Administrator for EPA’s Region 7.
Two Manufacturers Agree to Settle Clean Air Act Claims Resulting from Explosions at Plants in Kentucky and MississippiRead the Press Release
WASHINGTON—Two manufacturing companies, in separate settlements, have agreed to pay civil penalties and take corrective measures to settle Clean Air Act violations resulting from explosions at two plants in 2002 and 2003 in Louisville, Ky., and Pascagoula, Miss., the Justice Department and U.S. Environmental Protection Agency (EPA) announced today.
D. D. Williamson and Co. and First Chemical Corp. have agreed in separate settlements to pay a combined total of $1,331,000 in civil penalties and to implement corrective measures to settle Clean Air Act claims resulting from a 2003 explosion at D.D. Williamson’s Kentucky plant and a 2002 explosion at First Chemical’s Mississippi plant.
"Today’s settlements are a forceful reminder to the regulated community that the failure to adhere to the Clean Air Act’s general duty obligations can lead to serious, even deadly, accidents and harm to the environment," said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environmental and Natural Resources Division. "Today’s settlements also demonstrate the Justice Department’s continuing efforts to ensure the public safety, and protection of the environment, by holding industry to the duty to maintain safe facilities."
"This case demonstrates that a failure to fulfill obligations under the law can have serious consequences," said Stan Meiburg, EPA Acting Regional Administrator in Atlanta. "EPA will continue to aggressively pursue those who fail to comply with the laws that protect our environment, and we will hold them accountable."
The complaints filed today against both companies allege that they failed to adhere to the Clean Air Act’s general duty of care provision. The general duty of care requirement obligates companies handling extremely hazardous substances to take steps to identify and reduce the risks associated with the use of these chemicals, including providing layers of protection on their equipment, such as pressure relief valves, automatic shut-off valves or temperature alarms; ensuring the mechanical integrity of their equipment and piping; and properly training employees to monitor and address emergencies.
D.D. Williamson
The complaint filed against D.D. Williamson, a caramel coloring manufacturer, alleges the company failed to comply with the Clean Air Act and its regulations. The 2003 incident at the plant resulted in the death of one employee and the release of an ammonia cloud in a nearby residential neighborhood. Specifically, the complaint alleges that D.D. Williamson failed to comply with the general duty of care imposed on users of extremely hazardous substances and also failed to comply with the chemical accident prevention provisions also known as the risk management program. The risk management program outlines specific safety management requirements for certain extremely hazardous substances, such as ammonia, that are used in amounts over specific limits.
D.D. Williamson, under the consent decree lodged today with the U.S. District Court for the Western District of Kentucky, has agreed to pay $600,000 in civil penalties to be divided equally between the United States and the Louisville Metro Air Pollution Control District, which enforces the risk management program regulations. After the 2003 explosion, D.D. Williamson took steps to improve its Louisville plant by building a new facility that housed its manufacturing operations. Under the consent decree, D.D. Williamson is required to use an outside engineering consultant to complete a full hazard operability study of its manufacturing operations and implement the study’s recommendations, and to train its managers in process-hazard assessment techniques.
First Chemical
The complaint filed against First Chemical, which makes extremely hazardous mononitrotoluene (MNT), asserts the company similarly failed to meet the general duty requirement, leading to the 2002 explosion that resulted in the release of over 1,200 pounds of MNT into the air.
First Chemical, under the consent decree lodged today with the U.S. District Court for the Southern District of Mississippi, has agreed to pay the United States $731,000 in civil penalties, to complete an ongoing comprehensive hazard analysis of its MNT process and to implement all recommendations resulting from the analysis.
The consent decrees lodged today are each subject to a 30-day public comment period and to the approval of the U.S. District Court where each is filed. Copies of the consent decrees are available on the Department of Justice Web site at: http://www.usdoj.gov/enrd/Consent_Decrees.html.
Two Chief Engineers from Oil Tanker “Georgios M” Indicted for Environmental CrimesRead the Press Release
WASHINGTON -- A federal grand jury in Houston has returned an indictment charging two crewmembers of the oil tanker Georgios M with making false statements, violating federal law designed to prevent pollution from ships and obstruction of justice, the Justice Department announced.
According to the indictment, Ioannis Mylonakis and Argyrios Argyropoulos, served as Chief Engineers aboard the oil tanker Georgios M and each have been charged with violating the Act to Prevent Pollution from Ships (APPS), making material false statements to the U.S. Coast Guard and obstruction of justice.
Both are accused of maintaining false oil record books aboard the oil tanker that concealed deliberate discharges of oil-contaminated waste directly into the ocean. The defendants are accused of being responsible for the oil record book when the oil tanker entered various ports in Texas from 2006 to 2008 including Corpus Christi, Texas City and Houston.
Engine room operations on board large oceangoing vessels such as the Georgios M generate oil-contaminated bilge waste. International and U.S. law prohibit the discharge of bilge waste containing more than 15 parts per million of oil without treatment by an oily water separator - a required pollution prevention device. APPS requires all overboard discharges be recorded in an oil record book, a standardized log which is regularly inspected by the Coast Guard.
Knowing violations of APPS are punishable by up to 6 years in prison and a $250,000 fine. Making false statements are punishable by up to 5 years in prison and a $250,000 fine, while obstruction of justice is punishable by up to 20 years in prison and a $250,000 fine.
An indictment is a formal accusation and is not proof of guilt. Defendants are presumed innocent until and unless they are found guilty.
The investigation is being conducted by the Coast Guard Investigative Service and the Environmental Protection Agency Criminal Investigation Division. The case is being prosecuted by the Justice Department’s Environmental Crimes Section with assistance from the Environmental Protection Agency Regional Counsel’s Office.
Ten Alleged Mexican Drug Cartel Leaders Among 43 Defendants Indicted in Brooklyn and Chicago as Part of Coordinated Strike Against Mexican Drug Trafficking OrganizationsRead the Press Release
WASHINGTON – Forty-three defendants in the United States and Mexico, including 10 alleged Mexican drug cartel leaders, have been charged in 12 indictments unsealed yesterday and today in U.S. federal courts in Brooklyn and Chicago, the Department of Justice, U.S. Drug Enforcement Administration (DEA) and U.S. Immigration and Customs Enforcement (ICE) announced. The alleged leaders and other high-ranking members of several of Mexico’s most powerful drug cartels are charged with operating continuing criminal enterprises or participating in international drug trafficking conspiracies.
"Breaking up these dangerous cartels and stemming the flow of drugs, weapons and cash across the Southwest border is a top priority for this Justice Department," said Attorney General Eric Holder. "The cartels whose alleged leaders are charged today constitute multi-billion dollar networks that funnel drugs onto our streets and what invariably follows is more crime and violence in our communities. Today’s indictments demonstrate our unwavering commitment to root out the leaders of these criminal enterprises wherever they may be found. We will continue to stand with our partners in Mexico to dismantle the cartels’ insidious operations."
"Realizing that neither of our two countries can win over drug traffickers on its own, we have built up the bilateral cooperation between the United States and Mexico to allow us to combine our investigative and legal resources to dismantle these transnational drug organizations and bring the leaders to justice," said Mexican Attorney General Eduardo Medina Mora. "We can only protect the right of our societies to live in peace and harmony through our governments’ mutual trust and shared responsibility."
Three of the suspected leaders were charged in both Brooklyn and Chicago. Joaquin "el Chapo" Guzman-Loera, Ismael "el Mayo" Zambada-Garcia and Arturo Beltran-Leyva, who are allegedly among the most powerful drug traffickers in Mexico, are alleged to be present and former heads of an organized crime syndicate known as the "Sinaloa Cartel" and "the Federation." Each of these three is designated as a Consolidated Priority Organization Target or CPOT by the Organized Crime Drug Enforcement Task Force (OCDETF).
Also charged in the Brooklyn indictments were seven other cartel leaders, including CPOT Ignacio "Nacho" Coronel Villarreal, Hector Beltran-Leyva (Arturo’s brother) and Jesus Zambada-Garcia (Ismael’s brother), each alleged leaders within the Federation; CPOT Vicente Carrillo Fuentes, the alleged head of the Juarez Cartel; CPOT Luis and Esteban Rodriguez-Olivera, alleged leaders of Los Gueros; and CPOT Tirso Martinez-Sanchez, the alleged head of his own international drug trafficking organization.
Together, the four Brooklyn and eight Chicago indictments charge that between 1990 and December 2008, Guzman-Loera, Ismael Zambada-Garcia, Arturo Beltran-Leyva and others were responsible for importing into the United States and distributing nearly 200 metric tons of cocaine, additional large quantities of heroin, and the bulk smuggling from the United States to Mexico of more than $5.8 billion in cash proceeds from narcotics sales throughout the United States and Canada.
The indictments unsealed today collectively seek forfeiture of more than $5.8 billion in drug proceeds. Also, more than 32,500 kilograms of cocaine have been seized, including approximately 3,000 kilograms seized during the Chicago investigation, approximately 7,500 kilograms seized during the New York investigation and 22,500 kilograms seized previously that were later linked to the activities of the Federation. The indictments also detail seizures of 64 kilograms of heroin and more than $22.6 million in cash during the course of the investigation.
As part of the coordinated actions, eight defendants have been arrested in the Chicago and Atlanta areas in the last week. Earlier this year, 10 additional defendants, all customers of or couriers for the organizations, were charged separately in Chicago. Five defendants, all New York-based wholesale distributors or logistics coordinators for the cartels, were charged separately in Brooklyn. In all, 58 individuals have been charged in the investigation coordinated between the U.S. Attorneys’ Offices in Brooklyn and Chicago. All but one of the defendants face a maximum sentence of life in prison if convicted of the charges against them.
"The indictments announced today are the result of a sweeping national and international effort to stem the flow of drugs across the U.S./Mexico border and into our communities," said Benton J. Campbell, U.S. Attorney for the Eastern District of New York. "We will apply all available resources to win this battle." Mr. Campbell extended his grateful appreciation to ICE and the DEA Task Force in New York, the agencies responsible for leading the Eastern District’s investigation, and to the assistance provided by ICE and DEA in Miami, Houston, Mexico and Colombia.
"These indictments are among the most significant drug conspiracy charges ever returned in Chicago," said Patrick J. Fitzgerald, U.S. Attorney for the Northern District of Illinois. "They charge two major international supply organizations with importing many tons of cocaine and large quantities of heroin into the United States, often to wholesale distribution customers in Chicago, as well as to customers in other major cities. The defendants allegedly used practically every means of transportation imaginable to move these large amounts of drugs and to funnel massive amounts of money back to Mexico. I applaud the efforts of the DEA investigators who worked hard to put these cases together." Mr. Fitzgerald also thanked the Internal Revenue Service Criminal Investigation Division agents in Chicago and the U.S. Attorney’s Office for the Eastern District of Wisconsin in Milwaukee for their assistance.
"Today’s indictments are yet another strike against the leadership of the Mexican drug cartels," said DEA Acting Administrator Michele M. Leonhart. "Our relentless investigations penetrated deep into these pervasive criminal organizations, connecting street operations in U.S. communities like Chicago and New York to the top drug kingpins calling the shots in Mexico. Make no mistake; along with our courageous partners in Mexico, we will break these cartels and pursue their leaders."
"Law enforcement agencies in the Americas are working closer than ever before and setting up a united, borderless offense against drug cartels," said Homeland Security Assistant Secretary for ICE John Morton. "This is a significant step in breaking down the infrastructure of these criminal organizations."
According to one of the Brooklyn indictments, between 1990 and 2005, Guzman-Loera, Ismael Zambada-Garcia and Arturo Beltran-Leyva, together with Hector Beltran-Leyva, Jesus Zambada-Garcia and Villareal as leaders of the Federation, conspired to import more than 120 metric tons (264,000 pounds) of cocaine into the United States through the cooperative arrangements and coordination that the Federation provided. Members of the Federation shared drug transportation routes and obtained their drugs from various Colombian drug organizations, in particular, the Colombian Norte Valle Cartel. For example, in 2004, two shipments totaling 22,500 kilograms of cocaine were seized by the U.S. Coast Guard off the coast of Mexico. The indictment alleges that the defendants employed "sicarios," or hitmen, who carried out hundreds of acts of violence in Mexico, including murders, kidnappings, tortures and violent collections of drug debts, at their direction.
The indictments in Chicago allege that in approximately early 2008 Arturo Beltran-Leyva split his alliance with Guzman-Loera, Ismael Zambada-Garcia and the Federation due to various issues, including control of lucrative narcotics trafficking routes into the United States and the loyalty of wholesale narcotics customers, including the alleged leaders of a Chicago distribution cell. The indictments charge that Guzman-Loera and Ismael Zambada-Garcia, together with seven other high-ranking associates, including two of their sons, Alfredo Guzman-Salazar (Guzman-Loera’s son) and Jesus Vicente Zambada-Niebla (Ismael Zamada-Garcia’s son, who is in custody in Mexico), coordinated their narcotics trafficking activities to import multi-ton quantities of cocaine from Central and South American countries, through Mexico, and into the United States using various means of transportation, including Boeing 747 cargo aircraft; submarines and other submersible and semi-submersible vessels; container ships; go-fast boats; fishing vessels; buses; rail cars; tractor trailers; and automobiles
Guzman-Loera and Ismael Zambada-Garcia allegedly coordinated their cocaine and heroin smuggling activities to wholesale distributors throughout the United States, including a large distribution cell in Chicago of which 16 individuals were charged in an indictment unsealed today. On average, the Chicago cell allegedly received 1,500 to 2,000 kilograms of cocaine per month, at times obtaining all or a large portion of that quantity from Guzman-Loera and Ismael Zambada-Garcia and the factions of the Sinaloa Cartel they controlled, while also obtaining a substantial portion of that quantity from the Arturo Beltran-Leyva Cartel. From Chicago, the indictments allege that large quantities of cocaine and heroin were further distributed to customers in Cincinnati and Columbus, Ohio; Detroit; Milwaukee; New York; Philadelphia; Washington, D.C.; Vancouver, British Columbia; and elsewhere.
Guzman-Loera, Ismael Zambada-Garcia and the factions of the Sinaloa Cartel they controlled allegedly used various means to evade law enforcement and protect their narcotics distribution activities, including obtaining guns and other weapons; bribes; engaging in violence and threats of violence; and intimidating with threats of violence members of law enforcement, rival narcotics traffickers and members of their own drug trafficking organizations. According to the indictment, Guzman-Loera, Ismael Zambada-Garcia and his son, Jesus Vicente Zambada-Niebla, discussed obtaining weapons from the United States and using violence against American and/or Mexican government buildings in retaliation for each country’s enforcement of its narcotics laws and to perpetuate their narcotics trafficking activities.
In one of the indictments unsealed today in Brooklyn, Vicente Carrillo Fuentes is alleged to be the leader of the Juarez Cartel, which operates in the Juarez-El Paso corridor, one of the primary drug smuggling routes along the border between the United States and Mexico running from Ciudad Juarez, Mexico, to El Paso, Texas. The DEA estimates that approximately 90 percent of the cocaine that enters the United States comes through Mexico. The Juarez Cartel allegedly received multi-ton cocaine shipments in Mexico from the Colombian Norte Valle Cartel and from the Autodefensas Unidas de Colombia (AUC), a Colombian paramilitary organization and a major drug trafficking organization. According to the indictment, the Juarez Cartel maintained its power through the payment of bribes and through numerous acts of violence, including murder.
In another Brooklyn indictment, brothers Luis and Esteban Rodriguez-Olivera are charged with leading Los Gueros, a drug trafficking organization that rose to prominence within the Federation. According to court documents, Los Gueros operated a narcotics supply route that originated in Mexico, stretched into Texas and then branched off to various points, including the New York metropolitan area. Between 1996 and 2008, Los Gueros allegedly imported more than 100,000 kilograms of cocaine into the United States. The DEA estimates that between 2004 and 2006, the organization was responsible for shipping more than 2,000 kilograms of cocaine to New York City alone. In January 2006, Mexican authorities seized approximately 5,200 kilograms of the organization’s cocaine destined for the United States.
Tirso Martinez-Sanchez is alleged in one of the Brooklyn indictments to be an organizer and leader of an extensive international narcotics importation, distribution and transportation organization that is responsible for the distribution of multiple tons of cocaine in the United States. Martinez-Sanchez’s organization allegedly imported cocaine into the United States from Mexico through California and Texas, and then transported the cocaine overland to large distribution centers, including Los Angeles, New York and Chicago. In addition to coordinating the distribution of his own organization’s cocaine, Martinez-Sanchez also allegedly transported and distributed narcotics for members of the Juarez Cartel and the Federation.
The cases in the Eastern District of New York are being prosecuted by Assistant U.S. Attorneys Andrea Goldbarg, Claire Kedeshian, Bonnie Klapper, Stephen Meyer, Walter Norkin, Patricia Notopoulos and Carolyn Pokorny.
The cases in the Northern District of Illinois are being prosecuted by Assistant U.S. Attorneys Thomas Shakeshaft, Michael Ferrara, Greg Deis, Lindsay Jenkins, Renai Rodney, Angel Krull and Halley Guren.
The cases were investigated by the DEA, ICE and Internal Revenue Service Criminal Investigation, in cooperation with Mexican and Colombian law enforcement authorities. Additional assistance was provided by U.S. Attorney’s Offices in Milwaukee, Miami and Houston. The Criminal Division’s Office of International Affairs provided assistance in these cases. The investigative efforts were coordinated with the Special Operations Division, comprised of agents, analysts and attorneys from the Criminal Division’s Narcotic and Dangerous Drug Section (NDDS); DEA; FBI; ICE; the Bureau of Alcohol, Tobacco, Firearms and Explosives; U.S. Marshals Service; and Internal Revenue Service. Certain individuals named in indictments unsealed today have also been charged by other U.S. Attorneys’ Offices around the country and by NDDS.
An indictment is a formal charging document notifying the defendant of the charges. All persons charged in an indictment are presumed innocent until proven guilty.
Copies of indictments can be found at: http://www.usdoj.gov/opa/cartel-indictments.htm
Swiss Banking Executive and Swiss Lawyer Charged<br /> with Conspiring to Defraud the United StatesRead the Press Release
WASHINGTON - Hansruedi Schumacher and Matthias Rickenbach, both of Switzerland, were indicted today for conspiring to defraud the United States, the Justice Department and Internal Revenue Service (IRS) announced. According to the indictment, Schumacher worked as an executive manager at Neue Zuercher Bank (NZB), a Swiss private bank located in Zurich, Switzerland. Rickenbach worked as a Swiss attorney who provided legal advice and services to U.S. clients. Both are alleged to have aided wealthy Americans conceal assets and income in Switzerland from United States authorities.
According to the indictment, Schumacher and Rickenbach helped wealthy American clients conceal their assets by establishing sham and nominee offshore entities to hide their U.S. clients' assets and income while allowing these clients to still control the assets and make investment decisions.
The indictment further alleges that Schumacher and Rickenbach regularly traveled to the United States to conduct banking and investment activities with their U.S. clients and that when they traveled they concealed their business activities in the United States by falsely representing to American authorities that they were traveling to the U.S. for personal reasons. While in the United States, the defendants would sometimes bring cash for their clients..
According to court documents, Schumacher and Rickenbach aided their wealthy American clients repatriate money back to the United States using several deceptive means. Schumacher and Rickenbach helped their clients obtain offshore credit cards and created sham loan documents. Additionally, Schumacher and Rickenbach falsified bank documents to generate the appearance that assets of their U.S. clients belonged to Swiss citizens, and they falsified documents to disguise their United States clients’ repatriation of offshore funds as inheritances from foreign citizens.
According to court documents, Schumacher and Rickenbach discouraged their U.S. clients from voluntarily coming into compliance in the United States. Instead, the defendants encouraged their clients to transfer their assets from UBS, a large Swiss bank, to NZB, a smaller bank in Switzerland. The defendants told their clients that their assets and identification would be safer at NZB because they had no presence in the United States and was therefore less likely to be pressured by the American authorities to disclose the identities of their United States clients.
"The Justice Department will continue to investigate leads provided by U.S. taxpayers who have come forward to disclose foreign bank accounts and will prosecute those foreign bankers and banks who illegally helped U.S. clients evade taxes," said John A. DiCicco, Acting Assistant Attorney General of the Justice Department’s Tax Division. "We encourage foreign banks to come forward and disclose their conduct immediately, before we learn about their criminal conduct from U.S. taxpayers."
"Today’s Indictment is the latest prosecution in this District against foreign bankers and professionals who enabled and assisted wealthy Americans conceal their assets offshore," said Jeffrey H. Sloman, Acting U.S. Attorney for the Southern District of Florida. "As more Americans voluntarily come into compliance and face their financial obligations, more leads are being developed and new investigations are initiated. American taxpayers who sought to avoid taxes by hiding their assets in Swiss accounts are on notice that this investigation continues."
"This is another step in our ongoing effort to pursue hidden offshore assets -- no matter where they are located," said IRS Commissioner Doug Shulman. "We're in the early stages of our work to crack down on offshore tax evasion. Through our efforts, we are gaining access to more and more information on institutions and individuals involved in offshore tax evasion, and you can expect us to use all of our enforcement tools to stop this abuse. For people with hidden offshore assets, they have an opportunity to get right with the government. Time is quickly running out, and people should take advantage of our voluntary disclosure process before special provisions expire September 23."
Acting Assistant Attorney General DiCicco and Acting U.S. Attorney Sloman commended the investigative efforts of the IRS agents involved in this case. The prosecution is being handled by Senior Litigation Counsel Kevin M. Downing and Trial Attorney Michael P. Ben’Ary of the Tax Division, and Assistant U.S. Attorney Jeffrey A. Neiman.
U.S. citizens who have an interest in, or signature or other authority over, a financial account in a foreign country with assets in excess of $10,000 are required to disclose the existence of such account on Schedule B, Part III of their individual income tax return. Additionally, American citizens must file a Report of Foreign Bank and Financial Accounts, or F-Bar, with the U.S. Treasury, disclosing any financial account in a foreign country with assets in excess of $10,000 for which they have a financial interest in or signature authority, or other authority over.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at http://www.usdoj.gov/tax/.
New Hampshire, Massachusetts and Rhode Island Residents <br /> Arrested for Promoting and Using Tax Defier SchemesRead the Press Release
BOSTON - Seven individuals from around New England have been indicted in federal court in Boston for conspiracies to defraud the United States through the promotion and use of multiple tax fraud schemes, the Justice Department and the Internal Revenue Service (IRS) announced today.
William Scott Dion and Catherine Floyd, both of Sanbornville, N.H., Charles Adams of Norwood, Mass., and Gary Alcock of Westborough, Mass., were arrested today on charges that they conspired to defraud the United States by promoting and using illegal schemes to defraud the IRS. Arrest warrants have also been issued for Gail and Myron Thorick, both of West Warwick, R.I., and for Kenneth Scott Alcock of Westborough, Mass.
One of the conspiracy counts in the indictment alleges that Dion, Floyd, and Adams ran a payroll tax scheme to pay employees "under the table" without properly accounting for, withholding, and paying over to the IRS the payroll taxes required by law. It is alleged that the three promoted the payroll scheme to employers and individuals who wanted to avoid payment of employer payroll taxes and individual payroll taxes. According to the indictment, the three ran the payroll scheme under three different names: Contract America, Talent Management, and New Way Enterprises. Approximately 150 individuals subscribed to the payroll scheme.
Another of the conspiracy counts in the indictment further alleges that husband and wife Gail and Myron Thorick conspired with Dion and Floyd to defraud the United States by promoting and operated a "warehouse banking" scheme which helped subscribers conceal income and assets from the IRS. According to the indictment, the warehouse scheme operated under three different names: Your Virtual Office, Office Services, and Calico Management. Allegedly, as part of the warehouse banking scheme, the defendants maintained accounts at several banks and used the accounts to deposit and commingle business receipts and other funds received from subscribers in order to mask the true ownership of the funds.
It is alleged that between 2000 and 2005, Gail and Myron Thorick, along with Dion and Floyd, caused more than $16 million to be deposited into the warehouse bank accounts. The indictment further alleges that in order for subscribers to withdraw cash from the accounts, the Thoricks, Dion, and Floyd wrote checks to withdraw substantial amounts of cash, which was subsequently delivered to subscribers wrapped in aluminum foil.
A third conspiracy count alleges that Gary Alcock and his brother, Kenneth Scott Alcock, conspired to defraud the IRS as subscribers to the payroll tax scheme promoted by Dion, Floyd, and Adams. According to the indictment, Gary Alcock owned and operated G&K Trucking Co. and Barkmulch & Loam Co., two businesses located in Shrewsbury, Mass. It is alleged that Gary and Kenneth Alcock created a nominee entity named "Alex Management" to conceal the business activities of G&K Trucking and Barkmulch & Loam, and also retained the services of Contract America to pay employees of these businesses "under the table."
In addition to conspiracies, Dion and Floyd are each charged with one count of obstructing and impeding the IRS; Adams is charged with three counts of tax evasion; Gail and Myron Thorick are each charged with three counts of filing false joint income tax returns ; Gary Alcock is charged with five counts of evading payroll taxes and one count of willfully failing to file a corporate tax return; and Kenneth Scott Alcock is charged with three counts of tax evasion.
If convicted on conspiracy and tax evasion counts, the defendants face up to five years in prison on each count, together with fines of up to $250,000 or twice the financial gain to the defendant or loss to the IRS, to be followed by three years of supervised release. The charges for obstructing the IRS carry maximum penalties of three years in prison, fines of $250,000 and one year of supervised release. False tax return charges each carry a maximum penalty of three years in prison, with fines of $250,000 and one year of supervised release. The failure to file charge carries a maximum one-year prison term, a fine of $100,000 and one year of supervised release.
The case was investigated by Special Agents of the Internal Revenue Service - Criminal Investigation Division. It is being prosecuted by Assistant U.S. Attorney Victor A. Wild of Loucks’ Economic Crimes Division at the U.S. Attorney’s Office in Boston and by Trial Attorneys John N. Kane and Jeffrey L. Shih of the Justice Department’s Tax Division.
The details contained in the indictment are allegations. The defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Justice Department Reaches Settlement with Microsemi Corp.Read the Press Release
WASHINGTON – The Department of Justice announced today that it has reached a proposed settlement with Microsemi Corporation that requires the company to divest all of the assets that it acquired from Semicoa Inc. on July 14, 2008. The Department said that without this divestiture, there would be little or no competition in the development, manufacture and sale of certain semiconductor devices used in military and space programs essential to the security of the United States.
The Department’s Antitrust Division has filed a proposed settlement in U.S. District Court for the Central District of California. If approved by the court, the settlement would resolve the lawsuit and address the Department’s competitive concerns.
These semiconductor devices, small signal transistors and ultrafast recovery rectifier diodes, are used to control the flow of electric current. Both small signal transistors and ultrafast recovery rectifier diodes are used in critical military and civil applications ranging from satellites to nuclear missile systems. Highly reliable performance under demanding conditions is essential in these military and space systems, where component failure could result in failure of the mission.
Prior to the acquisition, Microsemi and Semicoa were the only manufacturers of small signal transistors qualified for these applications. In addition, Semicoa and Microsemi were each poised to become qualified for their ultrafast recovery rectifier diodes, which are in critically short supply. The Department alleged in its complaint that Microsemi’s acquisition of Semicoa’s assets would result in increased prices and slower delivery of critical military components.
Microsemi is a Delaware corporation that manufactures a range of products, including QML semiconductors. In fiscal year 2008, Microsemi reported total sales of approximately $500 million. Semicoa was a Costa Mesa, Calif., corporation that, prior to the acquisition, manufactured a variety of QML semiconductors. Semicoa’s United States sales in 2007 were approximately $15 million.
The proposed settlement, along with the Department’s competitive impact statement, will be published in the Federal Register, as required by the Antitrust Procedures and Penalties Act. Any person may submit written comments regarding the proposed final judgment within 60 days of its publication to Maribeth Petrizzi, Chief, Litigation II Section, Antitrust Division, U.S. Department of Justice, 450 5th Street, N.W., Suite 8700, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the court may enter the Final Judgment upon a finding that it serves the public interest.
19 August 2009
U.S. Judge Permanently Bars Suffolk County, N.Y., Tax Preparer <br /> from Doing Returns for OthersRead the Press Release
WASHINGTON – A federal district judge in New York has permanently barred Howard Levine from preparing federal tax returns for others, the Justice Department announced today. The court also ordered Levine to provide his customer lists to the government and to mail copies of the court order to his customers.
According to the government complaint, Levine operated a tax return preparation service under the name Milaur Associates in Suffolk County, N.Y. The complaint states that Levine prepared an estimated 7,160 returns for the tax years 2003 through 2007. The Internal Revenue Service can not determine the exact number of returns that Levine prepared during this time period because he did not properly report his employer identification number on the returns that he prepared. Levine reported all Form 1099 income on a customer’s Schedule C, whether or not the customer had a business, and then reported excessive and unsupported expense deductions, thus resulting in a substantial loss to which the customer was not otherwise entitled. In addition, Levine, reported flow-through losses on customers’ Schedule E that were completely fabricated.
Based on its examination results to date, the government estimates that it has incurred losses in excess of $2.8 million.
"The Justice Department and Internal Revenue Service are working vigorously to shut down return preparers who prepare false or fraudulent returns for their customers, and catch those customers who actually filed false or fraudulent returns," said John A. DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division.
In the past decade the Tax Division has obtained injunctions against more than 410 tax preparers and tax-fraud promoters. Information about these cases is available on the Justice Department Web site.
U.S. Discloses Terms of Agreement with Swiss Government Regarding UBSRead the Press Release
WASHINGTON – The Justice Department and the Internal Revenue Service (IRS) today announced that the agreement with the Swiss government has been finalized. As a result of the agreement, the United States will receive substantially all of the accounts of interest when it initiated the John Doe summons against UBS on June 30, 2008.
Under the agreement, the IRS will submit a treaty request to the Swiss government describing the specific accounts for which it is requesting information. The Swiss government will then direct UBS to initiate procedures which could result in the turning over of information on thousands of accounts to the IRS. The IRS will receive information on accounts of various amounts and types, including bank-only accounts, custody accounts in which securities or other investment assets were held and offshore company nominee accounts through which an individual indirectly held beneficial ownership in the accounts.
Also, the agreement retains the U.S. Government’s right, if the results are significantly lower than expected and other measures fail, to seek appropriate judicial remedies, including resuming actions to enforce the John Doe summons.
The agreement involves a number of simultaneous legal actions:
- The judicial enforcement of the John Doe summons will be dismissed. While this enforcement motion will be withdrawn, the underlying John Doe summons remains in effect.
- Upon receiving the treaty request, the Swiss government will direct UBS to notify account holders that their information is included in the IRS treaty request. It is expected that these notices will be sent on a rolling basis with some being sent over the coming weeks and others over the coming months. Receipt of this notice will not by itself preclude the account holder from coming into the IRS under the Voluntary Disclosure Program, which is due to end on Sept. 23, 2009.
In addition, the Swiss Government has agreed to review and process additional requests for information from other banks regarding their account holders to the extent that such a request is based on a pattern of facts and circumstances equivalent to those of the UBS case.
Information provided to the IRS through this process will be thoroughly examined for all potential civil and criminal tax violations. The IRS will assess any additional tax, interest and a number of applicable penalties. This includes the penalty for the willful failure to file a Report of Foreign Bank and Financial Accounts (FBAR). This penalty can be up to 50 percent of the value of the account for each year an FBAR was not filed. Under the Voluntary Disclosure Program, the account holders must pay 20% of the amount of tax that was underpaid for the past six years and 20% of the highest value of the account over the past six years, in addition to all their unpaid taxes and interest due on those taxes.
The IRS will also recommend criminal prosecution in those cases where the facts warrant such an action. To date, the Justice Department and the IRS have successfully prosecuted four U.S. customers of UBS whose information was provided to the IRS by the Swiss bank as part of the Deferred Prosecution Agreement.
Individuals whose information is obtained by the IRS through this process will, by longstanding policy, not be eligible for the voluntary disclosure program.
Swiss Agreement
UBS Agreement
San Diego Tax Return Preparer Convicted of Tax FraudRead the Press Release
WASHINGTON – Fe S. Garrett, a resident of National City, Calif., was convicted today of filing false individual tax returns, failure to pay taxes, and multiple counts of aiding and assisting in the preparation of false tax returns, the Justice Department and Internal Revenue Service (IRS) announced. A federal jury convicted Garrett of 28 counts of the superseding indictment following a nine-day trial before U.S. Judge M. James Lorenz in San Diego.
According to the evidence presented at trial, for tax years 2001 and 2002, Garrett prepared at least 18 federal income tax returns for her clients that were false as to material matters in that the tax returns claimed fraudulent itemized deductions, child care expenses and Schedule E real estate rental expenses in amounts that she knew her clients were not entitled to claim.
Additionally, according to the evidence presented at trial, Garrett was a licensed tax return preparer and licensed real estate broker who operated a tax return preparation and bookkeeping business and a real estate financing business. These businesses operated under multiple names, including Fe's Tax Service, Garrett's Tax Service and Garrett's Realty and Mortgage. Garrett failed to report over $300,000 of her business gross receipts from those businesses on her federal income tax returns for tax years 2001, 2002, 2004 and 2005.
Additionally, the evidence at trial showed that Garrett willfully failed to pay approximately $279,000 in federal income taxes that she owed for tax years 2001 through 2006. Despite filing tax returns for 2001 and 2006 on which she admitted owing tax each year, Garrett spent hundreds of thousands of dollars at local casinos, wired over $100,000 to the Philippines, and did not respond to numerous attempts by the IRS to contact her.
According to the evidence presented at trial, Garrett prepared a false tax return for an undercover IRS agent that included false items similar to those on her client’s returns. In a recording presented at trial, Garrett was heard describing her "style" of preparing tax returns using "loopholes" for claiming deductions on income tax returns.
Judge Lorenz remanded Garrett to the custody of the U.S. Marshals pending sentencing, which is scheduled for Nov 9, 2009. Garrett faces a maximum sentence of 72 years in prison and a maximum fine of $6.1 million.
"While the majority of return preparers provide excellent service to their clients, a few unscrupulous tax preparers file false and fraudulent returns to defraud the government and the tax-paying public, including their own clients," said Ronald A. Cimino, Acting Deputy Assistant Attorney General of the Justice Department's Tax Division. "We are committed to prosecuting those illegal return preparers who betray their clients' trust and their duty to correctly prepare tax returns."
"Today’s guilty verdict sends a clear message to the public that individuals who hold trusted positions in our community and use those positions to abuse our tax system for their personal financial benefit will be prosecuted," said Special Agent in Charge Leslie P. DeMarco. "IRS Criminal Investigation will continue to diligently work tax preparer fraud investigations and ensure the public that our tax system works."
Acting Deputy Assistant Attorney General Cimino commended the IRS-Criminal Investigation special agents who investigated the case, as well as Tax Division trial attorneys Christopher S. Strauss and Elizabeth C. Hadden, who prosecuted the case. Acting Assistant Attorney General DiCicco also thanked the U.S. Attorney’s Office in San Diego for their assistance in successfully prosecuting this matter.
Former Taiwanese Executive Indicted in Color Display Tube Price-Fixing ConspiracyRead the Press Release
WASHINGTON – A federal grand jury in San Francisco has returned an indictment against a former executive of a large Taiwanese color display tube (CDT) manufacturing company for participating in a global conspiracy to fix prices of CDTs, a type of cathode ray tube used in computer monitors and other specialized applications, the Department of Justice announced today.
The indictment, filed last night in the U.S. District Court in San Francisco, charges Wen Jun (Tony) Cheng, a former Assistant Vice President of Sales and Marketing, with conspiring with unnamed co-conspirators to suppress and eliminate competition by fixing prices, reducing output, and allocating market shares of CDTs. The Department alleges that Cheng participated in the conspiracy beginning at least as early as January 1999 until at least September 2004.
Cheng was previously indicted on Feb. 3, 2009, for his participation in a global conspiracy to fix prices of Thin Film Transistor-Liquid Crystal Display (TFT-LCD) panels.
The indictment alleges, among other things, that Tony Cheng and co-conspirators carried out the CDT conspiracy by attending meetings and engaging in conversations and communications in Taiwan, Korea, Malaysia, China and elsewhere to discuss and agree on the prices, output and market shares of CDTs. Cheng and co-conspirators are also alleged to have implemented an auditing system to verify that production lines had been shut down as agreed, and to have taken steps to conceal the conspiracy.
Cheng is charged with violating the Sherman Act, which carries a maximum penalty of 10 years imprisonment and a fine of $1 million for individuals for violations occurring after June 22, 2004. The maximum fines may be increased to twice the gain derived from the crime or twice the loss suffered by the victims if either or those amounts is greater than the Sherman Act maximum fines.
This case is part of an ongoing joint investigation by the San Francisco Office of the Antitrust Division of the U.S. Department of Justice and the Federal Bureau of Investigation in San Francisco. Anyone with information concerning illegal conduct in the cathode ray tube industry is urged to call the San Francisco Field Office of the Antitrust Division at 415-436-6660.
Former Member of Armed Services Sentenced for<br /> Participating in Bribery and Extortion ConspiracyRead the Press Release
WASHINGTON – A former member of the U.S. armed services was sentenced today to 28 months in prison for his role in a widespread bribery and extortion conspiracy that operated from January 2002 through March 2004, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division.
Rommel I. Schroer, 33, a former sergeant in the U.S. Air Force, was also ordered to pay a $7,500 fine and to serve three years of supervised release. Schroer was sentenced in U.S. District Court for the District of Arizona in Tucson by Judge Cynthia K. Jorgenson.
The charges arose from Operation Lively Green, an undercover FBI investigation that began in December 2001. Fifty-six additional defendants have been sentenced for their roles in the conspiracy.
Schroer pleaded guilty on Feb. 10, 2009, to one count of conspiring to enrich himself by obtaining cash bribes from persons he believed to be narcotics traffickers in return for his assistance, protection and participation in the activities of what he believed to be an illegal narcotics trafficking organization that distributed cocaine from Arizona to other locations in the southwestern United States. In reality, the narcotics traffickers were undercover FBI agents. According to court documents, in order to protect the shipments of cocaine, Schroer and his co-conspirators wore official uniforms, carried official forms of identification, and used official vehicles, when necessary, to prevent police stops, searches and seizures of the narcotics as they drove the cocaine shipments through checkpoints manned by the U.S. Border Patrol, the Arizona Department of Public Safety and Nevada law enforcement officers.
These cases are part of a joint investigation being conducted by the Southern Arizona Corruption Task Force, which is comprised of the FBI, the Drug Enforcement Administration, the U.S. Immigration and Customs Enforcement at the Department of Homeland Security and the Tucson Police Department. The Arizona Air National Guard, Air Force Office of Special Investigations, Defense Criminal Investigative Service and Internal Revenue Service Criminal Investigation are also participating in the investigation. The case is being prosecuted by Trial Attorneys Michael Ferrara and Peter Koski of the Criminal Division’s Public Integrity Section, headed by Chief William M. Welch II. The U.S. Attorney’s Office for the Western District of Oklahoma has also secured the guilty pleas of 14 defendants in a related investigation, Operation Tarnish Star.
18 August 2009
New Mexico Farmer Charged with Tax Fraud, Fraudulently Collecting Farm SubsidiesRead the Press Release
WASHINGTON - Bill Melot, a resident of Hobbs, N.M., appeared in federal court today before Magistrate Karen B. Molzen in Las Cruces, N.M., on tax and false statement charges, the Justice Department and Internal Revenue Service (IRS) announced. Melot, a farmer who owns approximately 250 acres in Lea County, N.M., was charged with tax evasion, failing to file tax returns, corruptly impeding the IRS, and making false statements to the U.S. Department of Agriculture.
According to the indictment, Melot owes the IRS more than $18 million in federal taxes and has not filed a personal tax return since 1986. However, Melot has collected over $225,000 in federal farm subsidies from the U.S. Department of Agriculture.
According to the indictment, Melot took a number of steps to conceal his ownership of the 250 acres in Lea County, including notarizing forged deeds and titling the property in the name of nominees. The indictment further alleges that Melot used false Social Security Numbers and fictitious Employer Identification Numbers to hide his assets from the IRS. The indictment further alleges that Melot provided fictitious Employer Identification Numbers to the U.S. Department of Agriculture to collect federal farm aid. Additionally, Melot maintained a bank account with Nordfinanz, a Swiss financial institution.
According to the indictment, Melot also intermittently owned and operated gas stations in Lea County and elsewhere in the United States, including two gas station in Hobbs.
If convicted on all counts, Melot faces a maximum term of 49 years in prison and a maximum fine of $2,850,000.
The case is being prosecuted by Tax Division trial attorney Jed Silversmith. The case was investigated by the IRS Criminal Investigation Division and the U.S. Department of Agriculture Office of Inspector General.
Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at http://www.usdoj.gov/tax.
Home Development Company Agrees to Settle Federal Lawsuit for Clean Water Act ViolationsRead the Press Release
WASHINGTON—Cooper Land Development, Inc., a luxury home development company headquartered in Rogers, Ark., has agreed to pay a civil penalty and implement a storm water compliance program at its construction sites to settle allegations that it violated the Clean Water Act, the Justice Department and U.S. Environmental Protection Agency announced today.
According to a consent decree filed today in U.S. District Court in Kansas City, Mo., Cooper Land Development has agreed to pay a $513,740 civil penalty to settle the allegations that it failed to properly manage construction site storm water runoff and implement erosion control at five of its housing developments located in Missouri, West Virginia and Arkansas. The penalty will be paid in four annual installments, plus interest, according to the consent decree.
Additionally, the consent decree requires Cooper Land Development to implement a company-wide storm water compliance program that provides for improved environmental performance and increased oversight of its operations at all of its current and future construction sites. In addition to the Creekmoor and Glade Springs Village projects, those sites include Bella Vista Village, Benton County, Ark.; Hot Springs Village, Garland and Saline counties, Ark.; and Sienna Lake, Little Rock, Ark.
The settlement resolves a civil complaint filed Sept. 22, 2008, in which the United States alleged that inspections in 2006 found Cooper Land Development had violated the terms of separate National Pollution Discharge Elimination System permits issued by respective state environmental authorities for its Creekmoor housing development in Raymore, Mo., and the Glade Springs Village housing development near Daniels, W. VA.
The Clean Water Act requires that construction sites have controls in place to prevent pollution from being discharged with storm water into nearby waterways. These controls include simple pollution prevention techniques such as silt fences, phased site grading and sediment basins to prevent common construction contaminants from entering the nation’s waterways.
EPA estimates that by implementing the terms and conditions of the settlement, approximately 8.67 million pounds of construction sediments will be kept from polluting the nation’s waterways.
Besides causing soil erosion and clogging streams with sediment, construction site storm water runoff can pick up other pollutants such as debris, pesticides, chemicals, solvents and other substances. Sediment-laden runoff can result in the loss of in-stream habitat for fish and other aquatic species, killing fish directly, destroying their spawning beds and blocking sunlight, which can result in reduced growth of beneficial aquatic grasses.
"Storm water discharges from construction sites cause serious degradation of our nation’s waterways," said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. "This agreement will result in better management practices that will ultimately lead to a cleaner environment."
"The failure to properly control storm water runoff at construction sites can have serious consequences for the environment," said William Rice, acting administrator for EPA Region 7. "EPA will enforce the laws and regulations to ensure that storm water runoff is properly managed in a way that protects our fragile ecosystems."
Improving compliance at construction sites is one of EPA’s national enforcement priorities. Construction projects have a high potential for environmental harm because they disturb large areas of land and significantly increase the potential for erosion. Without onsite pollution controls, sediment-laden runoff from construction sites can flow directly to the nearest waterway and degrade water quality. In addition, storm water can pick up other pollutants, including concrete washout, paint, used oil, pesticides, solvents and other debris. Polluted runoff can harm or kill fish and wildlife and can affect drinking water quality.
This settlement is the latest in a series of enforcement actions to address storm water violations from construction sites around the country. Similar consent decrees have been reached with companies like Home Depot and four major home building companies.
The consent decree, lodged in the U.S. District Court for the Western District of Missouri, is subject to a 30-day public comment period and approval by the federal court. A copy of the consent decree is available on the Justice Department Web site at http://www.usdoj.gov/enrd/Consent_Decrees.html.
Learn more about EPA’s civil enforcement of the Clean Water Act: http://www.epa.gov/compliance/resources/reports/endofyear/eoy2008/2008enfwaterhighlights.html
Five Sentenced for Forcing Guatemalan Girls and Women to Work as Prostitutes in Los AngelesRead the Press Release
WASHINGTON – Five members of an extended family were sentenced to federal prison late yesterday, all receiving lengthy sentences for their roles in an international sex trafficking ring that lured young Guatemalan women and girls to the Los Angeles area and forced them into prostitution, the Justice Department announced.
The five defendants sentenced yesterday – four Guatemalan nationals and one Mexican national – were found guilty in February of various charges, including conspiracy; sex trafficking by force, fraud or coercion; and importation of aliens for purposes of prostitution. Gladys Vasquez Valenzuela, 38, was sentenced to 40 years in prison; Gabriel Mendez, the Mexican national, 35, was sentenced to 35 years; and the other three defendants, Mirna Jeanneth Vasquez Valenzuela, aka Miriam, 28, Maria de los Angeles Vicente, aka Angela, 30, and Maribel Rodriquez Vasquez, 29, were each sentenced to 30 years in prison.
Evidence showed that the defendants intimidated and controlled their victims by threatening to beat them and kill their loved ones in Guatemala if they tried to escape. Some defendants also used witch doctors to threaten the girls that a curse would be placed on them and their families if they tried to escape. At least two of the defendants further restrained the victims by locking them in at night and blocking windows and doors. The defendants also used manipulation of debts, verbal abuse and psychological manipulation to reinforce their control over the victims. The scheme included strict controls over the victims’ work schedules and ominous comments about consequences that befell the families of other victims who attempted to escape.
The defendants collected the profits generated by the acts of prostitution the victims were compelled to perform, and maintained control over the proceeds, keeping tens of thousands of dollars while the victims received next to nothing.
"The young girls and women in this case were victimized and exploited in a horrific way, and these sentences should send a stern message to all sex traffickers that they cannot escape justice for such egregious human rights violations," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "Attorneys in the Civil Rights Division will continue to work with U.S. Attorney's Offices across the nation to stamp out this vicious and intolerable crime, and to seek significant prison sentences for anyone engaging in these despicable acts."
"In this disturbing case, the defendants lured young, uneducated and impoverished women and girls to the United States, where they were forced to work as prostitutes in terrifying conditions," said U.S. Attorney Thomas P. O’Brien for the Central District of California. "There were at least 10 victims who were forced into becoming prostitutes under a variety of threats, as well as actual physical attacks that included rapes."
"These sentences are a stern reminder about the consequences facing those involved in the unconscionable practice of human trafficking," said Robert Schoch, special agent in charge for the U.S. Immigration and Customs Enforcement (ICE) Office of Investigations in Los Angeles. "While we can’t erase the suffering these young women experienced, by aggressively investigating and prosecuting these cases, ICE and the other members of the Los Angeles Human Trafficking Task Force are ensuring that those involved in schemes like this pay a significant price for the pain they cause."
Four additional defendants have pleaded guilty for their role in the scheme. Flor Morales Sanchez was sentenced in May to two years in prison; Pablo Bonifacio was sentenced last November to 33 months in prison; Albertina Vasquez Valenzeula, also known as Cristina, was sentenced in February to 33 months in prison. The final defendant, Luis Vicente Vasquez, is scheduled to be sentenced on Thursday.
The case was prosecuted by Assistant U.S. Attorneys Cheryl O’Connor Murphy, Curtis A. Kin, Anthony J. Lewis, Sara J. Heidel and Special Litigation Counsel Andrew J. Kline from the Civil Rights Division. The case was investigated by the FBI, ICE and the U.S. Department of Labor, Office of the Inspector General.
Detroit Clinic Owner and Patient Recruiter Plead Guilty <br /> in $15 Million Fraud SchemeRead the Press Release
WASHINGTON – Miami residents Jose and Arnaldo Rosario pleaded guilty today to participating in a conspiracy to defraud the Medicare program of approximately $15.3 million, Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Terrence Berg of the Eastern District of Michigan and Daniel R. Levinson, Inspector General of the Department of Health & Human Services (HHS) announced. Both defendants pleaded guilty to one count of conspiracy to commit health care fraud before U.S. District Judge Gerald Rosen.
According to information contained in plea documents, Jose Rosario acknowledged that in approximately September 2006, he and a co-defendant incorporated Sacred Hope Medical Center Inc. (Sacred Hope) in the state of Michigan. Sacred Hope purported to specialize in providing injection and infusion therapy services to Medicare patients. Jose Rosario admitted that he and the co-defendant were the owners of the clinic, and agreed to split the profits generated there evenly between them. During the time that Sacred Hope was open, the clinic routinely billed the Medicare program for services that were medically unnecessary and/or never provided. Jose Rosario admitted to being aware that the clinic had purchased only a small fraction of the medications that the clinic billed the Medicare program for providing. According to information contained in plea documents, patients were prescribed medications at the clinic based not on medical need, but based on what medications were likely to generate Medicare reimbursements. Jose Rosario admitted he participated in hiring co-conspirators to falsify the medical files to make the treatments purportedly being provided at Sacred Hope appear legitimate, when in fact he knew they were not.
In his plea, Jose Rosario also admitted that Medicare beneficiaries were neither referred to Sacred Hope by their primary care physicians, nor for any other legitimate medical purpose, but rather were recruited to come to the clinic through the payment of kickbacks. In exchange for their kickbacks, the Medicare beneficiaries would visit the clinic and sign documents falsely indicating that they had received the services billed to Medicare. According to information contained in the plea documents, kickbacks came in the form of cash and prescriptions for narcotic drugs. Jose Rosario admitted he directed his nephew, co-defendant Arnaldo Rosario, to oversee and facilitate the payment of cash kickbacks to the Medicare beneficiaries. Jose Rosario admitted that he would routinely obtain cash that he would provide to Arnaldo Rosario for the purpose of paying the beneficiaries cash kickbacks.
Arnaldo Rosario admitted that he was responsible for overseeing and facilitating the payment of cash kickbacks to the Medicare beneficiaries at Sacred Hope. According to information contained in his plea documents, Arnaldo Rosario admitted to obtaining cash on a daily basis from his uncle or other co-conspirators to pay the beneficiaries cash kickbacks. After obtaining the cash, Arnaldo Rosario admitted that he would then distribute the money to two co-defendants who were responsible for recruiting and paying the beneficiaries the kickbacks. Arnaldo Rosario admitted to being directed to pay bonuses to the co-defendants if they were able to recruit additional Medicare beneficiaries to come to Sacred Hope.
In addition to the conduct at Sacred Hope, Jose Rosario admitted to being a part owner of Dearborn Medical Rehab Center (DMRC), a Dearborn, Mich., infusion clinic. Arnaldo Rosario admitted to being a patient recruiter at DMRC. In addition, both defendants admitted to playing similar roles at a third Detroit-area infusion clinic, Xpress Center. As at Sacred Hope, both defendants admitted they were fully aware that the DMRC and Xpress Center routinely billed the Medicare program for services that were medically unnecessary and, in many instances, never provided. As at Sacred Hope, both defendants admitted that the purpose of the DMRC and Xpress Center was not to provide legitimate health care to patients, but rather to defraud the Medicare program.
Between approximately March 2006 and March 2007, the two defendants admitted to causing the submission of approximately $15,311,605 in false and fraudulent claims to Medicare for services supposedly provided at Sacred Hope, DMRC and Xpress Center. Based on the fraudulent claims, approximately $10,765,325 was paid.
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 more than 293 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
Attorney General Holder Announces Recovery Act Tribal Crime Data ProjectRead the Press Release
WASHINGTON – U.S. Attorney General Eric Holder today announced that $1 million in Recovery Act funds has been awarded to Westat Inc. and its partner Northern Arapaho Tribal Industries (NATI) to improve the collection of tribal crime and justice data used to determine tribal eligibility for the Edward Byrne Memorial Justice Assistance (JAG) program.
The grant will address gaps in Indian Country crime statistics and current reporting methods, the reasons why many tribes are currently ineligible to receive JAG grants. In addition to addressing tribal eligibility, Westat and NATI will collect information on American Indians in the criminal justice system and crimes committed on Indian Country reservations, in tribal communities and on trust land.
“These funds will have a long-term positive impact in Indian Country by increasing tribes’ eligibility to receive vital JAG funding,” Attorney General Holder said. “This project will also help the Department better understand and assist tribes with their criminal justice challenges.”
Funding for the grant is part of the Recovery Act Edward Byrne Memorial Justice Assistance Grant Program managed by the Office of Justice Programs’ (OJP) Bureau of Justice Assistance (BJA). The Bureau of Justice Statistics (BJS) will be the program manager of the grant and the project. The project will involve the BJS, BJA, the Office of Tribal Justice, the FBI, the Department of Interior’s Bureau of Indian Affairs, and certain state and tribal governments.
The statutory procedure for allocating JAG grants is based on a formula of population and violent crime statistics, in combination with a minimum allocation to ensure that each state and territory receives an appropriate share of funding. Sixty percent of the allocation is awarded directly to a state and 40 percent is set aside for units of local government. States are required to sub-grant a portion of the funds to local units of government, such as a city, county, township or town. Tribal governments are eligible to receive pass-through funding from the state.
The JAG program, which is managed by BJA, is the primary provider of federal criminal justice funding to state and local jurisdictions. JAG funds support all components of the criminal justice system, from multi-jurisdictional drug and gang task forces to crime prevention and domestic violence programs, courts, corrections, treatment, and justice information sharing initiatives. Projects may address crime through the provision of services directly to individuals and/or communities and by improving the effectiveness and efficiency of criminal justice systems, processes, and procedures. For more details on the JAG Program or to track the use of Recovery Act funds, visit www.ojp.gov/recovery .
17 August 2009
San Diego Attorney and Accountant Charged with Tax CrimesRead the Press Release
WASHINGTON - Craig Shaber, an attorney from San Diego was arraigned today before Magistrate Judge Anthony J. Battaglia in that city on charges of conspiracy to defraud the Internal Revenue Service (IRS) and tax evasion for years 2000 to 2002, the Justice Department and IRS announced. On Aug. 14, 2009, Steven Wright, an accountant, pleaded guilty before U.S. Magistrate Judge Jan M. Adler to one count of tax evasion for the 2000 tax year. Wright admitted to evading $387,000 in taxes for 2000 to 2002.
According to the indictment, the plea agreement and court documents, between 1999 and 2002, Shaber and Wright fraudulently acquired control of numerous public shell companies by, among other things, installing nominee officers and directors and submitting false registration statements and reports to the U.S. Securities and Exchange Commission (SEC) and the National Association of Security Dealers (NASD). Shaber and Wright earned millions of dollars from the sale of these public shell companies and deposited the proceeds into bank accounts in the names of Bonaventure Capital Ltd. and one of Shaber’s client trust accounts. In 2002, Shaber and Wright received $260,000 in cash from the sale of one of these companies. In 2003, the SEC filed a complaint related to Shaber’s and Wright’s conduct selling these public shell companies.
According to, the indictment, the plea agreement and court documents, Shaber and Wright then evaded taxes on the millions of dollars earned from the sale of the public shell companies. They withdrew these proceeds for their own personal benefit and in a way that it concealed that they received income from the stock scheme. Shaber and Wright disbursed these funds to various bank accounts in the names of nominee entities that they controlled, and they used accounts in the names of nominee entities to pay for personal expenses to help conceal their receipt of this income. Some of these nominee entities held title to various assets, which helped conceal Shaber and Wright’s receipt of taxable income and their control over some of these assets.
According to the indictment and court documents, Shaber used the proceeds from the shell company scheme to purchase numerous luxury items, including his personal residence in Coronado, Calif., a McDonnell Douglas helicopter, a World War II-era Tigercat airplane, a Plymouth Prowler, a Porsche 996 Turbo and artwork. Additionally, Wright purchased significant assets, including property in Poway, Calif., a condominium in Mammoth Lakes, Calif., a BMW X5 and artwork.
Shaber is next scheduled to be in court for a status hearing before Magistrate Judge Battaglia on Aug. 27, 2009 at 1:30 p.m. If convicted on all counts, Shaber faces a maximum sentence of 20 years in prison and a maximum fine of $1,000,000.
Wright’s sentencing is scheduled for Nov. 9, 2009, before U.S. District Court Judge Marilyn L. Huff. Wright faces a maximum sentence of 5 years in prison and a maximum fine of $250,000.
These cases are being prosecuted by Tax Division trial attorneys Christopher Maietta and Timothy J. Stockwell, and are being investigated by the IRS, Criminal Investigation Division. Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at http://www.usdoj.gov/tax.
Fifth Person Pleads Guilty to Illegally Accessing Confidential Passport FilesRead the Press Release
WASHINGTON – A fifth individual pleaded guilty today to illegally accessing numerous confidential passport application files, Assistant Attorney General Lanny A. Breuer of the Criminal Division announced. Kevin M. Young, 42, of Temple Hills, Md., pleaded guilty before U.S. Magistrate Judge Alan Kay in the District of Columbia to a one-count criminal information charging him with unauthorized computer access. Young is scheduled to be sentenced on Dec. 9, 2009.
According to court documents, Young has worked full-time for the State Department since February 1987. For the past eight years, Young has been a contact representative for the Passport Special Issuance Agency. In pleading guilty, Young admitted he had access to official State Department computer databases in the regular course of his employment, including the Passport Information Electronic Records System (PIERS), which contains all imaged passport applications dating back to 1994. The imaged passport applications on PIERS contain, among other things, a photograph of the passport applicant as well as certain personal information including the applicant’s full name, date and place of birth, current address, telephone numbers, parent information, spouse’s name and emergency contact information. These confidential files are protected by the Privacy Act of 1974, and access by State Department employees is strictly limited to official government duties.
In pleading guilty, Young admitted that between March 11, 2003, and Dec. 21, 2005, he logged onto the PIERS database and viewed the passport applications of more than 125 celebrities, actors, comedians, professional athletes, musicians, models, a politician and other individuals identified in the press. Young admitted that he had no official government reason to access and view these passport applications, but that his sole purpose in accessing and viewing these passport applications was idle curiosity.
Young is the fifth current or former State Department employee to plead guilty in this continuing investigation. On Sept. 22, 2008, Lawrence C. Yontz, a former Foreign Service Officer and intelligence analyst, pleaded guilty to unlawfully accessing nearly 200 confidential passport files. Yontz was sentenced on Dec. 19, 2008, to 12 months of probation and ordered to perform 50 hours of community service. On Jan. 14, 2009, Dwayne F. Cross, a former administrative assistant and contract specialist, pleaded guilty to unlawfully accessing more than 150 confidential passport files. On March 23, 2009, Cross was sentenced to 12 months of probation and ordered to perform 100 hours of community service. On Jan. 27, 2009, Gerald R. Lueders, a former Foreign Service Officer, watch officer and recruitment coordinator, pleaded guilty to unlawfully accessing more than 50 confidential passport files. Lueders was sentenced on July 8, 2009, to one year of probation and ordered to pay a $5,000 fine. On July 10, 2009, William A. Celey, a file assistant, pleaded guilty to unlawfully accessing more than 75 confidential passport files. Celey is scheduled to be sentenced on Oct. 23, 2009.
These cases are being prosecuted by Trial Attorney Armando O. Bonilla of the Criminal Division’s Public Integrity Section, headed by Section Chief William M. Welch II. The cases are being investigated by the State Department Office of Inspector General.
Consortium of 49 Massachusetts Law Enforcement Agencies<br /> to Pay U.S. $200,000 for Alleged False ClaimsRead the Press Release
WASHINGTON – The North Eastern Massachusetts Law Enforcement Council (NEMLEC) will pay the United States $200,000 to settle allegations that it made false claims related to the use of Justice Department grant funds. Based in Boston, NEMLEC is a non-profit corporation and a law enforcement council. It is comprised of a consortium of 47 police departments in Middlesex and Essex Counties, as well as two county sheriff’s departments.
The settlement relates to NEMLEC’s 2003 certifications that it used the grant funds from the Department of Justice for approved purposes. The Justice Department awarded these funds to NEMLEC in 2001 and 2002 for the "School Threat Assessment and Response System" (STARS) program.
According to the consortium’s Web site, NEMLEC created and implemented STARS in 1999 to assist the region’s over 500 schools in enhancing school safety, preventing threats and violence in schools, and ensuring that the schools were prepared to identify, assess, and respond to threats and emergencies. An investigation by the Justice Department’s Office of the Inspector General concluded that NEMLEC had not properly accounted for several hundred thousand dollars of grant funds.
"The Civil Division plays a critical role in protecting taxpayer funds," said Tony West, Assistant Attorney General for the Civil Division. "With the Justice Department making significant grants to local law enforcement agencies, we will continue to ensure that all of the funds are spent only on the projects for which they were intended."
The Justice Department’s Office of Juvenile Justice and Delinquency Prevention provided the funds at issue to NEMLEC through the Edward Byrne Memorial State and Local Law Enforcement Assistance Grant Program. The Byrne Formula Grant Program is a partnership among federal, state, and local governments to create safer communities.
Alleged International Hacker Indicted for Massive Attack on U.S. Retail and Banking NetworksRead the Press Release
WASHINGTON – Albert Gonzalez, 28, of Miami, Fla., was indicted today for conspiring to hack into computer networks supporting major American retail and financial organizations, and stealing data relating to more than 130 million credit and debit cards, announced Assistant Attorney General of the Criminal Division Lanny A. Breuer, Acting U.S. Attorney for the District of New Jersey Ralph J. Marra Jr. and U.S. Secret Service Assistant Director for Investigations Michael Merritt.
In a two-count indictment alleging conspiracy and conspiracy to engage in wire fraud, Gonzalez, AKA "segvec," "soupnazi" and "j4guar17," is charged, along with two unnamed co-conspirators, with using a sophisticated hacking technique called an "SQL injection attack," which seeks to exploit computer networks by finding a way around the network’s firewall to steal credit and debit card information. Among the corporate victims named in the 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.
The indictment, which details the largest alleged credit and debit card data breach ever charged in the United States, alleges that beginning in October 2006, Gonzalez and his co-conspirators researched the credit and debit card systems used by their victims; devised a sophisticated attack to penetrate their networks and steal credit and debit card data; and then sent that data to computer servers they operated in California, Illinois, Latvia, the Netherlands and Ukraine. The indictment also alleges Gonzalez and his co-conspirators also used sophisticated hacker techniques to cover their tracks and to avoid detection by anti-virus software used by their victims.
If convicted, Gonzalez faces up to 30 years in prison on the wire fraud conspiracy charge and an additional five years in prison on the conspiracy charge, as well as a fine of $250,000 for each charge.
Gonzalez is currently in federal custody. In May 2008, the U.S. Attorney’s Office for the Eastern District of New York charged Gonzalez for his alleged role in the hacking of a computer network run by a national restaurant chain. Trial on those charges is scheduled to begin in Long Island, N.Y., in September 2009.
In August of 2008, the Justice Department announced an additional series of indictments against Gonzalez and others for a number of retail hacks affecting eight major retailers and involving the theft of data related to 40 million credit cards. Those charges were filed in the District of Massachusetts. Gonzalez is scheduled for trial on those charges in 2010.
The charges announced today relate to a different pattern of hacking activity that targeted different corporate victims and involved different co-conspirators.
This case is being prosecuted by Assistant U.S. Attorneys Erez Lieberman and Seth Kosto for the U.S. Attorney’s Office for the District of New Jersey and by Senior Counsel Kimberly Kiefer Peretti of the Criminal Division’s Computer Crime and Intellectual Property Section. The case is being investigated by the U.S. Secret Service.
14 August 2009
Tax Division Statement on 1st Circuit Appeals Court Ruling in U.S. V. Textron, Inc.Read the Press Release
WASHINGTON – On Aug. 13, 2009, the 1st U.S. Circuit Court of Appeals, sitting en banc, in United States v. Textron, Inc. and Subsidiaries (No. 07-2631), refused to afford work product protection to tax accrual workpapers that the IRS sought in an administrative summons issued during an audit of Textron. The 1st Circuit held that the work product privilege is designed to protect work done for litigation, not work done for the preparation of financial statements, and it recognized that providing the IRS with access to the workpapers serves the legitimate, and important, function of deterring abusive tax shelters.
“We are extremely pleased that the 1st Circuit has concluded that tax accrual workpapers prepared by a public corporation to support the corporation's tax reserve figures in its audited financial statements do not constitute privileged attorney work product and are thus disclosable to the IRS,” remarked Gilbert S. Rothenberg, Acting Deputy Assistant Attorney General of the Department of Justice's Tax Division.
Pipeline Firms to Pay $3.65 Million to Settle Claims Related to 2004 Ammonia Spills in Nebraska and KansasRead the Press Release
WASHINGTON—A pipeline company and two of its former operating firms will jointly pay a civil penalty of $3.65 million to resolve violations of the Clean Water Act resulting from anhydrous ammonia spills in Nebraska and Kansas, the Justice Department and U.S. Environmental Protection Agency announced today. The spills which occurred in 2004 resulted in significant fish kills in surrounding waterways.
Magellan Ammonia Pipeline, of Tulsa, Okla.; Enterprise Products Operating, of Houston, Tex.; and Mid-America Pipeline Company, also known as MAPCO, also of Houston agreed to the settlement in the form of a consent decree filed today in U.S. District Court in Kansas City, Kan.
In a complaint filed jointly with the consent decree, the United States alleges that Magellan, which owned the pipeline, along with operating firms Enterprise and MAPCO, were responsible for two anhydrous ammonia spills in 2004. The first spill occurred on Sept. 27, 2004, near Blair, Neb., killing an estimated 1,000 fish along North Creek and a golf course pond; and the second spill occurred on Oct. 27, 2004, near Kingman, Kan., killing more than 20,000 fish along a 12.5-mile section of Smoots Creek.
The rupture of the pipeline near Blair resulted in the hospitalization of one individual and emergency responders evacuated homes within a one mile circumference of the break. Additionally, the Kingman rupture resulted in a 40-foot high vapor cloud that was a mile long and resulted in evacuations as well.
The United States further alleges that as operators of the pipeline system, Enterprise and MAPCO violated the federal Comprehensive Environmental Response, Liability and Compensation Act (CERCLA) by failing to immediately notify the National Response Center about the spills.
"These two pipeline spills were significant and proper notification was not given to National Response Center when they occurred," said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. "Today’s settlement will ultimately result in better training of employees and implementation of prevention systems to reduce the possibility of future discharges of harmful chemicals."
"The Kingman spill caused severe environmental damage, killing all fish for more than 10 miles in Smoots Creek, which is one of Kansas’ high-quality streams. The penalty to be paid under this settlement reflects the seriousness of the violation," said Ron Hammerschmidt, environmental services division director for EPA Region 7 in Kansas City, Kan. "The actions the company will take under the settlement should help prevent this kind of spill from happening in the future."
Under the terms of the settlement, Magellan has agreed to spend an additional $550,000 on improvements to prevent or minimize releases along selected segments of its pipeline system, and will establish a program to minimize third-party damage to the system. Magellan presently operatesthe ammonia pipeline, having terminated its operating agreement with Enterprise and MAPCO in 2007.
Additionally, through the consent decree, Magellan has promised to make a series of required improvements in its employee training, leak response procedures, and protocols for detecting and responding to leaks and ruptures.
The consent decree, lodged today in U.S. District Court for the District Kansas, is subject to a 30-day public comment period and approval by the federal court. A copy of the consent decree is available on the Department of Justice Web site at http://www.usdoj.gov/enrd/Consent_Decrees.html.
Defendants Sentenced in Connection with Business <br /> Opportunity ScamsRead the Press Release
WASHINGTON – The Justice Department announced that on Aug.11, 2009, two individuals were sentenced in connection with South Florida business opportunity scams. Stewart Pope was sentenced in connection with his participation in fraudulent business opportunity sales at a Miami firm called Global Resources ("Global"). Pope, who pleaded guilty to mail fraud as well as conspiracy to commit mail and wire fraud, was sentenced to 27 months in prison and ordered to pay $4,313,093 in restitution.
Pope was listed as the President of Global in the company’s marketing materials, communications with potential customers, and disclosure documents. In reality, Pope’s name was used to hide the involvement of Global’s true owners and principals, who, among other things, had a history of selling various sorts of failed business opportunities. Pope’s conviction and sentence brings to eight the number of individuals [Richard Goodman, William Judd, Stewart Pope, Lisa Cohan, Larry Taylor, Frank DiMezza, Laura Fadlon and John Maginnis] convicted in this scam that victimized over 200 people and caused more than $4,000,000 in losses.
Global promoted business opportunities to consumers across the country through television commercials and other media, touting the profits that could be earned by purchasing a Global distributorship, and urging consumers to call a telephone number that appeared in the advertisements. Potential purchasers were told that for a purchase price of approximately $15,000, Global would provide three terminals, numerous prepaid cell phones, and advertising material, and that potential purchasers would earn their investment back in approximately six months to a year. Global salespeople told consumers that Global would find viable, high-traffic locations to place the terminals; relocate any terminals that underperformed; only sell distributorships in a limited geographic area; and provide ongoing technical support and customer service. In fact, the locations where terminals were placed drew almost no business and many of the prepaid cell phones did not work.
A business opportunity salesperson was also sentenced on Aug.11, 2009, in connection with a similar scheme. Debra Filik was sentenced in connection with her role as a salesperson for Secure Payment Services of America, LLC ("Secure Pay"). Filik, who pleaded guilty to mail fraud, was sentenced to 30 months imprisonment and ordered to pay $507,8933 in restitution. Filik was a salesperson referred to as a "closer." She routinely misrepresented a number of aspects of Secure Pay’s business opportunity to potential purchasers. Filik was the second person sentenced in connection with Secure Pay, a scam that victimized over 100 people and caused more than $1,000,000 in losses.
Like Global, Secure Pay victimized consumers from across the country. Potential purchasers were told that for a purchase price of approximately $13,000, Secure Pay would provide three bill payment terminals. Filik told potential buyers that they would be provided with viable, high traffic locations to place the terminals and that, when the public used the terminals to pay personal bills, the terminal owner would earn commissions. Filik told prospective buyers that they would earn their investments back in 14 months or less. She misrepresented the profits purchasers would earn, the viability of locations, and ongoing customer support and technical assistance that Secure Pay would provide. Filik also gave out the names of the company's references, who falsely claimed to be successful Secure Pay distributors.
"We are continuing to prosecute individuals who take advantage of hard economic times by offering false hope to people looking for income," said Assistant Attorney General Tony West. "The lure of a business opportunity is the promise of a stream of income coming from kiosks, vending machines, automated teller machines, or other mechanisms for selling goods or services to the public. The problem is that the promises of good locations and potential profits are often completely bogus, as are the references and locators involved in these cases. We have prosecuted over 100 people in this sort of scam in recent years. These cases are just two examples," West added.
In addition to Pope, seven other individuals were previously convicted and sentenced in connection with the Global Resources fraud. Two of the principals of the firm, Richard Goodman and William Judd, were sentenced to 70 months and 46 months in prison, respectively. John Maginnis, Larry Taylor, and Lisa Cohan, salespeople referred to as closers, were sentenced to 84 months, 51 months, and 16 months in prison, respectively. Closers made several misrepresentations about the profits that would be generated by the business, territorial limitations, the viability of locations, and ongoing customer support and technical assistance that Global would provide. Closers also gave out the names of Global’s references, who falsely claimed to be successful Global distributors.
Defendants Frank DiMezza and Laura Fadlon, a/k/a "Laura Sadlon," were Global references who fraudulently held themselves out as successful Global distributors. In reality, neither DiMezza nor Fadlon ever purchased a Global distributorship, and they were paid to lie to prospective purchasers. DiMezza and Fadlon were each sentenced to 27 months in prison. All defendants were ordered to pay restitution to the victims of the offenses.
Defendant Noel Beres was another participant in the Secure Pay scheme who was charged and sentenced to prison. He was a Secure Pay owner and received a final sentence of 34 months in prison.
Acting U.S. Attorney Jeffrey H. Sloman, from the Southern District of Florida, said: "Business opportunity schemes, which scam innocent consumers looking to improve their financial situation, are difficult for even educated consumers to detect. However, business opportunity promoters need to realize that this type of fraud will be detected by law enforcement, vigorously prosecuted, and result in serious jail time in this District."
"The Postal Inspection Service remains vigilant to uncover individuals who use the mail to commit fraud on the American public," said U.S. Postal Inspector in Charge Henry Gutierrez, based in Miami. "We have devoted substantial resources in recent years to uncovering the activities of individuals like these defendants who falsely promise that consumers will be able to make money by investing in what often seems to be the latest trend, such as cell phones, DVD rental machines or Internet kiosks. The desire of Americans to start their own businesses should not be exploited in this fashion," added Inspector in Charge Gutierrez.
Assistant Attorney General West commended the investigative efforts of the Postal Inspection Service, as well as the Federal Trade Commission, which brought a related civil suit earlier and made a criminal referral. The Global Resources case was prosecuted by Josh Burke and Jill Furman, and the Secure Pay case was prosecuted by Richard Goldberg and Matthew Ebert, of the United States Department of Justice, Office of Consumer Litigation.
13 August 2009
Two Virginia Residents Sentenced for Their Role in Scheme<br /> to Defraud Clients of Funds Allegedly Held in TrustRead the Press Release
Two former employees of Edward H. Okun, who was sentenced to 100 years in prison on Aug. 4, 2009, after a three-week jury trial, were sentenced today before U.S. District Judge Robert E. Payne for their roles in a scheme to defraud and obtain approximately $126 million in client funds held by The 1031 Tax Group LLP (1031TG).
Lara Coleman, the former chief operating officer of Investment Properties of America (IPofA), was sentenced to 10 years in prison and ordered to pay full restitution. Coleman pleaded guilty on Jan. 6, 2009, to conspiring to commit mail and wire fraud and to making a material false statement to federal investigators.
According to the plea agreement and statement of facts, Coleman and others used 1031TG and its subsidiaries in a scheme to obtain millions of dollars of client funds by false pretenses. Section 1031 of the Internal Revenue Code allows investment property owners to defer the capital gains tax that would otherwise be due on properties sold, if the proceeds are used to purchase new property in a specified time frame. To facilitate such exchanges, investment property owners deposit the proceeds from the sale of their property with qualified intermediaries and sign exchange agreements, which include various promises by the qualified intermediaries to clients regarding the safekeeping of exchange funds in trust.
In the plea agreement and statement of facts, Coleman admitted that 1031TG falsely represented that it would hold client funds solely to complete the clients' 1031 exchanges. Coleman admitted that after obtaining clients’ exchange proceeds with that false promise, she and others misappropriated approximately $132 million in client funds to support the lavish lifestyle of the owner of 1031TG, pay operating expenses for the owner’s various companies, invest in commercial real estate and purchase additional qualified intermediary companies to obtain access to additional client funds. In addition, Coleman admitted that she lied to federal investigators about statements she made in 2006 to internal attorneys for Investment Properties of America about the amount of money she and others had misappropriated.
Robert D. Field II was sentenced today to five years in prison and was ordered to pay full restitution for his participation in the conspiracy to defraud 1031TG customers. Field was the chief financial officer of a holding company that was set up, in part, to oversee both IPofA and 1031TG, although neither company was ever officially made a subsidiary of the holding company. The sentencing of Richard Simring, the chief legal officer, has been continued. Field pleaded guilty on July 3, 2008, and Simring pleaded guilty on July 24, 2008.
The case is being prosecuted by Assistant U.S. Attorneys Michael S. Dry and Jessica A. Brumberg for the Eastern District of Virginia and Trial Attorney Brigham Q. Cannon of the Criminal Division’s Fraud Section. This continuing investigation is being conducted by the U.S. Postal Inspection Service, the Internal Revenue Service and the FBI.
Massachusetts Man Sentenced in Child Pornography CaseRead the Press Release
WASHINGTON – Michael D. Doyle, 41, of Woburn, Mass., was sentenced today to four years in prison for possessing images of child pornography, Assistant Attorney General of the Criminal Division Lanny A. Breuer, Acting U.S. Attorney for the District of Massachusetts Michael K. Loucks and Bruce M. Foucart, Special Agent-in-Charge of the Boston Field Office of the U.S. Department of Homeland Security’s Immigration and Customs Enforcement (ICE) announced.
Doyle also was sentenced to nine years of supervised release following his term in prison by U.S. District Court Judge George A. O’Toole Jr. The court accepted Doyle’s guilty plea to a one-count information charging possession of child pornography, which was filed on April 22, 2009.
This case was brought as part of a nationwide ICE investigation called "Operation Emissary," which targeted a Web site that offered images and movies of hardcore child pornography. The targeted Web site alerted would-be customers that subscribing to the site was illegal and warned them to be discreet about their purchases. Doyle admitted in his plea that he had subscribed to this Web site and possessed images and videos depicting prepubescent minors engaging in sexually explicit conduct.
The case was investigated by ICE’s Boston Field Office, an d w as prosecuted by Assistant U.S. Attorney Angel Kelley Brown of the District of Massachusetts and Trial Attorney Bonnie L. Kane of the Criminal Division’s Child Exploitation and Obscenity Section.
Justice Department Resolves Disability Discrimination Lawsuit<br /> Against Indiana Provider of Retirement HousingRead the Press Release
WASHINGTON – The Justice Department today announced that the operator and manager of the Rathbone Retirement Community in Evansville, Ind., has agreed to pay up to $116,000 to resolve a housing discrimination lawsuit. The November 2008 lawsuit alleged that the defendants violated the Fair Housing Act by prohibiting the use of motorized wheelchairs and scooters in residents’ apartments and in the home’s common dining room during meals.
"Persons with disabilities who live in retirement communities are entitled to the protections of the Fair Housing Act," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "This agreement will ensure equal access to housing for those individuals who use mobility aids to move about independently in their daily lives."
"This enforcement action provides yet another real-life example of our commitment to support the rights of persons with disabilities," said U.S. Attorney Timothy M. Morrison for the Southern District of Indiana.
The agreement, which must be approved by the U.S. District Court for the Southern District of Indiana, requires Rathbone Retirement Community Inc. and its resident manager Norma Helm to pay a total of $70,000 to three former residents. It also requires them to establish a $25,000 settlement fund for others who may have been injured by the policy and pay the government a $21,000 civil penalty. The agreement requires the defendants to provide fair housing training for employees, adopt nondiscrimination and reasonable accommodation policies, and maintain and submit records to the United States for the two-year term of the agreement.
"Wheelchair access is vital for many seniors and people with disabilities. This settlement underscores the importance of that right and the government’s resolve to it," stated John Trasvina, Assistant Secretary for Fair Housing & Equal Opportunity at the U.S. Department of Housing and Urban Development (HUD).
The case originated when two former residents of the Rathbone Retirement Community filed separate complaints with HUD. HUD investigated the complaints, determined there was reasonable cause to believe that unlawful housing discrimination had occurred and referred the matter to the Justice Department.
Persons with disabilities who believe they may have been discriminated against in connection with their dealings with the Rathbone Retirement Community should call 1-800-896-7743 and select menu option 94 to determine how they can make a claim for damages.
The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status. Individuals who believe that they may have been victims of housing discrimination can call the Housing Discrimination Tip Line (1-800-896-7743), email the Justice Department at [email protected], or contact the U.S. Department of Housing and Urban Development at 1-800-669-9777.