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9 June 2009
United States Files False Claims Act Suit Against California Mortgage Lender Capmark FinanceRead the Press Release
WASHINGTON – The Department of Justice filed suit today against California mortgage lender Capmark Finance Inc., charging that Capmark violated the False Claims Act by making false statements on applications for federal mortgage insurance covering residential nursing homes. The lawsuit, filed in United States District Court in Los Angeles, relates to a federal program under which the U.S. Department of Housing and Urban Development (HUD) guarantees mortgage loans used to acquire healthcare facilities such as hospitals and nursing homes.
The United States alleges that Capmark made false statements in HUD applications to guarantee mortgage loans made to acquire the Canoga Care Center, a residential nursing home facility in Canoga Park, Calif., and the Hudson Valley Care Center, located in Ghent, N.Y. After accepting Capmark’s applications for mortgage insurance, HUD was forced to pay $25,895,701.21 when both the Canoga Care Center and Hudson Valley Care Center defaulted on their loans. Pursuant to the False Claims Act, the United States is seeking treble damages and penalties.
"Mortgage fraud is a top priority for this Administration, especially when public dollars are at stake," said Tony West, Assistant Attorney General for the Justice Department’s Civil Division. "This complaint sends a clear message that we will aggressively pursue allegations of fraud on federal mortgage insurance programs, which are so vitally important to this economy."
New Jersey University Hospital to Pay Additional $2 Million to Resolve Fraud Claims That Facility Double Billed MedicaidRead the Press Release
WASHINGTON - The University of Medicine and Dentistry of New Jersey (UMDNJ) has agreed to pay the United States $2 million to resolve federal civil fraud allegations that its hospital defrauded Medicaid, the Justice Department announced today. From 1993 to 2004, UMDNJ’s University Hospital submitted claims to Medicaid for outpatient physician services that were also being billed by doctors working in the hospital’s outpatient centers. By submitting duplicate claims for payment, University Hospital effectively doubled billed the government’s Medicaid program.
"Today’s settlement demonstrates that the Department of Justice will not tolerate fraud on our Medicaid programs, which were created to serve our nation’s low-income families, children and seniors," said Tony West, Assistant Attorney General for the Justice Department’s Civil Division. "We will continue to work with our partners at the Department of Health and Human Services Inspector General’s Office to protect the integrity of our public health programs."
The case against UMDNJ and University Hospital originated in a qui tam or whistleblower complaint filed under the Federal False Claims Act by Dr. Steven Simring. In late 2005, the double billing addressed by today’s settlement was also the subject of a criminal complaint filed against UMDNJ by the U.S. Attorney’s Office for the District of New Jersey. As a result of a Deferred Prosecution Agreement concerning that criminal complaint, the state of New Jersey previously recouped $4.9 million from University Hospital, half of which was to be returned to the federal Medicaid program.
Under the terms of today’s agreement, UMDNJ will pay an additional $2 million to the federal government to resolve the outstanding civil federal false claims act allegations. The total federal recovery when combined with the previous payment is $4.45 million. Dr. Simring will receive $801,000 as his share of the total federal recovery.
The Office of the Inspector General of Department of Health and Human Services worked with the Justice Department’s Civil Division to obtain today’s result.
Jenkens & Gilchrist Attorneys, BDO Seidman Accountants, and Bankers Charged in Criminal Tax Fraud Related to Tax Shelters Generating over Seven Billion Dollars of Fraudulent Tax LossesRead the Press Release
An indictment was filed today charging seven individuals -- three former shareholders of the Jenkens & Gilchrist law firm (J&G), the former Chief Executive Officer and a former tax partner from the BDO Seidman accounting firm (BDO), and two former bankers from a foreign bank with headquarters in New York (Bank A) -- with tax fraud conspiracy and related crimes arising out of tax shelters promoted by J&G, BDO, and the bank.
According to the indictment filed today in Manhattan federal court, the defendants and their co-conspirators designed, marketed, and implemented fraudulent tax shelters used by wealthy individuals with multimillion-dollar taxable income in order to eliminate or reduce the taxes they would have to pay the IRS.
The Indictment charges the seven individuals in 27 separate counts, including conspiracy to defraud the IRS, tax evasion, and impeding and impairing the lawful functioning of the IRS.
The seven individuals charged in the Indictment are:
Paul M. Daugerdas, 58, of Wilmette, Ill., a lawyer, was the former head of J&G’s Chicago office and its tax practice. Daugerdas is a certified public accountant who previously served as a tax partner at Arthur Andersen LLP and head of the tax department at the Chicago law firm Altheimer & Gray (A&G).
Erwin Mayer, 45, of Winnetka, Ill., a lawyer, was a shareholder at J&G's Chicago office in its tax practice. Mayer is an accountant who previously served as a tax partner in A&G's Chicago office.
Donna Guerin, 48, of Elmhurst, Ill., a lawyer, was a shareholder at J&G's Chicago office in its tax practice. Guerin is a certified public accountant who previously served as a tax partner in A&G's Chicago office.
Denis Field, 51, of Naples, Fla.is the former Chief Executive Officer and Chairman of the Board of BDO Seidman, former head of its national tax practice, and one of three heads of BDO's "Tax Solutions Group," which handled all aspects of BDO's tax shelter practice. Field is a certified public accountant and an attorney, with an LLM in taxation.
Robert Greisman, 48, of Deerfield, Ill. was a tax partner in BDO's Chicago office and a member of BDO's Tax Solutions Group. GReisman is a certified public accountant and an attorney.
Raymond Craig Brubaker, 53, of Plano, Texasis a former investment representative at Bank A's Dallas office. Brubaker, who is a certified public accountant and an attorney, previously served as a tax partner in Arthur Andersen's Dallas office.
David Parse, 47, of Elmhurst, Ill., is a former investment representative at Bank A's Chicago office. Parse is a certified public accountant.
As alleged in the Indictment:
From 1994 through 2004, the seven defendants and others participated in a scheme to defraud the IRS by designing, marketing, implementing and defending fraudulent tax shelters. The conspirators sought to deceive the IRS about the bona fides of those shelters and the circumstances under which the shelters were marketed and implemented.
The defendants and their co-conspirators understood that if the IRS were to detect their clients' use of these tax shelters and learn the true facts and circumstances surrounding the design, marketing, and implementation of the shelters, the IRS would aggressively challenge the claimed tax benefits. In that event, the IRS would seek to collect the unpaid taxes plus interest, and might also seek to impose substantial penalties upon the clients. Accordingly, the conspirators undertook to prevent the IRS from: (I) detecting their clients' use of these shelters; (ii) understanding how the transactions operated to produce the tax results reported by the clients; (iii) learning that the shelters were marketed as cookie-cutter products that would eliminate or reduce large tax liabilities; (iv) learning that the clients were not seeking profit-making investment opportunities, but were instead seeking huge tax benefits for which they paid fees based on a percentage of the desired tax loss; and (v) learning that, from the outset, all the clients intended to complete a pre-planned series of steps that had been designed by the conspirators to lead to the specific tax benefits sought by the clients.
In order to maximize the appearance that the tax shelters were investments undertaken to generate profits, and to minimize the likelihood that the IRS would learn the transactions were actually designed to create tax losses and deductions, the defendants and their co-conspirators created and assisted in creating transactional documents and other materials that falsely and fraudulently described the clients' motivations for entering into the tax shelters and for taking the various steps that would yield the tax benefits.
In order to encourage clients to participate in the shelters, and to shield the clients from substantial penalties that could be imposed if the IRS disallowed the claimed tax benefits, the defendants conspired to provide J&G's clients with opinion letters which claimed the tax shelter losses or deductions would "more likely than not" survive IRS challenge. The defendants knew those opinions were based on false and fraudulent statements, and omitted material facts. By helping their clients obtain false and fraudulent opinion letters, with the understanding and intent that those opinion letters would be presented to the IRS if and when the clients were audited, the defendants sought to undermine the ability of the IRS to ascertain the clients' tax liabilities and determine whether penalties should be imposed.
Among the alleged fraudulent tax shelter designed, marketed, and implemented by the defendants and their co-conspirators were "Short Sales," "Short Options Strategy" (SOS), "Swaps," and "HOMER." The Short Sale tax shelter was marketed and sold from at least 1994 through at least 1999 to at least 290 wealthy individuals and generated at least $2.6 billion in false and fraudulent tax losses. The SOS tax shelter was marketed and sold from at least 1998 through at least 2000 to at least 550 wealthy individuals, and generated at least $3.9 billion in false and fraudulent tax losses. The Swaps tax shelter was marketed and sold in 2001 and 2002 to at least 55 wealthy individuals, and generated more than $420 million in false and fraudulent tax losses. The HOMER tax shelter was marketed and sold in 2001 to at least 36 wealthy individuals, and generated more than $400 million in false and fraudulent tax losses.
Defendants Daugerdas, Mayer, Brubaker, Parse, Field and Greisman also developed and utilized tax shelters for themselves in order to evade personal tax liabilities on the substantial income they were receiving from their design, marketing, and implementation of fraudulent tax shelters. In addition, J&G provided Brubaker and Parse with free opinion letters for their personal tax shelters, and provided discounted tax shelter opinion letters to other Bank A personnel.
Count One of the indictment charges all defendants with conspiracy to defraud the IRS and to evade taxes. In addition, each defendant except Parse is charged with multiple counts of tax evasion relating to the use of various tax shelters for specified clients. Each defendant is also charged with one count of corruptly endeavoring to obstruct and impede the internal revenue laws. The indictment also charges Daugerdas and Mayer with tax evasion based on their use of fraudulent tax shelters to eliminate or reduce their personal income tax liabilities between 1999 and 2001.
On the conspiracy charge, each defendant faces a maximum penalty of 5 years in prison; 3 years' supervised release; a fine of the greatest of $250,000 or twice the gross gain to the defendant or twice the gross loss to the IRS; and restitution. Each count of tax evasion carries a maximum penalty of 5 years in prison; 3 years' supervised release; a fine of the greatest of $250,000 or twice the gross gain to the defendant or twice the gross loss to the IRS; and costs of prosecution. Each defendant also faces a maximum penalty of 3 years in prison; 1 year's supervised release; and a fine of the greatest of $250,000 or twice the gross gain to the defendant or twice the gross loss to the IRS on the charge of corruptly endeavoring to obstruct and impede the internal revenue laws.
Former BDO Seidman Vice Chairman and board member Charles W. Bee Jr., pleaded guilty on June 3, 2009, to related charges of conspiracy to defraud the IRS, tax evasion, and perjury. Michael Kerekes, another principal of BDO Seidman and also a former member of BDO's TSG and Tax Opinion Committee, pleaded guilty on Feb. 13, 2009, to related conspiracy and tax evasion charges. Adrian Dicker, a former Vice Chairman of BDO Seidman and TSG member, also pleaded guilty on March 17, 2009, to related conspiracy and tax evasion charges.
"We are dedicated to holding accountable tax and financial professionals whose deceit and fraud cost this country millions in tax revenues," said Lev L. Dassin, the Acting U.S. Attorney for the Southern District of New York. "The allegations contained in the Indictment reflect a brazen disregard for the law."
"In today's economic environment, it's more important than ever that the American people feel confident that everyone is playing by the rules and paying the taxes they owe," said Internal Revenue Service Commissioner Doug Shulman. "Taxpayers deserve our vigilance in the investigation and prosecution of allegations of fraud by unscrupulous tax and financial professionals who assist others in hiding income and evading the payment of their fair share of taxes."
"Dishonest and fraudulent tax professionals, including accountants, attorneys, and bankers, should stand up and take note of today's indictment," said John A. DiCicco, the Acting Assistant Attorney General of the Justice Department's Tax Division. "Professionals who sell and promote fraudulent tax shelters that help wealthy clients illegally evade taxes face serious felony charges and substantial prison time."
Dassin thanked the IRS and the Department of Justice Tax Division for their efforts in this case.
Southern District of New York Assistant United States Attorney Stanley Okula and Department of Justice Tax Division Assistant Section Chief Nanette L. Davis are in charge of the prosecution.
The charges contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
Former District of Columbia Police Officer Pleads Guilty to Tax ChargesRead the Press Release
Willie Borden, a former Washington, D.C., Metropolitan Police Department officer, pleaded guilty today to a criminal tax charge before U.S. District Court Judge James Robertson.
According to the court proceedings, Borden was the co-owner of B&B Security Consultants located at 1219 Good Hope Road, SE, in Washington, DC. B&B was in the business of providing security guards to various entities and events in the District of Columbia and throughout the metropolitan area.
Borden shared responsibility to collect, account for and pay over employment taxes for B&B. However, during 2002 through 2006, although Borden and his business partner withheld more than $2.1 million in payroll taxes from employee paychecks, they did not pay this sum over to the IRS, as the law requires.
Judge Robinson scheduled sentencing for Oct. 20, 2009. Borden faces up to five years in prison, a fine of up to $250,000 and restitution for the unpaid employment taxes.
The case is being jointly prosecuted by Assistant U.S. Attorney Susan Menzer from the U.S. Attorney’s Office for the District of Columbia and Justice Department Tax Division trial attorney Karen E. Kelly. The case was investigated by the IRS Criminal Investigation Division.
Fact Sheet: Prosecuting and Detaining Terror Suspects in the <br /> U.S. Criminal Justice SystemRead the Press Release
I. Terror Prosecutions in the Southern District of New York
Since the 1990s, the U.S. Attorney’s Office for the Southern District of New York (SDNY) has investigated and successfully prosecuted a wide range of international and domestic terrorism cases — including the bombings of the World Trade Center and U.S. Embassies in East Africa in the 1990s. More recent cases include those against individuals who provided material support to al-Qaeda and other terrorist groups, as well as against international arms trafficker Monzer al Kassar and the Somalian pirate charged in the hijacking of the Maersk Alabama.
Major Historical Cases in SDNY:
1993 World Trade Center Bombing: After two trials, in 1993 and 1997, six defendants were convicted and sentenced principally to life in prison for detonating a truck bomb in the garage of the World Trade Center, killing six people and injuring hundreds more. One of the defendants convicted at the second trial was Ramzi Yousef, the mastermind of the attack.
1994-95 Manila Air Plot: Ramzi Yousef and two others were convicted in 1996 for plotting to plant bombs aboard a dozen U.S. commercial aircraft that were timed to go off as the planes were flying over the Pacific. The defendants were sentenced to substantial prison terms. Yousef concocted the plan with Khalid Sheikh Mohammed, who is currently detained at Guantanamo Bay and has been indicted in SDNY for the Manila Air conspiracy since 1996.
1995 "Blind Sheikh" Trial: Ten defendants associated with a mosque in Brooklyn, N.Y., were convicted of plotting to blow up the World Trade Center, United Nations headquarters, and various bridges, tunnels and landmarks in and around New York City. The lead defendant, Omar Abdel Rahman, also known as the "Blind Sheikh," was sentenced to life in prison, while his co-defendants were sentenced to prison terms ranging between life and 25 years.
Bin Laden Indictment and Embassy Bombings Trial: Shortly after the August 1998 bombings of the U.S. Embassies in Kenya and Tanzania, SDNY indicted Usama Bin Laden and approximately 20 alleged al-Qaeda loyalists for conspiring to murder Americans worldwide. Many of the defendants were also charged for their roles in the attacks on the U.S. Embassies in East Africa, including three defendants who were convicted after a six-month trial in early 2001. Those three defendants, and a fourth al-Qaeda member who was tried with them, were all sentenced to life in prison.
Recent Cases in SDNY:
James Cromitie et al.: On May 20, 2009, four individuals -- James Cromitie, David Williams, Onta Williams and Laguerre Payen -- were arrested on charges arising from a plot to detonate explosives near a synagogue in the Bronx, N.Y., and to shoot Stinger surface-to-air guided missiles at military planes located at a the National Guard Base at Stewart Airport in Newburgh, N.Y. On June 2, 2009, all four defendants were charged in an eight-count indictment and face potential life in prison, if convicted.*
Oussama Kassir: On May 12, 2009, Oussama Kassir was convicted of charges related to his participation in an effort to establish a jihad training camp in Oregon and his operation of several terrorist Web sites containing instructions about how to make bombs and poisons. Kassir was found guilty of all 11 charges against him, including providing material support to al-Qaeda and distributing information on explosives and weapons of mass destruction.
Abduwali Abdukhadir Muse: On April 21, 2009, accused Somalian pirate Abduwali Abdukhadir Muse was transported to the SDNY to face criminal charges stemming from his alleged participation in the April 8, 2009, hijacking of the Maersk Alabama container ship in the Indian Ocean. Muse is charged in a 10-count indictment and faces a mandatory life sentence, if convicted.*
U.S. v. Viktor Bout: On April 9, 2008, international arms dealer Viktor Bout was arrested by Thai authorities on a provisional arrest warrant based on an SDNY complaint, which charged conspiracy to provide material support to a designated foreign terrorist organization. Bout was later indicted for, among other things, conspiring to sell millions of dollars worth of weapons to the Fuerzas Armadas Revolucionarias de Colombia (FARC) to be used to kill Americans in Colombia. Bout has been in custody in Thailand since March 6, 2008, pending an extradition request by the United States.*
Monzer al Kassar et. al.: On Nov. 20, 2008, international arms trafficker Monzer al Kassar and a co-defendant were convicted after a three-week jury trial of all charges — including conspiracy to murder U.S. nationals; conspiracy to murder U.S. officers; conspiracy to acquire and export anti-aircraft missiles; and conspiracy to provide material support and resources to the FARC, a designated foreign terrorist organization — for conspiring to sell millions of dollars worth of high-powered weapons to the FARC to be used to kill Americans in Colombia. Al Kassar, who had been extradited on these charges from Spain, and the co-defendant, who had been extradited from Romania (the first ever to the United States on terrorism charges), were sentenced to 30 and 25 years in prison, respectively. Another co-defendant, who was also extradited from Romania, was found guilty on similar charges, and awaits sentencing.
II. Terror Prosecutions Nationwide
Nationwide, the Justice Department and its U.S. Attorney’s offices have prosecuted many terrorism cases in recent months and years . Last year, Human Rights First published a comprehensive study on prosecuting terrorism in federal court from 9/11 through the end of 2007. The study, entitled: "In Pursuit of Justice: Prosecuting Terrorism Cases in the Federal Court," found that federal prosecutors achieved a conviction rate of more than 90 percent in the set of terrorism cases examined by the report’s authors. The study examined a specific set of 257 defendants charged with terrorism related violations in the United States between 9/11 and the end of 2007. Of the 160 defendants from this group who had their cases resolved, 145 were convicted of at least one count, either by a verdict of guilty after trial or by a guilty plea.
Recent Cases:
Since Jan. 1, 2009, more than 30 individuals charged with terrorism violations have been successfully prosecuted and/or sentenced in federal courts nationwide, including the following:
Five Sentenced in Terror Finance Case: (Northern District of Texas) – On May 27, 2009, five leaders of the Holy Land Foundation, once the largest Muslim charity in the United States, were sentenced for their role in funneling more than $12 million to the Hamas terror organization. Shukri Abu Baker and Ghassan Elashi were each sentenced to 65 years in prison. Mufid Abdulqader was sentenced to 20 years in prison, while Mohammed El Mezain and Abdulrahman Odeh were each sentenced to 15 years in prison.
Mohammed Warsame: (District of Minnesota) – On May 20, 2009, Mohammed Warsame pleaded guilty to conspiracy to provide material support to al-Qaeda, admitting that he attended al-Qaeda training camps, sent money from Canada to one of his former training camp commanders and continued to exchange messages with individuals associated with al-Qaeda once in Minnesota.
Ali al-Marri: (Central District of Illinois) – On April 30, 2009, Ali al-Marri pleaded guilty to conspiracy to provide material support to al-Qaeda, admitting that he attended terrorist training camps, learned al-Qaeda tradecraft and was dispatched by al-Qaeda to carry out its terrorist objectives in America.
Five Sentenced in Fort Dix Terror Plot: (District of New Jersey) – On April 28, 29, 2009, five individuals -- Mohamad Ibrahim Shnewer, brothers Dritan Duka, Shain Duka and Eljvir Duka and Serdar Tatar -- received sentences ranging from 33 years in prison, to life in prison plus 30 years, for plotting to kill U.S. soldiers in an armed attack on the military base in Fort Dix, New Jersey. All five individuals were convicted at trial in December 2008.
Seven Plead Guilty in MEK Terror Case: (Central District of California) – On April 28, 2009, seven individuals – Roya Rahmani, Alireza Mohammadmoradi, Moustafa Ahmady, Hossein Afshari, Hassan Rezaie, Navid Taj and Mohammad Omidvar -- who were engaged in fundraising activities on behalf of the Mujahedin-e-Khalq (MEK), a designated foreign terrorist organization, pleaded guilty to federal charges of providing material support to terrorists.
Wesam al-Delaema: (District of Columbia) -- On April 16, 2009, Wesam al-Delaema was sentenced to 25 years in prison for conspiring to murder Americans overseas, including by planting roadside bombs targeting U.S. soldiers in Iraq and by demonstrating on video how these explosives would be detonated to destroy American vehicles. He pleaded guilty on Feb. 25, 2009.
Christopher Paul: (Southern District of Ohio) -- On Feb. 26, 2009, Christopher Paul was sentenced to 20 years in prison for conspiring to use explosives against targets in Europe and the United States. Paul joined al-Qaeda in the early 1990s, fought in Afghanistan and Bosnia and conspired with others to target Americans both at home and abroad.
Four Plead Guilty in LTTE Prosecution: (Eastern District of New York) -- On Jan. 27, 2009, four defendants -- Thiruthanikan Thanigasalam, Sahilal Sabaratnam, Sathajhan Sarachandran and Yogarasa Nadarasa -- pleaded guilty to terrorism violations in connection with their efforts to acquire surface-to-air missiles, missile launchers and hundreds of assault rifles for the Liberation Tigers of Tamil Eelam (LTTE), a designated terrorist organization.
Two Plead Guilty in Plot to Murder U.S. Soldiers: (Northern District of Ohio) -- On Jan. 15, 2009, Zubair Ahmed and Khaleel Ahmed pleaded guilty to conspiracy to provide material support to terrorists in connection with their efforts to travel abroad in order to murder or maim U.S. military forces in Iraq or Afghanistan.
III. Detaining Terror Inmates in Federal Prisons
International Terror Inmates
There are currently 216 inmates in Bureau of Prisons (BOP) custody who have a history of/or nexus to international terrorism. Sixty seven of these individuals were extradited to the United States for prosecution, while 149 were not extradited. Seventy two of these individuals are U.S. citizens (45 of them born in the United States, 27 of them naturalized). The "Supermax" facility in Florence, Colo. (ADX Florence), which is BOP’s most secure facility, houses 33 of these international terrorists. There has never been an escape from ADX Florence, and BOP has housed some of these international terrorists since the early 1990s. In addition to the ADX Florence, the BOP houses such individuals in the Communications Management Units at Terre Haute, Ind., and Marion, Ill., as well as in other facilities among different institutions around the country.
Among those convicted international terrorists currently serving sentences in BOP facilities are:
- Sheikh Omar Abdel-Rahman, convicted of the 1993 World Trade Center bombing
- Ramzi Yousef, convicted of the 1993 World Trade Center bombing
- Ahmed Ressam, the Millenium Bomber
- Wadih el-Hage, convicted of the 1998 U.S. Embassy bombings in Africa
- Richard Reid, convicted of attempting to ignite a shoe bomb while on a flight from Paris to Miami carrying 184 passengers and 14 crewmembers
- Ahmed Omar Abu Ali, convicted of plotting to assassinate the U.S. President as well as attack and destroy civilian airliners
- Zacarias Moussaoui, convicted of conspiring with al-Qaeda to hijack and crash planes into prominent U.S. buildings as part of the 9/11 attacks
Domestic Terror Inmates
In addition to those inmates with an international terrorism history or nexus, there are approximately 139 individuals in BOP custody who have a history of/or nexus to domestic terrorism. These individuals include:
- Theodore Kaczynski, the Unabomber
- Terry Nichols, convicted accomplice of Timothy McVeigh in the 1995 Oklahoma City bombing
Special Administrative Measures
Under the law, the Attorney General may direct the BOP to initiate Special Administrative Measures (SAMs) with respect to a particular inmate (including those being held pre-trial or during trial) when there is a substantial risk that a prisoner's communications or contacts with persons could result in death or serious bodily injury to persons, or substantial damage to property that would entail the risk of death or serious bodily injury to persons. Generally, these measures can be initiated to prevent acts of terrorism, acts of violence, or the disclosure of classified information.
SAMs are specific to a particular inmate. The special administrative measures may include housing the inmate in administrative detention and/or limiting certain privileges, including, but not limited to, correspondence, visiting, and other communications, as is reasonably necessary to protect persons against the risk of acts of violence or terrorism, while still maintaining the inmate’s attorney/client privilege. The SAMs authorization automatically expires after one year, unless renewed or vacated.
- As of May 22, 2009, there were 44 inmates subject to SAMs, out of a total federal inmate population of more than 205,000.
- Of the 44 inmates subject to SAMs, 29 were incarcerated on terrorism-related charges, while 11 were incarcerated on violent crime-related charges (gangs, organized crime, etc.), and four were incarcerated on espionage charges.
*The public is reminded that charges contained in an indictment or criminal complaint are mere allegations, and that defendants are presumed innocent unless and until proven guilty.
Ahmed Ghailani Transferred from Guantanamo Bay to <br /> New York for Prosecution on Terror ChargesRead the Press Release
Ahmed Khalfan Ghailani, a Tanzanian national who had been held at the Guantanamo Bay detention facility since September 2006, arrived early this morning in the Southern District of New York to face criminal charges stemming from his alleged role in the Aug. 7, 1998 bombing of the U.S. Embassies in Dar es Salaam, Tanzania and Nairobi, Kenya.
After a thorough review of his case by the interagency Guantanamo Review Task Force, Ghailani was recently referred for criminal prosecution in the Southern District of New York pursuant to a March 12, 2001 superseding indictment against him.
Ghailani was transferred from the custody of the Department of Defense to the Southern District of New York by the U.S. Marshals Service. He is currently in custody at the Metropolitan Correctional Center, which has housed numerous terror suspects over the years during their prosecutions in the Southern District of New York. Ghailani is expected to make his initial appearance in Manhattan federal court later today.
Ghailani faces 286 separate counts in the March 2001 superseding indictment. Among other violations, the superseding indictment charges him with conspiring with Usama bin Laden and other members of al-Qaeda to kill Americans anywhere in the world, as well as separate charges of murder for the deaths of each of the 224 people killed in the U.S. Embassy bombings in Tanzania and Kenya and various other offenses related to the bombings.
"With his appearance in federal court today, Ahmed Ghailani is being held accountable for his alleged role in the bombing of U.S. Embassies in Tanzania and Kenya and the murder of 224 people," said Attorney General Eric Holder. "The Justice Department has a long history of securely detaining and successfully prosecuting terror suspects through the criminal justice system, and we will bring that experience to bear in seeking justice in this case."
The chart below details the charges against Ghailani and the statutory maximum penalties. The public is reminded that the charges and allegations contained in the superseding indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
Count(s) Description of Charge Maximum Penalties Counts 1 – 6: Conspiracies to Murder, Bomb, and Maim 1 Conspiracy to Kill U.S. Nationals Life 2 Conspiracy to Murder, Kidnap, and Maim At Places Outside the United States Life 3 Conspiracy to Murder Life 4 Conspiracy to Use Weapons of Mass Destruction Against U.S. Nationals Death or life 5 Conspiracy to Destroy Buildings and Property of the United States Life (mandatory minimum of 20 years) 6 Conspiracy to Attack National Defense Utilities 10 years Counts 7 – 286: The Africa Bombings 7 Bombing of the U.S. Embassy in Nairobi, Kenya Death or life (mandatory minimum of 20 years) 8 Bombing of the U.S. Embassy in Dar es Salaam, Tanzania Death or life (mandatory minimum of 20 years) 9 Use and Attempted Use of Weapons of Mass Destruction Against U.S. Nationals in Nairobi, Kenya Death or life 10 Use and Attempted Use of Weapons of Mass Destruction Against U.S. Nationals in Dar es Salaam, Tanzania Death or life 11–223 Murders in Nairobi, Kenya Death or mandatory life 224–234 Murders in Dar es Salaam, Tanzania Death or mandatory life 235–275 Murder of U.S. Employees in Nairobi, Kenya Death or mandatory life 276 Attempted Murder of U.S. Employees in Nairobi, Kenya 20 years 277–278 Murder of U.S. Employees in Dar es Salaam, Tanzania Death or mandatory life 279 Attempted Murder of U.S. Employees in Dar es Salaam, Tanzania 20 years 280–281 Murder of Internationally Protected Persons in Nairobi, Kenya Death or mandatory life 282 Attempted Murder of Internationally Protected Persons in Nairobi, Kenya 20 years 283 Attempted Murder of Internationally Protected Persons in Dar es Salaam, Tanzania 20 years 284 Using and Carrying An Explosive During the Commission of A Felony 10 years consecutive 285 Using and Carrying A Dangerous Device During the Bombing Of the U.S. Embassy in Nairobi, Kenya 30 years consecutive 286 Using and Carrying A Dangerous Device During the Bombing Of the U.S. Embassy in Dar es Salaam, Tanzania Life or 30 years consecutiveRelated Materials:
Fact Sheet: Prosecuting and Detaining Terror Suspects in the U.S. Criminal Justice System
8 June 2009
Justice Department Files Religious Discrimination Lawsuit Against Essex County, New JerseyRead the Press Release
The Department filed a lawsuit today against Essex County, N.J., alleging that it discriminated against a Muslim corrections officer on the basis of her religion in violation of Title VII of the Civil Rights Act of 1964. The suit alleges that the county refused to permit Yvette Beshier to wear a religiously mandated headscarf while working as a corrections officer.
Title VII prohibits employment discrimination on the basis of race, color, sex, national origin and religion. Its religious discrimination provisions require employers to make a reasonable accommodation of employees’ religious observances and practices. The Justice Department enforces Title VII’s prohibitions against employment discrimination with respect to state and local governments.
According to the complaint, the Essex County Department of Corrections (DOC), first suspended Beshier and then terminated her on the ground that her wearing of a khimar (a head scarf) violated its uniform policy for corrections officers. The complaint alleges that Beshier had requested a religious accommodation that would permit her to wear her khimar, but the DOC denied her request.
The suit filed in U.S. District Court in Newark seeks a court order requiring Essex County to adopt a policy that reasonably accommodates the religious observances and practices of employees and prospective employees subject to the Essex County DOC’s uniform policy for corrections officers. The suit also seeks monetary damages and other relief for Beshier.
"Employees should not have to choose between their religious beliefs and their economic livelihood," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "Federal law requires all employers, even those having policies regarding the wearing of uniforms, to reasonably accommodate the religious observances and practices of their employees."
The filing of this lawsuit reflects the Civil Rights Division’s ongoing commitment to actively enforce Title VII’s prohibitions against religious discrimination. In February, the Division obtained court approval of a settlement agreement with the Washington Metropolitan Area Transit Authority requiring the authority to adopt a religious accommodation policy to its uniform requirements for bus drivers, and providing relief to a prospective Apostolic Pentecostal employee and two Muslim employees who required religious accommodations. The Division also has a pending suit against the New York City Transit Authority alleging it has discriminated against Muslims, Sikhs and other employees through its uniform policy.
Please visit http://www.usdoj.gov/crt for additional information about the Civil Rights Division and its law enforcement activities.
Former Employee at U.S. Embassy in Haiti Sentenced to 18 Months <br /> in Prison for Theft of More Than $800,000Read the Press Release
A former employee at the U.S. Embassy in Haiti was sentenced today to 18 months in prison for stealing more than $800,000 from the U.S. Department of State.
Jean G. Saint-Joy, 44, aka Gary Saint-Joy, aka Garry Saint-Joy, a citizen of Haiti, was also ordered by U.S. District Court Judge Ricardo Urbina to pay restitution in the amount of the theft. Saint-Joy pleaded guilty on Feb. 5, 2009, in U.S. District Court for the District of Columbia.
Saint-Joy admitted that beginning in approximately 2003 and continuing until early 2008, he engaged in a scheme to embezzle funds from the State Department. According to court documents, Saint-Joy was employed as a cashier by the U.S. Embassy in Port-au-Prince, Haiti, from approximately 1995 until July 2008. As part of this scheme, Saint- Joy admitted he submitted and caused to be submitted false and fraudulent documents to the State Department claiming that he required reimbursement for the payment of legitimate embassy expenses. According to court documents, Saint-Joy illegally obtained approximately $428,639 from the State Department as a result of the scheme. Saint-Joy also admitted he provided and caused to be provided false and fraudulent requests for cash advances from the embassy’s cash advance accounts with two banks in Port-au-Prince. According to court documents, Saint-Joy illegally obtained approximately $50,000 from one account and approximately $371,627 from the other account. The total amount of Saint-Joy’s theft was approximately $849,000.
The case is being prosecuted by Trial Attorneys Ethan H. Levisohn and Marc Levin of the Criminal Division’s Public Integrity Section, which is headed by William M. Welch, II. The case was investigated by the Office of Inspector General for the U.S. Department of State.
5 June 2009
Obama Administration Announces National Strategy to Reduce Drug Trafficking and Flow of Bulk Cash and Weapons Across Southwest BorderRead the Press Release
Today, U.S. Attorney General Eric Holder, U.S. Department of Homeland Secretary Janet Napolitano, and Director of National Drug Control Policy Gil Kerlikowske released President Obama’s strategy to stem the flow of illegal drugs and their illicit proceeds across the Southwest border and reduce associated crime and violence in the region.
The National Southwest Border Counternarcotics Strategy directs federal agencies to increase coordination and information sharing with state and local law enforcement agencies, intensifies national efforts to interdict the southbound flow of weapons and bulk currency, and calls for continued close collaboration with the Government of Mexico in their efforts against the drug cartels. The strategy is an important component of the Administration’s national drug control policy and complements the Administration’s comprehensive efforts to respond to threats along the border.
"Drug trafficking cartels spread violence and lawlessness throughout our border region and reach into all of our communities, large and small," said Attorney General Holder. "By focusing on increased cooperation between the U.S. and Mexican governments as well as enhanced communication within U.S. law enforcement agencies, the National Southwest Border Counternarcotics Strategy we introduce today provides an effective way forward that will crack down on cartels and make our country safer."
"The President’s counternarcotics strategy will play a critical role in our efforts to stop cross-border drug trafficking and violence," said Secretary Napolitano. "The plan calls for tougher inspections, more enforcement personnel and close coordination with our partners in Mexico as we work across Federal, State and local governments to achieve safety and security in our communities. Together, we will continue to reduce the flow of illegal drugs across the Southwest border and ensure that those who ignore our laws are prosecuted."
"Under President Obama’s leadership we have designed a new plan to pull together the capabilities not only of Federal agencies, but also state, local, and tribal law enforcement officials," said Director Kerlikowske. "This new plan, combined with the dedicated efforts of the Government of Mexico, creates a unique opportunity to make real headway on the drug threat. At the same time, we are renewing our commitment to reduce the demand for drugs in the United States, which will support this effort. The National Southwest Border Counternarcotics Strategy will improve the safety of communities on the border and throughout our Nation."
National Southwest Border Counternarcotics Strategy Objectives
- Enhance intelligence capabilities associated with the Southwest border.
- Interdict drugs, drug proceeds, and associated instruments of violence at the ports of entry, between the ports of entry, and in the air and maritime domains along the Southwest border.
- Ensure the prosecution of all significant drug trafficking, money laundering, bulk currency and weapons smuggling/trafficking cases.
- Disrupt and dismantle drug trafficking organizations.
- Enhance counterdrug technologies for drug detection and interdiction along the Southwest border.
- Enhance U.S.-Mexico cooperation regarding joint counterdrug efforts.
The National Southwest Border Counternarcotics Strategy can be found at www.whitehousedrugpolicy.gov .
Korean Corporate Owner of Cargo Vessel Sentenced to Pay $2.2 Million for Conspiracy and Falsifying RecordsRead the Press Release
WASHINGTON—U. S. District Court Judge Richard Lazzara (Middle District of Florida) today sentenced the Korean corporation STX Pan Ocean Co. Ltd., which operates the commercial cargo ship M/V Ocean Jade, to pay $2.2 million in penalties and serve four years of probation for conspiring to falsify and falsifying environmental compliance records, the Justice Department announced.
Of the $2.2 million that STX must pay, $200,000 will go to the National Fish and Wildlife Foundation, which partners in Florida with the Pinellas County Environmental Fund (PCEF). PCEF has funded numerous wide-ranging projects related to the protection, restoration and enhancement of fish and wildlife habitat in the Tampa Bay area. The court also ordered STX to implement a detailed environmental compliance plan, including monitoring of its fleet-wide operations for the next four years, training for crew members, and engineering alterations to protect gulf and ocean waters.
STX pleaded guilty to four felony offenses on April 24, 2009, including conspiracy, falsifying records, and making false statements, all of which were committed by crew members aboard the M/V Ocean Jade from July to October 2008. Federal and international law requires that all ships comply with pollution regulations that include the proper disposal of oily waste and sludge by passing the oily waste through an oil-water separator aboard the vessel or burning the sludge in the ship’s incinerator. Federal law requires the ship’s crew to record accurately each transfer or disposal of oily waste and sludge in the ship’s oil record book. In addition, federal and international law also requires that ships record disposals of garbage in the vessel’s garbage record book. Both record books must be available for inspection by the U.S. Coast Guard when the vessel is within the waters of the United States.
According to the various plea agreements filed in the case, in late July 2008, the Chief Engineer Hong Hak Kang ordered several crew members to dump approximately 10 barrels containing oily waste water directly overboard into the ocean. Then, on Sept. 27, 2008, Chief Officer Jeong Gyu Lee instructed several members of the deck department to dispose of oily waste from the crane houses directly into the ocean using a flexible plastic hose that was draped over the side of the vessel. In addition, from August to October 2008, Chief Engineer Kang and another engineering officer made entries into the M/V Ocean Jade’s oil record book by applying a pre-established formula, rather than recording the actual amounts of oily waste and sludge transferred, burned or discharged. When the ship arrived in the Port of Tampa on Oct. 7, 2008, its officers presented false oil and garbage record books to Coast Guard investigators. Several crew members also provided investigators with false statements about the several dumping incidents that had occurred in the three months before the ship arrived in Tampa.
Chief Officer Lee and Chief Engineer Kang both pleaded guilty to felony offenses relating to their falsification of the M/V Ocean Jade’s oil and garbage record book. In April 2008, Judge James Whittemore sentenced Lee to time served and three years’ supervised release. Today Judge Richard Lazzara also sentenced Kang to three years of probation and a $1,500 fine.
"Dumping pollution directly overboard into the ocean and lying to investigators is unacceptable and will not be tolerated," said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. "This sentence should make clear to the shipping industry that the Justice Department along with our federal partners will continue to prosecute companies and crew members if they fail to abide by laws protecting the environment."
U.S. Attorney A. Brian Albritton stated, "Keeping our ocean waters clean and free from pollution is extremely important. Those who recklessly foul our waters must pay a penalty and take measures to make sure it does not happen again."
"This outcome sends a clear message that it doesn’t pay to intentionally pollute and intentionally disregard international pollution prevention standards," said Captain Timothy Close, Commander of U.S. Coast Guard Sector St. Petersburg. "The U.S. Coast Guard will pursue all such cases and will continue to work closely with the U.S. Attorney and the Department of Justice to prosecute offenders."
"The defendants used the ocean as a dumping ground for waste oil and then tried to cover it up," said Maureen O'Mara Special Agent in Charge, U.S. Environmental Protection Agency (EPA). "The oceans must be protected and marine shipping companies and crew members that break the law will be prosecuted."
The case was investigated by the U.S. Coast Guard, Coast Guard Investigative Service and the EPA. It was prosecuted by Cherie L. Krigsman, Assistant U.S. Attorney for the Middle District of Florida; Leslie E. Lehnert, Trial Attorney for the Justice Department’s Environmental Crimes Section; and Lieutenant William George, U.S. Coast Guard.
Justice Department Launches Investigation into Federal Crimes in Connection <br /> with the Murder of Dr. George TillerRead the Press Release
The Department's Civil Rights Division and the U.S. Attorney’s Office for the District of Kansas have launched a federal investigation into federal crimes in connection with the murder of Dr. George Tiller. The federal probe will consist of a thorough review of the evidence and an assessment of any potential violations of the Freedom of Access to Clinic Entrances Act (FACE Act) or other federal statutes. The federal investigation will be conducted in close coordination with the Office of the Sedgwick County, Kan., District Attorney, and the state's ongoing murder prosecution will have the full support of federal investigators.
The FACE Act was enacted by Congress in 1994 to establish federal criminal penalties and civil remedies for violent, obstructionist or damaging conduct affecting reproductive health care providers and recipients.
"The Department of Justice will work tirelessly to determine the full involvement of any and all actors in this horrible crime, and to ensure that anyone who played a role in the offense is prosecuted to the full extent of federal law," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "We will conduct a thorough investigation that will complement and build upon the fine work of the Sedgwick County District Attorney and other state and local law enforcement agencies."
Following the May 31, 2009, murder, the Attorney General directed the U.S. Marshals Service to offer protection to appropriate people and facilities around the country. The U.S. Marshals Service has moved expeditiously to implement the Attorney General’s directive with the assistance of the reproductive health care service providers and organizations throughout the country.
In an effort to coordinate the federal government’s efforts in response to the shooting of Dr. Tiller, the Civil Rights Division recently convened a meeting of the National Task Force on Violence Against Reproductive Health Care Providers, an interagency law enforcement working group that includes attorneys from the Civil Rights Division and the Criminal Division, and law enforcement officials from the FBI, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the U.S. Marshals Service and the U.S. Postal Inspection Service. This task force was established more than a decade ago to commit resources to the reduction of threats and violence against health care providers on a national level.
International Competition Network Adopts Recommended Practices to Improve Merger Analysis and Presents Reports on Unilateral Conduct IssuesRead the Press Release
WASHINGTON — At the eighth annual International Competition Network (ICN) conference in Zurich, Switzerland, the ICN adopted new Recommended Practices for substantive merger analysis and presented two new reports on the analysis of tying and bundled discounting and loyalty discounts and rebates under unilateral conduct laws, the Department of Justice announced today.
The ICN conference, hosted by the Swiss Competition Commission, was held on June 3-5, 2009. More than 450 delegates participated, representing over 80 antitrust agencies from around the world, and competition experts from international organizations and the legal, business, consumer and academic communities.
In October 2001, the Department of Justice and the Federal Trade Commission (FTC) joined with antitrust agencies from 13 other jurisdictions around the world (Australia, Canada, the European Union, France, Germany, Israel, Italy, Japan, Korea, Mexico, South Africa, the United Kingdom and Zambia) to create the ICN. The ICN now includes 107member agencies from 96 jurisdictions. The goal of the ICN is to provide a forum for antitrust agencies to address antitrust enforcement and policy issues of common interest and formulate proposals for procedural and substantive convergence through a results-oriented agenda and structure.
Christine A. Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division and FTC Commissioner William E. Kovacic, who serves as the ICN Vice Chair for Outreach, were among the U.S. delegates who participated in the conference. The conference showcased the recent work of ICN working groups on mergers, unilateral conduct, cartels, competition advocacy and competition policy implementation.
"The ICN plays a central role in promoting collaboration among antitrust authorities from around the world," said Assistant Attorney General Varney. "The Antitrust Division is committed to participating fully in ICN efforts to promote international convergence in antitrust enforcement and explore ways in which we can pursue our shared enforcement goals."
"The ICN is making impressive progress toward fulfilling a central aim that motivated its creation: to be a demand-driven institution that promotes acceptance of superior methods, enables agencies to understand more deeply their common interests and differences, and to realize, through collective action, results that elude individual initiative," said Commissioner Kovacic.
Based on the work of the Merger Working Group, co-chaired by the Department’s Antitrust Division and the Irish Competition Authority, ICN members adopted three new Recommended Practices for Merger Analysis. The new Recommended Practices for merger analysis address:
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Competitive Effects Analysis in Horizontal Merger Review. Agencies should conduct competitive effects analysis to assess whether a merger is likely to harm competition significantly by creating or enhancing market power. Competitive effects analysis should be clearly grounded in both sound economics and the facts of the particular case.
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Unilateral Effects. In analyzing the potential for a merger to result in anticompetitive unilateral effects, agencies should assess whether the merger will create or enhance the merged firm’s ability or incentive to exercise market power independently. Agencies should apply the economic theory or model that best fits the characteristics of the market at issue, and assess the competitive constraints and other factors relevant to the merged firm’s ability to exercise market power.
- Coordinated Effects. In analyzing the potential for a merger to result in anticompetitive coordinated effects, agencies should assess whether the merger increases the likelihood that firms in the market will successfully coordinate their behavior or strengthen existing coordination. Agencies should assess whether the conditions that are generally necessary for successful coordination are present, and the extent to which competitive constraints and other factors would likely deter or disrupt effective coordination.
The Merger Working Group also presented a detailed report, presented by the Notification and Procedures subgroup chaired by Cynthia Lewis Lagdameo of the FTC’s Office of International Affairs, on the ways in which agencies address information requirements in the initial notification of a merger. In addition, Assistant Attorney General Varney moderated a Merger Working Group panel discussion on "Merger Analysis in Troubled Times."
The conference highlighted the work of the Unilateral Conduct Working Group, which was established to promote analytical convergence and sound enforcement of laws governing unilateral conduct by firms with substantial market power. Co-chaired by the FTC and the German Bundeskartellamt, the Working Group presented reports on the analysis of tying and bundled discounting and on the analysis of single-product loyalty discounts and rebates in over 30 jurisdictions. Randolph W. Tritell, Director of the FTC’s Office of International Affairs and co-chair of the Working Group, opened the group’s panel on "Distinguishing Pro from Anticompetive Conduct: The Fine Line Between Aggressive Competition and Anticompetitive Foreclosure in Tying and Discounting Cases." The Working Group also highlighted the successful results of the first ICN Unilateral Conduct Workshop, conducted on March 23-24, 2009. Hosted by the Antitrust Division and the FTC in Washington, D.C., the workshop was attended by more than 130 participants from nearly 35 jurisdictions.
"The Unilateral Conduct Working Group is continuing to build a body of knowledge on which enforcers and policy-makers around the world can draw to assist them in implementing their competition laws in this complex area," said Tritell.
In addition, the ICN conference highlighted the work of the Cartel Working Group, which aims to improve the ability of antitrust agencies to crack cartels through the exchange of effective investigative techniques and the examination of important legal and policy topics. In Zurich, the Cartel Working Group conducted panel discussions on transitioning to criminal sanctions and the use of effective investigative techniques.
"The Antitrust Division is working closely with enforcers abroad to combat international cartels that victimize businesses and consumers around the globe. There is a growing recognition in this effort that the surest way to deter these conspiracies is by imposing stiff criminal sanctions on the individuals who perpetrate these crimes," said Scott D. Hammond, Deputy Assistant Attorney General for Criminal Enforcement of the Department of Justice’s Antitrust Division. "In many jurisdictions where the punishment for cartel offenses has historically been limited to administrative fines against companies, laws adopting criminal sanctions against individuals for cartel offenses are now being introduced. The ICN provides a valuable forum for agencies to share their experiences and ideas in addressing the challenges of transitioning to a criminal antitrust enforcement regime."
The Advocacy Working Group presented two reports. One report addresses the results of a survey of ICN members on their experience with market studies and the other makes recommendations for future ICN work in the field of competition advocacy. The plenary session also addressed advocacy in an economic downturn, highlighting the need for competition agencies to be an advocate for competition principles. The Competition Policy Implementation Working Group held a plenary session on agency effectiveness. The Group also reported on a January 2009 workshop on agency effectiveness attended by agency leaders from more than 60 jurisdictions.
The conference host presented a special project on competition law in small economies.
The ICN members also elected John Fingleton, Chief Executive Office of the United Kingdom’s Office of Fair Trading, to a two-year term as Chair of the ICN Steering Group.
ICN documents are available at www.internationalcompetitionnetwork.org.
MEDIA CONTACTS: Department of Justice, Gina Talamona, 202-514-2007
Federal Trade Commission, Mitchell J. Katz, 202-326-2161
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Four Miami-Area Residents Sentenced in $10 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – Four Miami-area residents were sentenced today in connection with a $10 million Medicare fraud scheme involving HIV infusion clinics, Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney R. Alexander Acosta of the Southern District of Florida announced.
Alexis Dagnesses, 44; Gonzalo Nodarse, 38; Alexis Carrazana, 41; and Dr. Carlos Garrido, 69, all pleaded guilty in March 2009 to one count of conspiracy to commit health care fraud before U.S. District Judge Paul C. Huck.
Today, Judge Huck sentenced Dagnesses to 90 months in prison, to be followed by a three-year-term of supervised release. Dagnesses was also ordered to pay $12.4 million in restitution. Nodarse was sentenced to 78 months in prison, with a three-year-term of supervised release following his prison term, and was ordered to pay $5.1 million in restitution. Carrazana was sentenced to 72 months in prison, to be followed by three years of supervised release, and was ordered to pay $3.6 million in restitution. Garrido was sentenced today to 37 months in prison and three years of supervised release, and was ordered by the judge to pay $747,000 in restitution.
All four defendants had admitted to working at Midway Medical Center Inc. (Midway), a Miami clinic that purported to specialize in the treatment of patients with HIV. According to plea documents, most of the services allegedly provided to patients at Midway were billed to the Medicare program as treatments for a diagnosis of thrombocytopenia, a disorder involving a low count of platelets in the blood. None of Midway’s patients actually had low blood platelet counts.
Dagnesses’ admitted role at Midway was to manipulate the blood samples drawn from the clinic’s patients before the blood was sent to a laboratory for analysis, so that the resulting laboratory reports would make it appear that the patients actually had dangerously low blood platelet counts. Specifically, Dagnesses would obtain vials of blood drawn from Midway’s patients and place those vials in a blood centrifuge. After rotating the blood in the centrifuge for approximately 15 minutes, the blood would separate into its component parts, enabling Dagnesses to extract the platelets from the sample. Dagnesses would then return the adulterated blood to his co-conspirators at Midway, who would send it to a laboratory for testing.
Dagnesses admitted he was generally paid $1,000 for every vial of blood that he tainted for his co-conspirators at Midway. Dagnesses also admitted he was fully aware that the purpose of tainting the blood was to obtain false laboratory reports for Midway’s medical files, which would make it appear that the medications allegedly provided at Midway were medically necessary, when in fact they were not. At today’s sentencing, Dagnesses was found to have engaged in similar conduct at two additional fraudulent HIV infusion clinics, and he was held accountable for conspiring to cause the submission of more than $20 million in fraudulent claims at the three clinics.
Nodarse and Carrazana worked at Midway as medical assistants. In their pleas, the two defendants admitted to making false entries in medical records that indicated they had provided medications on particular dates and in particular dosages to patients, when, in fact, they had not. The two also admitted to being fully aware that blood samples drawn from Midway’s patients were tainted to make it appear that the patients had conditions they did not have. Despite this awareness, both assistants admitted to administering medications to patients that they knew the patients did not need. Both defendants were found to have conspired to submit more than $10 million in false and fraudulent claims for HIV infusion services allegedly provided at the clinic.
Garrido was a part-owner and practicing physician at Midway. In his plea, Garrido admitted that he and his co-conspirators billed the Medicare program routinely for services that were medically unnecessary and in many instances were never provided. Garrido admitted to purchasing only a small fraction of the medication that was purportedly being administered to Midway’s patients, and that he ordered the patients treated with medications he knew they did not need and, in many instances, the clinic did not have available. Garrido also admitted to working at Midway for approximately eight months (the last eight months the clinic was open). In that time, he admitted to submitting more than $1 million in fraudulent claims to the Medicare program.
Two additional co-conspirators, Doctors Carmen Lourdes del Cueto and Roberto Rodriguez, also pleaded guilty in March 2009 to conspiring to commit health care fraud at Midway. Rodriguez’s sentencing is scheduled for June 29, 2009, and Del Cueto’s has been scheduled for Sept. 11, 2009.
The case is being prosecuted by Trial Attorney John K. Neal of the Criminal Division’s Fraud Section. The FBI and the Department of Health and Human Services - Office of Inspector General conducted the investigation. The case was brought as part of the Medicare Fraud Strike Force, supervised by Deputy Chief Kirk Ogrosky of the Fraud Section and U.S. Attorney Acosta of the Southern District of Florida. Federal prosecutors have indicted 108 cases with 196 defendants in strike force operations since investigations opened in March 2007. Collectively, these defendants fraudulently billed the Medicare program for more than $577 million.
Former State Department Official and Wife Arrested for Serving as Illegal Agents of Cuba for Nearly 30 YearsRead the Press Release
A former State Department official and his wife have been arrested on charges of serving as illegal agents of the Cuban government for nearly 30 years and conspiring to provide classified U.S. information to the Cuban government.
The arrests were announced today by David Kris, Assistant Attorney General for National Security; Channing D. Phillips, Acting U.S. Attorney for the District of Columbia; Joseph Persichini, Jr., Assistant Director for the FBI’s Washington Field Office, and Ambassador Eric J. Boswell, Assistant Secretary of State for Diplomatic Security.
An indictment and criminal complaint unsealed today in the District of Columbia charge Walter Kendall Myers, 72, a.k.a. "Agent 202," and his wife, Gwendolyn Steingraber Myers, 71, a.k.a. "Agent 123," and "Agent E-634," with conspiracy to act as illegal agents of the Cuban government and to communicate classified information to the Cuban government. Each of the defendants is also charged with acting as an illegal agent of the Cuban government and with wire fraud.
The Myers, both residents of Washington, D.C., were arrested yesterday afternoon by FBI agents. They made their initial appearances today in U.S. District Court for the District of Columbia. Wire fraud carries a maximum sentence of 20 years in prison, while serving as an illegal agent of a foreign government carries a maximum sentence of 10 years in prison and conspiracy carries a maximum sentence of five years in prison.
"The clandestine activity alleged in the charging documents, which spanned nearly three decades, is incredibly serious and should serve as a warning to any others in the U.S. government who would betray America's trust by serving as illegal agents of a foreign government. We remain vigilant in protecting our nation's secrets and in bringing to justice those who compromise them," said David Kris, Assistant Attorney General for National Security. "These arrests are the culmination of an outstanding counterespionage effort by many agents, analysts and prosecutors who deserve special thanks for their extraordinary work."
"This case demonstrates the care we must take in protecting our nation’s valuable secrets, and shows the dedication and perseverance of the men and women investigating this crime who never tired in finding those now charged with betraying our country," said Acting U.S. Attorney Channing D. Phillips.
"Intelligence services from around the globe continue to steal what information they can from the United States," said Joseph Persichini, Jr., Assistant Director for the FBI's Washington Field Office. "Vigilance must be matched with patience to successfully bring their agents to trial. I would particularly like to thank the men and women in my office who worked on this case and who work on other espionage investigations. They work without accolades; silently protecting the safety and security of the United States and its citizens."
Assistant Secretary of State for Diplomatic Security Eric J. Boswell stated, "The U.S. Department of State is jointly investigating this matter with the FBI, and will continue to aggressively pursue any and all breaches of national security. The Department’s Bureau of Diplomatic Security works closely with its law enforcement colleagues in the FBI and other agencies to uncover and prosecute any breath of security within its ranks. Any compromise of classified information is a serious threat to the security of our nation, and the State Department will aggressively investigate any such activity to the fullest extent possible."
U.S. Government Employment:
According to an affidavit in support of the criminal complaint, Kendall Myers began his work at the State Department in 1977, initially serving as a contract instructor at the Department’s Foreign Service Institute (FSI) in Arlington, Va. After living briefly in South Dakota, he returned to Washington, D.C., and resumed employment as an instructor with FSI. From 1988 to 1999, in addition to his FSI duties, he performed periodic work for the State Department’s Bureau of Intelligence and Research (INR).
Kendall Myers later began working full-time at the INR and, from July 2001 until his retirement in October 2007, he was a senior analyst for Europe for INR, where he specialized in intelligence analysis on European matters and had daily access to classified information through computer databases and otherwise. He received a Top Secret security clearance in 1985 and, in 1999, his clearance was upgraded to Top Secret / SCI.
Gwendolyn Myers moved to Washington, D.C., in 1980 and married Kendall Myers in May 1982. She later obtained employment with a local bank as an administrative analyst and later as a special assistant. Gwendolyn Myers was never granted a security clearance by the U.S. government.
Recruitment:
According to the affidavit, Kendall Myers traveled to Cuba in December 1978 after receiving an invitation from an official who served at the Cuban Mission to the United States in New York City. His guide while in Cuba was an official with Cuba’s Foreign Service Institute. This trip provided the Cuban Intelligence Service (CuIS) with the opportunity to assess or develop Myers as a Cuban agent, according to the affidavit.
Approximately six months after the trip, the Myers were visited in South Dakota by the official from the Cuban Mission in New York and, according to the affidavit, Kendall and Gwendolyn Myers agreed to serve as clandestine agents of the Cuban government. Afterwards, the CuIS directed Kendall Myers to pursue a job at either the State Department or the CIA. Kendall Myers, accompanied by his wife, then returned to Washington, D.C., where he resumed contract work at the State Department and later obtained a State Department position that required a Top Secret security clearance.
According to the affidavit, during this time frame, the CuIS often communicated with its clandestine agents in the United States by broadcasting encrypted radio messages from Cuba on shortwave radio frequencies. Clandestine agents in the United States monitoring the frequency on shortwave radio could decode the messages using a decryption program provided by the CuIS. Such methods were employed by defendants previously convicted of espionage on behalf of Cuba. According to the affidavit, the Myers have an operable shortwave radio in their apartment and they told an FBI source that they have used it to receive messages from the CuIS.
Undercover Operation:
According to the affidavit, in April 2009, the FBI launched an undercover operation to convince the couple that they had been contacted by a Cuban intelligence officer and to ascertain the scope of their activities for the CuIS. On April 15, 2009, an undercover FBI source posing as a Cuban intelligence officer approached Kendall Myers in Washington, D.C., stating that he had been sent to contact Myers by a named CuIS official in order to obtain information. The FBI source also congratulated Kendall Myers on his birthday and offered him a cigar. Myers agreed to meet the source later that day at a nearby hotel and volunteered to bring his wife along to the meeting.
During the meeting later that day, the couple agreed to meet the source again and to provide information on U.S. government personnel with responsibility for Latin America. According to the affidavit, the couple also made a series of statements about their past activities on behalf of the CuIS, including acknowledging having received coded messages from the CuIS via shortwave radio, meeting CuIS officials in Mexico, and being alert to surveillance. "We have been very cautious, careful with our moves and, uh, trying to be alert to any surveillance," Kendall Myers allegedly told the FBI source.
In subsequent meetings with the FBI source, the Myers allegedly agreed to provide information on the April 17-19, 2009 Summit of the Americas in Trinidad and Tobago, as well as to use specified code words, signals and encryption programs to transmit information via email during future interactions with the source. They also asked the source to "send special greetings…and hugs" to certain CuIS officials.
In addition, the couple allegedly made further statements to the source about their past activities for the CuIS. According to the affidavit, the defendants discussed how they were first recruited by the CuIS and how codes had been used for each of them in messages, including "123" for Gwendolyn Myers and "202" for Kendall Myers. The Myers also stated that they had traveled to meet Cuban agents in Mexico, Trinidad and Tobago, Argentina, Brazil, Ecuador, Jamaica, New York City and other locations.
The Myers also discussed how they had passed information to CuIS agents, with both agreeing that the most secure way was "hand-to-hand." According to the affidavit, Gwendolyn Myers said her favorite way of passing information to CuIS agents involved the changing of shopping carts in a grocery store because it was "easy enough to do."
According to the affidavit, Kendall Myers told the source that he typically removed information from the State Department by memory or by taking notes, although he did occasionally take some documents home. "I was always pretty careful. I, I didn’t usually take documents out," he said. According to the affidavit, he also acknowledged delivering information to the CuIS that was classified beyond the "Secret" level. He further stated that he had received "lots of medals" from the Cuban government and that he and his wife had met and spent an evening with Fidel Castro in 1995.
Additional Evidence:
According to the affidavit, the FBI collects high frequency messages broadcast by the CuIS to its agents and has identified messages that it has determined were broadcast to a handler of Kendall and Gwendolyn Myers. Furthermore, the FBI has confirmed trips by the couple to Mexico, Trinidad and Tobago, Argentina, Brazil, Ecuador and Jamaica that correspond to statements made by the defendants. In addition, the FBI has identified emails to the couple in 2008 and 2009 from a suspected representative of the CuIS in Mexico who was allegedly requesting that the couple travel to Mexico.
The affidavit further indicates that an analysis of Kendall Myers’ classified State Department work computer hard drive revealed that, from August 22, 2006, until his retirement on Oct. 31, 2007, he viewed more than 200 sensitive or classified intelligence reports concerning the subject of Cuba, while employed as an INR senior analyst for Europe. Of these reports concerning Cuba, the majority was classified and marked Secret or Top Secret, the affidavit alleges. An FBI review of Kendall Myers’ State Department security files further revealed numerous false statements by him to conceal the couple’s clandestine activities on behalf of the CuIS, the affidavit further alleges.
According to the affidavit, neither Kendall Myers nor Gwendolyn Myers ever provided notification to the Attorney General that either of them was acting as an agent of a foreign government, as required by law.
Finally, the affidavit alleges that Kendall Myers engaged in a scheme to defraud the State Department and the United States by means of false pretenses and caused the U.S. government to lose property, specifically money in the form of salary payments. By not disclosing his clandestine activity on behalf of the CuIS and by making false statements to the State Department about his status, Kendall Myers allegedly defrauded the State Department whenever he received his government salary. Gwendolyn Myers is also criminally liable for this alleged wire fraud scheme.
This investigation was conducted jointly by the FBI’s Washington Field Office, and the State Department’s Bureau of Diplomatic Security. The prosecution is being handled by Assistant U.S. Attorney Michael Harvey, from the U.S. Attorney’s Office for the District of Columbia, and Senior Trial Attorney Clifford I. Rones, from the Counterespionage Section of the Justice Department’s National Security Division.
The public is reminded that criminal complaints and indictments contain mere allegations and are not evidence of guilt. A defendant is presumed innocent unless and until proven guilty.
Appeals Court Rejects Challenge to Conviction of Former Mississippi Klansman in 1964 Kidnapping and Murder of Two African American MenRead the Press Release
WASHINGTON – The U.S. Court of Appeals for the Fifth Circuit today rejected a challenge to the conviction of James Ford Seale, a former member of the White Knights of the Ku Klux Klan of Mississippi.
Seale was convicted by a federal jury in Mississippi in 2007 and sentenced to three life terms in prison. The jury determined that Seale and other Klansmen conspired to abduct, interrogate, beat and eventually murder Henry Hezekiah Dee and Charlie Eddie Moore, both 19 years old at the time of their murders.
Seale appealed his convictions, arguing that a 1972 amendment to the federal kidnapping statute changed the statute of limitations to five years. In September 2008, a three-judge panel agreed with Seale, overturning his convictions. The United States successfully urged the full court to rehear the case and, in the meantime, to keep Seale in jail. Today, a divided court upheld the trial court’s decision to deny Seale’s motion to dismiss the indictment based on the statute of limitations. The appeal will return to the original three-judge panel to resolve the remaining issues.
"We are pleased with today’s decision rejecting the argument that it was too late to bring Seale to justice," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division.
Based on evidence presented at trial, the jury determined that on May 2, 1964, Seale and his accomplices abducted Dee and Moore and drove the two young men into the Homochitto National Forest in Franklin County, Miss., where the Klansmen beat the victims, interrogated them at gunpoint and bound the two men with duct tape. The Klansmen then drove the victims to Parker’s Landing in Warren County, Miss., passing through the state of Louisiana, where the Klansmen secured Dee and Moore to heavy objects and threw them into the Old Mississippi River, drowning them.
Seale is the first and only individual to be convicted for participating in the kidnapping and murders.
The conviction of James Ford Seale is the result of the investigative work of the FBI, the U.S. Attorney’s Office and the Civil Rights Division of the Justice Department. The Franklin County Sheriff’s Office, the Adam’s County Sheriff’s Office and the Mississippi Department of Public Safety also assisted in the investigation. This case was prosecuted by Dunn Lampton, former U.S. Attorney for the Southern District of Mississippi, and Special Litigation counsel Paige Fitzgerald and trial attorney Eric Gibson, both of the Civil Rights Division. The appeal was handled by attorney Tovah R. Calderon, also of the Civil Rights Division.
4 June 2009
Department Asks Alaska Corruption Cases Be Remanded to District Court, Former State Representatives Be ReleasedRead the Press Release
The Department of Justice today asked the U.S. Court of Appeals for the Ninth Circuit to remand the cases of former Alaska State Representatives Victor Kohring and Peter Kott, who were convicted on corruption charges in 2007, to the District Court. The Department also asked the Court of Appeals to release the two on personal recognizance, after the Department uncovered material that appears to be information that should have been, but was not, disclosed to the defense prior to trial.
Attorney General Eric Holder also instructed the Department’s Criminal Division to review the Department’s public corruption investigation in Alaska to ensure that all other discovery obligations have been met.
"After a careful review of these cases, I have determined that it appears that the Department did not provide information that should have been disclosed to the defense," Holder said. "Department of Justice prosecutors work hard every day and perform a great service for the American people. But the Department’s mission is to do justice, not just win cases, and when we make mistakes, it is our duty to admit and correct those mistakes. We are committed to doing that."
"The Criminal Division must ensure that defendants receive all appropriate discovery materials, and today’s action demonstrates that commitment to this responsibility," said Lanny A. Breuer, Assistant Attorney General of the Criminal Division. "We will continue regular discovery training for all Criminal Division prosecutors to make certain that they perform their duties in adherence to the highest ethical standards. Every day, hundreds of career prosecutors work to uphold this Division’s proud tradition of being vigilant, ethical and stellar in the execution of their work. This action is faithful to that tradition."
Kohring was convicted in U.S. District Court for the District of Alaska on Nov. 1, 2007, of bribery and extortion-related charges. He was sentenced on May 9, 2008, to 42 months in prison and two years of supervised release. Kott was convicted on Sept. 25, 2007, of bribery and extortion-related charges and was sentenced on 72 months in prison and three years of supervised release.
In April, after the dismissal of charges against former Sen. Theodore F. Stevens, Attorney General Holder instituted comprehensive steps to enhance the Department’s compliance with rules that require the government to turn over evidence to the defense in criminal cases.
Since the launch of those reforms, the Department has been providing supplemental training to federal prosecutors on discovery obligations and has established a working group of senior prosecutors and Department officials from each component to review discovery practices and the need for additional improvements, resources and training.
Kott Appeal
Kohring Appeal
3 June 2009
Northwest Indiana Businessman Who Used Sham Trusts Pleads Guilty to Tax Fraud on Eve of TrialRead the Press Release
Donald Sikma, a businessman from Dyer, Ind., has pleaded guilty to filing a false tax return. Sikma, whose trial was scheduled to begin today, entered his guilty plea Monday before Judge Theresa L. Springmann in Fort Wayne, Ind.
According to the superseding indictment and statements made during the guilty plea, Sikma sheltered millions of dollars of income using a tax avoidance scheme promoted by the now-defunct Aegis Company. As part of this scheme, Sikma transferred portions of his income to an offshore trust. Sikma failed to report this income on his individual income tax returns. Using the offshore Aegis trust and other sham trusts, Sikma fraudulently avoided paying at least $1.13 million in federal income taxes.
Sikma pleaded guilty to one count of filing false tax returns for the 1998 tax year. This charge carries a statutory maximum penalty of three years in prison and a $250,000 fine. Donald Sikma further agreed to cooperate with the IRS and to pay his outstanding tax liabilities. Judge Springmann scheduled Sikma’s sentencing for Aug. 31, 2009.
The six principal promoters of the Aegis trust scheme were convicted of a tax fraud conspiracy and other tax crimes following a jury trial in May 2008 in Chicago, Illinois. These Aegis promoters have been sentenced to terms of imprisonment ranging from ten to eighteen years.
Acting Assistant Attorney General John A. DiCicco of the Justice Department’s Tax Division commended the IRS-Criminal Investigation special agents who investigated the case, as well as Assistant U.S. Attorney Diane Berkowitz from the Northern District of Indiana and Tax Division trial attorney Joseph Rillotta who prosecuted the case.
Massachusetts Couple Charged with Tax EvasionRead the Press Release
WASHINGTON - Frederick Allen and Kimberlee Allen, both of Harwich, Mass., were arraigned today before Magistrate Judge Marianne B. Bowler in Boston on charges of conspiracy to defraud the United States, tax evasion and failure to file tax returns, the Justice Department and Internal Revenue Service (IRS) announced.
The indictment alleges that the Allens conspired to defraud the United States of assessing and collecting federal income taxes from 1998 through April 2009. The indictment further alleges that the couple evaded the payment of income taxes for the 1999 tax year and that they failed to file tax returns for tax years 2003 through 2006.
According to the indictment, Frederick and Kimberlee Allen have not submitted a tax return to the IRS since tax year 1999. The indictment alleges that the Allens concealed their income and assets from the IRS in numerous ways, including putting their residence in a trust, assigning their wages to third parties and using a third party to cash checks. The indictment also alleges that they obstructed and harassed the Internal Revenue Service by mailing frivolous documents to the IRS.
An indictment is merely a formal charge by the grand jury. Each defendant is presumed innocent unless and until proven guilty in U.S. District Court. If convicted, the defendants each face a maximum potential sentence of 14 years in prison and maximum fines of $900,000.
The case is being prosecuted by Tax Division trial attorneys Karen E. Kelly and Michelle M. Petersen. The case was 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.
Attorney General Vacates Compean Order, Initiates New Rulemaking to <br /> Govern Immigration Removal ProceedingsRead the Press Release
Attorney General Eric Holder today vacated the order issued in Matter of Compean by Attorney General Mukasey in January and announced his intention to initiate a new rulemaking proceeding for regulations to govern claims of ineffective assistance of counsel in removal proceedings.
"The integrity of immigration proceedings depends in part on the ability to assert claims of ineffective assistance of counsel, and the Department of Justice’s rulemaking in this area will be fair, it will be transparent, and it will be guided by our commitment to the rule of law," Holder said. "It is important that the American people have the opportunity to participate in formulating our procedures in this area, and this new process will ensure they do."
On January 7, Attorney General Mukasey issued an order in Matter of Compean overturning Board of Immigration Appeals precedent and procedures governing assistance of counsel in removal proceedings. The order limited non-citizens’ ability to make claims of ineffective assistance of counsel in immigration proceedings, and it did so without the full range of public input that a notice and comment rulemaking would have provided.
In the order issued today, Attorney General Holder directs the Executive Office for Immigration Review to initiate rulemaking procedures as soon as practicable to evaluate the existing framework for making claims of ineffective assistance of counsel, to solicit public comment, and, if appropriate, to issue a final rule.
By vacating the previous order, Attorney General Holder restores the procedures governing removal proceedings to those in place before the issuance of Attorney General Mukasey’s order. A copy of the Attorney General’s order is attached.
2 June 2009
Three Colombian Nationals Arrested, Charged in Alien Smuggling and Visa Fraud SchemeRead the Press Release
Three Colombian nationals have been arrested in Colombia on charges of conspiracy to commit alien smuggling for profit, alien smuggling for profit, and conspiracy to commit visa fraud in connection with their alleged roles in an extensive and sophisticated visa fraud scheme against the U.S. Embassy in Bogotá, Colombia.
Heliber Toro Mejia, 50, Humberto Toro Mejia, 58, and Luz Elena Acuna Rios, 51, all of Bogotá, are charged in a three-count indictment returned by a federal grand jury in the District of Columbia on Feb. 4, 2009, and unsealed today. All three defendants were arrested on June 2, 2009, by Colombian authorities in Bogotá on provisional arrest warrants in response to a U.S. government request for their arrest.
According to the indictment, the defendants were the leaders of an extensive and sophisticated visa fraud ring that profited by assisting otherwise inadmissible Colombian nationals in fraudulently procuring U.S. visas from the U.S. Embassy in Bogotá. To support the visa applications of alien applicants, the defendants and other conspirators allegedly created fictitious backgrounds for the aliens and created fraudulent supporting documentation, including paperwork that appeared to be official Colombian government-issued documents such as tax filings and birth and marriage certificates. The indictment alleges that the conspirators coached the aliens on how to pass the U.S. visa interview at the U.S. Embassy in Bogotá by answering questions untruthfully. During the course of this conspiracy, which according to the indictment lasted between July 15, 2005, and March 20, 2007, more than 100 aliens are alleged to have fraudulently obtained or attempted to fraudulently obtain a U.S. visa. According to the indictment, many of those aliens who did obtain a fraudulently-procured visa used that visa to enter the United States.
If convicted, each defendant faces a maximum sentence of 10 years in prison for conspiracy to commit alien smuggling for profit, 10 years in prison for alien smuggling for profit, and five years in prison for conspiracy to commit visa fraud. Each defendant is also subject to a maximum fine of $250,000 for each charge.
The arrests and charges are the result of "Operation Coffee Country," a coordinated international investigation by the Diplomatic Security Service - Regional Security Office in Bogotá and the ICE Attaché’s Office in Bogotá. The Diplomatic Security Service - Criminal Investigations Division and the ICE Special Agent in Charge, Washington, D.C. provided substantial assistance. The Colombian Department of Administrative Security (DAS) and Colombian prosecutors also provided substantial support.
The case is being prosecuted by Trial Attorney James S. Yoon of the Criminal Division’s Domestic Security Section and Assistant U.S. Attorney Frederick W. Yette of the U.S. Attorney’s Office for the District of Columbia. Former Assistant U.S. Attorney Jeanne M. Hauch of the District of Columbia and Trial Attorney Christine Duey of the Domestic Security Section provided substantial assistance. Thomas Black and Nicolette Romano of the Criminal Division’s Office of International Affairs along with Peter Vincent and Robert Emery of the Office of Judicial Attaché at the U.S. Embassy in Colombia provided invaluable support.
An indictment is merely a formal accusation. It is not proof of guilt, and a defendant is presumed innocent unless and until proven guilty.
Indictment
Fraudulent Telemarketers Who Claimed U.S. Victims Won Large Sweepstakes Sentenced to Prison for Roles in SchemeRead the Press Release
WASHINGTON – The owner of a Costa Rica-based telemarketing call center and two employees of another Costa Rica call center were sentenced for their roles in schemes that targeted and defrauded thousands of American victims of more than $10 million, Assistant Attorney General of the Criminal Division Lanny A. Breuer announced today.
U.S. District Court Judge Frank D. Whitney of the Western District of North Carolina sentenced Michael Kearns, 33, of Sacramento, Calif., to nine years in prison; Herman Kankrini, 44, of Montreal, Canada, to 87 months in prison; and Severin Marcel Stone, 32, of Los Angeles to 90 months in prison. Kankrini was ordered to pay restitution, jointly and severally with other defendants, of $10 million. Kearns and Stone were ordered to pay restitution, jointly and severally with other defendants, of $5 million.
A series of indictments returned by federal grand juries in Charlotte and Asheville, N.C., have charged 46 defendants for their roles in the scheme.
Kearns, Kankrini, and Stone pleaded guilty on Oct. 25, 2007, Jan. 15, 2008, and Oct. 27, 2008, respectively, to conspiring to defraud U.S. residents, most over the age of 55, out of millions of dollars by deceiving them into believing that each had won a large monetary prize in a "sweepstakes contest." According to court documents, calls to victims were made from Costa Rica using Voice over Internet Protocol (VoIP), which utilized computers to make telephone calls through the Internet, thereby disguising the originating location of the calls. Victims were informed that the callers were from the "Sweepstakes Security Commission" and that to receive their "prize," they had to wire thousands of dollars to Costa Rica for a purported "refundable insurance fee." As long as the victims continued to pay, the co-conspirators continued to solicit more money from them.
To date, 33 defendants have pleaded guilty and three have been convicted by jury trials for their roles in the massive fraudulent telemarketing scheme. On Sept. 24, 2008, telemarketing room owner Giuseppe Pileggi, 48, of Montreal, Canada, was sentenced to 50 years in prison, and ordered to forfeit $8.3 million dollars.
The investigation is being conducted by a multi-agency task force, which includes law enforcement authorities from Costa-Rica, the U.S. Postal Inspection Service, the Departments of Justice and Commerce, along with the Immigration and Customs Enforcement a component of the Department of Homeland Security.
The case was prosecuted by Senior Trial Attorney Peter B. Loewenberg and Senior Litigation Counsel Patrick M. Donley of the Criminal Division’s Fraud Section.
An indictment is merely an allegation, and every defendant is presumed innocent until proven guilty beyond a reasonable doubt.
Former Michigan School Superintendent Indicted in Bribery ConspiracyRead the Press Release
Note: The defendant in this case, Bradley J. Hansen, was acquitted by a jury of the charges alleged in the indictment described in the press release below.
A Grand Rapids, Mich., grand jury returned a two-count indictment charging a former school superintendent with engaging in a conspiracy to accept a bribe from a vendor and to deprive his former employer and the citizens of Michigan of his honest services in connection with the Federal Communications Commission’s (FCC) E-Rate Program. The former superintendent was also charged with obstructing justice in relation to the Department of Justice’s investigation into potential fraud and competitive bidding violations relating to E-Rate Program funding applications in Michigan.
According to the indictment filed today in the U.S. District Court in Grand Rapids, Mich., Bradley J. Hansen, who served as the superintendent of the Montcalm Area Intermediate School District (MAISD) from October 1993 to Jan. 1, 2003, was charged with conspiring with the owner of an Internet Service Provider (ISP) to sign a three-year Internet service contract with the ISP in exchange for receipt of $60,000 in free goods and services. Hansen deprived MAISD and the citizens of Michigan of his honest services. The three-year contract was valued at a total of approximately $1.6 million. The conspiratorial conduct began in 2001 and ran at least until June 14, 2004, affecting needy schools throughout western Michigan. Hansen is also charged with obstructing justice in September 2007 when he was interviewed regarding E-Rate Program fraud in Michigan.
"Today’s indictment demonstrates the Department’s resolve to hold accountable individuals who frustrate efforts to help our nation’s school children," said Christine A. Varney, Assistant Attorney General in charge of the Department’s Antitrust Division. "The Department has charged the former school superintendent with selling his office for personal gain."
The Schools and Libraries Universal Service Fund, a federally-funded program known as E-Rate, was created by the Telecommunications Act of 1996. E-Rate is a program through which the Universal Services Administrative Company, a not-for-profit corporation, acting under oversight of the FCC, subsidizes the provision of Internet access and telecommunications services, as well as internal computer and communications networks to economically disadvantaged schools and libraries.
As a result of the Antitrust Division’s investigation into fraud and anticompetitive conduct in the E-Rate program, a total of seven companies and 18 individuals have pleaded guilty or have been convicted and found guilty or entered civil settlements. Those companies and individuals have paid, agreed to pay, or been sentenced to pay criminal fines and restitution totaling more than $40 million. Thirteen individuals have been sentenced to serve jail time.
The conspiracy charge carries a maximum penalty of five years in prison and a $250,000 fine. The obstruction of justice charge carries a maximum penalty of 20 years in jail and a $250,000 fine. The maximum fines may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either amount is greater than the statutory maximum fine.
"The FBI remains committed to ensuring a fair and honest procurement process," said Special Agent in Charge Andrew G. Arena. "Working with our partners, we will continue to pursue all individuals who engage in bribery or other criminal conduct that impacts our nation’s schools and children."
"I congratulate the extraordinary dedication and professionalism shown by members of the Department of Justice not only in this cooperative interagency prosecution, but in all other cases where we fight against fraud, waste, and abuse in the federal E-Rate program," said Kent Nilsson, the Inspector General of the FCC. "The success of this prosecution helps to protect the integrity of the E-Rate Program, insures that its benefits flow to schools and students across the country, and deters all those who would otherwise attempt to defraud this vital national program."
The charges announced today resulted from an ongoing investigation by the Department’s Antitrust Division, with the assistance of the U.S. Attorney’s Office in Grand Rapids, Mich., the FBI and the FCC Office of Inspector General. Anyone with information concerning violations of the E-Rate Program or other anticompetitive conduct is urged to call the Chicago Field Office of the Antitrust Division at 312-353-7530.
Appeals Court Affirms Governments Default Termination of Navy Contract for A-12 Stealth Attack AircraftRead the Press Release
WASHINGTON - The U.S. Court of Appeals for the Federal Circuit has affirmed a judgment upholding the Navy’s termination for default of a contract with McDonnell Douglas and General Dynamics for the A-12 stealth attack aircraft, the Justice Department announced today.
In 1988, the Navy awarded the $4 billion fixed-price contract for development of the A-12, which was to be a stealthy, carrier-based attack aircraft. The program encountered serious technical difficulties, and in 1991, after the Department of Defense refused to approve additional funding for the program, the Navy terminated the contract because it was substantially over budget and behind schedule.
The contractors challenged the termination, resulting in 18 years of litigation. On appeal for the third time on June 2, 2009, the court of appeals affirmed the 2007 judgment of Court of Federal Claims Judge Robert B. Hodges Jr., holding that the Navy had properly terminated the contract for default. In a 29-page opinion, the court of appeals explained that the termination decision was justified under the parties’ contract because the contractors’ performance history demonstrated that "the government was justifiably insecure about the contract’s timely completion" and there was no excuse for the contractors’ failure to make progress toward completion of the contract.
"We are gratified by the appellate court’s decision upholding the Navy’s decision to protect the public fisc by terminating the A-12 contract for default," said Tony West, Assistant Attorney General for the Justice Department’s Civil Division. "Today’s decision also represents a critical step toward bringing this long litigation to an end."
Under the decision, the contractors are required to repay the government more than $1.35 billion in principle funds advanced under the contract, plus interest accruing since 1991, for a total sum that currently approaches $2.8 billion.
1 June 2009
Thirty-Six Companies Agree to Clean up Breslube-Penn Superfund Site in Coraopolis, Pa.Read the Press Release
WASHINGTON— Thirty-six companies allegedly responsible for hazardous contamination of soil and groundwater at the Breslube-Penn Superfund Site in Coraopolis, Pa., have agreed to cleanup up the site, the Justice Department and U.S. Environmental Protection Agency (EPA) announced today.
According to the settlement filed in U.S. District Court in the Western District of Pennsylvania, the companies have agreed to fund and/or complete a $12 million cleanup at the seven-acre site.
The settling companies have also agreed to reimburse EPA $3 million in past costs at the site, and to pay for EPA’s future costs, which include oversight of the cleanup. The Commonwealth of Pennsylvania, which has also signed the consent decree, will be reimbursed $41,000 for its past enforcement costs and will also recover future response costs. The United States has collected more than $4.2 million in prior settlements with other parties, bringing the total value of the judicial settlements involving this site to more than $19 million.
"As a result of this settlement, the Breslube-Penn Superfund Site will be cleaned up and taxpayers will be reimbursed for money already spent to respond to contamination at the site," said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division.
"EPA is pleased with a settlement that allows the parties to concentrate their efforts on the cleanup rather than the courthouse," said William C. Early, Acting Administrator of EPA’s Mid-Atlantic region.
Under the Superfund law, parties responsible for contamination of a Superfund site must clean up the site, or reimburse EPA or other parties for cleanup costs. In June 1996, EPA added the Breslube-Penn Site to the EPA’s Superfund National Priorities List of sites where hazardous contaminants could impact public health and/or the environment. According to EPA and the commonwealth, industrial activities at the site contaminated soil and groundwater with volatile organic compounds, semi-volatile organic compounds, PCBs, metals and cyanide.
The United States sued several "potentially responsible parties" in 1997 including facility owners and operators, waste generators and waste transporters that were involved with industrial activities at the site. According to the United States’ complaint, American Tallow operated a meat rendering plant at the site until 1977, when Wiseman Oil Company began fuel oil recycling activities at the property. After Wiseman Oil became bankrupt in 1982, the property was purchased by Breslube-Penn Inc., which continued used oil reprocessing until 1986, and constructed a lubricating oil refining plant. The facility was used as a used oil transfer station from 1987 until the facility’s closure in 1992.
The settling companies include nine (AK Steel, Alcoa Inc., CBS Corporation, Elliot Company, Exxon Mobil Corp., Ford Motor Company, General Motors Corporation, Hussey Copper Ltd., and U.S. Steel) that have agreed to conduct the EPA-approved cleanup. Under the settlement, these nine companies will remove oil and other pollutants and then install a cap and slurry wall containment system to prevent the release of any additional contaminants. These companies will also remediate the groundwater outside the containment area. The remaining defendants have agreed to help fund the cleanup.
The consent decree is subject to a 30-day public notice and comment period, and final court approval. A copy of the consent decree is available on the Justice Department Web site at http://www.usdoj.gov/enrd/Consent_Decrees.html.
Additional information about the Breslube-Penn Superfund Site is available at http://www.epa.gov/reg3hwmd/super/sites/PAD089667695/index.htm .
Justice Department to Monitor Elections in<br /> Mississippi, New Jersey and South DakotaRead the Press Release
On June 2, 2009, the Department of Justice will monitor elections in the following jurisdictions to ensure compliance with the Voting Rights Act of 1965 and other federal voting rights statutes: the towns of Como, Drew, Greenwood, Isola, Louise and Meridian, Miss.; Bergen County, Middlesex County and the borough of Penns Grove, N.J.; and the town of Martin, S.D.
Under the Voting Rights Act, the Justice Department is authorized to ask the U.S. Office of Personnel Management to send federal observers to areas that are specially covered in the act or by a federal court order. Federal observers will be assigned based on the special coverage provisions to monitor polling place activities in Drew, Greenwood, Isola and Louise, Miss.. In addition, federal observers will be assigned to monitor polling place activities in Penns Grove, N.J., according to a federal court order entered in 2008. The observers will watch and record activities during voting hours at polling locations in these jurisdictions and Civil Rights Division attorneys will coordinate the federal activities and maintain contact with local election officials. In addition, Justice Department personnel will monitor elections in the towns of Como and Meridian, Miss.; Bergen and Middlesex Counties, N.J.; and the town of Martin, S.D., for compliance with the Voting Rights Act.
Each year, the Justice Department deploys hundreds of federal observers from the Office of Personnel Management, as well as departmental staff, to monitor elections across the country. In calendar year 2008, for example, 1,060 federal observers and 344 Department personnel were sent to monitor 114 elections in 76 jurisdictions in 24 states. To file complaints about discriminatory voting practices, including acts of harassment or intimidation, voters may call the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.
Visit http://www.usdoj.gov/crt/voting/index.htm for more information about the Voting Rights Act and other federal voting laws.
Former Political Action Committee ContractorPleads Guilty to Embezzling FundsRead the Press Release
Melissa Thomas, 34, pleaded guilty today to one count of forgery in connection with a scheme to embezzle more than $17,000 from a political action committee (PAC), which was a client of her employer. Thomas pleaded guilty before U.S. District Judge Rosemary M. Collyer in the District of Columbia.
According to documents filed with the court, Thomas was employed by a fund-raising consulting firm located in Alexandria, Va. The consulting firm managed the bank account of a PAC for which the consulting firm’s owner served as treasurer.
From approximately February 2007 until January 2008, Thomas was responsible for accounting for checks received to and dispersed from the PAC’s bank account and for reconciling the monthly bank statements. From approximately March 2007 to November 2007, Thomas admitted she wrote 10 checks from the PAC’s bank account, made out to either herself or her employer, which she fraudulently signed with the treasurer’s name. Thomas admitted she then deposited these checks into her personal bank account, thereby obtaining approximately $17,825 to which she was not entitled.
The charge to which Thomas pleaded guilty carries a maximum penalty of 10 years in prison and a maximum fine of $250,000. Sentencing is scheduled for Sept. 3, 2009.
This case is being prosecuted by Trial Attorneys Ethan H. Levisohn and Marc Levin of the Criminal Division’s Public Integrity Section, which is headed by William M. Welch, II. The case was investigated by the FBI.
Factual Basis
Plea Agreement
Former Enron Broadband Chief Financial Officer Pleads Guilty to Falsifying Books and RecordsRead the Press Release
Kevin Howard, former chief financial officer and vice president of finance for Enron Broadband Services (EBS), Enron’s failed telecommunications business, pleaded guilty today to falsifying books and records.
Kevin Howard, 46, of Houston, entered the guilty plea today before Judge Vanessa Gilmore at U.S. District Court in Houston. Howard pleaded guilty to one count of falsifying books and records. According to the terms of the plea agreement, Howard faces a maximum sentence of up to 12 months of home confinement at his sentencing, which will be scheduled at a later date.
According to the superseding indictment and the plea agreement, Howard knowingly and willfully directly or indirectly caused Enron’s Form 10K for the year-ending 2000 to be falsified because it did not accurately and fairly reflect, in reasonable detail, the transactions and dispositions of Enron’s assets.
In January 2000, Enron officially unveiled EBS to the public as Enron’s newest "core" business group and announced that EBS would report a loss of $60 million for the year 2000. According to court documents, by the fourth quarter of 2000, EBS had failed to generate any significant revenue. Howard admitted that he and others at EBS and Enron knew that absent a large revenue-generating transaction, EBS would miss the announced target by a wide margin. According to court documents, while EBS had little revenue, it had entered into an agreement with Blockbuster to provide video on demand services. This agreement had anticipated future revenue in the hundreds of millions of dollars.
In an attempt to generate earnings sufficient to meet the earnings target, Howard admitted that he and others at EBS structured a transaction known as "Project Braveheart" designed to "monetize" or book a portion of the anticipated hundreds of millions of dollars of future earnings from EBS’s agreement with Blockbuster in the fourth quarter of 2000.
Howard admitted that, in November 2000, he and others at EBS approached a small video on demand (VOD) technology company and asked if the company would be willing to be EBS’s joint venture partner so that EBS could meet its earnings target for the year 2000. According to the plea agreement, through discussions with Howard and others at EBS, the VOD technology company understood that it would not suffer financially in any way from participating in Project Braveheart and that EBS was going to arrange for the company to be bought out of the joint venture by a third party the next quarter. Howard admitted he explained to the company that its participation in the joint venture was simply a "bridge mechanism" to get EBS into the next quarter. Based on these conversations, the company agreed to be the joint venture partner.
Prior to the close of Project Braveheart, Howard admitted he learned that Enron’s auditors, Arthur Andersen, would probably not have agreed with EBS’s recognition of earnings from Project Braveheart if it had known that the VOD technology company intended to exit the joint venture in the first quarter of 2001. Howard admitted that he knowingly and willfully failed to inform Andersen or cause Andersen to be informed of the VOD technology company’s intentions. Similarly, Howard admitted that he knowingly and willfully failed to inform the VOD technology company prior to the close of the transaction that he had learned that the company could not be bought out in the first quarter as originally discussed.
According to the plea agreement, Project Braveheart closed on Dec. 22, 2000, and EBS subsequently sold a portion of its interest in the joint venture and booked $53 million in earnings from this transaction in the fourth quarter of 2000. Project Braveheart enabled EBS to falsely record these earnings as revenue in order to meet the $60 million loss goal and this false loss amount was reported in Enron’s 10K for the year 2000.
In November 2005, Howard was charged in a superseding indictment with conspiracy to commit wire fraud and falsify books and records; wire fraud, including honest services wire fraud; and falsifying books and records. In May 2006, Howard was found guilty of the charges against him, but the conviction was vacated prior to sentencing due to the Fifth Circuit Court of Appeals’ decision in United States v. Brown relating to honest services wire fraud. Subsequently, the government removed the honest services wire fraud charges from the superseding indictment and the case was set for re-trial, with trial scheduled to begin today.
Charges against a number of EBS employees, including Howard, were initially brought in March 2003 by the Enron Task Force, a team of federal prosecutors and agents formed to investigate matters related to the collapse of Enron Corp. All remaining Enron Task Force cases are now being handled by the Criminal Division’s Fraud Section, with investigatory assistance from the FBI.
This case is being prosecuted by Senior Trial Attorney Jonathan E. Lopez and Trial Attorney Laura N. Perkins from the Criminal Division’s Fraud Section.
Plea Agreement
Federal Court Enjoins Iowa Tax Preparation FirmRead the Press Release
WASHINGTON - A federal judge in Sioux City, Iowa, has barred a Humboldt, Iowa, woman, Gayle Lemmon, and her tax preparation business from preparing federal tax returns, the Justice Department announced today. U.S. District Judge Mark W. Bennett entered the preliminary injunction against Gayle Lemmon and Gayle’s Bookkeeping and Tax Service Inc. The order, which Lemmon agreed to, remains in effect until further order of the court.
According to the government complaint in the case, Lemmon’s firm, Gayle’s Bookkeeping and Tax Service Inc., prepares federal income tax returns for customers that unlawfully understate tax liabilities by claiming improper deductions for the business use of the home and for non-deductible personal expenses.
The suit alleges that Lemmon claims improper deductions on customers’ returns for charitable contributions and employee business expenses. According to the complaint, the IRS has examined approximately 243 returns that Lemmon prepared and found that 224 of them understated the customer’s tax liability. The complaint alleges that the tax loss from Lemmon’s alleged misconduct between 2003 and 2008 could be as much as $17 million.
In the past decade the Justice Department has obtained injunctions against more than 400 tax preparers and tax fraud promoters. Information about these cases is available on the Justice Department’s Tax Division Web site at http://www.usdoj.gov/tax/.
Carpinteria, Calif., Man Pleads Guilty to Mailing Child PornographyRead the Press Release
Donald Charles Collier III, 45, of Carpinteria, Calif., pleaded guilty today before U.S. District Judge George H. Wu to one count of mailing child pornography.
As part of his plea agreement, Collier admitted that he twice traveled to Europe in 2006, and during these trips participated in pre-arranged photo shoots during which he took pictures of seven girls who were between seven- and 14-years-old. The photo sessions were arranged by an individual in Italy who sold videos of child pornography through a Web site. Collier admitted that prior to these trips, he purchased a number of videos through this Web site. Through his plea agreement, Collier admitted that he took photos of the girls either partially or fully nude in provocative poses, and that many of the photos focused on the children's pubic region.
Collier admitted further that upon his return to the United States from the second European trip, he mailed a CD containing the images he produced to an individual in Europe. Collier was identified through Operation Joint Hammer, the U.S. component of an ongoing global enforcement operation targeting transnational rings of child pornographers. The operation already has led to the arrest of more than 60 people in the United States involved in the trade of child pornography.
Operation Joint Hammer was initiated through evidence developed by European law enforcement and shared with U.S. counterparts by Europol and Interpol. The European portion of this global enforcement effort, Operation Koala, was launched after the discovery of a handful of people in Europe who were molesting children and producing photographs of that abuse for commercial gain. Further investigation unveiled a number of online child pornography rings – some of which hosted dangerous offenders who not only traded child pornography, but who themselves sexually abused children. Law enforcement has determined that the customers of the Web site were located in nearly 30 countries around the world, including the United States.
Sentencing has been set for Aug. 31, 2009. At sentencing, Collier will face a mandatory minimum of five years and up 20 years in prison as well as the possibility of a lifetime period of supervised release. He will also face a fine of up to $250,000.
The case was investigated by U.S. Immigration and Customs Enforcement and the U.S. Postal Inspection Service. It is being prosecuted by Assistant U.S. Attorney Kim Meyer of the U.S. Attorney’s Office for the Central District of California and Trial Attorney Alexandra Gelber of the Criminal Division’s Child Exploitation and Obscenity Section.
29 May 2009
Ohio and Michigan Tax Defiers Sentenced to Prison<br /> for Tax OffensesRead the Press Release
Winfield Thomas, a resident of Carey, Ohio, and Jeanne Herrington, a resident of Parma, Mich., were sentenced today to prison for conspiracy and other tax charges. The Honorable David A. Katz, U.S. Senior District Judge for the Northern District of Ohio, sentenced Thomas to 30 months in prison and 3 years of supervised release. Herrington was sentenced to 96 months in prison and 3 years of supervised release.
In November 2008, a federal jury convicted Thomas and Herrington of conspiracy to impede the IRS. Herrington was also convicted of corruptly interfering with the administration of the internal revenue laws.
Judge Katz also today sentenced co-conspirator Chad Rickle of Findlay, Ohio, who pleaded guilty to conspiring with Thomas and Herrington, to 4 months in prison, 4 months of home confinement and 3 years of supervised release.
According to the evidence presented at trial, Thomas and Herrington promoted and sold bogus financial instruments which they fraudulently stated could be used to pay tax liabilities of their clients. These fictitious financial instruments, referred to as ‘Bills of Exchange’ and ‘drafts’ by witnesses, purported to be worth thousands of dollars. The total amount of fictitious financial instruments related to the scheme was in excess of $28 million.
According to the evidence presented at trial, Thomas began marketing and selling abusive trusts in northwest Ohio in 1993. He fraudulently promoted these trusts as estate planning vehicles. Thomas instructed trust participants to file false income tax returns that were prepared by co-defendant Chad Rickle which unlawfully assigned personal property and income to the trusts and then illegally deducted personal expenses as fiduciary and other fees. After the IRS sent the trust participants tax deficiency notices, Thomas instructed trust participants to ignore IRS correspondence, resulting in IRS tax assessments and the initiation of collectionactivities. Thomas and trust participants also sent false and threatening documents to the IRS in response to its collection efforts.
According to the evidence presented at trial, after the assessments were made against their clients, Herrington and Thomas promoted a scheme involving the preparation and submission of fictitious financial instruments to the IRS as purported payment of trust participants’ outstanding tax liabilities. Herrington instructed the trust participants to open and then quickly close checking accounts and to use the account and routing numbers for those closed accounts on the bogus ‘drafts.’
Also according to the evidence presented at trial, Herrington submitted false Forms 1099 to the IRS in October 2006, shortly after she was first indicted for tax crimes, in an effort to obstruct the prosecution. These Forms 1099 falsely reported that various individuals associated with the prosecution, including a Tax Division attorney and an Assistant U.S. Attorney in Toledo, Ohio, had received substantial amounts of income from Herrington.
Acting Assistant Attorney General John DiCicco of the Department of Justice’s Tax Division commended the IRS-Criminal Investigation special agents who investigated the case, as well as Tax Division trial attorneys Jorge Almonte and Sean O’Connell who prosecuted the case.
North Dakota Executive Pleads Guilty<br /> to Nine Counts of Tax Fraud on Eve of TrialRead the Press Release
Michael Fisher, owner of Fisher Sand & Gravel Co. Inc. (FSG), based in Dickinson, N.D., today pleaded guilty to nine felony counts of tax fraud. Fisher, who was supposed to begin trial on Monday, pleaded guilty in Bismarck, N.D., before Judge Daniel L. Hovland.
Fisher pleaded guilty to one count of conspiracy to defraud the United States by impeding the IRS, four counts of aiding in the filing of false federal tax returns for FSG and four counts of filing false individual tax returns. The conspiracy charge has a statutory maximum penalty of five years in prison and a $250,000 fine. Each of the other eight tax fraud charges has a statutory maximum penalty of three years in prison and a $250,000 fine.
FSG's chief financial officer, Amiel Schaff, pleaded guilty to one count of conspiracy to defraud the United States in October 2008. Clyde Frank, FSG's comptroller, pleaded guilty to one count of conspiracy to defraud the United States earlier this week. FSG was also charged in the superseding indictment with conspiracy to defraud the United States. Earlier this month, the United States reached a deferred prosecution agreement with FSG in which the company admitted responsibility for defrauding the United States. The agreement requires FSG to pay a total of $1.16 million in restitution, penalties, and fines, implement measures to prevent future fraud at the company and cooperate with the IRS in audits of its tax returns. Under that agreement, prosecution against FSG is deferred until December 2011.
According to court documents, Michael Fisher caused FSG to pay for personal expenses such as construction expenses and furnishings for his personal residence and a recreation building, construction expenses for improvements to Tiger Discount, a gas station owned and controlled by Fisher through a nominee entity, as well as household and utility bills, vacations, credit card bills and legal expenses. According to court documents, these payments for Fisher were never reported to the IRS, but were deducted on the FSG corporate income tax returns, and Fisher failed to report all of his income on his individual income tax returns.
Michael Fisher pleaded guilty to the nine counts of tax fraud without a plea agreement. Fisher's sentencing is set for Aug. 17, 2009. Frank’s sentencing is also set for Aug. 17, 2009. Schaff’s sentencing is set for July 13, 2009.
"U.S. taxpayers who honestly report their income and pay their taxes can rest assured that those who do not, those who secretly conceal their income and assets to avoid paying their fair share, will be investigated and prosecuted by the IRS and Department of Justice," said John A. DiCicco, Acting Assistant Attorney General of the Justice Department’s Tax Division.
"IRS Criminal Investigation directs its efforts at the portion of American taxpayers who willfully and intentionally file false tax returns, said Eileen Mayer, Chief, IRS Criminal Investigation. "The prosecution of these individuals is a vital element in maintaining public confidence in our tax system. We should not expect the honest taxpayer to foot the bill for those who circumvent the system to avoid paying their fair share."
This case was prosecuted by Tax Division Trial Attorneys Christopher S. Strauss and Michael J. Watling, with the support of the U.S. Attorney’s Office for the District of North Dakota. This prosecution resulted from a long-term investigation conducted by special agents of the Criminal Investigation Division of the Internal Revenue Service.
Massachusetts Man Indicted for Trafficking in Illegally-Imported Sperm Whale TeethRead the Press Release
WASHINGTON—A Massachusetts man has been charged in U.S. District Court in Boston with crimes related to the illegal importation and illegal trafficking of sperm whale teeth, the Justice Department announced today.
On May 13, 2009, a federal grand jury sitting in Boston, returned an indictment that was unsealed today against David L. Place of Nantucket, Mass. The indictment charges Place with multiple counts of conspiracy and Lacey Act violations for buying and illegally importing sperm whale teeth into the United States, as well as selling the teeth after their illegal importation. Place was arrested this morning at his home on Nantucket.
The indictment alleges that from 2001 to 2004, Place knowingly purchased and imported sperm whale teeth into the United States in violation of federal law. Sperm whales are classified as "endangered" under the Endangered Species Act (ESA), and are listed on Appendix I of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). It is illegal to import parts of sperm whale teeth into the United States without the requisite permits/certifications, and without declaring the merchandise at the time of importation to U.S. Customs and the U.S. Fish and Wildlife Service.
The indictment further alleges that Place conspired with persons located in Ukraine to illegally import the protected whale teeth for re-sale in the United States. Place owns Manor House Antiques Cooperative in Nantucket. Sperm whale teeth are commonly used for scrimshaw, and can fetch large sums of money from collectors and tourists. Scrimshaw as defined by the Endangered Species Act is any art form which involves the substantial etching or engraving of designs upon, or the substantial carving of figures, patterns, or designs from, any bone or tooth of any whale, dolphin or porpoise.
The charges contained in the indictment are merely accusations and the defendant is presumed innocent unless and until proven guilty in a court of law. If convicted of these charges, Place faces up to five years in prison on each of the most serious charges, as well as fines up to $250,000.
The case was investigated by agents from National Oceanic and Atomospheric Administration - Office of Law Enforcement, the Fish and Wildlife Service - Office of Law Enforcement, and Immigration and Customs Enforcement. The case is being prosecuted by Senior Trial Attorney Catherine Pisaturo of the Justice Department’s Environmental Crimes Section.
Los Angeles Area Man Sentenced to Five Years in Prison for Tax Evasion Used Frivolous Tax Defier ArgumentsRead the Press Release
WASHINGTON – Giancarlo Pertile was sentenced to prison for tax evasion yesterday afternoon, the Justice Department and Internal Revenue Service (IRS) announced. U.S. District Judge A. Howard Matz sentenced Pertile, the former owner of Art Marble Design Inc., in Moorpark, Calif., to 60 months in federal prison and ordered Pertile to pay a fine of $75,000.
In January 2009, Pertile was convicted by a Los Angeles federal jury of five counts of tax evasion for the years 1998 through 2002. According to evidence presented at trial and at the sentencing hearing, Pertile did not report the profits from the operation of his business, Art Marble Design, on his personal income tax returns for tax years 1998 through 2002. As a result of his concealment of business receipts from his bookkeeper and his accountant, Pertile caused false and fraudulent corporate income tax returns to be filed with the IRS, falsely understating his business’ income for the years at issue. Additionally, Pertile filed individual income tax returns for the years 1998 through 2002 that falsely understated his taxable income.
According to evidence presented at trial , Pertile paid only $1,200 in federal income tax from 1998 to 2002 despite earning over $850,000 from the operation of Art Marble Design during the same time period. Instead of reporting the profits from the business on his tax returns, Pertile deposited a substantial portion of the business income into additional bank accounts that he concealed from his bookkeeper, accountant and the IRS. As a result of Pertile’s conduct, he evaded the payment of approximately $247,000 in federal income tax between 1998 and 2002.
At trial, Pertile unsuccessfully argued that his company’s business receipts were not taxable because the company was owned by a "pure trust." Pertile also placed his home in the name of a ministry to conceal his ownership in the property from the IRS.
According to statements made by Judge Matz at the sentencing hearing, Pertile was sentenced to five years in prison based on a number of facts. Specifically, Judge Matz stated that after Pertile was indicted on tax charges, he continued with the same course of frivolous arguments that led to the indictment. Judge Matz also noted that Pertile attempted to obstruct his criminal prosecution by filing documents denying that the court possessed jurisdiction over him. Judge Matz stated that Pertile’s arguments made no sense and were designed solely to obstruct. In making this assessment, Judge Matz noted that the Pertile is a man of "supreme intelligence" who has two PhDs and who clearly knew better. Judge Matz stated that Pertile’s "arrogant conduct knows no limits."
According to statements made at the sentencing hearing, Judge Matz believed that Pertile showed no contrition or remorse. The judge stated that Pertile was "hypocritical" in accepting Social Security benefits and applying to become a U.S. citizen while refusing to admit to his failure to pay his personal taxes.
"This is precisely the type of conduct the Tax Division is committed to stopping under the National Tax Defier Initiative," said John A. DiCicco, Acting Assistant Attorney General of the Justice Department’s Tax Division. "Those who do engage in or promote this illegal tax defier conduct face being branded a felon for life, prison time, fines and still having to pay back all of the taxes and interest."
"Mr. Pertile chose to subscribe to a frivolous tax argument and lost," said Eileen Mayer, Chief of IRS - Criminal Investigation. "While taxpayers have the right to contest their tax liabilities in the courts, taxpayers do not have the right to violate and disobey tax laws. As in the case against Mr. Pertile, and others similarly situated, the courts have consistently held that there are no legal grounds for the failure to file tax returns or the failure to pay one’s tax liability."
Acting Assistant Attorney General DiCicco commended the IRS special agents who investigated the case, as well as Tax Division trial attorneys Jed Silversmith and Assistant U.S. Attorney Charles Pell, who prosecuted the case.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at www.usdoj.gov/tax.
Justice Department Settles Pregnancy Discrimination Lawsuit Against the Board of Education of the City of ChicagoRead the Press Release
The Department today has entered into a settlement agreement with the city of Chicago’s Board of Education that, if approved and entered by the court, will resolve a complaint of pregnancy discrimination filed by the United States against the board under Title VII of the Civil Rights Act of 1964. Title VII prohibits discrimination in employment on the basis of race, color, sex (including pregnancy), national origin or religion.
The complaint, filed in February 2009, in U.S. District Court in Chicago, alleged that the board discriminated against Traci Meziere, a former teacher with the Chicago Public Schools, because of her sex/pregnancy in that her accrued seniority was rescinded after she took a leave associated with her pregnancy; and after she announced her second pregnancy she was demoted to a position with less pay, benefits and significantly diminished responsibilities; and denied a requested maternity leave.
The settlement agreement requires the board to provide Meziere with a monetary award of $45,000 in lost back pay and compensatory damages. The agreement also requires the board to draft a fact sheet regarding certain maternity, child rearing and family medical leave practices; distribute the fact sheet and related policies and procedures electronically to all teachers, principles, assistant principals and relevant human resources staff; provide mandatory training on sex/pregnancy discrimination and equal employment opportunity; and retain certain documents.
"The settlement agreement that the United States obtained in this case makes it clear that pregnancy discrimination in the public school system will not be tolerated," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "I am pleased that we were able to work with the Board to establish mechanisms to protect current and future employees from pregnancy discrimination."
The Civil Rights Division is committed to the vigorous enforcement of Title VII. Visit http://www.usdoj.gov/crt/emp/index.html for more information about Title VII.
Justice Department Settles Lawsuit Against Sheriff of Hendry County, Florida, <br /> Alleging Pregnancy DiscriminationRead the Press Release
The Department today has entered into a consent decree that, if approved by the U.S District Court in Fort Myers, Fla., will resolve its complaint against the Sheriff of Hendry County, Fla., and the Hendry County Board of County Commissioners.
The complaint, filed in December 2008, alleged that the sheriff’s predecessor discriminated against Tanya Shaw, a former deputy sheriff with the Hendry County Sheriff’s Office (HCSO), on the basis of pregnancy and engaged in a pattern or practice of discrimination against Shaw and other pregnant employees of the HCSO by maintaining a policy requiring pregnant employees to take mandatory light duty regardless of their ability to perform the essential functions of their jobs in violation of Title VII of the Civil Rights Act of 1964. Title VII prohibits discrimination in employment on the basis of race, color, sex (including pregnancy), national origin or religion.
The Justice Department’s consent decree with the sheriff and the Board of County Commissioners requires the sheriff to implement a policy that prohibits employment discrimination on the basis of pregnancy; and to provide mandatory training regarding sex and pregnancy discrimination to HCSO officials, managers, supervisors and administrators. Additionally, the consent decree requires that the sheriff provide Shaw with a monetary award of $33,280 for lost wages and compensatory damages, and offer her an opportunity for reinstatement. Two other HCSO female employees who also were subjected to the mandatory light duty policy will receive $1,500 in compensatory damages under the terms of the consent decree.
"The Justice Department commends the Hendry County Sheriff’s Office for working cooperatively with us to resolve this matter. We are pleased that the sheriff has agreed to implement promptly new policies and procedures that comply with Title VII and to provide relief to the individuals who were harmed by the discriminatory light duty policy," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "The Civil Rights Division will continue to vigorously enforce the right of pregnant employees to be free of discrimination in the workplace."
Visit http://www.usdoj.gov/crt/emp/index.html for more information about the Civil Rights Division’s enforcement of Title VII.
Eight Almighty Latin King and Queen Nation Gang Members Plead Guilty to Drug Conspiracy and Related ChargesRead the Press Release
Eight members of the violent gang known as the "Almighty Latin King and Queen Nation" (ALKQN) have pleaded guilty to a variety of charges, including drug conspiracy and weapons trafficking.
Jesus Martinez, aka "Solid," 28, of Midland, Texas, and Guerrero Olivas, aka "Screech," 26, of Big Spring, Texas, both pleaded guilty late yesterday afternoon in Lubbock, Texas, before U.S. District Judge Sam R. Cummings to a superseding indictment charging them with conspiring to distribute and possession with intent to distribute five kilograms or more of cocaine and 100 kilograms or more of marijuana. Martinez also pleaded guilty to conspiring to engage in the business of dealing in firearms.
Luis Nava, aka "Flaco," 25, of Midland and John Guzman, 30, of Big Spring, both pleaded guilty on May 18, 2009, before Judge Cummings to the superseding indictment, which charged them with conspiring to distribute and possession with intent to distribute five kilograms or more of cocaine and 100 kilograms or more of marijuana.
Defendants Eliseo Perez, aka "Wicked," 28, of Mission, Texas; Cecily Dominique Juarez, 20, of Midland; and Reynaldo Nava, aka "Rat," 27, of Big Spring, have also pleaded guilty to conspiring to distribute and possession with intent to distribute five kilograms or more of cocaine and 100 kilograms or more of marijuana. Perez pleaded on May 14, 2009, before judge Cummings, Juarez pleaded on May 8, 2009, and Nava pleaded on April 17, 2009.
Hiluterio Chavez, aka "Zeus," 33, of Chicago, pleaded guilty on May 14, 2009, before Judge Cummings to a superseding indictment charging him with being a convicted felon in possession of firearms, possession of stolen firearms and conspiring to engage in the business of dealing in firearms.
The superseding indictment in this case, which charged a total of 17 defendants, was unsealed on Feb. 26, 2009. The indictment charged that from 2001 until Dec. 13, 2008, when six of the defendants were arrested, the defendants, as members of the ALKQN, conspired to distribute multi-kilogram quantities of cocaine and marijuana throughout Texas and elsewhere. According to the indictment, they acquired the cocaine and marijuana from Mexico and brought it to the South Texas region, where it was packaged, stored and transported to Big Spring, Lubbock and Midland for further distribution.
This case was investigated by the Organized Crime Drug Enforcement Task Force; the Midland and El Paso U.S. Attorney’s Offices; the U.S. Drug Enforcement Administration; the FBI; U.S. Immigration and Customs Enforcement; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the U.S. Marshals Service; the Texas Department of Public Safety; the Police Departments of Lubbock, Midland, Houston and Big Spring, and the Howard County, Texas, District Attorney’s Office.
Assistant U.S. Attorney Cody L. Skipper of the Lubbock division of the U.S. Attorney’s Office for the Northern District of Texas and Trial Attorney Joseph A. Cooley of the Criminal Division’s Gang Unit are prosecuting the case.
Attorney General Announces Center to Fight <br /> International Organized CrimeRead the Press Release
Today, Attorney General Eric Holder announced a new International Organized Crime Intelligence and Operations Center (IOC-2) that will marshal the resources and information of nine U.S. law enforcement agencies, as well as federal prosecutors, to collectively combat the threats posed by international criminal organizations to domestic safety and security. Attorney General Holder made the announcement today in Rome at the G8 Justice and Home Affairs Ministerial.
The new IOC-2 Center will allow partner agencies to join together in a task force setting, combine data, and produce actionable leads for investigators and prosecutors working nationwide to combat international organized crime, and to coordinate the resulting multi-jurisdictional investigations and prosecutions. Understanding that international criminal organizations are profit-driven, IOC-2 will also work with investigators and prosecutors to target the criminal proceeds and assets of international criminal organizations.
"The globalization of criminal networks and advances in technology have made international criminal organizations a significant threat to the safety and security of our nation," said Attorney General Holder. "But we are answering that threat by developing a 21st century organized crime program that will be nimble and sophisticated enough to combat the danger posed by these criminals for years to come. IOC-2 gives us the capacity to collect, synthesize and disseminate information and intelligence from multiple sources to enable federal law enforcement to prioritize and target the individuals and organizations that pose the greatest international organized crime threat to the United States."
As part of this strategy, IOC-2 will establish a team of financial experts to serve as consultants and identify opportunities and strategies to employ forfeiture and explore possibilities for using financial sanctions as a means of disrupting targeted criminal organizations. The team will coordinate multi-jurisdictional forfeiture strategies and assist agents in the field in obtaining the necessary resources, such as financial auditors, investigators and forfeiture attorneys, to employ the strategy.
The members participating in IOC-2 will include: the FBI; U.S. Immigration and Customs Enforcement (ICE); the Drug Enforcement Administration (DEA); U.S. Internal Revenue Service (IRS); the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF); U.S. Secret Service; U.S. Postal Inspection Service (USPIS); U.S. Department of State's Bureaus of Consular Affairs and Diplomatic Security; U.S. Department of Labor, Office of the Inspector General; and the U.S. Department of Justice, Criminal Division. IOC-2 will also partner with the 94 U.S. Attorneys’ Offices and the U.S. Department of the Treasury, Office of Terrorism and Financial Intelligence.
In recognition of the demonstrated interrelationship between criminal organizations that engage in illicit drug trafficking and those that engage in international organized crime involving a broader variety of criminal activity, IOC-2 will also work in close partnership with the Organized Crime Drug Enforcement Task Force (OCDETF) Fusion Center and DEA’s Special Operations Division to ensure these interrelationships are identified and coordinated across federal law enforcement .
From the G8 meeting, Attorney General Holder also emphasized the importance of continued cooperation with foreign law enforcement through existing police-to-police and mutual legal assistance mechanisms. He noted that the creation of IOC-2 demonstrates the United States’ commitment to addressing international organized crime issues and will make the United States a more effective partner for joint investigations and prosecutions.
"International organized crime threatens our safety, disrupts our communities, and subverts our economy," said U.S. Department of Homeland Security Secretary Janet Napolitano. "Our success targeting these criminals relies upon effective partnerships across the federal law enforcement community. The new IOC-2 Center will foster collaboration and strengthen our ability to crack down on international criminal organizations."
According to the U.S. Law Enforcement Strategy to Combat International Organized Crime (IOC Strategy) released in April 2008 by the Department of Justice, international organized crime has considerably expanded in presence, sophistication and significance in recent years and it now threatens many aspects of how Americans live, work and do business. These threats include criminal penetration of global energy and strategic material markets that are vital to American national security interests; logistical and other support to terrorists and foreign intelligence services; the use of cyberspace to target U.S. persons and infrastructure; and the manipulation of securities markets and financial institutions. International criminal organization are also jeopardizing our border security; endangering public health through the trafficking of humans and counterfeit pharmaceuticals; and corrupting public officials in the United States and abroad.
The Attorney General’s Organized Crime Council (AGOCC) is chaired by the Deputy Attorney General and consists of the Assistant Attorney General for the Criminal Division, the chair of the Attorney General’s Advisory Committee and the leaders of nine participating federal law enforcement agencies, which include: the FBI; ICE; DEA; IRS; ATF; U.S. Secret Service; USPIS; U.S. Department of State, Bureau of Diplomatic Security; and U.S. Department of Labor, Office of the Inspector General.
The AGOCC is an outgrowth of an executive order, issued by President Lyndon B. Johnson in 1968, that placed the Attorney General in charge of coordinating all federal law enforcement activity against organized crime. At the time, the enforcement efforts were primarily focused on La Cosa Nostra. In 2008, the AGOCC began to consider the threat from international organized crime, rather than the Italian-American mafia, to be the primary organized crime threat facing the United States.
More information on the IOC Strategy can be found at: http://www.usdoj.gov/criminal/icitap/press/room/2008/apr/04-23-08combat-intl-crime-overview.pdf
28 May 2009
United States Files Clean Air Lawsuit Against Engine ImporterRead the Press Release
WASHINGTON—The United States has filed a civil complaint against PowerTrain Inc., Wood Sales Co. Inc., and Tool Mart Inc., all based in Golden, Miss., alleging that they imported and sold more than 78,000 Chinese-made engines that do not meet federal air pollution standards, the Justice Department and Environmental Protection Agency (EPA) announced.
The lawsuit filed in U.S. District Court in Washington, D.C., is part of an ongoing effort to ensure that imported non-road engines and equipment comply with the Clean Air Act’s emissions standards. The filing marks the first federal court action enforcing the Clean Air Act’s emissions standards for portable generators, water pumps and other "non-handheld equipment."
The complaint alleges that the non-road engines imported and sold by Powertrain, Wood Sales and Tool Mart from September 2002 through at least May 2007 were not certified to meet applicable emission standards. The Clean Air Act prohibits any non-road engine from being imported and sold in the U.S. unless covered by a "certificate of conformity" indicating that the engine meets applicable emission standards. The complaint also alleges that the companies failed to provide buyers with the full emission-system warranty required by the Clean Air Act for all of the non-road engines that were sold, to install proper emission-compliance labels on many of the engines and to fully respond to EPA’s administrative information requests issued under the Clean Air Act.
The complaint, filed by the Department of Justice on behalf of the EPA, seeks civil penalties up to the maximum amount authorized by law, as well as actions by the companies to remedy the violations and to mitigate any excess pollutant emissions caused by the violations.
EPA estimates the engines have contributed to excess emissions of more than 150 tons of hydrocarbons and nitrogen oxides, and more than 5,000 tons of carbon monoxide.
Non-road engines emit carbon monoxide, as well as volatile organic compounds and nitrogen oxides that contribute to the formation of ground-level ozone or smog. Exposure to even low levels of ozone can cause respiratory problems, and repeated exposure can aggravate pre-existing respiratory diseases.
In 1995, EPA established regulations to reduce emissions of hydrocarbons from small gasoline-powered non-road engines. To obtain a certificate of conformity for non-road engines from EPA, a manufacturer must submit an application that describes the non-road engine and its emission control system, and that demonstrates that the non-road engines will meet applicable federal emissions standards. After obtaining a certificate of conformity, applicants must also comply with specific labeling, warranty and other requirements to ensure that the non-road engines will meet emissions standards in use.
Court Orders Tewksbury, Mass. Employer to Timely Pay Withholding and Unemployment TaxesRead the Press Release
WASHINGTON - A federal court in Boston issued a preliminary injunction ordering Excel Home Care Inc. and Diane E. Porter of Tewksbury, Mass., to comply with federal tax withholding requirements and to timely pay all future employment and unemployment tax liabilities, the Justice Department announced today.
The Justice Department filed suit on April 15, 2009, seeking a preliminary and permanent injunction order that requires the defendants to comply with all federal employment and unemployment tax filing and deposit requirements. The complaint alleges that the defendants have failed to comply fully with Excel Home Care’s employment and unemployment tax obligations since the fourth quarter of 2005 and the year 2003, respectively.
At the time the complaint was filed, the government alleged that Excel Home Care failed to pay employment taxes for the quarters ending Dec. 31, 2005, through March 31, 2008. It was further alleged that Excel Home Care has failed to pay unemployment taxes for the years 2003 and 2005-2007. In addition, the pleadings state that the Internal Revenue Service (IRS) estimates for each new quarter that Excel Home Care fails to pay its employment taxes the loss of revenue approximates $100,000 and for each year that this entity fails to pay its unemployment taxes, the revenue loss is in excess of $7,000.
The order also prohibits the defendants from making any disbursements or assigning any property outside the ordinary course of business from the date of payment of wages until the amounts which are required to be withheld from the payment of those wages are, in fact, paid to the IRS. In addition, the defendants are required to notify IRS representatives of any new company or business that Ms. Porter owns or manages.
Christine A. Varney to Participate in Eighth Annual International Competition Network Conference in Zurich, SwitzerlandRead the Press Release
WASHINGTON – Christine A. Varney, Assistant Attorney General in charge of the Department’s Antitrust Division, will participate in the eighth annual International Competition Network (ICN) conference in Zurich, Switzerland, from June 3-5, 2009. At the conference, senior government antitrust officials, private-sector antitrust experts from around the world, and representatives from intergovernmental organizations will meet to discuss competition issues.
The ICN conference will focus on the recent accomplishments of its five substantive working groups which address: unilateral conduct, mergers, cartels, advocacy and competition policy implementation. Conference panels will include discussions on proposed Recommended Practices for Substantive Merger Analysis and the analysis of tying and discounting arrangements, and will promote the general exchange of views regarding competition law and policy among the participants. Members also will finalize work programs for the coming year.
In October 2001, the Department of Justice and the Federal Trade Commission (FTC) joined with antitrust agencies from 13 other jurisdictions around the world (Australia, Canada, the European Union, France, Germany, Israel, Italy, Japan, Korea, Mexico, South Africa, the United Kingdom and Zambia) to create the ICN. The ICN now includes 107member agencies from 96 jurisdictions. The goal of the ICN is to provide a forum for antitrust agencies to address antitrust enforcement and policy issues of common interest and formulate proposals for procedural and substantive convergence through a results-oriented agenda and structure.
The following portions of this year’s conference will be open to the press:
WEDNESDAY, JUNE 3, 2009: 8th ANNUAL ICN CONFERENCE (DAY 1)
8:30 A.M. (Zurich), 2:30 A.M. (EDT) – Welcoming Remarks by Swiss and ICN Officials
9:30 A.M. (Zurich), 3:30 A.M. (EDT) – Advocacy Session
John Fingleton, CEO of the U.K.’s Office of Fair Trading will moderate the plenary session on market studies and competition advocacy. Panelists will include Melanie L. Aitkin, Interim Commissioner of Competition, Canadian Competition Bureau and HackHyun Kim, Director of the Korea Fair Trading Commission. Delegates will discuss these topics in breakout sessions.
1:30 P.M. (Zurich), 7:30 A.M. (EDT) – Merger Session
Christine A. Varney, Assistant Attorney General of the Department of Justice’s Antitrust Division, will moderate a panel on "Merger Analysis in Troubled Times." J. Robert Kramer II, the Department of Justice Antitrust Division’s Director of Operations and Civil Enforcement, will present Recommended Practices for Merger Analysis on competitive effects. Delegates will discuss these topics in breakout sessions.
4:15 P.M. (Zurich), 10:15 A.M. (EDT) – Special Project (Competition Law in Small Economies)
This session will be moderated by Walter A. Stoffel, Chairman of the Swiss Competition Commission.
THURSDAY, JUNE 4, 2009: 8th ANNUAL ICN CONFERENCE (DAY 2)
9:00 A.M. (Zurich), 3:00 A.M. (EDT) – Cartel Session
A plenary session, moderated by Scott D. Hammond, Deputy Assistant Attorney General for Criminal Enforcement of the Department of Justice’s Antitrust Division, will examine "Transitioning From an Administrative to a Criminal Regime." Panelists will include Graeme Samuel, Chairman of the Australian Competition and Consumer Commission and Ana Paul Martinez, Head of the Competition Division of Brazil’s Secretariat of Economic Law of the Ministry of Justice. Delegates will discuss criminalization of cartel conduct and investigative strategy in breakout sessions.
11:45 A.M. (Zurich), 5:45 A.M. (EDT) – Unilateral Conduct Session
FTC Chairman Jon Leibowitz will provide introductory remarks, to the plenary session focusing on "Distinguishing Pro From Anticompetitive Conduct: The Fine Line Between Aggressive Competition and Anticompetitive Foreclosure in Tying and Discounting Cases." The panel discussion will be moderated by Markus Lange, Head of the International Section of Germany’s Bundeskartellamt, with participants including Damien Neven, Chief Economist of the European Commission’s DG Comp, and chief economists from the competition authorities of Israel and South Africa. Delegates will discuss these topics in breakout sessions.
4:15 P.M. (Zurich), 10:15 A.M. (EDT) – Competition Policy Implementation Session
Maria Coppola Tineo, Counsel for International Antitrust at the FTC’s Office of International Affairs, is a panelist for a discussion of agency effectiveness. Russell Damtoft, Associate Director of the FTC’s Office of International Affairs, will present a summary of ICN activities this past year on its experience sharing teleconferences and on-line discussion forum. Delegates will discuss these topics in breakout sessions.
FRIDAY, JUNE 5, 2009: 8th ANNUAL ICN CONFERENCE (DAY 3)
9:00 A.M. (Zurich), 3:00 A.M. (EDT) – Interactive ICN – Maximizing Network Effects
This session will focus on the three ICN vice chairs' present and future work, including Vice Chair for Outreach, FTC Commissioner William E. Kovacic. Commissioner Kovacic will join other ICN members in discussing how the ICN can address better the needs of its members.
1:15 P.M. (Zurich), 7:15 A.M. (EDT) – Closing
Complete information about the conference is available at http://www.icn-zurich.org/The 2009 ICN conference will be held at the Kongresshaus Zürich, Gotthardstrasse 5, Postfach 2523 CH-8022 in Zurich, Switzerland.
MEDIA CONTACTS: Department of Justice, Gina Talamona, 202-514-2007
Federal Trade Commission, Mitchell J. Katz, 202-326-2161
Aventis Pharmaceutical to Pay U.S. $95.5 Million to Settle False Claims Act AllegationsRead the Press Release
WASHINGTON – Aventis Pharmaceutical Inc., a wholly owned subsidiary of sanofi-aventis U.S. LLC, has agreed to pay the United States $95.5 million to settle allegations that it violated the False Claims Act by misreporting drug prices in order to reduce its Medicaid Drug Rebate obligations, the Justice Department announced today.
The settlement resolves allegations that between 1995 and 2000, Aventis and its corporate predecessors knowingly misreported best prices for the steroid-based anti-inflammatory nasal sprays Azmacort, Nasacort and Nasacort AQ. Under the Medicaid Drug Rebate Statute, Aventis was required to report to Medicaid the lowest, or "best" price that it charged commercial customers, and pay quarterly rebates to the states based on those reported prices.
In order to avoid triggering a new best price that would obligate it to pay millions of dollars in additional drug rebates to Medicaid, Aventis entered into "private label" agreements with the HMO Kaiser Permanente that simply repackaged Aventis’s drugs under a new label. As a result, Aventis underpaid drug rebates to the Medicaid program and overcharged certain Public Health Service entities for these products.
"This agreement reflects our commitment to ensuring that Aventis and other drug companies fulfill their obligations under the Drug Rebate Statute to accurately report pricing information and pass the savings along to the Medicaid program," said Tony West, Assistant Attorney General for the Department’s Civil Division. "We will continue to ensure that programs for the most vulnerable portions of our population do not pay any more for pharmaceutical products than they should under the law."
"We will continue to be vigilant in investigating and prosecuting those who scam the Medicaid system - a system that is meant to benefit the poor," said Michael K. Loucks, Acting U.S. Attorney for the District of Massachusetts. "When a drug company agrees to be a provider to the Medicaid programs, it agrees to sell its drugs to them at the same price it gives its best customers. We will, as here, pursue those who break their promises."
Out of the settlement amount, the federal recovery is approximately $49 million. Aventis will also pay over $40 million to the Medicaid participating states, and over $6 million to certain public health services entities who paid inflated prices for the drugs at issue.
As part of today’s settlement, sanofi-aventis and the Office of Inspector General of the Department of Health and Human Services entered into an Addendum to sanofi-aventis’s existing Corporate Integrity Agreement that requires the company to report certain best price information for drugs covered by Medicaid and other health care programs. The Agreement already in place requires the company to report other pricing information to the government as a result of a prior drug pricing settlement concerning the company’s drug Anzemet.
"The Medicaid program serves our nation’s most vulnerable, including low-income parents, children, seniors and people with disabilities. As drug costs continue to spiral upward, we must be vigilant and ensure that pharmaceutical companies comply with all federal laws related to the Medicaid program," said Daniel R. Levinson, Inspector General of the Department of Health and Human Services. "Our agreement requires that the Aventis board members personally certify that the company’s compliance program is truly effective."
The investigation was handled by the Civil Division, the U.S. Attorney’s Office for the District of Massachusetts, the Department of Health and Human Services’ Office of Inspector General and Office of Counsel to the Inspector General, and the National Association of Medicaid Fraud Control Units.
Another Commercial Fisherman Sentenced to Prison for Illegal Harvesting of RockfishRead the Press Release
WASHINGTON— Keith A. Collins, a commercial fisherman licensed in Maryland, was sentenced today in U.S. District Court in Greenbelt, Md., to 13 months in prison for illegally overfishing striped bass also known as rockfish, the Justice Department announced.
He was also fined $4,500 and ordered to pay restitution in the amount of $70,569 to the National Fish and Wildlife Foundation to the benefit of the Chesapeake Bay Striped Bass Restoration Account. He was further sentenced to two years of supervised release.
"This prison sentence as well as past sentences in this case should serve as a warning to unscrupulous fishermen who consider illegally harvesting or underreporting their rockfish catch. You will be prosecuted and you will face stiff sentences," said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. "Fishing limits in the Chesapeake Bay and surrounding waterways have been enacted to protect a healthy sustainable population of striped bass and ensure a viable fishery up and down the eastern seaboard."
"For honest fishermen who work hard and play by the rules, it must be a relief to see violators held accountable," said Rod J. Rosenstein, U.S. Attorney for the District of Maryland.
Collins of Deale, Md., pleaded guilty on Feb. 19, 2009, to falsely recording the amount of striped bass that he harvested from 2003 to 2007 with the assistance of two Maryland designated fish check-in stations. In each year, he recorded a lower weight of striped bass than he actually caught. Collins and the check-in station operators would also falsely inflate the actual number of fish harvested. By under-reporting the weight of fish harvested, and over-reporting the number of fish taken, the records would make it appear that the defendants had failed to reach the maximum poundage quota for the year, but had nonetheless run out of tags. As a result, the state would issue additional tags that could be used by the defendants allowing them to catch striped bass above their maximum poundage quota amount. Collins admitted that the estimated fair market value of the fish involved in the illegal transactions was between $600,000 and $750,000. In addition, Collins falsely tagged many of the striped bass that he caught in pound nets with tags indicating that the fish had been caught using a hook and line.
Sentencing dates for three commercial fishermen who have pleaded guilty to similar charges as Collins are listed below.
Jerry Decatur, Sr. July 1, 2009 9:30 AM
Kenneth Dent July 2, 2009 9:30 AM
Jerry Decatur, Jr. Aug. 12, 2009 9:30 AM
As a result of the investigation and prosecution, to date a total of 15 individuals and two fish wholesalers have been charged for illegally harvesting and underreporting their catch of striped bass. Ten individuals and a wholesale company have pleaded guilty. The prosecution to date has resulted in the sentencing of seven individuals including Collins to a total of 46 months in prison. They have also been ordered to a total of 13 months of home detention, $165,500 in fines and $284,819 in restitution.
Two fishermen, Joseph Peter Nelson Jr. of Great Mills, Md., and his father Joseph Peter Nelson of Avenue, Md., have been indicted in the District of Maryland and are awaiting trial.
The case is being prosecuted by Assistant U.S. Attorney Stacy Dawson Belf for the District of Maryland and Senior Trial Attorney Wayne Hettenbach of the Justice Department’s Environmental Crimes Section.
27 May 2009
Virginia Man Pleads Guilty to Illegal Campaign Fundraising SchemeRead the Press Release
A Virginia man pleaded guilty today to illegally making conduit contributions to a candidate seeking federal office.
Jerry Pierce-Santos, 50, of Vienna, Va., pleaded guilty today before Magistrate Judge Alan Kay in U.S. District Court for the District of Columbia to a single-count criminal information that charged him with making $17,000 in conduit contributions to a candidate seeking election to federal office during the 2003 calendar year. According to court documents, conduit contributions are illegal campaign contributions made by one person in the name of another person.
According to court documents, during the 2003 calendar year, Pierce-Santos agreed with 10 other individuals that he would use them to make a contribution to a candidate seeking federal office by reimbursing them for some or all of contributions they would make to the candidate he was supporting. Specifically, according to plea documents, Pierce-Santos reimbursed seven people $2,000 and three people $1,000 for their contributions. In 2003 the individual contribution limit was $2,000 for a candidate seeking election to federal office.
At sentencing, Pierce-Santos faces up to two years in prison, three years supervised release following his incarceration and a statute-mandated $50,000 fine.
This case is being prosecuted by Trial Attorneys Peter M. Koski and Kevin O. Driscoll of the Criminal Division’s Public Integrity Section, which is headed by Chief William M. Welch II. The case is being investigated by the FBI and the Office of the Inspector General for the Department of Housing and Urban Development.
Plea Agreement
Factual Basis
Tampa Judge Shuts Down Florida Tax PreparerRead the Press Release
WASHINGTON – A federal judge in Tampa, Fla., has permanently barred a Port Richey, Fla., tax preparer and his firm from preparing federal tax returns, the Justice Department announced today. U.S. District Court Judge Elizabeth A. Kovachevich of the Middle District of Florida entered the permanent injunction against Frank Lighty and his firm, Lighty and Associate. Lighty consented to the permanent injunction.
According to the government complaint filed in the case, Lighty prepared federal income tax returns claiming false or inflated deductions for medical expenses, charitable contributions and other items. The tax loss from Lighty’s conduct was alleged to be as much as $6 million. The complaint also alleged that Lighty falsely told customers that he was a former IRS agent and had a Master’s Degree in Tax Administration.
John A. DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division thanked Justice Department trial attorney Michael Pahl for handling the case, and revenue agent Joe Slater of the Internal Revenue Service’s Small Business/Self-Employed Division, who conducted the investigation.
In the past decade the Justice Department has obtained injunctions against more than 400 tax preparers and tax fraud promoters. Information about these cases is available on the Justice Department’s Tax Division Web site at http://www.usdoj.gov/tax/.
Federal Judge Hands Downs Sentences in Holy Land Foundation CaseRead the Press Release
Today, in federal court in Dallas, U.S. District Judge Jorge A. Solis sentenced the Holy Land Foundation for Relief and Development (HLF) and five of its leaders following their convictions by a federal jury in November 2008 on charges of providing material support to Hamas, a designated foreign terrorist organization.
"Today's sentences mark the culmination of many years of painstaking investigative and prosecutorial work at the federal, state and local levels. All those involved in this landmark case deserve our thanks," said David Kris, Assistant Attorney General for National Security. "These sentences should serve as a strong warning to anyone who knowingly provides financial support to terrorists under the guise of humanitarian relief."
HLF was incorporated by Shukri Abu Baker, Mohammad El-Mezain, and Ghassan Elashi. Mufid Abdulqader and Abdulrahman Odeh worked as fund raisers. Together, with others, they provided material support to the Hamas movement.
Shukri Abu Baker, 50, of Garland, Texas, was sentenced to a total of 65 years in prison. He was convicted of 10 counts of conspiracy to provide, and the provision of, material support to a designated foreign terrorist organization; 11 counts of conspiracy to provide, and the provision of, funds, goods and services to a Specially Designated Terrorist; 10 counts of conspiracy to commit, and the commission of, money laundering; one count of conspiracy to impede and impair the Internal Revenue Service (IRS); and one count of filing a false tax return.
Mohammad El-Mezain, 55, of San Diego, California, was sentenced to the statutory maximum of 15 years in prison. He was convicted on one count of conspiracy to provide material support to a designated foreign terrorist organization.
Ghassan Elashi, 55, of Richardson, Texas, was sentenced to a total of 65 years in prison. He was convicted on the same counts as Abu Baker, and one additional count of filing a false tax return.
Mufid Abdulqader, 49, of Richardson, Texas, was sentenced to a total of 20 years in prison. He was convicted on one count of conspiracy to provide material support to a designated foreign terrorist organization, one count of conspiracy to provide goods, funds, and services to a specially designated terrorist, and one count of conspiracy to commit money laundering.
Abdulrahman Odeh, 49, of Patterson, New Jersey, was sentenced to 15 years in prison. He was convicted on the same counts as Abdulqader.
HLF, now defunct, was convicted on10 counts of conspiracy to provide, and the provision of, material support to a designated foreign terrorist organization; 11 counts of conspiracy to provide, and the provision of, funds, goods and services to a Specially Designated Terrorist; and 10 counts of conspiracy to commit, and the commission of, money laundering.
The Court reaffirmed the jury’s $12.4 million money judgment against all the defendants, with the exception of El Mezain, who was not convicted of money laundering.
From its inception, HLF existed to support Hamas. Before HLF was designed as a Specially Designated Terrorist by the Treasury Department and shut down in December 2001, it was the largest U.S. Muslim charity. It was based in Richardson, Texas, a Dallas suburb. The "material support statute," as it is commonly referred to, was enacted in 1996 as part of the Antiterrorism and Effective Death Penalty Act. That statute recognizes that money is fungible, and that money in the hands of a terrorist organization — even if for so called charitable purposes — supports that organization’s overall terrorist objectives.
The government presented evidence at trial that, as the U.S. began to scrutinize individuals and entities in the U.S. who were raising funds for terrorist groups in the mid-1990s, the HLF intentionally hid its financial support for Hamas behind the guise of charitable donations. HLF and these five defendants provided approximately $12.4 million in support to Hamas and its goal of creating an Islamic Palestinian state by eliminating the State of Israel through violent jihad.
The government’s case included testimony that in the early 1990's, Hamas’ parent organization, the Muslim Brotherhood, planned to establish a network of organizations in the U.S. to spread a militant Islamist message and raise money for Hamas. The government’s case also included testimony about Hamas material found in zakat committees. The defendants sent HLF-raised funds to Hamas-controlled zakat committees and charitable societies in the West Bank and Gaza. Zakat is an Arabic word referring to the religious obligation to give alms.
HLF became the chief fundraising arm for the Palestine Committee in the U.S. created by the Muslim Brotherhood to support Hamas. According to a wiretap of a 1993 Palestine Committee meeting in Philadelphia, former HLF President and CEO Shukri Abu Baker, spoke about playing down their Hamas ties in order to keep raising money in the U.S. Another wiretapped phone call included Abdulrahman Odeh, HLF’s New Jersey representative, referring to a suicide bombing as "a beautiful operation."
The government also presented evidence that several HLF defendants have family members who are Hamas leaders, including Hamas’ political chief, Mousa Abu Marzook, who is married to a cousin of Ghassan Elashi, HLF’s former Chairman of the Board. Ghassan Elashi, who also served as the vice-president of marketing for Infocom Corporation, is currently serving an 80-month sentence following his conviction on several charges related to export violations. Mohammed El-Mezain was HLF’s Director of Endowments and Mufid Abdulqater was a major HLF fundraiser. Two named defendants, Akram Mishal and Haitham Maghawri are fugitives.
The defendants provided financial support to the families of Hamas martyrs, detainees, and activists knowing and intending that such assistance would support the Hamas terrorist organization. Since 1995, when it first became illegal to provide financial support to Hamas, HLF provided approximately $12.4 million in funding to Hamas through various Hamas-affiliated committees and organizations located in Palestinian-controlled areas and elsewhere.
During trial, the government also presented evidence that HLF was so concerned about investigators uncovering the group’s intentions that they kept a manual entitled "The Foundation’s Policies and Procedures." HLF followed various security procedures outlined in the manual to include hiring a security company to search the HLF for listening devices, ordering defendant Haitham Maghawri, a fugitive, to take training on advanced methods in detecting wiretaps, shredding documents after board meetings, and maintaining incriminating documents in off-site locations.
The case was investigated by the Joint Terrorism Task Force, involving agents from federal, state, and local agencies including: FBI, IRS - Criminal Investigation, U.S. Immigration and Customs Enforcement (ICE), Department of State, U.S. Secret Service, U.S. Army Criminal Investigation Division, the Texas Department of Public Safety, and the Dallas, Plano, Garland and Richardson, Texas, Police Departments. In addition, the Department of Justice Criminal Division’s Asset Forfeiture and Money Laundering Section provided assistance.
The case was prosecuted by James T. Jacks, acting U.S. Attorney; Barry Jonas, Trial Attorney for the Department of Justice Counter-terrorism Section; and Elizabeth J. Shapiro, Deputy Director, Federal Programs Branch, Department of Justice, serving as a Special Assistant U.S. Attorney.
Eight Uzbekistan Nationals Among 12 Charged with<br /> Racketeering, Human Trafficking & Immigration Violations in Scheme <br /> to Employ Illegal Aliens in 14 StatesRead the Press Release
Twelve defendants, including eight Uzbekistan nationals, have been charged in a 45-count indictment returned by a federal grand jury in Kansas City, Mo., on May 6, 2009, on RICO (Racketeer Influenced and Corrupt Organizations Act) charges related to labor racketeering, forced labor trafficking and immigration and other violations in 14 states.
Abrorkhodja Askarkhodjaev, 30, Nodir Yunusov, 22, Rustamjon Shukurov, 21, citizens of Uzbekistan residing in Mission, Kan.; Ilkham Fazilov, 44, Nodirbek Abdoollayev, 27, both citizens of Uzbekistan residing in Kansas City, Mo.; Viorel Simon, 27, Alexandru Frumasache, 23, both citizens of Moldova residing in Kansas City, Kan.; Kristin Dougherty, 49, of Ellisville, Mo.; Andrew Cole, 53, of St. Charles, Mo.; Abdukakhar Azizkhodjaev, 49, a citizen of Uzbekistan residing in Panama City, Fla.; and Sandjar Agzamov, 27, and Jakhongir Kakhkharov, 29, both citizens of Uzbekistan who recently left the United States and are living abroad; as well as three companies owned or controlled by Askarkhodjaev – Giant Labor Solutions LLC, headquartered in Kansas City, Mo., Crystal Management Inc, headquartered in Mission, Kan., and Five Star Cleaning LLC, headquartered in Overland Park, Kan. – were charged in the indictment made public today upon the arrests and initial court appearances of the defendants.
The RICO indictment alleges that, since January 2001, Askarkhodjaev has been the leader of a criminal enterprise and directed the rest of the co-defendants in carrying out unlawful activities to further the enterprise. Among the criminal acts alleged in a pattern of racketeering activity are forced labor trafficking, identity theft, harboring illegal aliens, mail fraud, conspiracy to commit money laundering, transporting illegal aliens, visa fraud, extortion, interstate travel in aid of racketeering, wire fraud and inducing the illegal entry of foreign nationals. Many of the workers were employed at hotels in the Kansas City area and in Branson, Mo.
According to the indictment, Askarkhodjaev owned and operated a labor leasing company, Giant Labor Solutions, in Kansas City, Mo.. Through Giant Labor and a dozen other businesses that he associated with or controlled as part of the alleged criminal enterprise, Askarkhodjaev allegedly secured fraudulent labor leasing contracts from clients in the hotel/resort, casino and construction industries in Missouri, Kansas, Alabama, Arizona, California, Colorado, Florida, Louisiana, Massachusetts, Minnesota, Nevada, New Jersey, South Carolina and Wyoming. The criminal enterprise allegedly used illegal aliens to fulfill labor contracts for housekeeping, cleaning services and other duties. The workforce was predominately comprised of foreign nationals, the indictment says, who either entered the United States illegally, overstayed their visas, or did not have legal authorization to reside or work in their specific locations during their term of employment.
The federal indictment also alleges that Askarkhodjaev, Yunusov, Shukurov, Fazilov, Simon, Cole and Frumusache aided and abetted each other to obtain the labor and services of a person by means of serious harm and threats of serious harm, and by means of the abuse and threatened abuse of law and legal process.
According to the indictment, the enterprise required the foreign nationals to work where the enterprise assigned them. However, the enterprise threatened to cancel the immigration status of foreign nationals who refused to work as directed by the enterprise. The enterprise allegedly charged the foreign nationals numerous fees. It further profited, the indictment says, by requiring the foreign national workers to reside in apartments it exclusively secured, controlled and for which it charged exorbitant rents. According to the indictment, the enterprise often threatened to cancel the immigration status of foreign nationals who requested permission to seek alternative housing,
Allegedly, these fees and expenses, combined with the lack of payment for hours worked, underpayment for hours worked and lack of work assignments, often resulted in the foreign national workers receiving a paycheck with negative earnings. The enterprise allegedly ensured that the workers did not make enough to repay their debt, to purchase a plane ticket home, or pay for their own living expenses while in the United States. It further controlled the foreign national workers in the Kansas City area by not allowing them to receive mail, the indictment says.
RICO is a federal law that provides for extended criminal penalties for acts performed as part of an ongoing criminal organization or enterprise. The charges contained in the indictment are simply accusations, and not evidence of guilt.
This case is being prosecuted by Assistant U.S. Attorneys William L. Meiners and Cynthia L. Cordes and Civil Rights Division Human Trafficking Prosecution Unit Trial Attorney Jim Felte. It was investigated by U.S. Immigration and Customs Enforcement, the FBI, the U.S. Labor Department’s Office of Labor Racketeering and Fraud Investigations, IRS Criminal Investigation, the Kansas Department of Revenue – Criminal Investigations, U.S. Citizenship and Immigration Services and the Independence, Mo., Police Department in conjunction with the Human Trafficking Rescue Project.
Defense Contractor Pleads Guilty to Wire Fraud in Connection with the Procurement of a Bullet-Proof Vest Contract in IraqRead the Press Release
WASHINGTON – A defense contractor has pleaded guilty to wire fraud and has admitted to engaging in other bribery-related conduct in connection with contracts in Iraq, the Department of Justice today announced.
According to the plea agreement filed in the U.S. District Court in the District of Columbia on Dec. 18, 2007, and unsealed today, Diana Bakir Demilta, a U.S. citizen, pleaded guilty to one count of wire fraud. Demilta, the President of Global-Link Distribution LLC, a defense contracting company with operations in the International Zone, Baghdad, Iraq, subverted the competitive bidding process used by the Department of Defense and the Multi-National Security Transition Command - Iraq for a bullet-proof vest contract by submitting multiple sham bids from about September 2004 until about March 2005.
In addition, Demilta admitted that she paid at least $60,000 to an unnamed public official to induce that person to influence the award of contracts and to induce expedited payments for contracts awarded to Demilta’s company.
"The Department of Justice will prosecute those who corrupt the competitive bidding process and who undermine the military’s efforts to obtain equipment that is critical to protecting lives, such as bullet proof vests," said Christine A. Varney, Assistant Attorney General in charge of the Department’s Antitrust Division. "The Division will not tolerate anticompetitive schemes that affect the men and women serving in our nation’s armed forces."
According to the court documents, Demilta devised a scheme and instructed a co-conspirator to submit sham bids from dormant and/or related companies for the bullet-proof vest contract. The sham bids were submitted with intentionally increased prices so that one company, a Kuwaiti general trading firm, would win the contract at a lower price. The owner of the Kuwaiti general trading firm then authorized Demilta to negotiate and receive all funds related to the contract.
"Today’s announcement demonstrates that our commitment to rooting out fraud in the Department of the Army is stronger than ever," said Brigadier General Rodney Johnson, the commanding general of the U.S. Army Criminal Investigation Command. "This plea agreement should send a crystal clear message that we will aggressively pursue allegations of wrongdoing wherever the leads take our special agents. We will continue our fight against fraud and our unwavering commitment to the Department of Justice and our fellow agencies who stand shoulder to shoulder with us in this fight."
"Today’s criminal action demonstrates the ongoing commitment of SIGIR and the U.S. Army - Criminal Investigation Command to aggressively pursue those who have committed fraud and bribery in connection with the U.S.-funded effort to rebuild Iraq," said Stuart W. Bowen, Jr., Special Inspector General for Iraq Reconstruction (SIGIR). "We owe nothing less to the dedicated military and civilian personnel, and contractors who are serving, or have served, in Iraq, and to the Iraqis, and, of course, to the U.S. taxpayers."
Demilta pleaded guilty to one count of conspiracy to commit wire fraud, which has a maximum penalty of 20 years in prison and a fine of $250,000. The fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either amount is greater than the statutory maximum fine.
Today’s charges represent the Department’s commitment to protecting U.S. taxpayers from procurement fraud through its creation of the National Procurement Fraud Task Force. The National Procurement Fraud Initiative, announced in October 2006, is designed to promote the early detection, prosecution, and prevention of procurement fraud associated with the increase in contracting activity for national security and other government programs.
This case is part of an ongoing investigation being conducted by the Antitrust Division’s National Criminal Enforcement Section (NCES) along with Special Agents from SIGIR, the U.S. Army Criminal Investigation Division (Army CID), the Defense Criminal Investigative Service, the FBI and U.S. Immigrations and Customs Enforcement.
Anyone with information concerning bid rigging, bribery or other criminal conduct in the procurement of goods and services in Iraq is urged to contact NCES at 202-307-6694, SIGIR at 1-866-301-2003 or [email protected]; or Army CID at www.cid.army.mil.
26 May 2009
United States Sues California Man to Bar Him from Promoting Fraudulent Tax SchemesRead the Press Release
WASHINGTON — The Justice Department announced today that it has filed suit against convicted tax fraud promoter Daniel Andersen to enjoin him from promoting fraudulent tax schemes. The government’s complaint alleges that Andersen directed the activities of both the Institute for Global Prosperity (between 1996 and 2002) and the Stratia Corporation (between 2002 and 2004). The lawsuit states that Andersen used these organizations to promote the fraudulent tax schemes sold by others in a series of audio recordings and at offshore conferences.
Andersen, a co-founder of the Institute for Global Prosperity, was indicted in 2004 for conspiring to defraud the United States. He pleaded guilty in 2004, and in July 2008, a federal judge sentenced him to 30 months imprisonment for his offenses.
Global Prosperity orchestrated offshore conferences where individuals, which Global Prosperity touted as "experts," hawked numerous tax fraud schemes. According to the government’s complaint, these vendors falsely told customers that they could revoke or relinquish their Social Security numbers using a U.C.C.-1 filing statement and that wages earned inside the United States are not subject to income taxes. The court papers state that Global Prosperity promoted and sold its products through a multi-level marketing system that rewarded existing salespeople for recruiting new salespeople.
The government complaint asserts that Global Prosperity received cease-and-desist orders from six states’ attorneys general in 1997 and 1998, but that Andersen ignored these orders and continued to promote the organization under a different name and offshore locations. According to court documents, after Global Prosperity disbanded in 2002, Andersen and Lorenzo "Zo" Lamantia founded Stratia Corporation, which continued to promote fraudulent tax schemes, including the fraudulent schemes formerly sold by enjoined tax-fraud promoter Bruce Hawkins. The government enjoined Lamantia from promoting fraudulent tax schemes in July, 2006.
Since 2001, the Justice Department has obtained injunctions against more than 400 tax preparers and tax-fraud promoters. Information about these cases is available on the Justice Department website and about the Justice Department’s Tax Division is available on the Justice Department website.
Justice Department Files Lawsuit Against the<br /> Newark, New Jersey, Public Schools to Enforce the Employment Rights of Naval ReservistRead the Press Release
The Justice Department today filed a lawsuit in U.S. District Court in Newark, N.J., on behalf of U.S. Naval Reserve member George Lawton against the Newark Public Schools (NPS) alleging violations of the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA).
The complaint alleges that Lawton, then a substitute teacher for the NPS since 1997, was offered a full-time teaching position in July 2005, but was called to active duty overseas in August 2005. Upon completing his active duty in August 2007, Lawton began contacting the NPS to seek reemployment temporarily in his substitute position and then later in his full time position. The complaint alleges the NPS did not promptly reemploy Lawton as a substitute or otherwise place him in the position that he would have been in had his employment not been interrupted by military service. The Labor Department’s Veterans’ Employment and Training Service investigated the matter, determined that Lawton’s claim had merit and, upon completion of conciliation efforts, referred the matter to the Justice Department.
"The Justice Department is committed to vigorously enforcing federal laws that protect the employment rights of our service members," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "Cases like this, on behalf of a service member who was not promptly reemployed following military service, further reinforce that commitment."
Subject to certain limitations, USERRA requires that individuals who leave their civilian jobs to serve in the U.S. military be promptly reemployed by their civilian employers in the same or comparable positions as the one that they would have held had they not left to serve in the military. USERRA also requires that civilian employers reemploy returning service members in positions of like pay, status and benefits to the positions the service members would have held had they been continuously employed by their civilian employers.
The Civil Rights Division has given a high priority to the enforcement of service members’ rights under USERRA. This is the thirteenth USERRA suit the Civil Rights Division has filed this year on behalf of service members. Please visit http://www.servicemembers.gov and http://www.usdoj.gov/crt/emp for more information.
Civil Rights Division Attorney Named Top Prosecutor<br /> by the Association of Women in Federal Law EnforcementRead the Press Release
Special Litigation Counsel Kristy Parker, a senior attorney in the Civil Rights Division’s Criminal Section, has been selected to receive the 2009 Top Prosecutor Award from the Women in Federal Law Enforcement (WIFLE).
Parker was selected for her role as the lead prosecutor in the successful 2008 case of United States v. Sydnor, et al.,which resulted in the federal conviction of three Kentucky jailers who retaliated against an 18-year-old traffic offender by arranging to have him locked in a jail cell with violent inmates, who in turn brutally assaulted and raped the teenaged victim.
"Kristy Parker represents the tenacious spirit and extraordinary commitment of the many fine career attorneys who serve the public interest at the Justice Department. Her tireless and extraordinary litigative ability vindicated the civil rights of the victim," said Acting Assistant Attorney General Loretta King for the Civil Rights Division. "We thank the Women in Federal Law Enforcement for recognizing her for this distinguished honor."
"I congratulate Ms. Parker for receiving this high honor. Her unwavering dedication made certain that the officers who trampled on the dignity and rights of a powerless teenager were brought to justice," said Mark Kappelhoff, Chief of the Division’s Criminal Section.
The victim was arrested on Valentine’s Day, 2003, and taken to the Grant County, Ky., Detention Center. A sergeant and several officers teased the teenager at the jail and after announcing he needed to be "taught a lesson," visited a jail cell filled with hardened criminals and told them that they would be bringing down a young man who needed to be "messed" with. The officers then escorted him down a hallway lined with cells filled with hardcore criminals, as inmates yelled, "Fresh Meat!"; "Give him to me!" and "Happy Valentine’s Day!" The officers pushed the boy into the cell, slammed the door shut and left him without looking back. In the next hours the boy was viciously raped by an inmate and abused by others.
During the investigation and trial, Parker and another lawyer under her supervision won over reluctant law enforcement witnesses and made a powerful presentation of the evidence. Parker delivered arguments that educated and moved a jury initially reluctant to convict law enforcement officers. The jury convicted the defendants on all counts. They received lengthy prison sentences.
This is the third consecutive year in which WIFLE selected an attorney from the Civil Rights Division’s Criminal Section as its top prosecutor. Last year, Deputy Chief Paige Fitzgerald received the award for her successful cold case prosecution of James Ford Seale, a former Ku Klux Klansman, for the racially-motivated murders of two young black men killed in Mississippi more than 40 years earlier. Deputy Chief Bobbi Bernstein was named WIFLE’s top prosecutor in 2007 for her role in the case of United States v. Saldana, et al., a prosecution marking the first – and to date, the only – use of federal criminal civil rights statutes to prosecute violent hate crimes carried out by members of a traditional street gang.
Parker has served the Justice Department for a decade and has been a trial attorney in the Criminal Section for six years. She will be presented the Top Prosecutor Award at a banquet ceremony honoring WIFLE award recipients on June 17, 2009, in Tucson, Ariz.