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22 May 2009
Tax Shelter Promoter Pleads Guilty to Conspiring<br /> to Impede and Impair the IRSRead the Press Release
Anthony G. Merlo, a former resident of Fort Worth, Texas, and the U.S. Virgin Islands, pleaded guilty today to conspiracy to defraud the United States. Merlo appeared before Magistrate Judge Ellen S. Carmody in Grand Rapids, Mich.
In March 2008, Merlo and five others were indicted by a grand jury in Grand Rapids and charged with conspiring to defraud the United States by promoting, marketing, selling and administering fraudulent tax shelters called loss-of-income insurance policies. These policies were issued through Security Trust Insurance Co., a now-defunct company formerly known as Caduceus Life Insurance Co., that was located in the U.S. Virgin Islands.
Co-conspirator John A. Campbell, a former partner in and resident director of the Kalamazoo, Mich., office of the law firm of Miller, Canfield, Paddock & Stone P.L.C., pleaded guilty to conspiracy in April 2008. Campbell’s client, Oskar René Poch of Hickory Corners, Mich., pleaded guilty to corruptly endeavoring to obstruct the administration of the Internal Revenue laws in April 2008. Poch owned and operated Trillium Staffing, an employee-leasing company in Kalamazoo.
Co-defendants Peter Peggs, Robert Larsen, and Craig Stone, who allegedly promoted fraudulent tax shelters, are scheduled to begin trial in September 2009.
According to the plea agreement and evidence presented at the plea hearing, Merlo became involved with promoting offshore tax shelters in 1995 with co-defendants Peggs and Larsen through Security Trust. Merlo admitted that his level of involvement in this promotion significantly increased from 1999 through mid-2002, when he was also interacting with Defendants Campbell and Stone.
According to the plea agreement and evidence presented at the plea hearing, Merlo agreed with Defendants Peggs, Larsen, Stone, and others to conceal information and documents from the IRS in connection with the marketing, promotion, selling, and administering of Security Trust’s tax shelter products known as "loss-of-income" or "general business risk" insurance and "deferred private annuities." Specifically, Merlo admitted that he and his co-conspirators attempted to impede and impair the IRS by, among other things, hiding from the IRS and others the relationship between the front and back ends of their loss-of-income tax shelter product; paying Campbell’s law firm for an opinion letter to be used in the marketing of this product that omitted any mention of the back-end; altering documents so as to refrain from accurately memorializing the connection between the front and back ends; and discussing, and approving of, the destruction of documents related to the program.
Judge Judge Janet T. Neff has scheduled the sentencing of Campbell and Poch for September 28, 2009. The scheduling of Merlo’s sentencing is pending. Merlo and Campbell face maximum potential sentences of five years’ in prison, followed by terms of supervised release not to exceed three years, fines of up to $250,000, and mandatory special assessments of $100. Poch faces a maximum potential sentence of three years’ in prison, followed by a one year term of supervised release, a fine of $250,000, and a mandatory special assessment of $100.
An indictment is only a charge and is not evidence of guilt. The defendants are entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
Acting Assistant Attorney General John A. DiCicco and acting United States Attorney for the Western District of Michigan Donald Davis thanked Tax Division trial attorneys Richard M. Rolwing and Patrick J. Murray, who are prosecuting the case. They also commended the investigative efforts of the IRS agents involved in this case.
Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at http://www.usdoj.gov/tax.
Justice Department Files Suit Against Fresno County, California, to Protect Employment Rights of Navy ReservistRead the Press Release
In a lawsuit filed today on behalf of U.S. Navy Reservist Porotesano Faapouli the Justice Department contends that Fresno County, Calif., violated the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) by failing to promptly and properly reemploy Faapouli when he returned from active military duty with a service-related injury.
Faapouli was a senior juvenile correctional officer in Fresno County’s Probation Department when he was called to active duty with the U.S. Navy in June 2004. During a January 2005 training exercise, Faapouli suffered severe back, neck and shoulder injuries which required several surgeries and a long period of recuperation. Following his honorable discharge, he reported back to work for the county in September 2007.
The complaint filed in U.S. District Court for the Eastern District of California alleges that Fresno officials refused to meet with Faapouli to identify an appropriate reemployment position until five months after he first reported to work, made no effort to accommodate Faapouli in his pre-service position, failed to reemploy him at all until June 2008 and ultimately reemployed him in an entry-level position that was not in any way equivalent to his pre-service position.
"Protecting the employment rights of our returning service members is among the highest priorities of the Department of Justice," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "The Department is committed fully to safeguarding the employment rights of our men and women in uniform, particularly those whose sacrifices include a disability incurred while in service to our nation."
The Labor Department’s Veterans’ Employment and Training Service investigated and attempted to resolve Faapouli’s USERRA complaint before referring it to the Justice Department.
USERRA, which was enacted by Congress in 1994 to minimize disruption in the lives of returning service members, recognizes the additional burden faced by returning veterans who were injured while serving our nation. Accordingly, USERRA requires employers to make reasonable efforts to accommodate a returning service member’s injury or disability. If the returning service member cannot perform the pre-service position with or without an accommodation, USERRA mandates that the employer reemploy the veteran in a position that he or she can perform that is equivalent in seniority, status and pay to the pre-service position.
The Civil Rights Division has given the enforcement of service members’ rights under USERRA a high priority. This is the twelfth USERRA suit the 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.Justice Department Files Lawsuit Against City of Chesapeake, Virginia, to Enforce the Employment Rights of Virginia Coast Guard ReservistRead the Press Release
The Justice Department today filed a lawsuit in U.S. District Court in Norfolk, Va., on behalf of U.S. Coast Guard Reserve member Paul Sutton against the city of Chesapeake alleging violations of the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA).
The complaint alleges that Sutton, a lieutenant in the Chesapeake Police Department (CPD), was denied reemployment in November 2007, after returning from active duty in the Coast Guard. Because the CPD denied Sutton’s timely request for reemployment, he extended his Coast Guard tour of duty until December 2009. Sutton filed a complaint with the Labor Department’s Veterans’ Employment and Training Service which investigated, determined the claim had merit and referred the matter to the Justice Department. In the suit, the Justice Department seeks reemployment for Sutton, as well as payment for his lost wages and benefits suffered by reason of Chesapeake’s failure or refusal to comply with USERRA.
"The 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 jobs to serve in the U.S. military be promptly reemployed by their civilian employers in the same positions, or in comparable positions, as the positions 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 had if they had 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 eleventh 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.
Former Velda City, Missouri, Reserve Police Officer Sentenced <br /> for Civil Rights and Obstruction ChargesRead the Press Release
A former Velda City, Mo., auxiliary reserve police officer was sentenced today to 19 years and seven months in prison, three years of supervised release and a special assessment for violating the federal civil rights of a woman he sexually assaulted during a traffic stop and for concealing evidence of his crime from federal investigators.
According to facts presented in court, in July 2006, Joe Ernest Phillips, 38, then an auxiliary reserve police officer for the Velda City Police Department, sexually assaulted a woman while acting under color of law and deprived her of her civil rights. While on-duty in a marked patrol car, Phillips admitted he pulled the female motorist over and searched her purse and the interior and trunk of her car. After completing his search, Phillips instructed the victim to follow him in her car to a poorly lit and isolated parking lot where he sexually assaulted her.
Phillips also admitted that after the sexual assault, he repeatedly lied to the FBI during its inquiry and concealed evidence in an effort to thwart the federal investigation into his crime.
"This officer abused his authority and violated the rights of the victim with a despicable act," said Acting Assistant Attorney General Loretta King of the Civil Rights Division. "The work of our nation’s law enforcement officers must always be guided by adherence to the laws they are sworn to uphold. If an officer violates the rights of a person the Justice Department will vigorously investigate and prosecute to the fullest extent of the law."
The case was investigated by the FBI’s St. Louis Division and is being prosecuted by Trial Attorneys Eric L. Gibson and Avner Shapiro of the Justice Department’s Civil Rights Division and Assistant U.S. Attorney Hal Goldsmith.
Five Defendants Sentenced in Puerto Rico Corruption CaseRead the Press Release
Five defendants were sentenced this week for their participation in a corruption scheme involving the 2000 resident commissioner and 2004 gubernatorial campaigns of a former governor of Puerto Rico, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney for the District of Puerto Rico Rosa Emilia Rodríguez-Vélez. The defendants were sentenced in U.S. District Court for the District of Puerto Rico by U.S. District Court Judge Paul J. Barbadoro, sitting by designation from the District of New Hampshire.
Former Puerto Rico Governor Aníbal Acevedo Vilá , 47, and Luisa Inclán Bird, 49, a legal advisor for the San Juan resident commissioner office when Acevedo Vilá served as resident commissioner, were acquitted on March 20, 2009, of all criminal charges related to the scheme.
The five defendants sentenced were:
- Jorge Velasco Mella, 39, of San Juan, Puerto Rico, who was sentenced on May 21, 2009, to three years probation, including 12 months of home detention. Velasco Mella pleaded guilty on Jan. 23, 2009, to one count of conspiracy to violate the Federal Election Campaign Act (FECA). According to plea documents, Velasco Mella worked in the San Juan resident commissioner’s office and assisted in handling campaign contributions.
- Ramón Velasco Escardille, 50, of San Juan who was sentenced on May 21, 2009, to three years probation, including 12 months of home detention. Velasco Escardille pleaded guilty on Jan. 23, 2009, to one count conspiracy to violate FECA. According to plea documents, Velasco Escardille was the treasurer for the resident commissioner campaign.
- Edwin Colón Rodríguez, 36, of Arecibo, Puerto Rico, who was sentenced on May 22, 2009, to 12 months and one day in prison, and three years supervised release following the prison term. Colón Rodríguez pleaded guilty on Jan. 23, 2009, to one count of making a false statement to the Federal Election Commission (FEC). According to plea documents, Colón Rodríguez was the assistant treasurer for the resident commissioner campaign.
- Jos é Gonz á lez Freyre, 56, of Guaynabo, Puerto Rico, who was sentenced on May 22, 2009, to one year probation, including six months of home detention, and a $5,000 fine. Gonz á lez Freyre pleaded guilty on Feb. 2, 2009, to one count of making a false statement to the FBI and the Internal Revenue Service (IRS). According to plea documents, Gonz á lez Freyre is the owner of Pan American Grain, a Puerto Rico agricultural company that contributed at least $50,000 to the former governor’s 2004 gubernatorial campaign.
- Miguel Nazario Franco, 62, of San Juan, who was sentenced on May 22, 2009, to one year probation, including six months of home detention, and a $5,000 fine. Nazario Franco pleaded guilty on Jan. 23, 2009, to one count of misprision of a felony. Nazario Franco, a businessman, volunteered in the finance department of the former governor’s 2004 gubernatorial campaign.
According to plea documents, Velasco Mella, Velasco Escardille and Col ó n Rodriguez admitted to participating in a scheme to defraud the United States and violate various FECA provisions by having Puerto Rico and Philadelphia-area businessmen make illegal and unreported contributions to pay off large and unreported debts stemming from the former governor’s campaign in 2000 for resident commissioner of the Commonwealth of Puerto Rico. The defendants admitted that the scheme involved soliciting, accepting, and then reimbursing illegal conduit contributions from the candidate’s family members and staff. Conduit contributions are illegal campaign contributions made by one person in the name of another person. According to plea documents, payments were made principally to the campaign’s public relations firm, Lopito, Ileana and Howie. Also, the illegal actions continued into 2003, due to the significant debt accumulated by the campaign, some of which was also concealed from the FEC and the public.
According to court documents, the scheme continued through unreported fundraising and the making of unrecorded vendor payments for the former governor’s 2004 gubernatorial campaign in order to raise and spend far more than the limited amount that Puerto Rican law permitted. According to court documents and the statements of the defendants who pleaded guilty, Puerto Rico businessmen, described in court documents as collaborators, used large amounts of money from their personal or corporate funds to pay for large and unreported debts to the campaign’s public relations firm. Large sums of cash were also used to keep contributions and vendor payments concealed from the Puerto Rico Treasury Department and the public. According to court documents, for many of the collaborator payments, the public relations company created fake invoices to make the payments appear to be legitimate business expenses of the collaborators’ companies. As Finance Director for the 2004 gubernatorial campaign, Nazario Franco became aware of this illegal activity and pleaded guilty for failing to report it. Gonz á lez Freyre pleaded guilty to making a false statement during the federal investigation into his illegal $50,000 contribution to the 2004 gubernatorial campaign.
A total of eight defendants have pleaded guilty in the ongoing corruption investigation in the District of Puerto Rico. In addition to the five defendants sentenced this week, the others are Salvatore Avanzato, Marvin Block and Ricardo Colón.
This case is being prosecuted by First Assistant U.S. Attorney María A. Domínguez and Assistant U.S. Attorneys Ernesto López, Timothy Henwood and Jacqueline Novas of the District of Puerto Rico, and Trial Attorneys Peter M. Koski and Ethan H. Levisohn of the Criminal Division’s Public Integrity Section, which is headed by Chief William M. Welch, II. The case is being investigated by the FBI and IRS, with assistance and cooperation from the Office of the Comptroller of Puerto Rico.
Assistant Attorney General Tony West Announces<br /> New Members to Civil Divisions Senior LeadershipRead the Press Release
WASHINGTON – Tony West, Assistant Attorney General (AAG) for the Justice Department’s Civil Division, today announced four new members of the Division’s leadership team. AAG West announced the appointment of Ann Ravel to be Deputy Assistant Attorney General (DAAG) for the Torts Branch and the Office of Consumer Litigation, and Juan Osuna to be DAAG for the Office of Immigration Litigation. Mr. West also announced that Brian Martinez will serve as the AAG’s Chief of Staff. and Geoffrey Graber as Counsel to the Assistant Attorney General.
"We are fortunate to have these talented and committed individuals joining the Justice Department’s Civil Division," said West. "I am confident that their service will meet the highest standards of the Division."
Ann Ravel, the new Deputy Assistant Attorney General for the Torts Branch and the Office of Consumer Litigation, previously served as the County Counsel of Santa Clara County, Calif. She has received numerous awards including the 2007 Public Lawyer of the Year award from the California State Bar, the American Bar Association’s Award for State and Local Government Law Advocacy presented in 2002 and the 2001 Professional Lawyer of the Year Award presented by the Santa Clara County Bar Association.
The Division’s Torts Branch represents the government in lawsuits where monetary judgments are sought for damages resulting from alleged negligent or wrongful acts. The Torts Branch also handles actions involving injury or damage to government property.
The Office of Consumer Litigation is responsible for criminal and civil litigation and related matters arising under federal statutes administered by the Food and Drug Administration, the Consumer Product Safety Commission, the Federal Trade Commission and the National Highway Traffic Safety Administration.
Prior to his appointment as DAAG for the Office of Immigration Litigation (OIL), Juan Osuna was chairman of the Board of Immigration Appeals, the highest administrative body for interpreting and applying U.S. immigration laws. Mr. Osuna received a bachelor of arts degree in 1985 from George Washington University, a juris doctorate in 1988 from the Washington College of Law at American University and a master of arts degree in law and international affairs in 1989 from American University’s School of International Service. As chairman of the Board of Immigration Appeals, Mr. Osuna guided the Board through some of the more challenging times in its history, putting in place a number of initiatives that substantially improved the Board’s operations, protecting due process while promoting efficiency.
OIL has jurisdiction over all civil immigration litigation, and is responsible for the nationwide coordination of immigration matters before the federal district courts and circuit courts of appeals.
Brian Martinez, prior to joining the Division as its Chief of Staff, served as an associate in the Litigation Department in the San Francisco Office of Morrison and Foerster. Before joining the law firm, he served as a law clerk for the Honorable Thelton E. Henderson, Senior U.S. District Court Judge for the Northern District of California. Mr. Martinez received his Bachelor of Arts degree in Political Science from Stanford University in 1997. He received his law degree from Stanford Law School in 2002. Prior to law school, he worked for two years in the Civil Rights Division of the Justice Department.
Geoffrey Graber, Counsel to the Assistant Attorney General, served as an associate in the Litigation Department of Morrison & Foerster in San Francisco prior to coming to the Justice Department. Mr. Graber’s private practice encompassed consumer class actions, securities fraud, product defects, tort and contract law, as well as general civil litigation. Mr. Graber graduated in 2000 from the University of Southern California Law School, where he served as the Managing Articles Editor for the Southern California Law Review. He received his bachelor of arts degree in 1995 from Vassar College.
Ms. Ravel and Mr. Osuna join Beth Brinkmann, the DAAG for the Division’s Appellate Branch, Ian Gershengorn, DAAG for the Federal Programs Branch and Michael Hertz, the Commercial Litigation Branch DAAG, to round out the Civil Division’s senior team.
21 May 2009
Virginia Resident Pleads Guilty to Conspiring to Defraud the U.S. NavyRead the Press Release
WASHINGTON — A U.S. Navy subcontractor from Virginia has pleaded guilty to conspiring to defraud the Navy in connection with contracts for fabricated metal to be used for the repair and maintenance of elevator equipment on Navy aircraft carriers and support vessels, the Department of Justice announced today. The charge is the first to arise out of the Department’s ongoing antitrust investigation into the sales of fabricated metal products and other materials to the U.S. Navy.
Todd M. Mosiman, a resident of Virginia Beach, Va., pleaded guilty in U.S. District Court in Norfolk, Va., to conspiring with another individual to steer more than $167,000 in contracts to Mosiman’s now-defunct Chesapeake-based company from at least June 2004 to at least March 2005. The other individual was an employee of a Virginia-based company that served as the Navy’s prime contractor for its elevator equipment repair and maintenance contracts.
Among its other responsibilities, the prime contractor assisted the Navy in its procurement of the materials, including fabricated metal products, needed to repair and maintain the elevator equipment. The co-conspirator was responsible for determining which vendor the prime contractor would recommend to the Navy for the fabricated metal contracts. The co-conspirator was also a secret co-owner of Mosiman’s company and shared the proceeds from the fabricated metal contracts.
Mosiman and the co-conspirator carried out the conspiracy by:
- Creating the vendor;
- Agreeing to conceal the co-conspirator’s involvement with the vendor from the prime contractor and the U.S. Navy;
- Assisting the vendor in winning contracts for fabricated metal; and
- Having joint access to the vendor’s bank account, including proceeds from sales to the U.S. Navy.
"Taxpayers ultimately pay the price for those who circumvent the Navy’s competitive procurement process for personal gain," said Christine A. Varney, Assistant Attorney General in charge of the Department’s Antitrust Division. "These fraudulent schemes are particularly egregious during wartime."
Mosiman has entered into a plea agreement with the United States that requires him to cooperate with the Department’s ongoing investigation. Mosiman’s sentence will be determined by the court. A sentencing date has yet to be scheduled by the court.
Mosiman is charged with one count of conspiracy to defraud, which carries a maximum sentence of five years of imprisonment and a maximum fine of $250,000. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum.
This action represents 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.
The ongoing investigation is being conducted by the Antitrust Division’s Philadelphia Field Office, the U.S. Attorney’s Office in Norfolk, Va., the Department of Defense’s Defense Criminal Investigative Service and the Naval Criminal Investigative Service. Anyone with information concerning fraudulent behavior related to the sales of fabricated metal products and other materials to the U.S. Navy is urged to call the Antitrust Division’s Philadelphia Field Office at 215-597-7405 or the Defense Criminal Investigative Service’s Norfolk Office at 757-441-6067.
Two Former Military Officials Charged with Participating in Scheme to Steal Large Quantities of Fuel from U.S. Army in IraqRead the Press Release
WASHINGTON – A federal grand jury returned a superseding indictment today charging Robert Young, 56, a former captain in the U.S. Army, and Robert Jeffery, 55, a former master chief petty officer in the U.S. Navy, with conspiracy and theft of government property in connection with a scheme to steal large quantities of fuel from the U.S. Army in Iraq, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and Acting U.S. Attorney Dana J. Boente for the Eastern District of Virginia.
According to the two-count superseding indictment, from October 2007 through May 2008, Young, Jeffery, and their co-conspirators, purportedly representing Department of Defense contractors in Iraq, used fraudulently obtained documents to enter the Victory Bulk Fuel Point (VBFP) in Camp Liberty, Iraq, and allegedly presented false fuel authorization forms to steal large quantities of aviation and diesel fuel from the VBFP for subsequent sale on the black market. The indictment alleges that Young initially served as an escort for the fuel trucks and subsequently played a managerial role in the retrieval of fuel. Jeffery allegedly served as an escort for the fuel trucks for several months and, like Young, illegally retrieved thousands of gallons of fuel from the VBFP.
According to the superseding indictment, Young and Jeffery are both U.S. citizens who, until their arrests in connection with this case, resided in the Philippines. In addition, according to court documents, the United States owns and operates the VBFP in support of Operation Iraqi Freedom. The VBFP supplies aviation fuel and diesel fuel to both military units and U.S. government contractors operating in and around the VBFP.
The conspiracy count carries a maximum penalty of five years in prison and a fine of the greater of $250,000 or twice the value gained or lost from the alleged scheme. The theft of government property count carries a maximum penalty of 10 years in prison and a fine of the greater of $250,000 or twice the value gained or lost from the alleged scheme.
In a related case, Lee William Dubois pleaded guilty on Oct. 7, 2008, to participating in a scheme to steal fuel worth approximately $39.6 million from the U.S. Army in Iraq. In his plea, Dubois admitted that he obtained government-issued common access cards for the drivers and escorts of the trucks and also presented false documents to the VBFP authorizing his co-conspirators to draw fuel. Dubois admitted that he and his co-conspirators stole approximately 10 million gallons of fuel, and that Dubois received at least $450,000 in personal profits from the subsequent sale of the fuel on the black market. Sentencing for Dubois is scheduled for June 18, 2009.
The case is being prosecuted by Special Assistant U.S. Attorney Steve Linick, Deputy Chief of the Criminal Division’s Fraud Section, and Fraud Section Trial Attorneys Andrew Gentin and Brigham Cannon. The investigation of this case was conducted by the U.S. Army Criminal Investigation Command, the Defense Criminal Investigative Service, the FBI and members of the National Procurement Fraud Task Force and the International Contract Corruption Task Force (ICCTF).
The National Procurement Fraud Task Force, created in October 2006 by the Department of Justice, was designed to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in government contracting activity for national security and other government programs. The ICCTF is a joint law enforcement agency task force that seeks to detect, investigate and dismantle corruption and contract fraud resulting from U.S. Overseas Contingency Operations, including in Afghanistan, Iraq and Kuwait.
An indictment is a formal accusation of criminal conduct, not evidence. A defendant is presumed innocent unless and until convicted through due process of law.
Texas-Based Regency Nursing and Rehabilitation Centers to Pay U.S. $4 Million to Resolve False Claims Act AllegationsRead the Press Release
WASHINGTON – Regency Nursing and Rehabilitation Centers Inc. nursing home chain will pay the United States $4 million to settle allegations that Regency submitted false claims to Medicare and the Texas Medicaid program, the Justice Department and the U.S. Attorney’s Office for the Southern District of Texas announced today. The Victoria, Texas-based chain currently owns and operates 24 nursing home facilities located through the state.
The False Claims Act settlement resolves allegations that Regency submitted claims for reimbursement to Medicare and Medicaid for rehabilitation and skilled nursing services that were not reimbursable because the nursing home residents were not qualified for the services, the services were not medically necessary, or they were not supported by adequate documentation.
"Nursing home providers participating in Medicare should be on notice that taxpayers will not absorb the costs of improper or false billings submitted to the government and that the Department of Justice will take action against them for submitting such claims," said Tony West, Assistant Attorney General for the Department’s Civil Division.
"With the number of Medicare and Medicaid beneficiaries increasing every year, we will take whatever action is necessary to make certain healthcare providers are reimbursed only for legitimate services provided to qualified beneficiaries," said Tim Johnson, Acting U.S. Attorney for the Southern District of Texas.
The case was investigated by the U.S. Department of Health and Human Services, Office of Inspector General; the Federal Bureau of Investigation; the Texas Health and Human Services Commission, Office of Inspector General; and was handled by the U.S. Attorney’s Office for the Southern District of Texas and the Civil Division of the Department of Justice.
Minnesota Hospitals to Pay U.S. $2.28 Million to Settle False Claims Act AllegationsRead the Press Release
WASHINGTON – Three HealthEast Care System hospitals have agreed to pay the United States $2.28 million to settle allegations that the health care facilities submitted false claims to Medicare, the Justice Department announced today. All three hospitals are located in the Minneapolis-St. Paul, Minn., area.
The settlement resolves allegations that the St. Paul-based hospitals overcharged Medicare from 2002 to 2007 by thousands of dollars each time they performed kyphoplasty, a minimally-invasive procedure used to treat certain spinal fractures that often are due to osteoporosis. The procedure can be performed safely as an outpatient surgery, but the government contends that the HealthEast hospitals performed the procedure on an inpatient basis in order to increase their Medicare billings.
"The Department of Justice is committed to ensuring that Medicare dollars are spent appropriately, and we will prevent Medicare providers from profiteering by providing unnecessary services," said Tony West, Assistant Attorney General for the Department’s Civil Division.
The settlement with HealthEast follows the government’s May 2008 settlement with Medtronic Spine LLC, corporate successor to Kyphon Inc. Medtronic Spine paid $75 million to settle allegations that the company defrauded Medicare by counseling hospital providers to perform kyphoplasty procedures as an inpatient procedure even though the minimally-invasive procedure should have been done in many cases as an outpatient procedure.
"By keeping patients overnight, hospitals could seek greater reimbursement from Medicare and make much larger profits on kyphoplasty," said Kathleen Mehltretter, Acting U.S. Attorney for the Western District of New York in Buffalo.
St. Joseph’s Hospital, St. John’s Hospital and Woodwinds Hospital – all part of the HealthEast Care System – are the first hospitals to settle Medicare fraud allegations related to kyphoplasty claims. The hospitals previously paid $1.45 million after determining through a self-audit that they had overbilled Medicare for inpatient kyphoplasty claims that should have been billed as outpatient procedures. This amount has been credited against the total settlement of $2.28 million.
The qui tam or whistleblower lawsuit against the HealthEast hospitals was brought under the False Claims Act, which permits private citizens to bring lawsuits on behalf of the United States and receive a portion of the proceeds of any settlement or judgment awarded against a defendant. The lawsuit was filed in 2008 in federal district court in Buffalo, N.Y. by Craig Patrick and Charles Bates. Mr. Patrick of Hudson, Wis., is a former reimbursement manager for Kyphon, and Mr. Bates was formerly a regional sales manager for Kyphon in Birmingham, Ala.
The settlement with the HealthEast hospitals was the result of a coordinated effort by the U.S. Attorney’s Office for the Western District of New York, with assistance from the Commercial Litigation Branch of the Justice Department’s Civil Division, and the Department of Health and Human Services’ Office of Inspector General and Office of Counsel to the Inspector General.
Maine Department of Education to Pay United States $1.5 Million <br /> to Settle False Claims Involving Migrant Education ProgramRead the Press Release
The Maine Department of Education (MDE) has agreed to pay the United States $1.5 million to settle allegations that it submitted false information to the U.S. Department of Education regarding the state education agency’s eligibility to receive federal funds under the Migrant Education Program.
Under the Migrant Education Program, the U.S. Department of Education provides funds to states and territories to assist state education agencies in providing appropriate educational services that address the special needs of migrant children. The regulations governing the Migrant Education Program enumerate specific criteria for state education agencies to use in identifying migratory children. The states and territories are responsible for providing to the U.S. Department of Education an accurate count of eligible migratory children residing within the State or territory.
The United States alleges the MDE, Portland Public Schools, Maine Administrative School District #14 and the Maine Family Resource Center Inc., a non-profit corporation responsible for identifying and servicing migrant children residing in much of the state of Maine, falsely represented the number of eligible migratory children residing within the state for fiscal years 2002, 2003 and 2004. Based on the false child counts reported by the MDE to the U.S. Department of Education, the defendants received federal funds to which they were not entitled. The United States’ amended complaint was filed in the U.S. District Court for the District of Maine.
"Today’s settlement is an example of the Justice Department’s work in protecting federal taxpayers’ dollars and ensuring that federal monies are used for their intended purposes," said Tony West, Assistant Attorney General for the Department's Civil Division.
This settlement resulted from collaborative efforts by the Office of the U.S. Attorney for District of Maine; the U.S. Department of Education, Office of Inspector General; U.S. Department of Education, Office of General Counsel; and the Civil Division of the Department of Justice.
Justice Department Files Lawsuit Against<br /> the City of Marion, Arkansas, Alleging Race DiscriminationRead the Press Release
The Department has filed a complaint in U.S. District Court in Arkansas against the City of Marion alleging it subjected Stacy D. Allen, an African-American and a former City part-time patrol officer, to discrimination on the basis of his race when he was not selected for either of two full-time patrol officer positions in the Marion Police Department.
The complaint alleges that Marion had a history of placing the most senior part-time patrol officer in a full-time officer position when it became available, except when Allen should have been selected based on seniority. The complaint seeks remedial relief for Allen, including back pay with interest, and compensatory damages. Allen is currently employed as a full-time police officer with the West Memphis, Ark., Police Department.
"The Justice Department is committed to the vigorous enforcement of all federal civil rights laws under its jurisdiction, including Title VII’s prohibition of discrimination in employment on the basis of race, color, sex, national origin and religion," said Loretta King, Acting Assistant Attorney General of the Civil Rights Division.
Please visit http://www.usdoj.gov/crt for additional information about the Civil Rights Division.
Former Ft. Campbell Soldier Convicted on Charges Related to Deaths of Iraqi CiviliansRead the Press Release
WASHINGTON – A federal jury that convicted Steven D. Green, a former Ft. Campbell, Ky., soldier of charges arising out of the rape of a 14-year-old Iraqi girl and the murder of the girl and her family today said it was unable to reach a unanimous verdict on whether the defendant should be sentenced to death. Because the jury did not unanimously reach a decision on the death penalty, U.S. District Judge Thomas B. Russell will sentence Green to life without parole, Assistant Attorney General Lanny A. Breuer of the Criminal Division and Acting U.S. Attorney Candace G. Hill of the Western District of Kentucky announced.
Judge Russell is scheduled to formally sentence Green on September 4, 2009.
Green, 24, was convicted by the federal jury on May 7, 2009, in Louisville, Ky., on all charged counts, including premeditated murder, aggravated sexual abuse, felony murder, conspiracy to commit murder, conspiracy to commit aggravated sexual abuse, use of firearms during the commission of violent crimes and obstruction of justice. Green was indicted by a federal grand jury on Nov. 2, 2006.
Green was charged with the crimes following an incident that occurred on March 12, 2006, in and around Mahmoudiyah, Iraq. According to evidence presented at trial, while manning a military checkpoint, Green and other fellow soldiers discussed raping and killing Iraqis. Trial evidence showed that Green and others then took off their uniforms, put on black clothing, left their post and forced their way into the nearby home of the Al-Janabi family. Evidence presented at trial proved that Green then took the mother, father and six-year-old into a bedroom where he shot and killed them. In the living room, Green and the other soldiers raped the 14-year-old and then Green repeatedly shot her in the face and set her body on fire. Green then tried to blow up the house, according to trial evidence, after which the soldiers returned to their checkpoint. After committing the rape and murders, trial testimony revealed that Green bragged to others that the experience was "awesome."
Green was discharged from the U.S. Army in May 2006 and was prosecuted in U.S. District Court under the Military Extraterritorial Jurisdiction Act (MEJA), a statute that gives U.S. courts jurisdiction to prosecute crimes committed outside the United States by, among others, persons who served with the armed forces but who are no longer subject to military prosecution. Green’s co-conspirators were prosecuted by military authorities under the Uniform Code of Military Justice. Green, formerly stationed at Ft. Campbell and deployed to Iraq while serving with the 101st Airborne Division of the U.S. Army, was arrested by the FBI on June 30, 2006, on federal charges of murder and rape based on MEJA.
The case was investigated by the FBI and the U.S. Army Criminal Investigation Division. The case was prosecuted by Assistant U.S. Attorneys Marisa Ford and Jim Lesousky of the U.S. Attorney’s Office in the Western District of Kentucky and Trial Attorney Brian Skaret of the Criminal Division’s Domestic Security Section.
Accused East Africa Embassy Bomber Held at Guantanamo Bay to Be Prosecuted in U.S. Federal CourtRead the Press Release
Ahmed Khalfan Ghailani, a Tanzanian national who has been held at the Guantanamo Bay detention facility since September 2006, will be prosecuted in federal court in the United States pursuant to the March 12, 2001 superseding indictment currently pending against him in the Southern District of New York.
In accordance with the President’s Jan. 22, 2009 Executive Order, which called for a review of all Guantanamo detainees and the closure of the Guantanamo Bay detention facility within a year, the interagency Guantanamo Review Task Force conducted a thorough review of Ghailani’s case. As a result of that review, Ghailani’s case was referred to the Justice Department for prosecution pursuant to the superseding indictment against him in the Southern District of New York.
"By prosecuting Ahmed Ghailani in federal court, we will ensure that he finally answers for his alleged role in the bombing of our embassies in Tanzania and Kenya," said Attorney General Eric Holder. "This administration is committed to keeping the American people safe and upholding the rule of law, and by closing Guantanamo and bringing terrorists housed there to justice we will make our nation stronger and safer."
Ghailani was first indicted on Dec. 16, 1998, by a federal grand jury in the Southern District of New York for conspiring with Osama bin Laden and other members of al-Qaeda to kill Americans overseas and for his role in the Aug. 7, 1998, bombing of the U.S. Embassy in Dar es Salam, Tanzania, which killed at least eleven people and caused injuries to at least 85 people.
Ghailani has since been charged in several superseding indictments in the Southern District of New York. He currently stands accused in a March 12, 2001, superseding indictment with 286 different counts, including charges related to his role in the murder of more than 200 people in the 1998 bombings of the U.S. Embassies in Tanzania and Nairobi, Kenya, as well as his participation in an al-Qaeda conspiracy to murder, bomb, and maim U.S. civilians anywhere in the world.
Among other things, the superseding indictment alleges that Ghailani assisted in the purchase of the Nissan truck as well as the oxygen and acetylene tanks that were used in the bombing of the U.S. Embassy in Tanzania. He is further alleged to have participated in loading boxes of TNT, cylinder tanks, batteries, detonators, fertilizer and sand bags into the back of the truck in the weeks immediately before the bombing. Ghailani departed Africa for Pakistan the night before the bombing.
Ghailani was captured in July 2004. In September 2006, he and several other "high value detainees" were transferred to Guantanamo Bay. Ghailani has remained in Defense Department custody at Guantanamo Bay since that time.
On March 31, 2008, the Office of the Chief Prosecutor of the Military Commissions swore charges against Ghailani under the Military Commissions Act for his alleged role in the 1998 attack on the U.S. Embassy in Tanzania and for his alleged service to al-Qaeda after the bombing, including serving as a document forger, physical trainer at an al-Qaeda camp, and as a bodyguard for Osama bin Laden.
Ghailani was charged with the following substantive offenses: murder in violation of the Law of War, murder of protected persons, attacking civilians, attacking civilian objects, intentionally causing serious bodily injury, and destruction of property in violation of the Law of War and Terrorism. He was also charged with conspiracy to commit all of the above offenses, as well as providing material support to terrorism. On Oct. 3, 2008, these charges were referred to trial by military commission.
In January 2009, a military commissions judge issued a stay in the military commission trial involving Ghailani. The Office of the Chief Prosecutor of the Military Commissions recently filed a motion seeking an additional 120-day continuance in Ghailani’s military commissions case.
The public is reminded that the charges contained in a criminal indictment are mere allegations and each defendant is presumed innocent unless and until convicted in a court of law.
20 May 2009
Minneapolis Man Pleads Guilty to Conspiracy <br /> to Provide Material Support to Al-QaedaRead the Press Release
Mohammed Abdullah Warsame, a 35-year-old resident of Minneapolis, has pleaded guilty to one count of conspiring to provide material support and resources to al-Qaeda
Warsame, a naturalized Canadian citizen of Somali descent, entered his plea of guilty this afternoon before U.S. District Judge John R. Tunheim in federal court in Minneapolis. At sentencing, which was set for 1:30 pm on July 9, 2009, Warsame faces a statutory maximum sentence of 15 years imprisonment and a $250,000 fine. He has agreed to be removed to Canada upon completion of his criminal sentence.
Warsame was charged with one count of conspiracy to provide material support to al-Qaeda in a Jan. 20, 2004, indictment returned in the District of Minnesota. A June 21, 2005, superseding indictment charged Warsame with one count of conspiracy to provide material support to al-Qaeda, one count of providing material support to al-Qaeda, and three counts of making false statements to the FBI. Warsame today pleaded guilty to count one of the superseding indictment. The government has agreed to dismiss the remaining charges.
According to the plea agreement, from about March 2000 through at least December 2003, Warsame conspired with others to provide material support to al-Qaeda in the form of personnel, training and currency.
Specifically, in March of 2000, Warsame traveled to Afghanistan where he attended an al-Qaeda training camp outside Kabul. In the summer of 2000, he then traveled to the al Faruq training camp, where he received further training and met Osama Bin Laden. Warsame subsequently worked at an al-Qaeda guesthouse and clinic.
According to the plea agreement, in late March 2001, Warsame traveled from Pakistan via London to Canada. After leaving Pakistan, Warsame established email contacts with several al-Qaeda associates that he had met in Afghanistan. In addition, he sent money to one of his former training camp commanders.
Warsame then relocated to Minneapolis. Throughout 2002 and 2003, he continued to exchange email messages with, and provide information to, several individuals associated with al-Qaeda, according to the plea agreement.
"The many agents, analysts and prosecutors who helped bring about today’s guilty plea -- after years of investigation and extensive pre-trial litigation -- deserve special thanks for their efforts," said Assistant Attorney General Kris. "This case serves as a reminder of the continuing threats we face as a nation and our resolve to meet those threats."
The case is the result of an investigation by the Federal Bureau of Investigation Joint Terrorism Task Force. The FBI Joint Terrorism Task Force (JTTF) is a multi agency effort combining the resources of federal, state and local law enforcement. In addition to the FBI, the investigation was conducted with the assistance of the U.S. Department of Homeland Security, the U.S. Immigration and Customs Enforcement (ICE), the U.S. Marshals Service, the Minneapolis Police Department, the St. Paul Police Department, the Hennepin County Sheriff’s Office, and the Minnesota Department of Public Safety. In addition to those agencies, the JTTF in Minneapolis includes representatives of the Minnesota Department of Homeland Security, the Ramsey County Sheriff’s Office, the U.S. Secret Service, the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives, the Minneapolis/St. Paul Airport Police, the Transportation Safety Administration, the Federal Air Marshals, the Bloomington Police Department, the U.S. Department of Agriculture and the U.S. Postal Inspection Service.
The case is being prosecuted by Assistant U.S. Attorney W. Anders Folk, of the U.S. Attorney’s Office for the District of Minnesota, and Trial Attorney Joseph N. Kaster from the Counterrrorism Section of the Justice Department’s National Security Division.
Justice Department Resolves Lawsuit Alleging Disability-Based Housing Discrimination at Four Multifamily Housing Complexes in Spokane County, WashingtonRead the Press Release
The Department announced today a settlement of a lawsuit alleging discrimination on the basis of disability in the design and construction of four multifamily housing complexes in the Spokane, Wash., area in violation of the federal Fair Housing Act.
Under the settlement, which must still be approved by the U.S. District Court for the Eastern District of Washington, the defendants will pay all costs related to making the apartment complexes accessible to persons with disabilities and will pay $120,000 to compensate individuals harmed by the inaccessible housing. The developer will pay a $10,000 civil penalty to vindicate the public interest and most of the defendants will undergo training on the requirements of the Fair Housing Act. The defendants include developer Lanzce G. Douglass and companies owned and controlled by him; Beverly Neraas, as representative of the estate of the late Spokane architect Donald E. Neraas; architect Ralph W. Hoover; Independent Home Designs Inc.; the engineering firm J. R. Bonnett Engineering Inc.; and engineer Gary S. Nelson.
"This settlement agreement makes clear that the federal government takes seriously accessibility requirements for multifamily housing," said Loretta King, Acting Assistant Attorney General for the Justice Department’s Civil Rights Division.
"Accessible multifamily housing substantially improves the quality of life for many persons with disabilities in the Spokane area," said James A. McDevitt, United States Attorney for the Eastern District of Washington. "This settlement assures that these multifamily housing complexes will be modified to comply with the Fair Housing Act."
The following four complexes in Spokane will be retrofitted as a result of the settlement:
- The Rock Creek Apartments, East Sitka Avenue and North Nevada Street
- The Prairie Hills Apartments, Lincoln Road
- The Granite Court Apartments, East 4th Avenue
- The Hilby Station Apartments, South Palouse Highway #4
The retrofitting includes modifying walkways to eliminate excess slopes and level changes, providing accessible curb ramps, and parking and routes to site amenities, such as clubhouses, pools, mailboxes and trash facilities. The settlement also provides for the replacement of inaccessible knob door hardware with levers, the widening of inaccessible doorways, and the reconfiguration of bathrooms and kitchens to accommodate persons who use wheelchairs.
The Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status. Among other things, the Act requires that new multifamily housing development be designed and constructed with basic accessibility features, including accessible common and public use areas, accessible routes to and through apartments, doors wide enough for wheelchair users, kitchens and bathrooms with sufficient maneuvering space for wheelchair users, outlets and environmental controls in accessible locations and bathrooms with reinforcements for grab bars.
Persons who believe they may have been harmed by the lack of accessible housing at one of the apartment complexes involved in this matter should contact the Justice Department at 1-800-896-7743. Please visit www.usdoj.gov/crt for more information about the Civil Rights Division and the laws it enforces. Individuals who believe that they may have been victims of housing discrimination can call the Housing Discrimination Tip Line at 1-800-896-7743, email the Justice Department at [email protected], or contact the U.S. Department of Housing and Urban Development at 1-800-669-9777.
Iowa Man Pleads Guilty to Possessing Obscene Visual Representations <br /> of the Sexual Abuse of ChildrenRead the Press Release
Christopher Handley, 39, of Glenwood, Iowa, pleaded guilty today in Des Moines, Iowa, to possessing obscene visual representations of the sexual abuse of children and mailing obscene material.
According to court documents, in May 2006, U.S. Immigration and Customs Enforcement (ICE) intercepted a mail package coming into the United States from Japan that was addressed to Handley. Inside the package was obscene material, including books containing visual representations of the sexual abuse of children, specifically Japanese manga drawings of minor females being sexually abused by adult males and animals. Pursuant to a search warrant, the U.S. Postal Inspection Service (USPIS) searched and seized additional obscene drawings of the sexual abuse of children at Handley’s residence in Glenwood. Handley was indicted by a grand jury sitting in the Southern District of Iowa in May 2007.
Pursuant to his plea agreement, Handley today pleaded guilty to one count of possessing obscene visual representations of the sexual abuse of children in violation of Title 18, United States Code, Section 1466A(b)(1), which prohibits the possession of any type of visual depiction, including a drawing, cartoon, sculpture, or painting, that depicts a minor engaging in sexually explicit conduct that is obscene.
Handley also agreed to plead guilty to one count of mailing obscene material and to forfeit all seized property. Handley faces a maximum of 15 years in prison, a maximum fine of $250,000, and a three-year term of supervised release.
The case is being prosecuted by Assistant U.S. Attorney Craig Peyton Gaumer and Elizabeth M. Yusi of the Criminal Division’s Child Exploitation and Obscenity Section. The case is being investigated by USPIS, ICE and the Iowa Division of Criminal Investigation. In addition, the FBI’s Language Services Section has provided significant assistance in the prosecution.
Attorney General Holder and HHS Secretary Sebelius Announce New Interagency Health Care Fraud Prevention & Enforcement Action TeamRead the Press Release
Attorney General Holder and Health and Human Services (HHS) Secretary Kathleen Sebelius today announced the creation of a new interagency effort, the Health Care Fraud Prevention and Enforcement Action Team (HEAT), to combat Medicare fraud. Holder and Sebelius also announced the expansion of Strike Force team operations to Detroit and Houston. Medicare Fraud Strike Forces, currently in operation in South Florida and Los Angeles, fight Medicare fraud on a targeted local level.
"With this announcement, we raise the stakes on health care fraud by launching a new effort with increased tools, resources and a sustained focus by senior-level leadership," said Attorney General Holder. "Every year we lose tens of billions of dollars in Medicare and Medicaid funds to fraud. Those billions represent health care dollars that could be spent on medicine, elder care or emergency room visits, but instead are wasted on greed. This is unacceptable, and the Justice Department is committed to working with the Department of Health and Human Services to eradicate it."
"Today, we are turning up the heat on perpetrators who steal from the taxpayers and threaten the future of Medicare and Medicaid," said Secretary Sebelius. "Most providers are doing the right thing and providing care with integrity. But we cannot and will not allow billions of dollars to be stolen from Medicare and Medicaid through fraud, waste and serious abuse of the system. It’s time to bring the fight against fraud into the 21st century and put the resources on the streets and out into the community to protect the American taxpayers and lower the cost of health care."
The HEAT team will include senior officials from DOJ and HHS who will build upon and strengthen existing programs to combat fraud while also investing new resources and technology to prevent fraud, waste and abuse before it happens. Efforts will include the expansion of joint DOJ-HHS Medicare Fraud Strike Force teams that have been successfully fighting fraud in South Florida and Los Angeles. Established in 2007, these teams have a proven record of success using a "data-driven" approach to identify unexplainable billing patterns and investigating these providers for possible fraudulent activity. The Medicare Fraud Strike Force team operating in South Florida has already convicted 146 defendants and secured $186 million in criminal fines and civil recoveries. After the success of operations in South Florida, the Medicare Fraud Strike Force expanded in May 2008 to phase two in Los Angeles, where 37 defendants have been charged with criminal health care fraud offenses. To date in the Los Angeles cases, more than $55 million has been ordered in restitution to the Medicare program.
"We know these strike forces work. I believe a targeted civil and criminal enforcement strategy in these locations will have a substantial impact on deterring fraud and abuse, protecting patients and the elderly from scams, and ensuring that taxpayer funds are not stolen," said Attorney General Holder.
Prevention is critical to reforming the system and the HEAT team will also focus critical resources on preventing fraud from occurring in the first place. The team will build on demonstration projects by the HHS Inspector General and the Centers for Medicare & Medicaid Services that focus on suppliers of durable medical equipment (DME). These projects increase site visits to potential suppliers to prevent imposters from posing as legitimate DME providers. Other initiatives include:
Increasing training for providers on Medicare compliance, offering providers the resources and the knowledge they need to help identify and prevent fraud.
Improving data sharing between the Centers for Medicare & Medicaid Services and law enforcement so we can identify patterns that lead to fraud.
Strengthening program integrity activities to monitor and ensure Medicare Parts C (Medicare Advantage plans) and D (prescription drug programs) compliance and enforcement.
The Attorney General and the HHS Secretary also called on the American people to visit a new Web site www.hhs.gov/stopmedicarefraud or call 1-800-HHS-TIPS (1-800-447-8477) to report suspected Medicare fraud.
"The American people are some of our best weapons in the fight against Medicare fraud," added Sebelius. "Fraud is happening in communities across the country right now and we need the American people to blow the whistle on thieves and criminals who are stealing from all of us."
Fraud prevention efforts are also strengthened in President Obama’s proposed Fiscal Year 2010 budget. The President’s budget invests $311 million – a 50 percent increase from 2009 funding – to strengthen program integrity activities within the Medicare and Medicaid programs. Combined, the anti-fraud efforts in the President’s budget could save $2.7 billion over five years by improving oversight and stopping fraud in the Medicare and Medicaid programs, including the Medicare Advantage and Medicare prescription drug programs.
Related Materials:
Stop Medicare Fraud Web Site
19 May 2009
President of Company That Illegally Imported Catfish Sentenced to More Than Five Years in Federal PrisonRead the Press Release
WASHINGTON—A Virginia man has been sentenced to 63 months in federal prison for participating in a conspiracy that led to more than 10 million pounds of frozen catfish being imported from Vietnam, but fraudulently labeled and sold in the United States as sole, grouper and other species, the Justice Department announced. This sentence is one of the longest imposed by a federal judge for falsely labeling seafood.
Peter Xuong Lam of Fairfax, Va., who was the president of Virginia Star Seafood Corp., was sentenced late yesterday afternoon by U.S. District Judge Philip S. Gutierrez for the Central District of California. In addition to the prison term, Judge Gutierrez ordered Lam to forfeit more than $12 million to the government for anti-dumping duties avoided.
A second man involved in the scheme, Arthur Yavelberg of Reston, Va., who was the president of Silver Seas, a Virginia-based fish importer, was also sentenced yesterday for his role in the conspiracy to import mislabeled fish to avoid federal tariffs. Judge Gutierrez sentenced Yavelberg to a one year period of probation.
The cases against Lam and Yavelberg are part of an ongoing prosecution of importers and seafood dealers who worked together to import catfish from Vietnam and sell frozen fillets that were falsely labeled as more desirable and more expensive fish.
Following a three-week trial, Lam was convicted last October of conspiring to import mislabeled fish in order to avoid federal import tariffs and three counts of dealing in fish that he knew had been imported contrary to law. At the same trial, Yavelberg was convicted of a misdemeanor conspiracy count.
Virginia Star and International Sea Products imported $15.5 million worth of catfish that was illegally labeled and imported as sole, grouper, flounder, snakehead, channa and conger pike (a type of eel). DNA tests revealed that the frozen fish was in fact Pangasius hypophthalmus, a fish in the catfish family marketed under approved trade names including swai or striped pangasius. An anti-dumping duty was placed on Pangasius hypophthalmus imports from Vietnam in January 2003 after a petition was filed by domestic catfish farmers, who alleged that this fish was being imported from Vietnam at less than fair market value. None of the species names used to label the imported fish are subject to any federal tariffs.
To date, a dozen individuals and companies have been convicted of criminal charges related to the scheme to avoid paying tariffs by falsely labeling fish for import and then selling it in the United States at below-market price. The organizer of the smuggling conspiracy, Henry Nguyen, remains a fugitive and is believed to be residing in Vietnam.
Major sentences for those involved include:
- David Wong: one year and a day in prison followed by one year of supervised release and a fine of $25,000.
- Tai Wai David Chu: two years probation to include six months of home detention and a fine of $3,000.
- Henry C.D. Yip: one year probation and a fine of $40,000.
- Dakon International: two years probation with a special condition of placing a public service advertisement and a fine of $100,000.
- True World Foods Inc.: forfeiture of $197,930 and a fine of $60,000.
- T.P. Company: one year probation with a special condition of placing a public service advertisement and a fine of $150,000.
The case was investigated by Special Agents of National Oceanic and Atmospheric Administration, Fisheries, Office of Law Enforcement; Food and Drug Administration’s Office of Criminal Investigations; and U.S. Immigration and Customs Enforcement. Senior Trial Attorney Elinor Colbourn and Assistant U.S. Attorney Joseph Johns, Chief of Environmental Crimes in the U.S. Attorney’s Office in Los Angeles, prosecuted the case.
Justice Department Sues Garner, North Carolina, forDisability DiscriminationRead the Press Release
The Department has filed suit against the town of Garner, N.C., and the town’s board of adjustment alleging that they violated the Fair Housing Act when they refused to allow up to eight men recovering from drug and alcohol addictions to live together as a reasonable accommodation for their disabilities.
The suit, filed in U.S. District Court in Raleigh, also alleges that the defendants have engaged in a denial of rights to a group of persons or a pattern or practice of discrimination by failing or refusing to recognize their obligation to make reasonable accommodations. The home is chartered by Oxford House Inc., a non-profit organization that assists in the development of self-governing houses in which persons in recovery support one another’s determination to remain sober. Garner permits up to six persons to live in the home, but has refused to consider requests by Oxford House Inc. to increase the number to eight.
"The Fair Housing Act requires jurisdictions to make reasonable accommodations in their rules when necessary to provide persons with disabilities an equal opportunity to housing. We will continue to enforce the Act vigorously," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division.
"Enforcement of Fair Housing laws prohibiting discrimination against people with disabilities is a priority of the U.S. Attorney in Eastern North Carolina. These federal laws provide a vital tool in enabling disabled persons to have access to decent and affordable housing in our communities," said George E. B. Holding, U.S. Attorney for the Eastern District of North Carolina.
This lawsuit arose as a result of a complaint filed with the U.S. Department of Housing and Urban Development (HUD) by Oxford House. HUD conducted an investigation and referred the matter to the Justice Department.
The suit seeks monetary damages for the victims, a civil penalty and a court order requiring Garner to grant the requested accommodation and establish a procedure for considering future accommodation requests. The complaint is an allegation of unlawful conduct. The allegations must still be proven in federal court.
Fighting illegal housing discrimination is a top priority of the Justice Department. The Federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability. Visit www.usdoj.gov/crt for more information about the Civil Rights Division and the laws it enforces is available. Additional information about the Fair Housing Act is also available at www.HUD.gov.
Justice Department Settles Lawsuit Against<br /> Wagner Industrial Electric Inc. to Enforce the <br /> Employment Rights of Indiana ReservistRead the Press Release
The Department has entered into a consent decree with Wagner Industrial Electric Inc. that, if approved by the court, will resolve the Department’s complaint the company failed to properly reemploy Indiana Army National Guard Reservist Kevin Stenger in violation of the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA).
The Department’s complaint, filed in February in U.S. District Court in Dayton, Ohio, alleges that Wagner violated USERRA by failing to reemploy Stenger in his foreman position following his return in January 2007 from a two-week required active duty military training program. The complaint alleges that, instead of reemploying Stenger in his foreman position, Wagner first demoted him and subsequently laid him off. Under the terms of the consent decree, Wagner is required to provide Stenger with $12,000 to compensate him for his lost wages.
USERRA was enacted in 1994 to protect service members from being disadvantaged in their civilian careers due to serving in the uniformed services. Subject to certain limitations, USERRA requires that service members who leave their jobs to serve in the U.S. military be timely reemployed by their civilian employers in the same position, or a comparable position, to the one that they would have held had they not left to serve. Servicemembers who believe their USERRA rights have been violated may file a complaint with the Labor Department and its Office of Veterans’ Employment and Training Services will investigate. After the investigation, service members have the right to request referral to the Justice Department for potential enforcement and initiation of a lawsuit.
"No person should lose his civilian job for choosing to serve in the military," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "This settlement demonstrates again our commitment to vigorously enforcing federal laws that protect the employment rights of men and women serving in the military. We are pleased that Wagner has chosen to resolve this lawsuit and abide by the requirements of USERRA."
The Civil Rights Division has given a high priority to the enforcement of service members’ rights under USERRA. Additional information about USERRA can be found on the Justice Department Web sites: www.servicemembers.gov and www.usdoj.gov/crt/emp.
Georgia-Pacific Agrees to Perform Cleanup Activities at the Kalamazoo Superfund Site in MichiganRead the Press Release
WASHINGTON—Georgia-Pacific, a manufacturing company headquartered in Atlanta, has agreed to perform remedial work at an estimated cost of nearly $13 million to contain two former disposal areas within the Kalamazoo River Superfund site in Allegan and Kalamazoo Counties, Mich., the Justice Department and U.S. Environmental Protection Agency (EPA) announced today.
According to the settlement filed in U.S. District Court in Grand Rapids, Mich., Georgia-Pacific will design and construct a landfill cap at the Willow Boulevard/A-Site Landfill portion of the Superfund site. The company has also agreed to pay $225,509 for EPA’s past response costs and will pay EPA’s future costs related to this portion of the site.
"This excellent settlement ensures that Georgia-Pacific will perform necessary cleanup work within the Kalamazoo River site," said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. "This settlement represents another step in the overall cleanup of this environmentally significant region of the country."
"This settlement marks an important milestone in addressing the Willow Boulevard/A-Site Landfill," said EPA Region 5 Acting Regional Administrator Bharat Mathur.
The Allied Paper Inc.,/ Portage Creek/Kalamazoo River Superfund site consists of an 80-mile stretch of river, a three-mile segment of Portage Creek, a number of now-closed paper mill properties, and four landfills, including the Willow Boulevard/A-Site Landfill, which has historically been addressed as a single unit.
Georgia-Pacific currently owns the Willow Boulevard/A-Site Landfill portion of the Superfund site, which consists of two former disposal areas and adjacent impacted areas that include wetlands and woodlands. Under the terms of the agreement, Georgia-Pacific will consolidate PCB-contaminated material, design and install a permanent geotextile landfill cap across a 32-acre area, design and install a groundwater monitoring system and build long-term erosion control measures. Additionally, Georgia-Pacific will restore wetlands and shoreline habitat areas along the borders and next to the Willow Boulevard/A-Site Landfill.
Landfill design work will begin immediately following a comment period and court approval. On-site construction work is expected to begin by 2011. Currently, to prevent erosion of PCB-contaminated material into the Kalamazoo River, the Willow Boulevard/A-Site Landfill is covered in part by a geotextile membrane and sand. In addition, a sheet-pile wall borders the A-Site portion of the landfill.
The consent decree, lodged today in the U.S. District Court for the Western District of Michigan, is subject to a 30-day public comment period and approval by the federal court. A copy of the consent decree is available on the department Web site at http://www.usdoj.gov/enrd/Consent_Decrees.html.
18 May 2009
U.S. and 16 States Join Suits Against Pharmaceutical Giant, WyethRead the Press Release
WASHINGTON – The United States and 16 states have joined in two whistleblower suits filed in the District of Massachusetts against the drug manufacturer, Wyeth, alleging that the company knowingly failed to give the government the same discounts it provided to private purchasers of its drugs, as required by laws governing the Medicaid program. As a result, Wyeth allegedly avoided paying hundreds of millions in rebates due to state Medicaid programs for its drugs, Protonix Oral and Protonix IV. These drugs belong to a class of drugs known as proton pump inhibitors (PPI), which are used to suppress stomach acid.
Under the Medicaid Drug Rebate Program, drug manufacturers of brand name drugs (i.e. non-generic drugs) are required to report to the government the prices they charge their customers, including the "best price" offered for their drugs. They also are required to pay rebates to the state Medicaid programs that are calculated on any discounted prices that are offered. Congress created the Medicaid Drug Rebate Program in order to ensure that Medicaid, one of the largest purchasers of drugs in the United States and the nation’s provider of health insurance to the poor and the disabled, received the benefit of the same discounts offered to large commercial customers in the marketplace.
Between 2000 and 2006, Wyeth offered steep discounts to thousands of hospitals nationwide for Protonix Oral and Protonix IV under a pricing arrangement known as the "Protonix Performance Agreement." This pricing arrangement required that the hospitals purchase both drugs together under a so-called "bundled" arrangement and it offered them a steep discount for doing so. Wyeth did this in part to gain access to the far more lucrative retail outpatient market, intending that patients who used the intravenous version of Protonix in the hospital would later purchase Protonix Oral once they were discharged from the hospital. Under the Protonix Performance Agreement, hospitals that placed both products on their formularies and attained certain market share requirements were entitled to up to a 94% discount off the list price of Protonix Oral and up to 80% off the list price of Protonix IV. Although Wyeth was required under the Medicaid Drug Rebate Program to determine the effective prices paid by hospitals under this arrangement, and to pass along the benefit of the lowest prices to the state Medicaid programs, Wyeth allegedly failed to do so and therefore avoided paying hundreds of millions of dollars to Medicaid in quarterly rebates.
"Our complaint charges that Wyeth created the Protonix bundle so they could increase their market share at the expense of the Medicaid program -- a program to provide the least advantaged Americans with necessary medical care and services," said Tony West, Assistant Attorney General for the Civil Division. "By offering massive discounts to hospitals, but then hiding that information from the Medicaid program, we believe Wyeth caused Medicaid programs throughout the country to pay much more for these drugs than they should have."
The two separate civil False Claims Act suits – called qui tam actions – were filed against Wyeth and are pending in the District of Massachusetts. In addition to the United States, California, Delaware, the District of Columbia, Florida, Illinois, Indiana, Louisiana, Massachusetts, New York, Michigan, Nevada, New Hampshire, Tennessee, Texas, Virginia and Wisconsin also have intervened in the whistleblower suits against Wyeth.
"The best price reporting requirement is designed to assure that the nation’s healthcare programs for the poor – the Medicaid programs - are treated equally with drug companies’ best commercial customers," said Michael K. Loucks, Acting U.S. Attorney for the District of Massachusetts. "We seek through today’s suit to put the Medicaid programs on par with Wyeth’s best customers, as it had agreed."
The investigation was conducted by the Civil Division of the U.S. Department of Justice, the U.S. Attorney’s Office for the District of Massachusetts, and the Offices of Inspector General of the Department of Health and Human Services.
U.S. Court of Appeals for the Fifth Circuit Joins Other Circuits in Invalidating Tax Losses Claimed in Son of Boss Tax ShelterRead the Press Release
WASHINGTON - On May 15, 2009, the Fifth Circuit, in Klamath Strategic Investment Fund v. United States (No. 07-40861), affirmed the district court’s decision denying over $50 million in claimed tax losses arising from the taxpayers’ investment in a "Son of Boss (BLIPS)" tax shelter. Joining the majority of circuits which have ruled on the question, the Fifth Circuit held that "a lack of economic substance is sufficient to invalidate the transaction regardless of whether the taxpayer has motives other than tax avoidance," and concluded that "no reasonable possibility of profit existed" for the transaction in question here.
"We are pleased that the Fifth Circuit has joined all the other appellate courts in ruling that ‘Son of Boss’ tax deductions are not permissible, and we are also pleased that the court has recognized that determinations of this sort must be made on the objective evidence irrespective of the claimed motives of the individual investors," said John A. DiCicco, the Tax Division’s Acting Assistant Attorney General.
Members of U.S. Army Plead Guilty to Role in Scheme to Steal Equipment from the U.S. Military in IraqRead the Press Release
Elbert Westley George III, 36, a U.S. Army captain who was stationed in Iraq, pleaded guilty today to participating in a scheme to steal U.S. government equipment and sell it to a local Iraqi businessman. In a related case, Roy Greene Jr., a sergeant first class in the U.S. Army who was also in Iraq with George, pleaded guilty on May 13, 2009, to participating with George in the same scheme.
George, of Suffolk, Va., and Greene, 32, of Sylvester, Ga., entered their guilty pleas in U.S. District Court in Alexandria, Va., before U.S. District Court Judge Gerald Bruce Lee. Both men pleaded guilty to a one-count criminal information charging them with conspiracy to defraud the Department of Defense (DOD) and to commit theft of government property from the Defense Reutilization and Marketing Office (DRMO) located at Joint Base Balad in Balad, Iraq. According to plea documents, the United States owns and operates DRMO in support of Operation Iraqi Freedom. DRMO disposes of excess property received from the military services. DRMO inventory includes items such as air conditioners, generators, cars, trucks and trailers. The items are first offered for reutilization within DOD but they can also be donated to state or local governments, or to the Iraqi military. DRMO equipment can also be sold, with the proceeds from those sales returning to the federal government.
According to their plea agreements, George and Greene had logistics responsibilities for their unit and had the authority to check out equipment from DRMO to fulfill those responsibilities. In their pleas, both Greene and George admit that between December 2007 and June 2008, they abused that authority by stealing equipment from DRMO and selling it to a local Iraqi businessman. George and Greene admitted to stealing one bus, eight trucks, 19 generators, five trailers and several other items from DRMO. They admit to personally profiting at least $400,000 from their illegal sales.
At sentencing on July 17, 2009, George and Greene both face a maximum sentence of five years in prison and a $250,000 fine.
The case is being prosecuted by Deputy Chief Steve A. Linick and Trial Attorney Brigham Cannon of the Criminal Division's Fraud Section. The investigation of this case is being conducted by the Defense Criminal Investigative Service, FBI, Army Criminal Investigative Division, and members of the National Procurement Fraud Task Force and the International Contract Corruption Task Force (ICCTF). The National Procurement Fraud Task Force, created in October 2006 by the Department of Justice, was designed to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in government contracting activity for national security and other government programs. The ICCTF is a joint law enforcement agency task force that seeks to detect, investigate and dismantle corruption and contract fraud resulting from U.S. Overseas Contingency Operations, including in Afghanistan, Iraq and Kuwait.
Statement of Facts - Elbert Westley George III
Statement of Facts - Roy Greene Jr.
Justice Department to Monitor Election in PhiladelphiaRead the Press Release
On May 19, 2009, the Justice Department will monitor the election in the city of Philadelphia to ensure compliance with federal voting rights laws.
Justice Department staff members will monitor polling place activities in Philadelphia. A Civil Rights Division attorney will coordinate the federal activities and maintain contact with local election officials. In April 2007, the Justice Department reached a settlement agreement with Philadelphia related to allegations that the city had violated the Voting Rights Act of 1965, the Help America Vote Act and the National Voter Registration Act. Philadelphia has an obligation to provide all election information, ballots and voting assistance information in Spanish according to Section 203 of the Voting Rights Act. The monitors will gather information concerning compliance with this requirement and other federal voting rights statutes.
Each year, the Justice Department deploys hundreds of federal observers from the U.S. Office of Personnel Management and departmental staff to monitor elections across the country. In 2008, for example, 1,060 federal observers and 344 Department personnel were sent to monitor 114 elections in 76 jurisdictions in 24 states. To file complaints about discriminatory voting practices, including acts of harassment or intimidation, voters may call the Voting Section of the Civil Rights Division at 1-800-253-3931.
More information about the Voting Rights Act and other federal voting laws is available on the Civil Rights Division Web site at www.usdoj.gov/crt/voting/index.htm.
15 May 2009
United States Transfers Lakhdar Boumediene to FranceRead the Press Release
Lakhdar Boumediene, an Algerian national who had been held at the Guantanamo Bay detention facility since 2002, has been transferred to France.
As directed by the President’s Jan. 22, 2009, Executive Order, the interagency Guantanamo Review Task Force conducted a comprehensive review of Boumediene’s case. As a result of that review, Boumediene was approved for transfer to France, which was carried out today pursuant to an arrangement between the United States and France.
Boumediene was involved in the Supreme Court case, Boumediene v. Bush, which in June 2008 established the writ of habeas corpus for detainees being held at Guantanamo Bay. In November 2008, a federal court ordered the U.S. government to take all necessary and appropriate steps to facilitate the release of Boumediene from Guantanamo Bay. He is the second Guantanamo Bay detainee to be transferred to a foreign country following consideration by the Guantanamo Review Task Force.
"As we continue to make progress with our review of detainees, the assistance of our international allies is critical to the closure of the detention facility at Guantanamo Bay," said Matthew Olsen, Executive Director of the Guantanamo Review Task Force. "We are extremely grateful to the French Government and the European Union for their assistance on the successful transfer of Lakhdar Boumediene and we commend the leadership they have demonstrated on this important issue."
Since 2002, approximately 540 detainees have departed Guantanamo for other countries including Albania, Algeria, Afghanistan, Australia, Bangladesh, Bahrain, Belgium, Denmark, Egypt, France, Great Britain, Iran, Iraq, Jordan, Kuwait, Libya, Maldives, Mauritania, Morocco, Pakistan, Russia, Saudi Arabia, Spain, Sweden, Sudan, Tajikistan, Turkey, Uganda, United Kingdom and Yemen.
Two Florida Businessmen Plead Guilty to Participating in a Conspiracy to Bribe Foreign Government Officials and Money LaunderingRead the Press Release
The president of a Miami-Dade County, Fla.,-based intermediary and the former controller of a Miami-Dade County-based telecommunications company both have pleaded guilty in connection with their roles in a conspiracy to pay and conceal more than $1 million in bribes to former Haitian government officials.
Juan Diaz51, of Miami, pleaded guilty today in Miami before U.S. District Judge Jose E. Martinez to a one-count information charging him with conspiring to make corrupt payments to a foreign government official for the purpose of securing business advantages for three different Miami-Dade County telecommunications companies from the Republic of Haiti’s state-owned national telecommunications company, Telecommunications D’Haiti, in violation of the Foreign Corrupt Practices Act (FCPA) and money laundering laws. According to plea documents, Diaz paid and concealed $1,028,851 in bribes to former Haitian government officials while serving as an intermediary for the three private telecommunications companies during the entire conspiracy.
Antonio Perez, 51, of Miami, pleaded guilty before Judge Martinez on April 27, 2009, to a one-count information charging him with conspiring to making corrupt payments for one of the three Miami-Dade County telecommunications companies to Telecommunications D’Haiti in violation of the FCPA and money laundering laws. Perez was the controller of the telecommunications company from March 1998 through approximately January 2002. According to the plea documents, approximately $674,193 in bribes from Perez’s employer was paid to former Haitian government officials throughout the course of the conspiracy, which continued into 2003.
According to court documents, the Miami-Dade County telecommunications companies executed a series of contracts with Telecommunications D’Haiti that allowed the companies’ customers to place telephone calls to Haiti. Diaz and Perez admitted they conspired with the companies to make "side payments" through a shell company belonging to Diaz to the then-Director of International Relations for Telecommunications D’Haiti and the then-Director General of Telecommunications D’Haiti. In exchange for these payments, the foreign government officials are alleged to have conferred a variety of business advantages upon the Miami-Dade County telecommunication companies, including issuing preferred telecommunications rates, reducing the number of minutes for which payment was owed, and giving a variety of credits toward owed sums.
In connection with his guilty plea, Diaz admitted that from November 2001 through October 2003, he and his co-conspirators used the shell company for the sole purpose of accepting bribes and then laundering those bribes to then-Haitian government officials. Diaz admitted that he did not ever provide or intend to provide any legal goods or services from the shell company to anyone. Diaz admitted he kept $73,824 as commissions for laundering the bribes.
In connection with his guilty plea, Perez admitted that from November 2001 through January 2002, on behalf of his employer, he offered to pay and assisted with the processing of "side payments" to the then-Director of International Relations for Telecommunications D’Haiti. Perez admitted that he assisted in paying $36,375 worth of "side payments" during this period. Perez also admitted that he helped conceal the payments through the use of Diaz’s shell company and by recording the payments as "consulting services."
At sentencing, Diaz and Perez each face a maximum of five years in prison and a fine of the greater of $250,000 or twice the gross gain. The government’s investigation is ongoing.
The Department of Justice expresses gratitude to the government of Haiti for providing substantial assistance in gathering evidence during this investigation. In particular, Haiti’s financial intelligence unit, the Unité Centrale de Renseignements Financiers (UCREF), the Bureau des Affaires Financières et Economiques (BAFE),which is a specialized component of the Haitian National Police, and the Ministry of Justice and Public Security provided significant cooperation and coordination in this ongoing investigation.
The cases were prosecuted by Assistant U.S. Attorney Aurora Fagan of the U.S. Attorney’s Office for the Southern District of Florida, Trial Attorney Nicola J. Mrazek of the Criminal Division’s Fraud Section and Trial Attorney Kevin Gerrity of the Criminal Division’s Asset Forfeiture and Money Laundering Section. The Criminal Division’s Office of International Affairs also provided assistance in this matter. The cases were investigated by the IRS-CI Miami Field Office.
Information - Diaz
Information - Perez
Indianapolis Man Pleads Guilty and Is Sentenced<br /> in Child Pornography CaseRead the Press Release
Roger Lowe, 50, of Indianapolis, was sentenced today to five years in prison for receiving child pornography.
Lowe pleaded guilty on May 8, 2009, in federal court in Indianapolis to one count of receipt of child pornography. In entering that plea, Lowe admitted that he downloaded images of children engaged in various sexual acts and participated in an e-mail group where he received videos of child pornography.
This case arose from "Operation Brick Wall," an FBI investigation that began in 2006. The investigation focused on a foreign producer of child pornography who provided videos depicting the sexual abuse of children to an e-mail group. Investigators targeted Lowe, who used an online service to download the videos from the e-mail group. A search warrant was executed at his residence and a forensic examination of the hard drive seized there revealed more than 7,000 images of child pornography, including those downloaded from the intercepted e-mail group.
The case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse, launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The case is being prosecuted jointly by Assistant U.S. Attorney Steven DeBrota for the Southern District of Indiana and Trial Attorney LisaMarie Freitas of CEOS. The international investigation was conducted by the FBI’s Innocent Image Unit at Calverton, Md., and the case was investigated by the FBI’s Indianapolis Field Office.
Former Image Entry Inc., VP Pleads Guilty to Securities <br /> and Wire Fraud Conspiracy, and Tax EvasionRead the Press Release
Michael Wayne Sulfridge, a resident of Union Grove, Ala., and former vice president of corporate finance at Image Entry, Inc. (Image Entry), pleaded guilty today to fraud and tax evasion charges stemming from the company’s 2001 acquisition by Sourcecorp, Inc. (Sourcecorp).
Sulfridge, 44, pleaded guilty to a two-count criminal information charging him with conspiracy to commit wire fraud and securities fraud, as well as tax evasion.
According to the plea agreement and evidence presented during the plea hearing, Image Entry, of London, Ky., is a data processing company that operated nearly a dozen facilities located in the Southeastern and Midwestern United States. Sourcecorp is a consulting and information management corporation located in Dallas that purchased Image Entry in March 2001.
According to the plea agreement and evidence presented during the plea hearing, the terms of the purchase agreement provided that in addition to the $33 million paid at closing, an additional sum of approximately $11 million would be held back and paid during the three succeeding years if Image Entry met its earnings targets. The purchase agreement also provided for additional incentive payments of up to $25 million during the three years that would be calculated based on the amount by which those earnings targets were exceeded.
According to the plea agreement and evidence presented during the plea hearing, Sulfridge and others conspired to fraudulently inflate Image Entry earnings in order to fraudulently increase those annual incentive payments by Sourcecorp. The total cost of the acquisition by Sourcecorp amounted to approximately $68 million, including the incentive payments.
Also according to the plea agreement and evidence presented at today’s hearing, Sulfridge allegedly caused a tax loss of $190,111 when he acted to evade income taxes due on approximately $592,393 in bonus compensation he was paid based on the fraudulently inflated earnings. According to the information, Sulfridge failed to report that income on the annual joint individual income tax returns he filed with the Internal Revenue Service (IRS) for tax years 2001, 2002 and 2004, and in May 2005 Sulfridge allegedly submitted a materially false income tax return to the IRS for tax year 2003.
At sentencing, Sulfridge faces a maximum penalty of five years in prison on the conspiracy count and five years on the tax evasion count. Sulfridge also faces a maximum fine of $250,000 on the conspiracy count and a maximum fine of $100,000 on the tax evasion count. A sentencing date has not yet been scheduled.
The case is being prosecuted by William H. Stapleton Jr., of the Criminal Division’s Fraud Section, James Etri of the U.S. Securities and Exchange Commission acting as a Special Attorney assigned to the Criminal Division, and by Jill M. Cassara of the Tax Division. The case is being investigated by the FBI and the IRS.
14 May 2009
U.S. Judge Bars Two Connecticut Residents from Preparing Federal Tax Returns for OthersRead the Press Release
A federal district court in Connecticut has permanently barred Wethersfield residents Deowraj Buddhu and his daughter, Sunita Buddhu, from preparing federal tax returns for others. Mr. Buddhu and/or Ms. Buddhu have operated businesses that provide tax return preparation services under the names Paradise Consulting, Phoenix Consulting and Lotus Consulting, in Hartford, and Wethersfield, Connecticut.
After conducting a hearing on February 6, 2009, the Court found that the Buddhus have prepared federal income tax returns and amended federal income tax returns containing falsified or inflated deductions for their customers resulting in understatements of their customers’ tax liabilities. Based on an IRS investigation, it was determined that the Buddhus prepared 2,090 tax returns for the tax years 2004 and 2005, and Ms. Buddhu, operating under the name Lotus Consulting, prepared 922 federal income tax returns for the tax year 2006. The Court also found that the Buddhus prepared federal income tax returns for their customers on which they listed false identification numbers for themselves. The Court found that Ms. Buddhu interfered with the administration of the internal revenue laws by falsely representing to her clients that the IRS has no authority to conduct examinations of Connecticut residents’ tax returns and by preparing letters for her clients to submit to the IRS stating this unfounded position.
Acting Assistant Attorney General John A. DiCicco thanked Tax Division trial attorney Lisa Bellamy for her efforts in obtaining the injunction and Supervisory Tax Specialist Lucille Jessey of the Internal Revenue Service who managed the investigation of tax returns prepared by the Buddhus.
In the past decade, the Justice Department has obtained injunctions against more than 400 tax return preparers and tax-fraud promoters. Information about those cases is available on the Tax Division web site.
U.S. Court Permanently Bars Meriden, Conn., Tax Preparer<br /> from Preparing Tax Returns for OthersRead the Press Release
A Connecticut federal court has permanently barred John Waszczak from preparing federal tax returns for others. The court also ordered Waszczak to provide his customer lists to the government and to mail copies of the complaint and the court order to his customers. Waszczak consented to the civil injunction order.
According to the government’s complaint, Waszczak operated a tax return preparation service under the name H & J Tax Service in Meriden, Conn. The complaint states that Waszczak prepared 9,638 returns for the tax years 2003-2006. According to the complaint, on many of these returns, Waszczak overstated expenses on customers’ Schedules C or fabricated Schedule C businesses for his customers. In addition, the complaint alleges that on many of the returns that he prepared, Waszczak improperly deducted personal clothing and commuting expenses as business expenses.
The government alleged that Waszczak habitually included a $500 non-cash charitable deduction on every Schedule A that he prepared because this amount did not require the taxpayer to submit additional document to the IRS to substantiate the deduction. The complaint also alleges that Waszczak forged a pastor’s signature on a letter to substantiate a customer’s cash donations to a church even though the customer had not made those charitable donations.
Based on the average actual tax loss per examined return, and assuming that all returns prepared by Waszczak resulted in similar averages losses per return, the government estimates that it has incurred losses of approximately $24.6 million for the four-year period that Waszczak prepared returns.
In the past decade, the Justice Department has obtained injunctions against more than 400 tax return preparers and tax-fraud promoters. Information about the Justice Department’s Tax Division and its efforts to enjoin unscrupulous tax return preparers and tax-fraud promoters is available on the Justice Department Web site .
Three Former Kentucky Jailers Plead Guilty<br /> to Systematic Detainee Abuse and CoverupRead the Press Release
Three former jailers at the Lexington-Fayette County Detention Center (FCDC) pleaded guilty today to civil rights charges in federal court in Lexington, Ky. Scott Tyree, Kristine Lafoe and Anthony Estep were convicted for their roles in abusing pretrial detainees and their efforts to conceal that abuse.
Tyree, 46, pleaded guilty to conspiring to deprive detainees of their constitutional rights by physically abusing them and by authoring false and misleading incident reports in order to conceal that abuse. Tyree faces a maximum prison sentence of ten years and a fine of up to $250,000.
Lafoe, 43, pleaded guilty to a charge of conspiring to obstruct justice for her role in concealing the abuses at FCDC by permitting others to write false and misleading incident reports in order to justify unnecessary and excessive uses of force. Lafoe faces a maximum prison sentence of five years and a fine of up to $250,000.
Estep, 34, pleaded guilty to a federal civil rights charge and a charge of obstruction of justice by bringing false disciplinary charges with the intent to hinder and delay the reporting of the assault by FCDC officers, and by witnessing and failing to intervene in an incident of abuse by another FCDC officer. Estep faces a maximum prison sentence of two years and a fine of up to $200,000.
Two of the three former jailers have agreed to cooperate in the government’s investigation and prosecution.
"The overwhelming majority of detention officers perform their difficult duties with honor and professionalism," said Assistant Attorney General King. "The Justice Department will vigorously prosecute those who cross the line to engage in acts of criminal misconduct."
Today’s guilty pleas resulted from the investigative work of the FBI’s Louisville Division and the Justice Department’s Civil Rights Division. The case is being prosecuted by Department attorneys Jared Fishman and Benjamin Hawk.
13 May 2009
Philadelphia Man Convicted of Advertising, Transporting, Receiving <br /> and Possessing Child PornographyRead the Press Release
Robert P. Merz, 45, was convicted by a federal jury in Philadelphia today of advertising, transporting, receiving and possessing child pornography.
Merz, of Philadelphia, had been charged in a third superseding indictment on Oct. 23, 2008. During the three-day trial before U.S. District Judge Juan R. Sanchez, the government presented evidence that Merz’s home was searched in February 2007, and computers, DVDs and CDs were seized. Upon review of the seized materials, investigators discovered hundreds of thousands of images and videos depicting the sexual abuse of minors as young as toddlers. Some of the images depicted violent sexual acts being committed against the victims.
In addition, evidence introduced at trial revealed that Merz used numerous online technologies to receive and transport the images.
Finally, investigators testified at trial that Merz created and administered an online group that was dedicated to trading images and videos depicting the sexual abuse of minors. The online group had members from around the world who were handpicked by Merz. The group could only be accessed via a password and was established not only to trade images and videos of minors, but also so members could talk about their common sexual interest in children.
"Mr. Merz, simply by using the Internet, collected and distributed hundreds of thousands of images and videos of some of the most horrific and unimaginable criminal acts committed against children," said Assistant Attorney General of the Criminal Division Lanny A. Breuer. "These images aren't just abstract representations. They are depictions of real crimes committed against those who are most deserving or our protection."
The identification of this online group resulted from Operation "Joint Hammer," the U.S. component of "Operation Koala," an ongoing global operation targeting transnational rings of child pornographers that was initiated by Europol and Eurojust, and involved 28 countries.
Testimony at Merz’s trial revealed that this conviction was not his first related to child exploitation. Pennsylvania law enforcement established that Merz had two prior convictions for the molestation of two young girls on separate occasions.
Sentencing has been set for July 13, 2009. At sentencing, Merz will face a mandatory minimum of 35 years and up to life in prison as well as the possibility of a lifetime period of supervised release if he does not receive a life sentence. He will also face a fine up to $250,000.
The case was investigated by the FBI and the U.S. Postal Inspection Service. It is being prosecuted by Assistant U.S. Attorneys Roberta Benjamin and Kevin Brenner of the U.S. Attorney’s Office for the Eastern District of Pennsylvania and Trial Attorney Steve Grocki of the Criminal Division’s Child Exploitation and Obscenity Section. Computer forensics in the case were performed by CEOS’ High Technology Investigative Unit.
Federal Judge Permanently Bars Texas Tax PreparersRead the Press Release
A federal court today has permanently barred two additional former employees of Preston Tax Services, Inc., from preparing federal tax returns. Chief Judge Sidney Fitzwater of the U.S. District Court for the Northern District of Texas signed injunctions permanently barring Ethel Washington of Dallas, Texas, and Jason Jeroski of Mesquite, Texas, from preparing tax returns. The court previously barred Jeroski’s and Washington’s former employer, Tina Preston, and her Dallas firm, Preston Tax Services, Inc., from preparing federal tax returns. The court also previously enjoined three other former Preston employees –Gayla Oladele, LaTavia Glover, and Tyrone Williams –from preparing tax returns.
In the injunction orders against Washington and Jeroski, http://www.usdoj.gov/tax/txdv09115.htmthe court held that they repeatedly prepared federal income tax returns containing unrealistic positions, including false business losses that they knew would result in the understatement of customers’ tax liabilities. The government complaint in the case alleged that Preston taught her employees how to list phony businesses on customers’ returns in order to report false business losses.
John A. DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division, thanked Justice Department trial attorney Michael Pahl, who handled the case, and Glenda Dziema, a revenue agent with the Internal Revenue Service’s Small Business/Self Employed Division, who handled the investigation.
In the past decade the Justice Department has obtained injunctions against more than 400 tax preparers and tax-fraud promoters. Information about these cases is available on the Justice Department Web site.
Deputy U.S. Marshal Pleads Guilty to Obstructing Justice by Witness TamperingRead the Press Release
Deputy U.S. Marshal Benjamin Bates pleaded guilty to a misdemeanor charge of obstructing justice today in federal court in San Antonio for tampering with a witness he was transporting to the grand jury to testify about civil rights abuses at the Bexar County Adult Detention Center in Texas. In his plea agreement, Bates agreed to resign from the U.S. Marshals Service and to never again seek employment in law enforcement. The defendant was sentenced to one year of probation.
According to documents filed in court, Bates admitted to attempting to delay and dissuade the witness from testifying truthfully before the grand jury by attempting to minimize the incident the witness was to testify about, and by suggesting ways the witness could delay or avoid testifying. In addition, Bates admitted to telling the target of the grand jury’s investigation that the witness would be testifying.
"In order for the grand jury to fulfill its vital role in our criminal justice system, it is of paramount importance that the names of witnesses not be disclosed and that witnesses not be discouraged from providing full and truthful testimony," said Acting Assistant Attorney General Loretta King for the Justice Department’s Civil Rights Division. "By his conduct, Deputy Bates compromised the system and betrayed his badge."
The FBI investigated this case and it was prosecuted by Gerard V. Hogan and James D. Walsh with the Civil Rights Division.
Defense Department Official Charged with Espionage ConspiracyRead the Press Release
A Defense Department official has been charged with conspiracy to communicate classified information to an agent of a foreign government.
A criminal complaint unsealed today in the Eastern District of Virginia alleges that, from approximately Nov. 2004 to Feb. 11, 2008, James Wilbur Fondren, Jr., while serving as an employee of the Defense Department, unlawfully and knowingly conspired with others to communicate classified information to another person who he had reason to believe was an agent or representative of a foreign government.
Fondren, 62, worked at the Pentagon and is the Deputy Director, Washington Liaison Office, U.S. Pacific Command (PACOM). He has been on administrative leave with pay since mid-February 2008 and has not performed any duties in or for PACOM since that time. This morning, he turned himself in to federal agents. Fondren is expected to have his initial appearance later today in U.S. District Court in Alexandria, Va. If convicted, he faces a maximum five years imprisonment and a $250,000 fine.
"Today’s case is the result of an outstanding long-term counterespionage effort by many agents, analysts and prosecutors that has thus far yielded three convictions," said David Kris, Assistant Attorney General for National Security. "The conduct alleged in this complaint should serve as a warning to others in government who would compromise classified information and betray the trust placed in them by the American people."
"The allegations in this case are troubling – providing classified information to a foreign agent of the People’s Republic of China is a real and serious threat to our national security," said Dana J. Boente, Acting U.S. Attorney for the Eastern District of Virginia. "The U.S. government places considerable trust in those given access to classified information, and we are committed to prosecuting those who abuse that trust."
"The complaint unsealed today alleges that Mr. Fondren conspired to steal our nation’s secrets for a foreign government, placing his own interests over those of the citizens he served as a U.S. Government employee," said Executive Assistant Director Arthur M. Cummings, II, FBI National Security Branch. "These charges are the result of the investigative efforts of the FBI’s Washington Field Office, with the invaluable assistance of the Air Force Office of Special Investigations. Espionage is a profoundly serious crime, and the FBI will continue to work with our law enforcement and intelligence community partners to ensure the protection of our nation’s most sensitive information."
According to an affidavit filed in support of the criminal complaint, Fondren retired from active duty as a Lieutenant Colonel in the U.S. Air Force in May 1996. In approximately Feb. 1998, he began providing consulting services from his Virginia home. Fondren’s sole client for his business was a friend by the name of Tai Shen Kuo. Kuo was a naturalized U.S. citizen from Taiwan who lived primarily in Louisiana and maintained business interests in the United States and the People’s Republic of China (PRC). Kuo also maintained an office in the PRC.
In August 2001, Fondren became a civilian employee at PACOM at the Pentagon, where he was again granted a security clearance by the government. He held a Top Secret security clearance, worked in a Sensitive Compartmented Information Facility, and had a classified and unclassified computer at his cubicle. Even after he began working at PACOM in 2001, Fondren continued to provide consulting services for Kuo.
Unbeknownst to Fondren, Kuo worked under the direction of a PRC government official. This PRC official provided Kuo with detailed instructions to collect certain documents and information from Fondren and other U.S. government officials, including Gregg William Bergersen, a former Weapons Policy Analyst at the Arlington, Va.-based Defense Security Cooperation Agency in the Defense Department. The PRC official paid Kuo approximately $50,000 for completing those tasks.
Kuo introduced the PRC official to Fondren in approximately March 1999, describing him to Fondren as a political researcher and consultant to the PRC government. Fondren maintained periodic email correspondence with the PRC official until at least March 2001. While Fondren was aware of Kuo’s relationship with the PRC official, he was not aware of the PRC official’s precise status with the PRC government nor of his coded requests to Kuo to obtain information from Fondren.
According to the affidavit, the PRC official instructed Kuo to mislead Fondren into believing that he was providing information to Kuo for Taiwan military officials. Nevertheless, Fondren was aware that Kuo was providing Fondren’s information to an agent of a foreign government, the affidavit alleges.
According to the affidavit, between Nov. 2004 and Feb. 11, 2008, Fondren provided Kuo with certain Defense Department documents and other information, some of which Fondren obtained from classified online systems available to him by virtue of his employment at the Pentagon. Fondren incorporated Defense Department information, including classified information, into "opinion papers" that he sold to Kuo for between $350 and $800 apiece through Fondren’s home-based consulting business. Eight of the "papers" Fondren sold to Kuo contained classified information. Fondren also provided Kuo with sensitive, but unclassified Defense Department publications.
According to the affidavit, Fondren allegedly provided Kuo with a variety of sensitive data, including classified information from a State Department cable, classified information about a PRC military official’s U.S. visit, classified information about a joint U.S.-PRC naval exercise, and classified information regarding U.S.-PRC military meetings. In one instance, Fondren provided Kuo with a draft Defense Department report on the PRC military and stated to Kuo: "This is the report I didn’t want you to talk about over the phone….Let people find out I did that, it will cost me my job."
On Feb. 11, 2008, Kuo and former Defense Department employee, Gregg William Bergersen, were arrested on espionage charges. On the day of his arrest, Kuo was staying as a guest in Fondren’s Virginia home and had among his possessions a draft, unclassified copy of a Defense Department document entitled "The National Military Strategy of the United States of America 2008." Fondren was interviewed by the FBI and later admitted that he gave the draft National Military Strategy report to Kuo.
On March 31, 2008, Bergersen pleaded guilty in the Eastern District of Virginia to conspiracy to disclose U.S. national defense information to persons not entitled to receive it. Bergersen admitted that, between March 2007 and February 2008, he provided national defense information to Kuo, much of it pertaining to U.S. military sales to Taiwan and classified as Secret. Bergersen was later sentenced to 57 months in prison.
On May 13, 2008, Kuo pleaded guilty in the Eastern District of Virginia to conspiracy to deliver national defense information to a foreign government, namely the PRC. Kuo admitted that he had cultivated a friendship with Bergersen, bestowing on him gifts, cash payments, dinners, and money for gambling trips to Las Vegas. Kuo admitted that he had obtained national defense information from Bergersen and that he had sent it on to the PRC government official. Kuo was later sentenced to 188 months in prison.
On May 28, 2008, Yu Xin Kang, an accomplice of Kuo from New Orleans who was arrested on the same day as Kuo and Bergersen, pleaded guilty in the Eastern District of Virginia to aiding and abetting an unregistered agent of the PRC. Kang admitted that she assisted Kuo by periodically serving as a conduit for the delivery of information from Kuo to the PRC government official. Kang was later sentenced to 18 months in prison.
This investigation was conducted by the FBI's Washington Field Office. The Air Force Office of Special Investigations (OSI) provided substantial assistance and cooperation throughout the course of the investigation. The prosecution is being handled by Assistant U.S. Attorney Neil Hammerstrom, from the U.S. Attorney’s Office for the Eastern District of Virginia, and Trial Attorney Ryan Fayhee from the Counterespionage Section of the Justice Department’s National Security Division.
The public is reminded that criminal complaints are only charges and not evidence of guilt. A defendant is presumed innocent unless and until proven guilty.
12 May 2009
Stanford Financial Group Chief Investment Officer Charged with Obstruction of JusticeRead the Press Release
WASHINGTON – A federal grand jury in Houston returned a two-count indictment today charging Laura Pendergest-Holt, the chief investment officer of Houston-based Stanford Financial Group (SFG), with conspiring to obstruct a U.S. Securities and Exchange Commission (SEC) proceeding investigating SFG, as well as a substantive count of obstructing the SEC proceeding, Assistant Attorney General of the Criminal Division Lanny A. Breuer and acting U.S. Attorney for the Southern District of Texas Tim Johnson announced.
The federal court in Houston will be issuing an order summoning Pendergest-Holt to appear in the near future for arraignment. Pendergest-Holt has been free on a $300,000 bond since being charged with obstruction in a criminal complaint issued from the Northern District of Texas on Feb. 26, 2009.
According to the indictment, Stanford International Bank Ltd. (SIBL), marketed certificates of deposits (CDs). In a December 2008 monthly report, SIBL purported to have more than 30,000 clients and $8.5 billion in assets. The indictment alleges that investors were not advised of the fact that SIBL internally segregated its investment portfolio into three tiers: "Tier I," which represented cash and cash equivalents; "Tier II," which contained investments with "outside portfolio managers;" and "Tier III," described as "other assets."
Internal SIBL documents show that as of June 30, 2008, Tier III contained more than 80 percent of SIBL’s purported investments, according to the indictment. The indictment also alleges that approximately $3.2 billion of the purported Tier III value included investments in artificially valued real estate and approximately $1.6 billion included notes on personal loans to SFG "Executive A."
The indictment alleges that in December 2008, as part of an ongoing investigation, the SEC made official inquiries of SFG regarding the value and content of SIBL’s purported investments and provided notice that it intended to schedule testimony of witnesses. The indictment further alleges that on or about Jan. 21, 2009, at a meeting in Miami, Pendergest-Holt and SFG Executives "A" and "B" and an attorney for SFG, discussed how to respond to the SEC subpoenas. In addition, the indictment alleges that at a meeting in Houston on or about Jan. 23, 2009, the attorney for SFG requested that the SEC defer the subpoenas to Executives A and B and represented that Pendergest-Holt and the president of SIBL would be better witnesses because, the attorney claimed, Executives A and B were not knowledgeable about the details of SIBL’s assets. The indictment alleges that prior to her SEC testimony, Pendergest-Holt suggested at a meeting in Miami that she only disclose the June 30, 2008, financials as those numbers "looked better," and that she received a phone call from Executive B in which he reminded her to only discuss Tier II. According to the indictment, as early as November 2008, Pendergest-Holt was aware of the current value of Tier III and the real estate holdings in Tier III. The indictment further alleges that just prior to her SEC testimony, Pendergest-Holt participated in preparing a document reflecting the value of Tier III and the assets in Tier III.
The indictment alleges that on Feb. 10, 2009, Pendergest-Holt provided sworn testimony to the SEC in Fort Worth, Texas, where in response to questions by the SEC, she did not disclose the Miami meetings to prepare for her testimony and falsely represented that she did not know the content or allocations of the Tier III assets. The indictment further alleges that on Feb. 12, 2009, after her false testimony, Pendergest-Holt caused $4.3 million in SIBL funds to be wire-transferred to SIBL’s operating account in Houston.
Finally, on Feb. 17, 2009, as the indictment alleges, at a meeting with SEC attorneys in Memphis, Tenn., Pendergest-Holt falsely represented that if she "knew anything about Tier III," she would tell them.
An indictment is a formal accusation of criminal conduct, not evidence. A defendant is presumed innocent unless proven guilty beyond a reasonable doubt.
The maximum penalties for each of the conspiracy and obstruction counts are five years in prison and a fine of $250,000.
The case is being investigated by the FBI’s Houston Field Office, Internal Revenue Service-Criminal Investigation and the U.S. Postal Inspection Service. The case is being prosecuted by Senior Litigation Counsel Jack Patrick, Trial Attorney Matthew Klecka and with assistance from Allan Medina, Law Clerk, Forfeiture Support Associates, assigned to the Fraud Section, as well as Assistant U.S. Attorney Gregg Costa of the U.S. Attorney’s Office for the Southern District of Texas.
Former Nazi Death Camp Guard John Demjanjuk Deported to GermanyRead the Press Release
WASHINGTON – John Demjanjuk, a former Nazi death camp guard and a resident of Seven Hills, Ohio, has been removed by U.S. Immigration and Customs Enforcement (ICE) to Germany, Assistant Attorney General Lanny A. Breuer of the Criminal Division and ICE Acting Assistant Secretary John P. Torres announced today. Demjanjuk was removed through a court order of removal obtained by the Department of Justice. On March 10, 2009, a German judge issued an order directing that Demjanjuk, 89, be arrested on suspicion of assisting in the murder of at least 29,000 Jews at the Sobibor extermination center in Nazi-occupied Poland during World War II. In addition to serving at Sobibor, Demjanjuk served the SS as an armed guard of civilian prisoners in Germany at the Nazi-operated Flossenbürg Concentration Camp in Germany and at Majdanek concentration camp and the Trawniki training and forced labor camp in Nazi-occupied Poland.
Demjanjuk was first tried on allegations of participation in Nazi persecution in a civil denaturalization (citizenship revocation) case decided in 1981. Relying principally on witness testimony, a federal court found at that time that Demjanjuk was a notorious gas chamber operator at the Treblinka extermination center known to prisoners as "Ivan the Terrible." He was extradited in 1986 to Israel, where he was tried and convicted. However, after the Israeli Supreme Court found that reasonable doubt existed as to whether Demjanjuk was Ivan the Terrible, he was released and returned to the United States in 1993.
In 1999, the Department of Justice initiated a new denaturalization case against Demjanjuk, relying in large part on captured Nazi documents that came to light following the 1991 dissolution of the Soviet Union. In revoking his citizenship in 2002, the district court found that, in addition to serving at Sobibor, where approximately 250,000 Jewish men, women, and children were murdered, Demjanjuk had served as an armed guard at Majdanek, a concentration camp and extermination center at which at least 170,000 victims perished. The court also found that Demjanjuk served at
Flossenbürg, where t housands of prisoners, confined solely because of their race, religion, national origin or political opinion, died as a result of the inhumane conditions , or were murdered.The removal of Demjanjuk to Germany was effected through close cooperation between the Departments of Justice, Homeland Security and State. The Criminal Division’s Office of International Affairs provided significant assistance in this matter. Demjanjuk’s removal is part of OSI’s continuing efforts to identify, investigate and take legal action against participants in Nazi crimes of persecution who reside in the United States. Since OSI began operations in 1979, it has won cases against 107 individuals who participated in Nazi crimes of persecution. In addition, attempts to enter the United States by more than 180 individuals implicated in wartime Axis crimes have been prevented as a result of OSI’s "Watch List" program, which is enforced in cooperation with the Departments of State and Homeland Security.
"The removal to Germany of John Demjanjuk is an historic moment in the federal government’s efforts to bring Nazi war criminals to justice," said Assistant Attorney General Lanny A. Breuer. "Mr. Demjanjuk, a confirmed former Nazi death camp guard, denied to thousands the very freedoms he enjoyed for far too long in the United States. Now, finally, Mr. Demjanjuk has been held accountable in one small way for his part in one of the most horrific chapters in history."
Demjanjuk, a retired auto worker who was born in present-day Ukraine, immigrated to the United States in 1952 by concealing from U.S. immigration authorities his true whereabouts during World War II and his Nazi camp guard service. As a former Sobibor guard, Demjanjuk is only the second person to be removed from the United States after having served at one of the four Nazi camps constructed solely to murder civilians. In 2002, the U.S. District Court in Cleveland revoked Demjanjuk’s naturalized U.S. citizenship after a two-week trial prosecuted by the Criminal Division’s Office of Special Investigations (OSI). Chief Judge Paul R. Matia found that Demjanjuk participated at the Sobibor extermination center in "the process by which thousands of Jews were murdered by asphyxiation with carbon monoxide" in the camp’s gas chambers. In December 2005, then Chief Immigration Judge Michael J. Creppy ordered Demjanjuk removed from the United States to Ukraine, Germany or Poland. In May 2008, the U.S. Supreme Court denied Demjanjuk’s petition for review.
OSI Director Eli M. Rosenbaum stated, "John Demjanjuk’s actions helped seal the fateof thousands of innocent people during the Holocaust. He has at last received his summons from history."
"Millions have sought refuge from persecution in this country under liberty’s mantle. We will not suffer persecutors and mass murderers tarnishing her image by staking such a claim for themselves," said John P. Torres, ICE Acting Assistant Secretary of Homeland Security. "The U.S. government is dedicated to preventing the cynical exploitation of our nation’s immigration system by the worst of the worst. With John Demjanjuk’s removal, we reaffirm our commitment to protection of the oppressed, not the oppressor."
Antitrust Division Announces Initiative to Help Protect Recovery Funds from Fraud, Waste and AbuseRead the Press Release
WASHINGTON — The Department of Justice’s Antitrust Division today announced the details of its newly formed initiative aimed at preparing government officials and contractors to recognize and report efforts by parties to unlawfully profit from the stimulus projects that are being awarded as part of The American Recovery and Reinvestment Act of 2009.
Consistent with its mission to protect the welfare of the American economy by promoting open and fair competition, the Department’s Antitrust Division launched an initiative to help government agencies insulate procurement, grant and program funding processes from collusion and fraud, as well as to ensure that those who abuse those processes are prosecuted to the fullest extent of the law.
"It is not lost on anyone, public servants and taxpayers alike, that along with the tremendous opportunity to help revive the economy that the Recovery Act provides, comes tremendous responsibility," said Christine A. Varney, Assistant Attorney General in charge of the Department’s Antitrust Division. "Fraud, waste and abuse of these stimulus funds will not be tolerated and the Antitrust Division is committed to doing everything possible to help protect the integrity of the government funding processes that are critical to making the stimulus plan a success."
The American Recovery and Reinvestment Act of 2009 was signed into law by President Obama on Feb. 17, 2009. It is an effort to jumpstart the economy and create or save jobs. The Act includes $4 billion in Department of Justice grant funding to enhance state, local and tribal law enforcement efforts, including the hiring of new police officers, to combat violence against women, and to fight Internet crimes against children.
The Antitrust Division’s Recovery Initiative involves training procurement and grant officials, government contractors, and agency auditors and investigators, on techniques for identifying the "red flags of collusion" before stimulus awards are made and taxpayer money is unnecessarily wasted. The initiative makes available to agencies Antitrust Division competition experts who can evaluate procurement and program funding processes. These Division experts will make recommendations on "best practices" that may be adopted by the agencies to further protect processes from fraud, waste and abuse and maximize open and fair competition. Finally, the initiative commits the Antitrust Division to playing a significant role in assisting agencies investigate and prosecute those who seek to or succeed in defrauding the government’s efforts to maximize competition for stimulus funds.
The Antitrust Division’s Recovery Initiative is already making a significant impact. Since March 2009, in partnership with agency Inspector Generals handling stimulus funds, the Antitrust Division has already assisted in training thousands of federal and state procurement, grant and program officials nationwide, with thousands more scheduled to be trained in the coming months. The Antitrust Division has also launched a Recovery Initiative Web site through which consumers, contractors and federal, state and local agencies, can review information about the antitrust laws and the Division’s training programs, request training, and report suspicious activity. The Web site is located at http://www.usdoj.gov/atr/public/criminal/economic_recovery.htm. This Web site is linked to www.recovery.gov, the official website of the Recovery Accountability and Transparency Board. The board is responsible for overseeing federal agencies to ensure that there is transparency and accountability for the expenditure of Recovery Act funds. The Web site is also available through a link on the main Department of Justice homepage at http://www.usdoj.gov.
Consumers are encouraged to contact the Antitrust Division if they have information concerning anticompetitive conduct involving stimulus funds by emailing [email protected] or calling 1-888-647-3258.
Alaska Mine Operators to Pay $883,628 to Resolve Environmental ViolationsRead the Press Release
Alaska Gold Co. (Alaska Gold), and NovaGold Resources Inc. (NovaGold), the owners and operators of the Rock Creek Mine near Nome, Alaska, have agreed to pay a $883,628 civil penalty to resolve violations of a storm water discharge permit.
According to the court documents, in 2006, Alaska Gold, an Alaskan corporation and its parent company, NovaGold, a Canadian corporation, applied for and received a permit for the construction of a mine near Nome. Construction began in October 2006.
Subsequently, from April 2007 until September 2008, Alaska Gold and NovaGold violated their permit on multiple occasions by discharging stormwater into Rock Creek, Lindblom Creek and Glacier Creek in violation of state water quality standards. The companies also failed to adequately prepare and update a storm water pollution prevention plan and failed to implement and maintain best management practices to control the discharges.
"Today’s settlement shows that the government will hold accountable any company that does not fully comply with stormwater requirements," said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. "We expect all companies to take the necessary steps to control stormwater discharge from their operations."
"Whether it’s in a far corner of Alaska or in a crowded urban area, stormwater rules protect our waterways from polluted runoff," said Michelle Pirzadeh, EPA’s Acting Regional Administrator in Seattle. "The construction at Rock Creek Mine resulted in virtually unchecked runoff of silt and sediment to important fish habitat. Companies taking on construction projects of this scale need to do so responsibly and in accordance with the law."
As of fall 2008, the mine was in compliance. EPA will be monitoring the site for future violations beginning in spring 2009.
The stipulation of settlement and judgment, lodged today in the U.S. District Court for the District of Alaska in Anchorage, is subject to a 30-day public comment period and approval by the federal court. A copy is available on the Department of Justice Web site at http://www.usdoj.gov/enrd/Consent_Decrees.html.
11 May 2009
U.S. District Court Judge Sentenced to 33 Months in Prison <br /> for Obstruction of JusticeRead the Press Release
U.S. District Judge Samuel B. Kent was sentenced today to 33 months in prison for obstruction of justice related to an investigation of a judicial misconduct complaint filed against him.
Kent, 59, a district judge in the Southern District of Texas, pleaded guilty to obstructing a special investigative committee of the U.S. Court of Appeals for the Fifth Circuit during an investigation of a judicial misconduct complaint filed against him. Kent was sentenced in federal court in Houston by Senior U.S. District Judge Roger Vinson for the Northern District of Florida, who was sitting by designation in the Southern District of Texas.
On Aug. 28, 2008, a grand jury in the Southern District of Texas indicted Kent, who was at that time a sitting U.S. District Judge for the Southern District of Texas, on two counts of abusive sexual contact and one count of attempted aggravated sexual abuse for his alleged assaults in 2003 and 2007 on an employee of the Office of the Clerk of Court identified as Person A. On Jan. 6, 2009, the grand jury returned a superseding indictment against Kent. The superseding indictment incorporated the original charges and added three counts: one count each of abusive sexual contact and aggravated sexual abuse, based on Kent’s alleged repeated assaults on another U.S. District Court employee identified as Person B, and one count of obstruction of justice, based upon his obstruction of the Fifth Circuit’s investigation into a misconduct complaint filed by Person A.
On Feb. 23, 2009, Kent pleaded guilty to obstructing the judicial misconduct investigation into his sexual assaults. As part of his plea, Kent admitted that in both 2003 and 2007, he engaged in non-consensual sexual contact with Person A without her permission. He also admitted that he engaged in non-consensual contact from 2004 through at least 2005 with Person B without her permission. When Person A filed a misconduct complaint against him, the Fifth Circuit appointed a committee to investigate whether Kent had engaged in unwanted sexual contact with Person A and individuals other than Person A. Kent admitted that when he appeared before the committee in June 2007, he falsely testified about his conduct with Person B.
Kent was also ordered to pay a $1,000 fine as well as restitution of $3,300 to Person A and $3,250 to Person B. Kent was ordered to surrender on June 15, 2009.
The case was prosecuted by Senior Deputy Chief for Litigation Peter J. Ainsworth and Trial Attorneys John P. Pearson and AnnaLou T. Tirol of the Criminal Division’s Public Integrity Section, which is headed by Section Chief William M. Welch II. The case was investigated by the FBI.
Novo Nordisk Agrees to Pay $9 Million Fine in Connection with Payment of $1.4 Million in Kickbacks Through the United Nations Oil-for-food ProgramRead the Press Release
Novo Nordisk A/S (Novo), a Danish corporation based in Bagsvaerd, Denmark, has agreed to pay a $9 million penalty for illegal kickbacks paid to the former Iraqi government. Novo agreed to pay the fine as part of a deferred prosecution agreement with the Department. The matter is part of the Justice Department’s ongoing investigation into the U.N. Oil-for-Food program.
A criminal information was filed today against Novo in U.S. District Court for the District of Columbia charging Novo with one count of conspiracy to commit wire fraud and to violate the books and records provisions of the Foreign Corrupt Practices Act (FCPA). Novo, an international manufacturer of insulin, medicines and other pharmaceutical supplies, has acknowledged responsibility for improper payments made by its agents to the former Iraqi government in order to obtain contracts with the Iraqi ministry of health to provide insulin and other medicines. The agreement requires the company and its subsidiaries to cooperate fully with the Justice Department’s ongoing Oil-for-Food investigation.
According to the agreement and the information filed today, between 2001 and 2003, Novo paid approximately $1.4 million to the former Iraqi government by inflating the price of contracts by 10 percent before submitting the contracts to the United Nations for approval and concealed from the United Nations the fact that the price contained a kickback to the former Iraqi government. Novo also admitted it inaccurately recorded the kickback payments as "commissions" in its books and records.
In recognition of Novo’s thorough review of the illicit payments and its implementation of enhanced compliance policies and procedures, the Department has agreed to defer prosecution of criminal charges against Novo for a period of three years. If Novo abides by the terms of the agreement, at the end of the three-year period the Department will dismiss the criminal information.
The Oil-for-Food Program was established by the United Nations to enable Iraq to sell its oil for humanitarian purposes, in the context of an extensive international sanctions regime. The Oil-for-Food Program mandated that the proceeds of oil sales be deposited in a United Nations bank account and that those proceeds be used by the Iraqi government only to purchase humanitarian goods and services, such a food and medicine, approved by the United Nations. Beginning in 2000, the former Iraqi government began requiring companies wishing to sell humanitarian goods to government ministries to pay a kickback, often mischaracterized as an "after sales services fee," to the government in order to be granted a contract. The amount of that fee was usually 10 percent of the contract price. Such payments were not permitted under the Oil-for-Food Program or other sanction regimes then in place.
In a related matter, Novo reached a settlement today with the U.S. Securities and Exchange Commission (SEC) on a complaint and agreed to pay $3,025,066 in civil penalties and $6,005,079 in disgorgement of profits, including pre-judgment interest, in connection with contracts for which it paid kickbacks to the former Iraqi government.
The case is being prosecuted by Fraud Section Senior Trial Attorney Jonathan Lopez with assistance from Paralegal Specialist Sarah Marberg.
The Department acknowledges and expresses its appreciation for the significant assistance provided by SEC’s Enforcement Division in the ongoing Oil-for-Food investigation.
Information
Justice Department Withdraws Report on Antitrust Monopoly LawRead the Press Release
WASHINGTON — Christine A. Varney, Assistant Attorney General in charge of the Department’s Antitrust Division, today announced that the Department is withdrawing, effective immediately, a report relating to monopolization offenses under the antitrust laws that was issued in September 2008. As of today, the Section 2 report will no longer be Department of Justice policy. Consumers, businesses, courts and antitrust practitioners should not rely on it as Department of Justice antitrust enforcement policy.
The report, "Competition and Monopoly: Single-Firm Conduct Under Section 2 of the Sherman Act," raised too many hurdles to government antitrust enforcement and favored extreme caution and the development of safe harbors for certain conduct within reach of Section 2, Varney said. Varney announced the withdrawal of the report today at a speech at the Center for American Progress.
"Withdrawing the Section 2 report is a shift in philosophy and the clearest way to let everyone know that the Antitrust Division will be aggressively pursuing cases where monopolists try to use their dominance in the marketplace to stifle competition and harm consumers," said Varney. "The Division will return to tried and true case law and Supreme Court precedent in enforcing the antitrust laws."
The report was issued after a series of joint hearings, involving more than 100 participants, that the Department and the Federal Trade Commission (FTC) held from June 2006 to May 2007 to explore the antitrust treatment of single-firm conduct. The FTC did not join with the Department in its report.
Varney said that while there is no question that Section 2 cases present unique challenges, the report advocated hesitancy in the face of potential abuses by monopoly firms. She said that implicit in this overly cautious approach is the notion that most unilateral conduct is driven by efficiency and that monopoly markets are generally self-correcting. "The recent developments in the marketplace should make it clear that we can no longer rely upon the marketplace alone to ensure that competition and consumers will be protected," Varney added.
"I want to commend the efforts of those who participated in the Section 2 hearings," said Varney. "While I do not agree with the conclusions of the Section 2 report, I do believe that the hearings and the report provided a valuable discussion of the enforcement issues involving single-firm conduct."
Related Materials:
Read Assistant Attorney General Varney's Remarks as Prepared for the Center for American Progress
Read Assistant Attorney General Varney's Remarks as Prepared for the U.S. Chamber of Commerce
8 May 2009
Justice Department to Monitor Elections in TexasRead the Press Release
On May 9, 2009, the Department of Justice will monitor municipal elections in the cities of Farmers Branch and Hondo, Texas, to ensure compliance with the Voting Rights Act of 1965.
Under the Voting Rights Act, the Justice Department is authorized to ask the U.S. Office of Personnel Management (OPM) to send federal observers to areas that are specially covered in the Act or by a federal court order. Federal observers will be assigned to monitor polling place activities for the elections in Farmers Branch and Hondo based on the special coverage provisions. 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.
Each year, the Justice Department deploys hundreds of federal observers from OPM, 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 Civil Rights Division at 1-800-253-3931.
More information about the Voting Rights Act and other federal voting laws is available on the Justice Department Web site at www.usdoj.gov/crt/voting/index.htm.
7 May 2009
Justice Department Seeks to Bar New York Attorney from Using Employment Taxes as Working CapitalRead the Press Release
WASHINGTON - The United States has filed a lawsuit against New York attorney Thomas B. Pruzan, d/b/a the Pruzan Law Firm, seeking to put an end to Mr. Pruzan’s repeated failure to timely deposit and pay the employment and unemployment taxes due from his law firm, as well as his failure to timely file employment and unemployment tax returns with the Internal Revenue Service.
The government complaint alleges that since the quarter ended September, 30, 1997, Mr. Pruzan has deliberately failed to make current employment tax deposits, and has, instead, used those funds as working capital, a practice referred to as "pyramiding." The complaint further alleges that Mr. Pruzan’s noncompliance with his federal tax obligations has resulted in a balance due to the government of more than one million dollars.
According to the complaint, despite the Internal Revenue Service’s best efforts over the past five years, Mr. Pruzan has made very minimal payments of his tax debt, and all attempts to induce compliance have failed. Accordingly, the complaint seeks an injunction requiring Mr. Pruzan to, among other things, timely deposit and pay his employment and unemployment taxes, and timely file all employment and unemployment tax returns with the IRS.
Since 2001, the Justice Department’s Tax Division has obtained more than 385 injunctions to stop the promotion of tax fraud schemes and the preparation of fraudulent returns. Information about these cases is available on the Justice Department website.
United States' Complaint for Preliminary and Permanent Injunction (PDF)
Justice Department Seeks to Bar New York Attorney from Using Employment Taxes as Working CapitalRead the Press Release
WASHINGTON – The United States has filed a lawsuit against New York attorney Thomas B. Pruzan, d/b/a the Pruzan Law Firm, seeking to put an end to Mr. Pruzans repeated failure to timely deposit and pay the employment and unemployment taxes due from his law firm, as well as his failure to timely file employment and unemployment tax returns with the Internal Revenue Service.
The government complaint alleges that since the quarter ended September, 30, 1997, Mr. Pruzan has deliberately failed to make current employment tax deposits, and has, instead, used those funds as working capital, a practice referred to as “pyramiding.” The complaint further alleges that Mr. Pruzans noncompliance with his federal tax obligations has resulted in a balance due to the government of more than one million dollars.
According to the complaint, despite the Internal Revenue Services best efforts over the past five years, Mr. Pruzan has made very minimal payments of his tax debt, and all attempts to induce compliance have failed. Accordingly, the complaint seeks an injunction requiring Mr. Pruzan to, among other things, timely deposit and pay his employment and unemployment taxes, and timely file all employment and unemployment tax returns with the IRS.
Since 2001, the Justice Departments Tax Division has obtained more than 385 injunctions to stop the promotion of tax fraud schemes and the preparation of fraudulent returns. Information about these cases is available on the Justice Department website.
Related Documents:
United States v. Thomas B. Pruzan, etc.
United States' Complaint for Preliminary and Permanent Injunction
(PDF document)Portable Document Format (PDF) files may be viewed with a free copy of Adobe Acrobat Reader
Accessibility InformationJustice Department Files Lawsuit Against Synapse Data and Telecom Inc<br /> to Enforce the Employment Rights of Utah National Guard MemberRead the Press Release
WASHINGTON — The Justice Department today announced the filing of a lawsuit in U.S. District Court in Salt Lake City on behalf of Jose A. Ortega, a Utah National Guard member, against Synapse Data and Telecom Inc., and Matthew Mossbarger, Synapse’s owner and operator, alleging violations of the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA).
Under USERRA, an employer is prohibited from terminating an employee if the employee’s service or obligation for service in the uniformed services is a motivating factor in the employer’s action, unless the employer can prove that the action would have been taken in the absence of such service or obligation for service.
The complaint alleges that Ortega, then a network administrator for Synapse, enlisted in the Utah National Guard in April 2008 and was given orders to report for basic training the following month. According to the complaint, Ortega informed Mossbarger of his military enlistment and attempted to provide Mossbarger with a copy of his orders to report for basic training. Mossbarger tried to convince Ortega to rescind his military obligation, offering him benefits, a raise and management opportunities. Mossbarger then terminated Ortega when Ortega declined to withdraw from the Utah National Guard. Ortega filed a complaint with the Labor Department’s Employment and Training Service (VETS). VETS investigated the matter, determined that Ortega’s claim had merit, and upon completion of conciliation efforts, referred the matter to the Justice Department.
"The Department of Justice is committed to vigorously enforcing federal laws that protect the employment rights of our servicemembers," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "That commitment is evidenced by cases such as this where a servicemember’s employment was terminated simply because he had committed to military service and would be reporting for training."
The Civil Rights Division of the Justice Department has given a high priority to the enforcement of servicemembers’ rights under USERRA. This is the tenth USERRA lawsuit filed this year by the Civil Rights Division on behalf of servicemembers. Additional information about USERRA can be found on the Justice Department Web site: www.servicemembers.gov and www.usdoj.gov/crt/emp.
Department of Justice FY 2010 Budget RequestRead the Press Release
WASHINGTON – Attorney General Eric Holder announced today that the President’s FY 2010 budget proposal totals $26.7 billion for the Department of Justice (DOJ) to increase support for the Department’s traditional missions while strengthening national security efforts. The request represents a 3.8 percent increase in budget authority and an increase of 3,977 positions over the FY 2009 enacted appropriation.
“The President’s budget request demonstrates both a dedication to protecting our national security as the Department of Justice’s top priority and a renewed commitment to the Department’s traditional missions,” Attorney General Holder said. “In these tough economic times, it’s more important than ever that we remain vigilant in the fight against crime while never relaxing our guard in the battle against global terrorism.”
“We must continue to invest public dollars into strategies and programs that have proved to be effective methods to combat the myriad security threats we face today. We have an obligation to protect our communities and our country in smart, proven ways,” Holder explained.
The $26.7 billion budget request fully funds base operations and activities for all DOJ components and includes program enhancements totaling $1.94 billion. Approximately 90 percent of the total resources are dedicated to national security programs and DOJ’s traditional missions in law enforcement and litigation, while the remaining 10 percent funds state and local assistance programs. FY 2010 program increases and key priorities include:
· $721.5 million to counter the threat of terrorism and strengthen national security.
· $510.6 million to assist state and local law enforcement, including the Second Chance Act.
· $62.6 million to combat financial fraud and protect the federal fisc (treasury).
· $15.7 million for civil rights law enforcement.
· $231.6 million to safeguard our southwest border.
· $386 million for prisons and detention services.
· $14 million to improve DOJ’s financial performance and accountability.
To view the budget summary, visit: http://www.usdoj.gov/jmd/2010summary/
National Security
The Department’s top priority remains the prevention, investigation and prosecution of terrorist activities. In total, the budget requests a $721.5 million increase, including 366 agents and 324 intelligence analysts in the FBI and Drug Enforcement Administration (DEA), to strengthen the Department’s counterterrorism investigative capabilities, support its efforts to identify, track and defeat terrorists operating in the United States and overseas and to fortify our nation’s intelligence analysis capabilities.
Within this enhancement are additional resources for the following Department components:
· $555.6 million, including 357 agents and 321 intelligence analysts, for the FBI;
· $64 million for General Administration;
· $27.4 million for Justice Information Sharing Technology;
· $20 million for Law Enforcement Wireless Communications;
· $25 million for the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF);
· $10.5 million for the Bureau of Prisons (BOP);
· $10 million, including 9 agents and 3 intelligence analysts, for the DEA;
· $4 million for the Office of the Inspector General;
· $2.5 million for the Criminal Division;
· $2.2 million for the U.S. National Central Bureau (Interpol); and
· $250,000 for the Foreign Claims Settlement Commission.
The budget enables the FBI in coordination with the Department’s National Security Division and U.S. Attorneys’ Offices across the country to further its development of a robust domestic intelligence capability and increase its ability to investigate and prevent cyber attacks and weapons of mass destruction incidents. The budget includes increases to build-out key FBI support functions, such as training and biometrics support for federal, state and local partners.
Finally, the budget request contains funds to process expeditiously approximately 240 individuals currently detained at the Guantanamo Bay Naval Base and to implement the President’s Executive Order to close Guantanamo by January 2010.
For more information, view the National Security Budget Fact Sheet at http://www.usdoj.gov/jmd/2010factsheets/pdf/national-security.pdf
State and Local Law Enforcement Assistance, Including the Second Chance Act
The FY 2010 budget request includes an increase of $510.6 million for state and local law enforcement assistance, bringing the total to $2.6 billion for state and local programs. The Administration is committed to providing communities across the country with resources to begin hiring 50,000 police officers. The budget request includes $298 million for the Community Oriented Policing Services (COPS) program which, combined with the $1 billion provided in the American Recovery and Reinvestment Act, will enable the hiring of more than 7,000 police officers nationwide by the end of 2010. The budget also provides for significant funding toward the Second Chance Act, which attempts to break the cycle of criminal recidivism by providing services to ex-offenders before and after they are released from prison and return to communities. The resources will fund prisoner reentry programs by providing an increase of $75 million in grant program and research funding, as well as an increase of $13.8 million for federal inmate skills development. Increased state and local funding will be used to provide drug treatment, mentoring and other transitional services to help ex-offenders integrate into society and lead productive lives.
For more information, view the State and Local Law Enforcement Fact Sheet at http://www.usdoj.gov/jmd/2010factsheets/pdf/state-local.pdf
Combating Financial Fraud and Protecting the Federal Fisc (Treasury)
The Department of Justice will continue to play a crucial role in the federal financial recovery effort through criminal and civil litigation. The budget includes $62.6 million for additional FBI agents, federal prosecutors, civil litigators and bankruptcy attorneys to address the problems that contributed to, and that are caused by the current financial crisis. Within this enhancement are additional resources for the following Department components:
· $25.5 million, including 50 agents for the FBI;
· $12.8 million for the U.S. Attorneys;
· $10 million for the Civil Division;
· $2.9 million for the Tax Division;
· $1.8 million for the Criminal Division;
· $4.2 million for the Environment and Natural Resources Division;
· $2.2 million for the U.S. Trustees Program;
· $1.2 million for the Antitrust Division; and
· $2 million, including four agents, for the Office of the Inspector General.
The FY 2010 budget provides for 50 additional FBI agents to combat financial fraud . It also provides for 165 attorneys in Washington and in U.S. Attorney Offices throughout the United States to aggressively pursue cases in the civil and criminal court systems, defend the United States in high-profile, high stakes Indian Tribal Trust litigation and support programs that have high rates of return, such as debt collection, tax law enforcement and fraud enforcement.
For more information, view the Combating Financial Fraud and Protecting the Federal Fisc Fact Sheet at http://www.usdoj.gov/jmd/2010factsheets/pdf/cff-fisc.pdf
Civil Rights Law Enforcement
Consistent with the President’s commitment to defend the laws of the United States and protect civil rights, the budget requests $15.7 million, and 102 additional positions including 60 attorneys, to expand existing initiatives and reinvigorate traditional civil rights enforcement. Additional staff allow for more vigorous pursuit of hate crimes and discrimination, human trafficking crimes and unsolved civil rights era crimes. The budget provides for increased enforcement of fair housing and fair lending laws, disability laws and laws protecting institutionalized persons from unconstitutional treatment. In total, the FY 2010 budget requests an 18 percent increase in funding for the Civil Rights Division over FY 2009.
For more information, view the Civil Rights Law Enforcement Fact Sheet at http://www.usdoj.gov/jmd/2010factsheets/pdf/civil-rights.pdf
Safeguarding our Southwest Border
Illegal immigration and border security are paramount concerns for the United States, particularly along the Southwest Border. The FY 2010 budget addresses the threats and challenges posed by the Southwest Border to the entire criminal justice system. In recent years, budget increases have been focused on the front end of the pipeline without proportionately increasing the back end of the system, which includes many DOJ responsibilities. To address this imbalance, the Department proposes an increase of $231.6 million, 632 agents and 110 attorneys for a Southwest Border Enforcement Initiative.
The Department’s initiative focuses on combating violence, stopping the flow of illegal weapons and drug trafficking, bringing criminals to justice and sharing critical information, technical assistance and training with our law enforcement partners on both sides of the border. The initiative brings together the law enforcement and prosecutorial components of the Department, including DEA, ATF, the Organized Crime Drug Enforcement Task Force program, the U.S. Attorneys, the Criminal and Civil Divisions and the Executive Office for Immigration Review, to help secure the border and restore the rule of law to the region. The budget also includes significant resources for the U.S. Marshals Service to protect and secure federal detainees before, during and after judicial proceedings.
Within this enhancement are additional resources for the following Department components:
· $18 million, including 34 agents for ATF;
· $24.1 million, including 70 agents for DEA;
· $8.1 million for the U.S. Attorneys;
· $26.3 million for the Executive Office for Immigration Review;
· $8.9 million for the Organized Crime Drug Enforcement Task Force program;
· $144.3 million, including 528 agents for the U.S. Marshals Service;
· $1.8 million for the Civil Division; and
· $122,000 for the Criminal Division.
For more information, view the Safeguarding our Southwest Border Fact Sheet at http://www.usdoj.gov/jmd/2010factsheets/pdf/safeguarding-our-swb.pdf
Prisons and Detention
The number of individuals appearing in federal court has grown at a rapid pace, as has the number of individuals detained and incarcerated. This has created substantial costs for the BOP and Office of the Federal Detention Trustee (OFDT). The FY 2010 budget includes $386 million in enhancements to expand prison and detention capacity, fund vacant staff positions and fund programs designed to help inmates successfully reintegrate into their communities. The budget expands federal prison capacity by funding the build-out and activation of two new medium security prisons and provides for medical care increases, drug treatment and life skills programs and additional correctional workers.
For more information, view the Prisons and Detention Budget Fact Sheet at http://www.usdoj.gov/jmd/2010factsheets/pdf/prisons-detention.pdf
Performance and Accountability
The Department of Justice continues to seek ways to improve performance and accountability. The budget request includes a program increase of $14.0 million to continue implementation of the critical Unified Financial Management System, a major initiative that greatly improves the efficiency and integrity of the Department’s financial and performance management and accounting functions.
For more information, view the Performance and Accountability Budget Fact Sheet at http://www.usdoj.gov/jmd/2010factsheets/pdf/performance-accountability.pdf
Anadarko Petroleum Co., Agrees to Pay Penalty for Oil Spills in WyomingRead the Press Release
WASHINGTON—Anadarko Petroleum Co., and two related oil production companies have agreed to pay a civil penalty of more than $1 million and implement injunctive relief, develop facility response plans, and revise spill prevention as well as containment plans at a cost of more than $8 million during the term of the settlement in order to resolve violations of the Clean Water Act, the Justice Department and U.S. Environmental Protection Agency (EPA) announced today.
According to the consent decree, filed in U.S. District Court in Cheyenne, Wyo., Anadarko, Howell Corp., and Howell Petroleum Corp., agree to pay $1.05 million and will upgrade and implement appropriate spill prevention plans and develop and implement facility response plans. The consent decree also requires the companies to implement a multi-phased integrity and mitigation plan that incorporates inspection, monitoring, testing, data collection and failure analysis activities.
"As a result of today’s settlement, Anadarko will pay a significant civil penalty and spend an even greater amount to come into compliance with the Clean Water Act," said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. "The consent decree will clearly improve Anadarko’s preparedness and prevention plans and will ultimately result in a cleaner environment for the people of Wyoming."
"This multi-million dollar settlement will protect water resources and habitat in Wyoming and the West," said Carol Rushin, EPA’s Acting Regional Administrator in Denver. "We are pleased that Anadarko and its partners will make significant investments in monitoring and control measures that will ensure compliance with the Clean Water Act and minimize the likelihood and severity of future spills."
According to a complaint filed concurrently with the consent decree, Anadarko Petroleum and the two related companies allegedly discharged harmful quantities of oil from its facility in Wyoming on more than 35 occasions between Jan. 26, 2003, and Oct. 19, 2008. The complaint alleges that more than 31,300 barrels of oily water and crude oil were released during the spills and resulted in an observable film, sheen or discoloration on the surface of the impacted water or shoreline. The spills occurred on oil production fields in Park, Johnson and Natrona Counties and resulted in the pollutants being discharged into the tributaries or drainages of Silver Tip Creek and Salt Creek which, respectively, are tributaries to the Clarks Fork and Powder Rivers.
The Clean Water Act prohibits discharges of oil into waterways and coastal areas in quantities that may be harmful to the environment or public health. Oil spills threaten fresh water and marine environments, harming plant and animal life through physical damage and the toxicity of the oil itself, which may poison exposed organisms. For more information on the effects and cleanups of oil spills, visit: http://www.epa.gov/oilspill.
The consent decree was lodged in the U.S. District Court for the District of Wyoming and is subject to a 30-day public comment period and subsequent 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.