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24 April 2009
Owner of Korean Commercial Cargo Vessel & Chief Engineer Plead Guilty to Marine Pollution Related ChargesRead the Press Release
WASHINGTON—STX Pan Ocean Co. Ltd. (STX), headquartered in Seoul, Korea, and the owner of the commercial cargo ship, M/V Ocean Jade, pleaded guilty today to conspiracy as well as falsifying and failing to properly maintain records meant to ensure compliance with maritime pollution laws, the Justice Department announced. The chief engineer of the M/V Ocean Jade, Hong Hak Kang, a Korean citizen, also pleaded guilty today to failing to maintain environmental records and making false statements.
STX, which faces five years probation for each of the four counts against it, has agreed to pay a $2 million fine, as well as make a $200,000 community service payment to the National Fish and Wildlife Foundation. In addition, STX has agreed to implement a detailed environmental compliance plan, which requires monitoring of its fleet-wide operations over the course of four years.
Chief Engineer Kang faces maximum penalties of six years in federal prison, a $250,000 fine and three years of supervised release.
Federal and international law requires that all ships comply with pollution regulations that include the proper disposal of oily waste and sludge by passing the oily waste through an oil-water separator aboard the vessel or burning the sludge in the ship’s incinerator. In addition, federal law requires the ship’s crew to record accurately each transfer or disposal of oily waste and sludge in an oil record book.
Federal and international law also requires that ships record disposals of garbage in a garbage record book. Both record books must be available for inspection by the U.S. Coast Guard when the vessel is within the waters of the United States.
According to court documents, in late July 2008, Chief Engineer Kang ordered several crew members to dump approximately 10 barrels containing oily waste water directly overboard into the ocean. Chief Engineer Kang also made entries into the M/V Ocean Jade’s oil record book by applying a pre-established formula, rather than recording the actual amounts of oily waste and sludge transferred, burned or discharged. On Sept. 27, 2008, a senior officer instructed several members of the deck department to dispose of oily waste from the crane houses directly into the ocean using a flexible plastic hose that was draped over the side of the vessel. When the ship arrived in the Port of Tampa on Oct. 7, 2008, its officers presented false oil and garbage record books and several crew members provided Coast Guard investigators with false statements about the prior dumping incidents.
This case is being investigated by the U.S. Coast Guard, Coast Guard Investigative Service and the U.S. Environmental Protection Agency. It is being prosecuted by Cherie L. Krigsman, Assistant U.S. Attorney for the Middle District of Florida; Leslie E. Lehnert, Trial Attorney, Department of Justice, Environment and Natural Resources Division, Environmental Crimes Section; and Lieutenant William George, Coast Guard.
Maryland Man Pleads Guilty to Using a Nooseto Assault a Man at the PentagonRead the Press Release
William Michael King, a fifty-year-old truck driver from Maryland, pleaded guilty today to assault and violating the civil rights of an African American man he encountered while King delivered construction materials to the Pentagon.
King admitted that in October 2006, he made a noose and displayed it to the victim in an attempt to intimidate the victim. The victim, identified as "CS" in the charging documents, is a pipe fitter who also was working at the Pentagon in 2006. The United States also alleged that King placed the noose around the victim’s neck, and pulled the victim into a large, metal storage container. Sentencing is set for July 10, 2009.
"Every American has the right to a workplace free from racial intimidation and violence," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "The Justice Department is committed to ensuring that those who use racially motivated threats and violence in the workplace are prosecuted and brought to justice."
"A noose is a powerful symbol of hate and racially motivated violence," said Dana J. Boente, Acting U.S. Attorney for the Eastern District of Virginia. "As permitted by federal criminal law, we continue to aggressively prosecute those within our society who attack others because of the victim's race or color."
"The FBI has a zero tolerance policy against those who commit hate crimes or violate the civil rights of any citizen," said Joseph Persichini Jr., Assistant Director in Charge of the FBI’s Washington Field Office. "And as occurred here, when the facts come out such acts are often perpetrated by cowards who prey upon the innocent and unsuspecting."
The investigation was led by special agents of the FBI Washington Field Office with assistance from the Pentagon Force Protection Agency. Assistant U.S. Attorney Jonathan L. Fahey and Civil Rights Division Trial Attorney Michael J. Frank are prosecuting this case for the United States.
Justice Department Files Lawsuit Alleging Disability<br /> Discrimination by the City of Baltimore, MarylandRead the Press Release
WASHINGTON - The Justice Department today announced it has filed a lawsuit in U.S. District Court in Baltimore alleging that the city of Baltimore’s zoning code discriminates against individuals with disabilities by requiring substance abuse treatment facilities to go through a burdensome "conditional ordinance" zoning process in order to locate in any zone.
Other comparable facilities are not required to go through the conditional ordinance process, which requires approval by the Baltimore City Council and the local neighborhood association. Because of unfounded stereotypes about persons with disabilities who are in drug treatment, this process has resulted in facilities not getting a permit or in expending tremendous resources to get the permit.
"Persons with disabilities must not be subject to different, and more burdensome, zoning standards because of unfounded stereotypes," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "Drug treatment programs are vital to our nation’s health. We must not allow discrimination to prevent such programs for opening."
The Americans with Disabilities Act protects individuals with disabilities from discrimination in all activities of state and local government entities, including zoning and land use decisions. Additional information about the Civil Rights Division is available at the Justice Department Web site at www.usdoj.gov/crt.
Hurricane Katrina Contractor Accepts $4 Million Judgment Under the False Claims ActRead the Press Release
WASHINGTON – The United States has settled its claims filed under the False Claims Act against Lighthouse Disaster Relief and its partners, Gary Heldreth and Kerry Farmer. In its complaint, which was filed in the U.S. District Court for the Middle District of Louisiana, the United States alleged that Lighthouse, Heldreth, and Farmer accepted a $5.3 million payment for work that was not completely performed on a contract with the Department of Homeland Security.
The United States filed suit against Heldreth, Farmer and Lighthouse alleging that the defendants knowingly breached their contract to build and operate a basecamp to house and feed first responders who went to New Orleans to help with rescue and recovery efforts after Hurricane Katrina. The complaint alleged that the defendants made false statements to FEMA employees in order to be paid prematurely. The defendants then failed to build and staff a basecamp sufficient to house the number of first responders called for in their contract.
The settlement agreements require Heldreth, Farmer and Lighthouse to accept a judgment of $4 million less the approximately $1.3 million previously garnished by the government.
"This settlement demonstrates that the United States will aggressively pursue those who exploit the taxpayers in times of disaster,"said Tony West, Assistant Attorney General for the Civil Division.
"Protecting disaster relief funds from fraud, waste or abuse of any kind has been, and remains, a top priority of this office and of the Hurricane Katrina Fraud Task Force" said David R. Dugas, U.S. Attorney for the Middle District of Louisiana and Executive Director of the National Center for Disaster Fraud. "This settlement is part of the ongoing efforts to ensure that disaster relief funds are not improperly diverted from their intended, and critically important, purpose."
This investigation and litigation was conducted by the U.S. Attorney’s Office for the Middle District of Louisiana, the Civil Division of the U.S. Department of Justice, with the assistance of the Office of Inspector General of the Department of Homeland Security.
The Civil Division of the U.S. Department of Justice, the U.S. Attorney’s Office for the Middle District of Louisiana and the Office of Inspector General for the Department of Homeland Security are members of the Justice Department’s Hurricane Katrina Fraud Task Force.
Cast Iron Pipe Manufacturer Sentenced for Environmental Crimes and Worker Safety ViolationsRead the Press Release
WASHINGTON—Atlantic States Cast Iron Pipe Co. a Phillipsburg, N.J.-based division of McWane Inc. of Alabama was sentenced today to pay a fine of $8 million for violations of environmental and worker safety laws as well as obstructing the federal investigation of its conduct, the Justice Department announced.
U.S. District Judge Mary L. Cooper for the District of New Jersey also sentenced the company to serve four years of probation, during which it will be subject to oversight by a court-appointed monitor. The monitor, who has yet to be named, will report twice annually to the court on the company’s lawful operation and adherence to environmental and worker health and safety regulations.
Judge Cooper also required an additional condition of probation that specific top managers at the Phillipsburg plant and at McWane headquarters in Birmingham, Ala. – including the chairman and president – read the entire transcripts from the sentencings this week of the four managers who were convicted along with the company.
The sentencing of the company followed sentencings this week of four former Atlantic States managers to federal prison terms. Those sentences were: 70 months for former plant manager John Prisque; 41 months for former human resources manager Scott Faubert; 30 months for former maintenance superintendent Jeffrey Maury; and six months for former Atlantic States finishing department head Craig Davidson.
"These sentences mete out just punishment for the company and its employees’ disregard of the law which was demonstrated during the longest environmental crimes trial in this country’s history for multiple violations of worker safety and environmental protection laws," said Associate Attorney General Thomas Perrelli. "This case should serve as an example for company execs and plant operations managers —ignoring environmental laws and disregard for workers’ lives and limbs will be met with prosecution and stiff sentences including multi-million dollar fines and prison time."
"We are gratified," said Ralph J. Marra, Jr., Acting U.S. Attorney for the District of New Jersey, "that just punishment has been imposed and we hope these sentences tell McWane one thing in no uncertain terms: once and for all end the practices that have been so destructive to workers, their families and the environment."
"These sentences show that senior managers, as well as companies, will be prosecuted when they break the law," said Catherine McCabe, Acting Assistant Administrator for EPA’s Office of Enforcement and Compliance Assurance. "The managers had an obligation to run the facility safely and legally; instead, they committed environmental crimes that polluted the air and water."
"The jail time imposed against the Atlantic States managers and the $8 million fine imposed on the company send a clear message of zero tolerance to employers who choose to disregard their basic, legal obligation to protect the safety and health of their workers," says Robert D. Kulick, OSHA Regional Administrator in New York. "OSHA will continue to take action, alone and in partnership with other agencies, to bring to justice those companies and executives who blatantly violate worker safety and health laws and endanger their employees."
"Some people don’t think environmental crimes are as significant as public corruption, fraud or violence," said Weysan Dun, Special Agent in Charge of the FBI in Newark, N.J. "Well, I want the public to know that we at the FBI take violations of our environmental laws very seriously because they impact our communities both now and in years to come. I offer my congratulations to all of our partners in this case."
Following a seven-month trial, a jury on April 26, 2006 convicted Atlantic States and the four managers of engaging in an eight-year conspiracy to pollute the air and Delaware River in violation of the Clean Air and Clean Water Acts, expose its employees to dangerous conditions, and impede and obstruct federal regulatory and criminal investigations. A fifth defendant was acquitted at trial.
The jury verdicts affirmed the government’s charges that Atlantic States and the managers regularly discharged oil and other pollutants into the Delaware River, willfully polluted the air and rigged emissions tests, concealed serious worker injuries from health and safety inspectors, and maintained a dangerous workplace that contributed to multiple injuries, including severe burns, broken bones and amputations and the death of one employee at the Phillipsburg plant. The company and individual defendants also were convicted of obstructing environmental and worker safety investigations.
The convictions then represented the fifth time in two years that a McWane division either pleaded guilty or was convicted in federal court of environmental and worker safety crimes and obstruction. The notorious practices at the plant, in which worker health and safety and reasonable environmental protections were sacrificed for the goal of maximum production and profits, became known as the "McWane Way" at the Phillipsburg and other McWane plants in the U.S. and Canada.
The company and each of the defendants were convicted of the main conspiracy count in a 34-count indictment. Atlantic States was convicted of a total of 32 of 34 counts, which also included five counts of making materially false statements to state and federal environmental agencies and the federal OSHA; four counts of obstructing OSHA investigations; and 22 counts of violating the Clean Water Act and one count of violating the Clean Air Act.
The privately held McWane Inc. and its divisions are among the largest manufacturers in the world of ductile iron pipe with more than a dozen plants in the United States and Canada. McWane’s products are used primarily for municipal and commercial water and sewer installations.
The case was prosecuted by Ralph J. Marra Jr., Acting U.S. Attorney for the District of New Jersey, Norv McAndrew, former Assistant U.S. Attorney, Andrew Goldsmith Senior Trial Attorney and First Assistant Chief for the Justice Department’s Environmental Crimes Section and Deborah Harris, Senior Trial Attorney from the Environmental Crimes Section.
The case was investigated by special agents of the EPA, under the direction of William V. Lometti, Special Agent in Charge of EPA’s Criminal Investigation Division in New York; staff of OSHA’s Avenel, N.J. office, under the direction of Robert D. Kulick, OSHA Regional Administrator in New York; the New Jersey Department of Environmental Protection, under the direction of Commissioner Mark N. Mauriello; special agents of the FBI, under the direction of Special Agent in Charge Weysan Dun in Newark; the New Jersey Department of Law and Public Safety, Division of Criminal Justice, under the direction of Attorney General Anne Milgram; and the Phillipsburg Police Department.
Attorney General Eric Holder Announces $100 Million in Recovery Act Funds for Victims Assistance and CompensationRead the Press Release
WASHINGTON – Attorney General Eric Holder announced today that the Department of Justice is beginning the process of awarding $100 million in Recovery Act funds to victim assistance and compensation programs. The Attorney General made the announcement in his remarks at the National Crime Victims’ Rights Week Awards Ceremony where he recognized 10 individuals and programs for their service to crime victims.
Of the $100 million in Recovery Act funds, the Department of Justice will begin the process of distributing $95 million through state formula grants to victim assistance and compensation programs today. In addition to these grants, the Department will award an additional $5 million in Recovery Act discretionary funds to provide training and technical assistance and to support demonstration programs in areas ranging from child abuse to sexual assault to victim services in corrections later this year. State allocations can be found at: http://www.ojp.usdoj.gov/ovc/fund/recoverycvfa2009.html
"We all owe a debt to these honorees and to the countless other advocates across the country who tirelessly work to protect victims’ rights," Attorney General Eric Holder said. "The Department of Justice is committed to fighting for victims’ rights, which is why I’m so pleased we’ve been able to dedicate such a substantial amount of funds from the Recovery Act to assist such advocates in their invaluable work."
These annual awards are presented as a prelude to the nation’s observance of National Crime Victims’ Rights Week, April 26-May 2, 2009. This year’s theme—"25 Years of Rebuilding Lives: Celebrating the Victims of Crime Act"—highlights the important role this law has played in serving victims.
The Victims of Crime Act was passed in 1984 and one of the innovative aspects of this landmark legislation was the Crime Victims Fund. Fines and penalties from federal criminals—not tax dollars—are paid into the fund to support victim assistance and compensation programs. Since 1984, more than $6.9 billion from the Crime Victims Fund has been distributed. Today, 4,200 local organizations provide counseling, courtroom advocacy, temporary housing and other services to crime victims. The Fund also has been used to aid victims of mass casualty violence, including the shootings at Virginia Tech and at the American Civic Association in Binghamton, N.Y.
The fund is administered by the Department’s Office of Justice Programs (OJP) through its Office for Victims of Crime (OVC), which organized today’s awards ceremony and the Candlelight Observance held yesterday in Washington, D.C. In addition to the Attorney General, others at the Candlelight Observance included: Lanny Breuer, Assistant Attorney General, Criminal Division; Laurie O. Robinson, Acting Assistant Attorney General, OJP; Joye E. Frost, Acting Director, OVC; and Quincy A. Lucas, a victims advocate and founder of Witney’s Lights Inc.
The recipients of today’s awards were nominated by their colleagues in the victim service and criminal justice fields to recognize their courageous responses in the aftermath of a crime and their professional efforts to better serve the needs of victims with disabilities, to design and implement curricula and tools for victim service providers and to ensure that victims receive the services that they need.
National Crime Victim Service Award: Honors extraordinary efforts in direct service to crime victims.
Recipient: The Boston Area Rape Crisis Center (BARCC), Boston, Mass., for establishing itself as a model program for other rape crisis centers across the country, many of which have incorporated BARCC’s programs, partnerships and trainings into their programs.
Recipient: Kenneth Barnes, Washington, D.C., for his dedication following his son’s violent death to reducing gun violence and its devastating impact on families and communities. Mr. Barnes founded Reaching Out to Others Together (ROOT) in 2002 to advocate, educate and intervene on behalf of homicide victims, as well as to motivate and mobilize communities to take proactive measures to reduce gun violence crimes.
Award for Professional Innovation in Victim Services: Recognizes a program, organization or individual that has helped to expand the reach of victims’ rights and services.
Recipient: Lafourche Parish Sheriff’s Office, Police Social Services (PSS), Thibodaux, La., for their commitment to coordinated community responses with advocates, counselors, prosecutors, social workers and the judicial system by going to great lengths to ensure that victims of crime are given immediate and long-term assistance. PSS provides crisis intervention from first response throughout the criminal justice process and serves 1,200 to1,400 victims per year.
Team members include: Lt. Karla S. Beck, Deanna Dufrene, Sgt. Valerie Day, Deputy Dale Savoie, Deputy Walter Tenney, Deputy Delaune Boudreaux, Advocate Tamera Joseph, Deputy Rebecca Shaver, Deputy Amy Guillot, Deputy Pam Guedry and Reservist Bernard Lafaso.
Volunteer for Victims Award: Honors individuals for their uncompensated efforts to reach out to victims.
Recipient: Barbara Ann Skudlarick, Blaine, Wash., for her volunteer work serving victims of crime since 1997, including her instrumental efforts to bring victim services to her community. Ms. Skudlarick, a retired R.N. and a retired flight attendant, also served as a member of the Aviation Family Support Team and flew to Washington, D.C. after the Sept. 11, 2001 attacks, to support surviving family members of those who were killed in the attack on the Pentagon.
Special Courage Award: Recognizes extraordinary bravery in the aftermath of a crime or courageous act on behalf of a victim or potential victim.
Recipient: Gracia Burnham, Rosehill, Kan., who served with her husband Martin as missionaries with the New Tribes Mission in the Philippines for more than 15 years. In May 2001, the couple decided to spend a night at the Dos Palmas Island Resort in the Palawan area of the Philippines to celebrate their 18th wedding anniversary. They were awakened by armed gunmen affiliated with the terrorist organization Abu Sayyaf Group (ASG). The Burnhams were among 20 hostages seized that morning and forced into a waiting motorboat. Throughout their terrifying ordeal which lasted more than a year they both exhibited remarkable strength and courage. On June 7, 2002, members of the Armed Forces of the Philippines found their encampment and a firefight ensued in which Mr. Burnham was killed and Mrs. Burnham was shot in the leg, but survived and was rescued. Since that time, Mrs. Burnham has dedicated herself to pursuing justice against the terrorists who held them captive.
Allied Professional Award: Recognizes an individual or organization outside the victim assistance field for services or contributions to the victims’ field.
Recipient: Daniel Man, M.D., Boca Raton, Fla., for his work on a unique model program that helps physically injured victims of domestic violence restore their lives by reconstructing battered faces mutilated by acts of violence.
Ronald Wilson Reagan Public Policy Award: Honors an individual whose leadership, vision and innovation results in significant changes to public policy and practice benefiting crime victims.
Recipient: William Van Regenmorter, Hudsonville, Mich., for authoring the Michigan Victims Bill of Rights Constitutional Amendment, which became law in 1988, as well as successive victim-related legislation. He also is the founder of the Michigan Crime Victim Foundation, which serves as a financial resource of last resort for victims who lack insurance or do not qualify for victim compensation. Mr. Van Regenmorter, a retired state legislator, is considered by many to be the "Father of Victims’ Rights" in the state of Michigan.
Federal Service Award: Honors exceptional contributions and extraordinary impact on behalf of victims in Indian Country, on military installations, in national parks or in other areas governed by federal jurisdiction.
Recipient: U.S. Immigration and Customs Enforcement, Senior Management Team, Washington, D.C., for recognizing the critical role that victims of crime play in the federal criminal justice process and embracing a victim-centered approach to investigations. Team members include: Marcy Forman, Raymond Parmer, Jr., James Hayes, William Reid, Michael H. Neifach, Gary W. Schenkel, Traci Lembke, Roger Applegate and Brian Moskowitz.
Recipient: Frank Marion, U.S. Postal Inspection Service, Washington, D.C., for 35 years of unwavering commitment and support to thousands of crime victims with information, referrals and support within the federal justice system.
Crime Victims Fund Award: Recognizes outstanding work in pursuit of federal criminal offenders and in the collection of fines, penalty fees, forfeited bail bonds and special assessments that constitute the Crime Victims Fund and victim restitution.
Recipient: U.S. Attorney’s Office, Eastern District of North Carolina, Financial Litigation Unit, Raleigh, N.C., for helping to restore victims’ rightful ownership from what has been taken away, lost or surrendered from federal criminal defendants. Team members include: S. Katherine Burnette, Sarah Aman, Margaret Davis, Claire Farland, Charlene Harris and David Stearns.
More information about National Crime Victims’ Rights Week, the Crime Victims Fund, and victim assistance and compensation programs is available at: www.ojp.gov.
23 April 2009
Kansas Man Charged with Immigration Crimes in Connection with 1994 Genocide in RwandaRead the Press Release
WASHINGTON - Lazare Kabaya Kobagaya, 82, of Topeka, Kan., was arrested today on charges of naturalization fraud and misuse of an alien registration card, Assistant Attorney General Lanny A. Breuer of the Criminal Division, Acting U.S. Attorney Marietta Parker for the District of Kansas and U.S. Immigration and Customs Enforcement (ICE) Acting Assistant Secretary John P. Torres announced.
According to the indictment, Kobagaya allegedly participated in genocidal activities during the 1994 Rwandan conflict including mobilizing attackers to commit arson and murder. Kobagaya is alleged to have failed to disclose his alleged participation in these activities during his immigration and naturalization processes.
A grand jury in Wichita, Kan., returned a sealed indictment against Kobagaya on Jan. 13, 2009, charging him with one count of unlawful procurement of naturalization and one count of misuse of an alien registration card. The indictment also notifies Kobagaya that he is subject to automatic revocation of his citizenship if convicted for unlawful procurement of naturalization. The indictment was unsealed today after his initial appearance before a federal magistrate judge.
If convicted of unlawful procurement of citizenship, Kobagaya faces a maximum of 10 years in prison as well as automatic revocation of his U.S. citizenship and a fine of up to $250,000. If convicted of fraud and misuse of an alien registration card, he faces a maximum of 10 years in prison and a fine of up to $250,000.
Kobagaya is scheduled to appear before Magistrate Judge Donald Bostwick of the U.S. District Court for the District of Kansas on April 24, 2009, at 10:00 a.m. CDT for his initial appearance.
The case is being prosecuted by Senior Trial Attorneys Michael E. Barr, Christina P. Giffin and Steven C. Parker from the Criminal Division’s Office of Special Investigations (OSI) and Assistant U.S. Attorney Alan Metzger for the District of Kansas. The investigation is being handled jointly by OSI and ICE.
The charges in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
Individual 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 an indictment today charging Robert Jeffery, 55, 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 indictment, from October 2007 through May 2008, Jeffery, a U.S. citizen residing in the Philippines, and his 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 Jeffery served as the lead escort for the fuel trucks for several months and illegally retrieved thousands of gallons of fuel from the VBFP. 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. 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.
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 Attorney Andrew Gentin. 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.
22 April 2009
Texas Man Pleads Guilty on Federal Civil Rights ChargesRead the Press Release
WASHINGTON – Brandit Franco, 33, a former deputy with the Bexar County Sheriff’s Office, pleaded guilty to a civil rights charge today in federal court in San Antonio, Texas, for using excessive force against a prisoner while working as a detention officer at the county jail, the Justice Department announced. Franco faces a maximum term of imprisonment of 10 years and a fine of $250,000. A sentencing hearing is set for July 24, 2009.
According to documents filed in court, Franco acknowledged that on the evening of Oct. 18, 2006, he willfully used more force than was necessary when he responded to noisy prisoners inside of a locked holding cell by entering the cell and striking a pretrial detainee. As a result of Franco’s assault, the prisoner sustained injuries to his head that necessitated medical treatment. By pleading guilty, Franco acknowledged that he deprived the prisoner of his constitutional right not to be deprived of liberty without due process, which includes the right to be free from the use of excessive force by a law enforcement officer.
"Law enforcement officers take an oath to uphold the law, not to violate it, as this officer did when he abused his authority over a man in his custody," said Acting Assistant Attorney General Loretta King of the Civil Rights Division.
The FBI investigated this case, and it was prosecuted by Gerard V. Hogan and James D. Walsh with the Justice Department’s Civil Rights Division.
Maryland Commercial Fisherman Sentenced to Prison for Illegal Harvesting of RockfishRead the Press Release
WASHINGTON—Thomas L. Hallock, a commercial fisherman licensed in Maryland, was sentenced today in U.S. District Court in Greenbelt, Md., to 12 months in prison, for illegally overfishing striped bass also known as rockfish, the Justice Department announced.
He was also fined $4,000 and ordered to pay restitution in the amount of $40,000 to the National Fish and Wildlife Foundation to the benefit of the Chesapeake Bay Striped Bass Restoration Account.
"Today’s prison sentence should serve as a warning to fishermen and wholesalers who may consider undercutting the market and risking the continuation of the striped bass population. You will be prosecuted and you face the possibility of serving time," said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. "Fishing limits in the Chesapeake Bay and Potomac River are designed to protect the healthy sustainable population of striped bass and ensure a viable fishery up and down the eastern seaboard."
"If fishermen obey the rules, the rockfish population can be sustained forever," said Rod J. Rosenstein, U.S. Attorney for the District of Maryland. "If we allow overfishing, the rockfish population could be wiped out very quickly."
Hallock of Catharpin, Va., pleaded guilty on Feb. 19, 2009, to falsely recording the amount of striped bass that he harvested from 2003 to 2007 with the assistance of a Maryland designated fish check-in station. In each year, he failed to record some of the striped bass that was caught or recorded a lower weight of striped bass than was actually caught. Hallock and the check-in station operator would also falsely inflate the actual number of fish harvested. By under-reporting the weight of fish harvested, and over-reporting the number of fish taken, the records would make it appear that the defendants had failed to reach the maximum poundage quota for the year, but had nonetheless run out of tags. As a result, the state would issue additional tags that could be used by the defendants allowing them to catch striped bass above their maximum poundage quota amount. Hallock admitted to overfishing 68,442 pounds of rockfish that had a fair market retail value of $342,210.
In a related matter, charges were filed on April 20, 2009, against the fish wholesaler and its owner who operated the check-in station that assisted Hallock and others in violating the law. Golden Eye Seafood LLC and owner, Robert Lumpkins of St. Mary’s County, Md., were charged with four felony counts including conspiracy to violate the Lacey Act and three substantive violations of the Act. According to the charging document, Golden Eye Seafood and Lumpkins also purchased fish that were outside the legal size limit from an undercover agent and sold those fish to purchasers in New York, Virginia, and California.
Golden Eye and Lumpkins also conspired to falsely record and verify lower weights of and higher numbers of the commercially harvested rockfish than were actually being caught. By increasing the number of fish allegedly checked-in and decreasing the weight, the defendants made it appear as if they and other Maryland fisherman were using more tags and catching lower weights of fish. They in turn would request more tags as it appeared they had not reached their poundage quota.
Additionally, John Evans, a commercial fisherman who operated in St. Mary’s County and the surrounding waters of the Chesapeake Bay, was charged with a violation of the Lacey Act for overfishing striped bass.
The charges contained in the criminal information are not a finding of guilt. An individual charged by criminal information is presumed innocent unless and until proven guilty in a court of law. The Lacey Act carries a maximum penalty of five years in prison and a fine of up to $250,000 per offense.
Sentencing dates for the remaining six commercial fishermen who have pleaded guilty to similar charges as Hallock are listed below.
Charles Quade, April 27, 2009, 9:30 AM
Thomas L. Crowder, April 28, 2009, 9:30 AM
John W. Dean, April 30, 2009, 9:30 AM
Keith A. Collins, May 28, 2009, 9:30 AM
Kenneth Dent, July 2, 2009, 9:30 AM
Jerry Decatur, Sr., July 1, 2009, 9:30 AM
Cannon Seafood, a Washington, D.C., fish wholesaler, its owner, Robert Moore Sr. and his son Robert Moore Jr. are scheduled for sentencing on May 8, 2009, at 9:30 AM in U.S. District Court for the District of Columbia. Two fishermen, Joseph Peter Nelson Jr. of Great Mills, Md., and his father Joseph Peter Nelson of Avenue, Md., have been indicted in the District of Maryland and are awaiting trial.
As a result of the investigation and prosecution, two fish wholesalers and a total of 14 individuals have been charged, including today’s defendants.
The case is being prosecuted by Assistant U.S. Attorney Stacy Dawson Belf for the District of Maryland and Senior Trial Attorney Wayne Hettenbach of the Justice Department’s Environmental Crimes Section.
Justice Department Settles Lawsuit Against Grand Forks County, North Dakota, to Enforce the Employment Rights of North Dakota Army National Guard MemberRead the Press Release
WASHINGTON – The Justice Department today announced that it has reached a settlement that will resolve its lawsuit filed against Grand Forks County, N.D., on behalf of Suzanne L. Halverson in accordance with the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA), if approved by the U.S. District Court in Fargo. USERRA prohibits employment discrimination against individuals because of their service in the uniformed services.
The complaint, filed in January 2009, alleged that Grand Forks County violated USERRA by taking into consideration Ms. Halverson’s military service obligations when it denied her promotion to a permanent juvenile detention officer position in the county’s correctional center. Under the terms of the settlement, which is called a consent decree, Grand Forks County is required to pay Ms. Halverson, who is no longer working at the correctional center, a monetary award of $20,000 for lost wages.
"No person should fear being penalized in their civilian careers because they serve in the military," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "This consent decree demonstrates the Department’s commitment to the vigorous enforcement of federal laws that protect the employment rights of men and women who serve in the military."
The Department’s Civil Rights Division places a high priority on 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 .
Former Manager of Michigan Wastewater Treatment Company Sentenced to Prison for Illegally Discharging Untreated Liquid WastesRead the Press Release
WASHINGTON— Michael Panyard, the former general manager of Comprehensive Environmental Solutions Inc. (CESI), a company that operates an industrial waste treatment and disposal facility in Dearborn, Mich., was sentenced today to 15 months in prison by U.S. District Court Judge Victoria A. Roberts of the Eastern District of Michigan, the Justice Department announced. He was also sentence to two years of supervised release and was ordered to participate in a comprehensive drug treatment program.
Panyard of Pleasant Ridge, Mich., was convicted following a three week trial in October 2008, of nine counts, including one conspiracy count, two counts of violating the Clean Water Act and six counts of making false statements in connection with illegal discharges of millions of gallons of untreated liquid wastes from the facility.
Charles Long of Brownstown, Mich., also a former plant manager, was convicted of conspiracy and a Clean Water Act violation. Earlier this month Long was sentenced to 24 months in prison followed by two years supervised release. Bryan Mallindine of Carlsbad, Calif., the former chief executive officer, was convicted of one count of negligently bypassing the facility’s required pretreatment system, a misdemeanor violation of the Clean Water Act. In March 2009, he was sentenced to three years probation, including three months home confinement. Another former plant manager, Don Kaniowski, also was sentenced in March to three years probation following his plea to a felony Clean Water Act violation. Kaniowski provided substantial assistance to the government in the course of its investigation.
According to the evidence presented during the trial, CESI had a permit to treat liquid industrial waste brought to the facility from throughout the Midwest and Canada, through a variety of processes, and then discharge it into the Detroit sanitary sewer system. Liquid industrial wastes were stored at the facility in twelve large above-ground tanks capable of holding more than 10 million gallons.
During the period from January 2001 to June 2002, facility employees routinely bypassed the facility’s treatment system in order to discharge untreated liquid wastes directly into the sanitary sewer system. During most of this time, the facility had no operable equipment to treat incoming liquid wastes and the 10 million gallon tank farm was full with virtually no capacity to store additional liquid wastes. Nonetheless, the facility continued to accept more than 16 million gallons of liquid industrial waste-streams for purported treatment and disposal. Because the facility had no space available for this additional waste, nor equipment to treat it, company employees discharged nearly 13 million gallons of untreated liquid waste into the sanitary sewer in violation of the Clean Water Act, the facility’s permit, and the consent order under which the facility operated.
Evidence at trial further showed that the defendants took steps to conceal the lack of treatment from customers and regulatory officials, including Detroit Water and Sewerage Department personnel, through false statements and tampering with legally required compliance samples.
"Self-regulation is the backbone of all of our environmental compliance programs, including our Clean Water Act pretreatment and National Pollution Discharge Elimination System permit programs," said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. "Without good faith efforts at compliance with pretreatment requirements and honest reporting when violations occur, even our best efforts at preserving our nation’s waters ultimately will fail. The sentences imposed in this case emphasize the powerful deterrent value of criminal enforcement efforts aimed at ensuring compliance with laws and regulations designed to protect the environment."
Terrence Berg, U.S. Attorney for the Eastern District of Michigan said, "The Clean Water Act protects our waters from being dumping grounds for untreated waste. Today’s sentencing demonstrates that the government or public will not tolerate those who choose to commit environmental crimes. My office will continue to aggressively prosecute the intentional pollution of one of Michigan’s most sacred natural resources."
"The defendant made the decision to risk harming the environment and then lied about it, all in an effort to ‘cut corners’ and make illegal profits," said Randy Ashe, Special Agent in Charge of Environmental Protection Agency’s Criminal Investigation Division in Chicago. "His sentence is a clear reminder that managers of companies, as well as the company itself, will be prosecuted when they commit environmental crimes."
On Sept. 4, 2008, CESI pleaded guilty to related charges and agreed to pay a fine of $600,000 plus an additional $150,000 to fund a community service project for the benefit, preservation and restoration of the environment and ecosystems in the waters adjoining the Rouge River and the Detroit River. In addition to accepting responsibility for its past misconduct, CESI, which is under new management, has taken a number of steps during the last several years to install new equipment and systems to treat liquid industrial waste before it is discharged to the sewer.
As a condition of probation, CESI has agreed to abide by the terms of a consent order with the Michigan Department of Environmental Quality for the cleanup of the facility, at an estimated cost of about $1.5 million that includes the proper disposal of the liquid waste previously stored in the facility’s tank farm. CESI has further agreed to develop, adopt, implement and fund an environmental management system/compliance plan at its facility. This will include an annual program to train employees on environmental compliance and ethics, to ensure that all CESI employees understand the requirements imposed by the facility’s discharge permit.
The company, the last defendant to be sentenced in the case, has a hearing scheduled for May 11, 2009 at 2 P.M.
The case was investigated by special agents of the EPA Criminal Investigation Division, with the assistance of the Federal Bureau of Investigation, as a part of the Detroit Multi Agency Environmental Crimes Task Force. The case is being prosecuted by Assistant U.S. Attorney Mark Chutkow, Senior Counsel James Morgulec of the Justice Department’s Environment and Natural Resources Division and EPA Regional Criminal Enforcement Counsel David Mucha.
Federal Court Shuts Down Dallas Tax PreparerRead the Press Release
WASHINGTON - A federal court in Dallas has permanently barred a Garland, Texas, man from preparing federal tax returns for others. Lucky Ngo, who operated "Lucky’s Translation and Tax Service" and "Water Inn," prepared over 6,100 federal tax returns for customers since 2004, according to the government complaint filed in the civil injunction case. Ngo agreed to the permanent injunction order.
The government lawsuit alleged that Ngo had a long history of preparing false tax returns claiming improper deductions for non-deductible personal expenses. According to the complaint, Internal Revenue Service (IRS) officials twice met with Ngo and explained to him that the deductions he was claiming were improper, but Ngo continued to claim improper deductions. Ngo’s conduct allegedly caused over $9.6 million dollars in harm to the United States.
"The Justice Department and Internal Revenue Service are working together closely to shut down tax preparers who refuse to comply with the tax laws," said John DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division.
DiCicco thanked Grayson Hoffman, the Justice Department trial attorney who handled the case, and Chris Hendrix, a revenue agent with the IRS’s Small Business/Self-Employed Division, who conducted the investigation.
Since 2001, the Justice Department’s Tax Division has obtained more than 385 injunctions against tax fraud promoters and tax return preparers. Information about these cases is available on the Justice Department’s Web site, as is information about the Justice Department’s Tax Division.
Antitrust Division Senior Leadership NamedRead the Press Release
WASHINGTON — The Department of Justice’s Antitrust Division today announced the appointment of its new leadership team including the Chief of Staff, four Deputy Assistant Attorneys General, and a Special Counsel for Competition Policy. Two Deputies will oversee civil matters, one Deputy will oversee economic analysis and one Deputy will oversee international, policy and appellate issues.
"This is an outstanding team of dedicated and highly regarded professionals who are well respected within their fields of expertise," said Christine A. Varney, Assistant Attorney General in charge of the Department’s Antitrust Division. "This dynamic team of individuals has the vision, intellect and experience to ensure that the Antitrust Division aggressively pursues all areas of antitrust enforcement in order to protect American consumers from anticompetitive harm."
The leadership team includes:
Sharis Arnold Pozen, Chief of Staff and Counsel —Before she came to the Department in February 2009, Pozen was a partner at Hogan & Hartson’s Antitrust, Competition, and Consumer Protection Group where she worked from1995 to February 2009, on a variety of antitrust matters in the technology and healthcare industries, and served as Practice Group Director for the Washington, D.C. office. She has counseled clients on a wide range of antitrust and consumer protection matters as well as issues pertaining to mergers and acquisitions, joint ventures, and trade association matters. Prior to joining Hogan & Hartson, Pozen worked for five years at the Federal Trade Commission (FTC) as an Attorney Advisor to then Commissioners Varney and Yao, as Assistant to the Director of the Bureau of Competition, and as staff attorney. Pozen received her B.A. from Connecticut College in 1986 and her J.D. from Washington University in 1989.
Molly S. Boast, Deputy Assistant Attorney General for Civil Matters —Boast, who is expected to arrive at the Department in May, is a seasoned antitrust veteran with extensive antitrust and management experience. Since 2001, she has been a partner at the New York law firm of Debevoise & Plimpton LLP where she leads the antitrust practice group. From July 1999 to June 2001, Boast was Senior Deputy Director and Director of the FTC’s Bureau of Competition. During that time, she had management responsibility for merger and civil nonmerger Commission litigation and investigations, and has experience in competition issues in the energy and pharmaceuticals industries. Boast also served as the FTC’s representative to the European Community/FTC/Department of Justice Mergers Working Group. From 1987 to 1999, she worked at the New York law firm of LeBoeuf, Lamb, Greene & MacRae where she was head of the litigation department and a member of the firms’ Steering Committee. She has served in various positions within the American Bar Association’s Sections of Antitrust and Litigation. Boast received her B.A. in 1970 from the College of William and Mary, her M.S. in 1971 from the Columbia University School of Journalism, and her J.D. in 1979 from the Columbia University School of Law.
William Cavanaugh Jr., Deputy Assistant Attorney General for Civil Matters —Cavanaugh, who is expected to arrive at the Department in May, is a highly experienced and lauded antitrust litigator. Since 1985, Cavanaugh has been with the New York law firm of Patterson, Belknap Webb & Tyler LLP where he has served as the firm’s Co-Chair, Chair of the Litigation Department and a Litigation Partner since 1991. He has extensive trial and litigation experience in complex antitrust, patent and commercial matters. From 1981 to 1985, Cavanaugh was a Litigation Associate handling complex product liability, insurance coverage and general commercial matters at the New York law firm of Rivkin Radler LLP. He is a Fellow of the American College of Trial Lawyers, was named as one of the Best Lawyers in America for Antitrust Law and Commercial Litigation, and was named as one of New York’s "Super Lawyers" for Antitrust Litigation. He received his B.S. in 1977, from St. John’s University and his J.D. in 1980 from St. John’s University School of Law.
Carl Shapiro, Deputy Assistant Attorney General for Economic Analysis —Shapiro, who arrived at the Department in March, is a leading scholar in economics and brings to the Department a wealth of experience on issues, including patents, intellectual property and licensing, network economics, and unilateral effects in mergersShapiro is taking a leave of absence from the University of California at Berkeley, where he is Transamerica Professor of Business Strategy in the Haas School of Business and a Professor of Economics. He has been at the Haas School of Business since 1990. Shapiro was previously the Antitrust Division’s Economics Deputy from August 1995 to June 1996, where he provided economic analysis on a variety of antitrust cases, including Microsoft, NASDAQ and several mergers. Shapiro had been a Senior Consultant with CRA International, an economic consulting company. He was vice-chair of the American Bar Association Antitrust Section’s Economics Committee from 1995-1998. Shapiro taught at the Woodrow Wilson School and the Department of Economics at Princeton University for 10 years. He has published one book, "Information Rules: A Strategic Guide to the Network Economy," and numerous articles in the areas of industrial organization, competition policy, patents, network economics and the economics of innovation and competitive strategy. Shapiro received his Ph.D. in Economics from the Massachusetts Institute of Technology (MIT) in 1981. He also earned B.S. degrees in mathematics and economics from MIT as well as an M.A. in mathematics from UC Berkeley.
Philip J. Weiser, Deputy Assistant Attorney General for International, Policy and Appellate Matters —Weiser, who is expected to arrive at the Department in July, is an Antitrust Division veteran, and is currently a Professor and Associate Dean for Research at the University of Colorado, where he has taught since January 1999, in the School of Law and in the Interdisciplinary Telecommunications Program. During his tenure at the Department, Weiser will be on a leave of absence from the University of Colorado. Weiser has also served as a visiting Professor at the New York University School of Law (2008) and the University of Pennsylvania School of Law (2006). From August 2001 to June 2002, he was a Law and Public Affairs Program Fellow at Princeton University, one of only six law Professors selected as a scholar-in-residence. Weiser is the Founder and Executive DirectorofSilicon Flatirons Center for Law, Technology, and Entrepreneurship, which focuses on spurring interdisciplinary engagement, facilitating community outreach, and supporting interest in the intersection of technology, policy and business. From September 1996 to August 1998, Weiser was a Senior Counsel to Joel Klein, Assistant Attorney General of the Department’s Antitrust Division, where he advised Klein on antitrust policy in the telecommunications industry as well as participated in civil investigations. He served this fall as the lead agency reviewer of the FTC for the Presidential Transition Team, serves as the co-Chair of the Colorado Innovation Council, was a Special Master for the Colorado Public Utilities Commission, and was a Special Counsel to Cablevision Systems Corporation. Weiser clerked for Justices Byron R. White (Ret.) and Ruth Bader Ginsburg at the U.S. Supreme Court from September 1995 to August 1996. He also clerked for Judge David M. Ebel, Tenth Circuit Court of Appeals, from September 1994 to August 1995. He has published two books and numerous articles on and has regularly taught in the areas of competition policy and technology law. Weiser graduated with high honors from Swarthmore College in 1990 and with high honors from the New York University School of Law in 1994.
Gene Kimmelman, Chief Counsel for Competition Policy and Intergovernmental Relations —Kimmelman, who arrived at the Department in April, was most recently Vice President for Federal and International Affairs at Consumers Union (CU). During his tenure at CU, from 1995 to 2009, he directed CU’s federal and international policy programs. Kimmelman has extensive knowledge of deregulation, market structure and consumer protection issues. He is a recognized expert in a wide variety of areas, including telecommunications, Internet/media policy, product liability and antitrust law. He has represented consumers during the break up of AT&T, consideration of the Telecommunications Act of 1996, major media and telecommunications mergers, and at numerous congressional hearings. Prior to his employment at CU, from 1993 to 1995, Kimmelman served as Chief Counsel and Staff Director for the Antitrust Subcommittee of the U.S. Senate Judiciary Committee. Previous to that, from 1984 to 1993, he was Legislative Director for the Consumer Federation of America (CFA) where he directed their legislative and regulatory programs. In 1981, he began his career as a staff attorney for Public Citizen’s Congress Watch. Kimmelman received his B.A. from Brown University in 1977 and his J.D. from the University of Virginia in 1981. He studied in Denmark as a Fulbright Fellow at Copenhagen University’s graduate program on the public sector.
21 April 2009
Illinois Refuse Container Repair Company Executives Indicted in Conspiracy to Defraud the City of ChicagoRead the Press Release
WASHINGTON — A Chicago grand jury indicted the president and vice president of an Illinois refuse disposal container repair company for engaging in a conspiracy and scheme to defraud the city of Chicago on a contract for the repair of refuse carts, the U.S. Department of Justice announced today. This is the first case to be brought in the Department’s ongoing antitrust investigation into the refuse cart repair industry.
The four-count indictment filed today in the U.S. District Court in Chicago charged Douglas E. Ritter, the company president, and Steven Fenzl, the company vice president, with conspiring to defraud the city of Chicago on a July 2005 contract. Ritter and Fenzl are also charged with mail and wire fraud.
According to the charges, Ritter and Fenzl’s scheme included misrepresenting the number of legitimate, competitive bids submitted to the city by, in addition to submitting a bid on behalf of their own company, fraudulently orchestrating the submission of bids from three additional companies, including determining the prices of those bids and submitting fraudulent documents with them. Additionally, as part of the scheme to defraud the city, Ritter and Fenzl made fraudulent certifications and omissions regarding the company’s use of Women and Minority Business Enterprise program subcontractors, and thereafter fraudulently collected payments from the city intended for those subcontractors. As part of the conspiracy and scheme to defraud, the conspirators used, or caused to be used, the U.S. Postal Service, FedEx Corporation and interstate wires.
"Schemes to subvert the competitive bidding process deprive citizens, and, in this case, the city of Chicago, of their right to fair and competitive pricing," said Scott D. Hammond, Deputy Assistant Attorney General in charge of the Antitrust Division’s Criminal Enforcement Program.
"Ensuring the integrity of the city of Chicago’s competitive bidding process is crucial, especially when citizens are stretching every dollar and making sacrifices to cope with a troubled economy. The city’s contracts are paid by the taxpayers. Those involved in obtaining contracts through fraud are inflating prices and are stealing from everyone in the community. These schemes erode the trust in government to spend public dollars wisely and procure goods and services at a fair price," said David H. Hoffman, Inspector General for the City of Chicago.
Ritter and Fenzl are charged with conspiracy to commit mail and wire fraud, two counts of mail fraud and one count of wire fraud. The defendants face a maximum penalty per count of $250,000 and 20 years in jail. The fine may be increased to twice the gain derived from the crime, or twice the loss suffered by the victims, if either of those amounts is greater than the statutory maximum.
The charges announced today resulted from an ongoing investigation of the refuse cart repair industry being conducted by the Department’s Antitrust Division and the City of Chicago Office of Inspector General.
Anyone with information concerning anticompetitive conduct in other city of Chicago, government or private contracts is urged to call the Chicago Field Office of the Antitrust Division at 312-353-7530.
Former Military Official Pleads Guilty to Participating in Bribery Conspiracy Involving $206 Million Telecommunications Contract in KoreaRead the Press Release
WASHINGTON - A former Army and Air Force Exchange Service (AAFES) official pleaded guilty today in U.S. District Court in Columbus, Ga., for his role in a conspiracy to commit bribery involving a multimillion dollar telecommunications contract, and for not reporting the bribes he accepted on his income tax returns, Assistant Attorney General Lanny A. Breuer of the Criminal Division announced.
According to court documents, Henry Lee Holloway, 42, of Hamilton, Ga., worked as an AAFES general store manager at the Central Exchange in the Republic of Korea from 2003 through 2007. The Department of Defense provides billions of dollars worth of merchandise and services annually through AAFES to military personnel by operating base and post exchanges worldwide.
From May 2003 to April 2005, Holloway admitted to conspiring with, among others, Gi-Hwan Jeong, the chief executive officer of Samsung Rental Company Ltd (SSRT), to use Holloway’s official position to maintain SSRT’s $206 million contract with AAFES to provide telecommunications services to U.S. Armed Forces installations in the Republic of Korea. In exchange for at least $70,000 worth of stock offerings, entertainment, travel expenses, cash and other things of value from Jeong, Holloway admitted he took official action to protect SSRT and further its interests, despite Holloway’s knowledge and belief that SSRT was underperforming and violating the terms of its contract with AAFES. According to court documents, prior to Jeong’s payments to Holloway, and as a result of SSRT’s failures to perform under the contractual relationship with AAFES, Holloway attempted to terminate the contractual relationship between AAFES and SSRT. After the payments from Jeong to Holloway began, and as the result of those payments, Holloway admitted he used official acts and influence to support and expand that contractual relationship, including contract amendments and obligation changes.
Holloway pleaded guilty to a two-count information before Judge Clay D. Land in the Middle District of Georgia, charging him with one count of conspiracy and one count of filing a false tax return. Holloway admitted he knowingly failed to report his bribe income for tax years 2003, 2004 and 2005. At sentencing, Holloway faces up to five years in prison on the conspiracy count, as well as a $250,000 fine. He faces up to three years in prison for filing a false tax return, as well as a $100,000 fine. The information also seeks forfeiture of Holloway’s assets derived from the criminal activity. A sentencing date has not yet been set by the court.
Jeong was indicted on Dec. 17, 2008, in the Northern District of Texas on two counts of bribery for his alleged role in the scheme. Jeong was arrested in Dallas on Nov. 19, 2008, on a criminal complaint. In upholding Jeong’s detention, U.S. District Court Judge Jane J. Boyle found probable cause to support charges and that Jeong was a flight risk. Jeong’s trial is scheduled to begin June 1, 2009.
An indictment is merely an allegation and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
The case is being prosecuted by Senior Trial Attorney Richard C. Pilger and Trial Attorneys Richard B. Evans and Eric G. Olshan of the Criminal Division’s Public Integrity Section, headed by William M. Welch, II, Chief. The case was investigated by the Air Force Office of Special Investigations, the FBI’s Dallas Field Office and the Internal Revenue Service.
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Columbus, Ohio, Home Builder, Accountant and Realtor Indicted in Tax Fraud and Money Laundering SchemeRead the Press Release
WASHINGTON - A federal grand jury has returned an 18-count superseding indictment charging Thomas E. Parenteau of Columbus, Ohio; Dennis G. Sartain of Hilliard, Ohio; and Bonnie Helt-Adams of Dublin, Ohio, with tax fraud, bank and wire fraud, money laundering and obstruction of justice, the Justice Department and Internal Revenue Service (IRS) announced today.
Parenteau and Sartain were indicted in September 2008 for an obstruction of justice conspiracy and witness tampering and have been detained since their arrests at that time. The superseding indictment includes additional allegations and adds Helt-Adams as a co-defendant. The case is assigned to Judge Michael H. Watson in Columbus.
According to the superseding indictment, Parenteau operated and controlled a number of Columbus-area businesses that were owned in the name of his wife, including Advanced Precast Building Systems LLC, Parenteau Builders LLC, Your Home Source LLC and MKP Investments LLC. Sartain has been Parenteau’s primary accountant since 2000. Helt-Adams is a licensed real estate agent who listed and sold many of Parenteau’s luxury homes and formally joined Your Home Source, LLC in 2005.
The superseding indictment alleges that Parenteau and Sartain prepared and filed four false income tax returns for Parenteau’s mistress that generated over $700,000 in fraudulent refunds, which went to Parenteau. The superseding indictment also charges Parenteau and Sartain with conspiracy to commit money laundering related to $18 million in fraudulently obtained loan proceeds secured against Parenteau’s home at 4500 Dublin Road, known as Loretta Estate – a 27,000 square foot residence that sits on 4.8 acres on the Scioto River in Dublin, Ohio.
In addition, the superseding indictment alleges that Parenteau and Helt-Adams engaged in a scheme to defraud lending and financial institutions out of millions of dollars by falsely inflating the purchase price of the homes Parenteau built and sold in exchange for paying large undisclosed or disguised kickbacks to the buyers after their purchases.
Finally, the superseding indictment alleges that after learning of the IRS investigation into the tax, bank fraud and money laundering schemes, Parenteau, Helt-Adams and Sartain engaged in a scheme to obstruct justice by concealing computers, creating false documents, destroying or altering evidence, tampering with a witness, lying to federal and local investigators and otherwise obstructing justice.
An indictment is merely a formal charge by the grand jury. Each defendant is presumed innocent unless and until proven guilty in U.S. District Court. If convicted, Parenteau faces a maximum sentence of 150 years in prison and a fine of over $4 million; Sartain faces a maximum sentence of 60 years in prison and a fine of over $1.5 million; Helt-Adams faces a maximum sentence of 105 years in prison and a fine of nearly $3 million.
The case is being prosecuted by Justice Department Tax Division Trial Attorneys Richard M. Rolwing, Jill M. Cassara and Sean B. O’Connell. The case was investigated by the IRS, Criminal Investigation Division.
Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at http://www.usdoj.gov/tax/. Additional information about tax fraud schemes to watch out for may be found on the IRS Criminal Investigation Web site at http://www.ustreas.gov/irs/ci/.
20 April 2009
West Virginia Man Pleads Guilty on Federal Civil Rights ChargesRead the Press Release
WASHINGTON - Daryl Lee Fierce, 69, of Charleston, W.Va., pleaded guilty today to a civil rights charge in federal court in the Southern District of West Virginia for using fire to intimidate and interfere with a person’s housing rights. Fierce set fire to the victim’s home because African-American and biracial individuals visited the victim in her home. Pursuant to the plea agreement, Fierce faces up to 10 years in prison and a fine of up to $250,000. Sentencing is scheduled for July 30, 2009.
According to documents filed in court, on or about July 16, 2007, Fierce admitted that he set fire to a home located on Noyes Avenue in Charleston because the tenant occupying the home, a white woman, associated with persons of another race and color. Fierce set fire to the outside wall of the victim’s bedroom at night as she slept. Fierce further admitted that before the incident he had used racial epithets against guests, including young children, who visited the victim’s home.
"Living in one’s home and associating with friends of one’s choosing, without violent interference because of race, is a core right of all persons in this country," said Loretta King, Acting Assistant Attorney General for Civil Rights. "The defendant used violence against an innocent victim because of his racial prejudice. This is illegal, and despicable, and we will prosecute such crimes whenever and wherever they occur."
The FBI, the Charleston Police Department and the Charleston Fire Department investigated this case. The case was prosecuted by James Walsh with the Justice Department’s Civil Rights Division and Lisa G. Johnson, Assistant U.S. Attorney for the Southern District of West Virginia.
Subsidiaries of Swedish Company, Trelleborg AB, Agree to Plead Guilty and Pay $11 Million in Criminal FinesRead the Press Release
WASHINGTON — Two subsidiaries of the Swedish company Trelleborg AB, one based in Virginia and the other in France, have agreed to plead guilty and pay a total of $11 million in criminal fines for their participation in separate conspiracies affecting the sales of marine products sold in the United States and elsewhere, the Department of Justice announced today.
A two-count felony charge was filed today in U.S. District Court in Norfolk, Va., against Virginia Harbor Services Inc., formerly known as Trelleborg Engineered Products Inc. (VHS/TEPI), a manufacturer of foam-filled marine fenders, buoys and plastic marine pilings headquartered in Clearbrook, Va.
According to the charges, VHS/TEPI participated in a conspiracy between December 2002 and August 2005 to allocate customers and rig bids for contracts to sell foam-filled marine fenders and buoys, and also participated in a separate conspiracy between December 2002 and May 2003 to allocate customers and rig bids for contracts to sell plastic marine pilings. Under the terms of the plea agreement, which is subject to court approval, VHS/TEPI has agreed to pay a $7.5 million criminal fine and to cooperate fully in the Department’s ongoing antitrust investigation.
To date, six individuals and two corporations have pleaded guilty or agreed to plead guilty in the Antitrust Division’s ongoing investigation of fraud and collusion in the marine fenders and pilings industries.
Foam-filled marine fenders are used as a cushion between ships and either fixed structures, such as docks or piers, or floating structures, such as other ships. Foam-filled buoys are used in a variety of applications, including as channel markers and navigational aids. Plastic marine pilings are substitutes for traditional wood timber pilings and are often used in port and pier construction projects in conjunction with foam-filled fenders.
In addition, a one-count felony charge was filed today in U.S. District Court in Fort Lauderdale, Fla., against Trelleborg Industrie S.A.S. (TISAS), a manufacturer of marine hose headquartered in Clermont-Ferrand, France. TISAS is charged with participating in a conspiracy from at least as early as 1999 and continuing until as late as May 2, 2007, to allocate market shares, fix prices and rig bids for contracts to sell marine hose to purchasers in the United States and elsewhere. Marine hose is a flexible rubber hose used to transfer oil between tankers and storage facilities.
Under the terms of the plea agreement, which is subject to court approval, TISAS has agreed to pay a $3.5 million criminal fine and to cooperate fully in the Department’s ongoing antitrust investigation. To date, three corporations have pleaded guilty or agreed to plead guilty in the Antitrust Division’s ongoing investigation in the marine hose industry. Twelve individuals have also been charged to date, nine of whom have pleaded guilty.
"The cases filed today follow the prosecution of numerous other participants in these worldwide conspiracies to inflate the price of marine products critical to both the military and to industry," said Scott D. Hammond, Acting Assistant Attorney General in charge of the Department’s Antitrust Division. "Those who harm U.S. purchasers by rigging bids will pay the price through stiff fines and jail sentences."
"Price fixing and bid rigging are serious crimes that drain resources from the Department of Defense and the American taxpayer. The Defense Criminal Investigative Service takes very seriously all violations of U.S. antitrust laws that affect products and services procured for our soldiers, sailors, airmen and Marines. DCIS aggressively investigates those who seek to cheat the DOD and the public by conspiring to suppress competition," said Sharon Woods, Director, DCIS.
Five former executives of TISAS and VHS/TEPI previously pleaded guilty to participating in the conspiracies charged today. Former VHS/TEPI president Robert B. Taylor was sentenced in January 2008 to serve 24 months in prison and pay a $300,000 criminal fine. Former VHS/TEPI chief financial officer Donald L. Murray was sentenced in March 2008 to serve 18 months in prison and pay a $75,000 criminal fine. William Alan Potts, a former vice president of VHS/TEPI, was sentenced in June 2008 to serve six months in prison and six months in home detention, and to pay a $60,000 criminal fine. Former TISAS executives Christian Caleca and Jacques Cognard were each sentenced in December 2007 to serve 14 months in prison and to pay criminal fines of $75,000 and $100,000, respectively.
VHS/TEPI and TISAS are charged with violating the Sherman Act, which carries a maximum fine of $100 million for corporations. 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 fine.
Today’s charge is an example of the Department’s commitment to protect U.S. taxpayers from public 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, identification, prevention and prosecution of procurement fraud associated with the increase in contracting activity for national security and other government programs.
The investigation is being conducted by the Antitrust Division’s National Criminal Enforcement Section, the Defense Criminal Investigative Service (DCIS) of the Department of Defense’s Office of Inspector General, the U.S. Navy Criminal Investigative Service and the Federal Bureau of Investigation. Anyone with information concerning bid rigging or other anticompetitive conduct in the marine products industry is urged to call the Antitrust Division’s National Criminal Enforcement Section at 202-307-6694, the Arlington, Va., Resident Agency of the DCIS at 703-604-8439, or the Long Beach, Calif., Resident Agency of the DCIS at 562-256-2501.
Dupont and Lucite International Agree to Pay $2 Million for Clean Air Act ViolationsRead the Press Release
WASHINGTON—DuPont and Lucite International Inc. have agreed to pay a $2 million civil penalty to settle Clean Air Act violations at a sulfuric acid plant in Belle, W. Va., the Justice Department, U.S. Environmental Protection Agency (EPA) and the state of West Virginia announced today.
The sulfuric acid plant is located on a 100-acre chemical manufacturing complex along the Kanawha River. The plant is owned by Lucite and operated by DuPont. The companies will pay $1 million to the United States and $1 million to the state of West Virginia. Further, the companies chose on their own to shut down the sulfuric acid manufacturing unit of a larger chemical facility at the site and the settlement confirms this agreement. Under the settlement, the sulfuric acid unit is scheduled to shut down by April 1, 2010.
"This settlement is part of the U.S. government’s dedicated effort to bring all sulfuric acid manufacturers into compliance with the Clean Air Act," said John C. Cruden, Acting Assistant Attorney General in charge of the Justice Department’s Environment and Natural Resources Division.
"The actions taken as part of this settlement will reduce emissions of air pollutants by more than 1,000 tons each year," said Catherine McCabe, Acting Assistant Administrator for the EPA’s Office of Enforcement and Compliance Assurance. "Sulfur dioxide emissions can be harmful to children, the elderly and people with heart and lung conditions."
In a joint complaint, filed concurrently with the consent decree, the United States and West Virginia allege that the companies made modifications to their plant in 1996 without first obtaining pre-construction permits and installing required pollution control equipment. The Clean Air Act requires major sources of air pollution to obtain such permits before making changes that would result in a significant emissions increase of any pollutant.
The Belle sulfuric acid plant burns sulfuric acid sludge, which creates sulfur dioxide. Most of the sulfur dioxide is converted to sulfuric acid and recovered but a portion of the chemical is emitted to the atmosphere. In addition to sulfur dioxide, the plant also emits sulfuric acid mist, nitrogen dioxide and carbon monoxide.
Sulfur dioxide can have serious health effects on children, the elderly, and people with heart and lung conditions. Acid rain is also believed to leach nutrients from sensitive soils and damage forests. Sulfuric acid is widely used for ore processing, fertilizer manufacturing, oil refining, wastewater processing and chemical synthesis.
The settlement is part of an EPA initiative to improve compliance among industries that have the potential to cause significant amounts of air pollution, including the cement manufacturing, glass manufacturing, and acid production industries.
The consent decree, lodged today in the U.S. District Court for the Southern District of West Virginia, is subject to a 30-day public comment period and approval by the federal court. A copy of the consent decree is available on the Department of Justice Web site at http://www.usdoj.gov/enrd/Consent_Decrees.html.
Attorney General Eric Holder Welcomes Assistant Attorneys Generalfor Antitrust, Civil and Criminal DivisionsRead the Press Release
WASHINGTON – Attorney General Eric Holder today welcomed the confirmation of three Assistant Attorneys General to the Department of Justice for the Antitrust, Civil and Criminal Divisions. Christine A. Varney of the Antitrust Division, Tony West of the Civil Division, and Lanny A. Breuer of the Criminal Division were confirmed today by the U.S. Senate.
"These exceptional individuals will help lead the Department with dedication, sound judgment and integrity, whether it’s aggressively enforcing the antitrust laws, overseeing civil enforcement in the Department’s largest litigation division, or combating traditional crimes such as financial fraud or drug trafficking," said Attorney General Eric Holder. "I look forward to working with them to advance the interests of justice on behalf of the American people."
The mission of the Antitrust Division is to enforce the nation’s antitrust laws to protect and promote competition. In a competitive marketplace, U.S. consumers benefit from lower prices, better quality goods and services, and greater innovation.
Since 1997, Varney was a partner at Hogan & Hartson’s Washington, D.C. office heading up the firm’s Internet Practice Group. She was an associate at that firm from 1990 to 1992. Varney’s practice included providing advice and counsel on antitrust, regulatory, consumer protection, privacy and intellectual property in various industries, including technology, media, airlines and health care. She has also provided her expertise to the Organization of Economic Cooperation and Development (OECD) on international competition issues. She had rejoined Hogan & Hartson in 1997 after serving five years in the government.
From 1994 to 1997, Varney served as a Commissioner at the Federal Trade Commission (FTC) working on a wide variety of technology-related issues including innovation markets, vertical theory and privacy issues in the information age. Prior to becoming an FTC Commissioner, Varney was Secretary to the Cabinet in the Clinton Administration.
She is a member of several committees of the American Bar Association including the Antitrust Section and served as Chair of the Committee on Election Law. She has lectured in the United States and abroad and has published articles on a variety of issues, including the computer industry, media, and privacy and data security.
Varney received her J.D. from Georgetown University in 1986. She received her M.P.A. from Syracuse University in 1978, and her B.A. from The State University of New York, University at Albany in 1977.
The Civil Division, which functions as the government’s law firm, represents the United States, its departments and agencies, Members of Congress, Cabinet officers and other federal employees. It is the Department’s largest litigation division.
Before coming to the Department, West was a litigation partner at Morrison & Foerster in San Francisco. His trial practice included representing individuals and companies in civil and criminal matters.
West previously served as state Special Assistant Attorney General, an appointee of California Attorney General Bill Lockyer. In that capacity, he advised the California Attorney General on various matters including high-tech crime, identity theft, the Microsoft antitrust litigation, police officer training, civil rights and police misconduct.
From 1994 to 1999, West served as an Assistant U.S. Attorney for the Northern District of California. From 1993 through 1994, he served as a Special Assistant in the Department under the direction of Deputy Attorneys General Philip Heymann and Jamie Gorelick, as well as Attorney General Janet Reno. West worked on the development of national crime policy, including the 1994 Omnibus Crime Bill.
West graduated with honors from Harvard University in 1987, where he served as publisher of the Harvard Political Review, and received his law degree, in 1992, from Stanford Law School, where he was elected President of the Stanford Law Review.
The Criminal Division’s more than 700 attorneys and support personnel develop, enforce and supervise the application of all federal criminal laws, except those specifically assigned to other divisions.
Before coming to the Department, Breuer was a partner at Covington & Burling LLP’s Washington, D.C. office, where he co-chaired the firm’s white collar defense and investigations practice group and served as vice-chair of the pro bono committee. Breuer first joined the firm in 1989, where he specialized in white collar criminal and complex civil litigation, internal corporate investigations, congressional investigations, antitrust cartel proceedings and other matters involving high-profile legal and political risks.
From 1997 to 1999, Breuer served as special counsel to former President William J. Clinton. Earlier in his career, Breuer was an Assistant District Attorney in Manhattan from 1985 to 1989, where he prosecuted various criminal cases including murder, gang violence, armed robbery, child abuse, burglary, white collar crime and larceny. Breuer has been recognized as a leading litigator by numerous publications, and he is a fellow of the American College of Trial Lawyers.
Breuer received a bachelor’s degree from Columbia University in 1980. He received his law degree from Columbia Law School in 1985, where he was a Harlan Fiske Stone Scholar .
Alta Colleges to Pay U.S. $7 Million to Resolve False Claims Act AllegationsRead the Press Release
WASHINGTON -- Alta Colleges Inc. and its wholly-owned collegiate schools in Texas have agreed to pay the United States $7 million to resolve allegations under the False Claims Act that the Texas schools submitted false claims for federal student aid funds, the Justice Department announced today.
For a college to qualify to receive federal student aid, one requirement is that it meet applicable state licensing requirements. The United States alleged that Alta’s Texas colleges obtained the requisite state licenses by misrepresenting to the state licensing agency that they complied with state job-placement reporting requirements and that their interior design programs complied with requirements for a professional license.
"This settlement demonstrates the government’s commitment to enforcing the compliance standards required of colleges participating in the federal student aid program," said Michael F. Hertz, Acting Assistant Attorney General of the Civil Division of the Department of Justice.
Alta Colleges, which is headquartered in Denver, has over 12,000 students at 19 campuses in California, Colorado, Georgia, Illinois, Texas and Virginia.
The civil settlement agreement released today resolves certain allegations that were originally filed in a federal lawsuit brought by whistleblowers under the federal False Claims Act. The False Claims Act permits private citizens to bring lawsuits on behalf of the United States and to share in any recovery. Under the settlement, the whistleblowers who initiated the lawsuit will receive $1.19 million.
This matter was investigated by the U.S. Department of Education. The settlement was the result of a coordinated effort among the Civil Division of the Department of Justice and the U.S. Attorney’s Office for the Northern District of Texas.
17 April 2009
Utah Natural Gas Producers Agree to Air Emission Reductions, Conservation PracticesRead the Press Release
WASHINGTON—Six energy companies, in three settlements, have agreed to install pollution control equipment at a cost of over $6 million to comply with the Clean Air Act at their natural gas producing facilities in the Uinta Basin, near Vernal, Utah, the Justice Department and U.S. Environmental Protection Agency announced today. The facilities are located on the Uintah & Ouray Indian Reservation.
The series of three settlements with Bill Barrett Corp, Wind River Corp, XTO Energy Inc., Dominion Exploration and Production Inc., Whiting Oil and Gas Corporation, and Miller Dyer and Company were filed today in U.S. District Court in Salt Lake City, Utah. The agreements mandate air pollution reductions and conservation practices at the companies’ natural gas compressor stations, well heads, and pipelines across the Uinta Basin.
In addition to $6,462,000 in retrofits and upgrades to implement pollution control equipment, the agreements require the companies to pay $632,000 in civil penalties and to spend $200,000 on supplemental environmental projects.
As part of the settlements, the companies have agreed to perform the following:
- Retrofit pneumatic controls with lower emitted components
- Conduct a process optimization review to increase natural gas recovery and reduce air emissions at compressor stations and well sites
- Control emission sources, such as large engines, gas dehydrators, condensate tanks at all new facilities constructed in the next five years and install low/no-bleed pneumatics
- Shale-plate all future well access roads
- Fund the operation & maintenance of two ambient air monitoring stations for one year at a cost of approximately $100,000
- Pilot new technologies that are less polluting and more energy efficient
According to complaints filed simultaneously with the settlements, the companies allegedly violated several provisions of the Clean Air Act, including emission standards for hazardous air pollutants, federal permitting, emissions monitoring and reporting requirements. Dominion Exploration and Production and Miller Dyer came forward and disclosed their violations under EPA’s self-audit policy. All the companies have worked cooperatively with EPA to appropriately resolve violations.
"These settlements not only obtain compliance with the law and control emission sources, but will reduce greenhouse gas emissions and bring more natural gas to the marketplace," said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division.
"These settlements deliver clear results for the people of Utah and the Uintah and Ouray Indian Reservation," said Carol Rushin, EPA Acting Regional Administrator. "The mandated pollution controls will reduce emissions of air toxics and greenhouse gases, while conservation measures will help return valuable natural gas to the marketplace."
EPA estimates that the investment in technology will reduce air pollution by more than 1,300 tons per year. The reduction in greenhouse gas emissions, including methane, is equivalent to the annual carbon sequestration of 9,400 acres of pine or fir forest or comparable to taking more than 7,600 cars off the road each year. The natural gas conserved is enough to heat approximately 1,080 homes annually.
The consent decrees were lodged in U.S. District Court for the District of Utah and are subject to a 30-day comment period and final approval by the court. A copy of the consent decree is available on the Justice Department Web site at http://www.usdoj.gov/enrd/Consent_Decrees.html.
Owner of Alabama Tire Store Pleads Guilty <br /> to Tax EvasionRead the Press Release
WASHINGTON - Timothy Smith, a resident of Cullman, Ala., pleaded guilty today in federal court in Birmingham to one count of tax evasion, the Justice Department and Internal Revenue Service (IRS) announced. Smith, the owner of College Tire in Hanceville, Ala., was scheduled to begin trial before Judge R. David Proctor on April 21, 2009.
Smith was indicted in September 2008 and charged with two counts of tax evasion relative to tax years 2002 and 2003.
According to the indictment, plea agreement and other court records, Smith diverted customer receipts from his tire business into two personal bank accounts. Smith also used, or directed others to use, cash and cashiers’ checks to make substantial principal payments on the mortgage for his vacation home in North Carolina and his vacation home in Pensacola, Fla. In total, Smith diverted more than $430,000 from his tire business to his personal bank accounts and his mortgages. In approximately August 2003, he also purchased a real estate lot in North Carolina near his vacation home with $68,100 in cash.
According to court records, Smith concealed the funds that were diverted to his personal accounts and his mortgages from his bookkeeper, who prepared both Smith’s business tax returns as well as Smith’s joint personal tax returns. Smith also took substantial fraudulent tax deductions in relation to a purported farm at his personal residence. As a result, Smith filed false personal and business tax returns for tax years 2000 through 2003. The tax loss resulting from Smith’s scheme was more than $400,000.
As part of his plea agreement, Smith agreed to a binding sentence of 30 months in prison and agreed to pay $170,380 in restitution to the IRS, including a lump sum payment of $50,000 to be paid prior to sentencing. As part of the plea agreement, the government agreed to dismiss tax charges against Smith’s wife, Lori Ann Smith.
Acting Assistant Attorney General John A. DiCicco of the Justice Department’s Tax Division thanked the special agents from IRS-Criminal Investigation who investigated the case, as well as Tax Division trial attorneys Jed M. Silversmith and Matthew J. Mueller, and Assistant U.S. Attorney Michael Whisonant, who are prosecuting the case.
Former Mendenhall, Mississippi, Police Chief Sentenced for Using Excessive ForceRead the Press Release
WASHINGTON – A federal judge today sentenced Jimmy "Jimbo" Sullivan, the former chief of police in Mendenhall, Miss., to 30 months in prison for using excessive force when he repeatedly stomped on the head of an arrestee, announced Acting Assistant Attorney General Loretta King for the Civil Rights Division and Acting U.S. Attorney Stan Harris for the Southern District of Mississippi.
At his guilty plea hearing on Jan. 30, 2009, Sullivan admitted that he used excessive force on July 22, 2005, after joining other law enforcement officials in the apprehension of a man who led police on a car chase. At the end of the chase, Sullivan pulled the man from his car and repeatedly stomped on his head as the man lay face-down in the street. A local hospital treated the man for injuries sustained during the assault.
This case was investigated by the Jackson office of the FBI, and was prosecuted by Trial Attorney Patti Sumner of the Justice Department’s Civil Rights Division and Assistant U.S. Attorney Glenda Haynes of the Southern District of Mississippi.
16 April 2009
Virginia Man Pleads Guilty to Selling Counterfeit <br /> Computer Software Worth $1 MillionRead the Press Release
WASHINGTON – A Virginia man pleaded guilty today to selling counterfeit computer software on eBay in violation of criminal copyright infringement laws, announced Acting Assistant Attorney General Rita M. Glavin of the Criminal Division and U.S. Attorney Jeffrey A. Taylor for the District of Columbia. According to court documents, the retail value of the software illegally sold was approximately $1 million.
Gregory William Fair, 46, of Falls Church, Va., pleaded guilty to one count of criminal copyright infringement and one count of mail fraud before Judge R.W. Roberts in U.S. District Court for the District of Columbia. According to court documents, from 2001 through February 2008, Fair admitted that he sold a large volume of counterfeit Adobe software on the eBay auction Web site using multiple user IDs. The combined retail value of this software was at least $1 million. Fair agreed to forfeit the proceeds of his unlawful enterprise including: $144,000 in currency seized from a safety deposit box and residence; one BMW 525i; one Hummer H2; one Mercedes CL600; and one 1969 Pontiac GTO.
At sentencing on July 8, 2009, Fair faces up to five years in prison on the criminal copyright infringement count and up to 20 years in prison on the mail fraud count. He also faces a maximum fine of $250,000 and three years of supervised release on each charge.
The case is part of the Department of Justice’s ongoing initiative to combat online auction piracy. Including the plea announced today, the Department has obtained 34 convictions involving online auction and commercial distribution of counterfeit software. The Department’s initiative to combat online auction piracy is just one of several steps being undertaken to address the losses caused by intellectual property theft and hold responsible those engaged in criminal copyright infringement.
The case was investigated by the U.S. Postal Inspection Service in Washington, D.C. The case is being prosecuted by Trial Attorney Marc Miller of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Glenn S. Leon for the District of Columbia.
Oil Company and Two Executives Plead Guilty to Environmental CrimesRead the Press Release
WASHINGTON—Texas Oil and Gathering Inc., its owner John Kessel and its operations manager Edgar Pettijohn pleaded guilty today in U.S. District Court in Houston to criminal violations related to the disposal of refinery wastes at an underground injection well in violation of the Safe Drinking Water Act, the Justice Department announced.
The two corporate officers pleaded guilty to conspiracy and violating the Safe Drinking Water Act for disposing of oil-contaminated waste water from its refinery process at an underground injection well permitted to accept wastes only from oil and gas production wastes. The company pleaded guilty to conspiracy and violating the Resource Conservation and Recovery Act (RCRA) for disposing of hazardous waste at an unpermitted facility. The crimes took place from January 2000 through January 2003.
Texas Oil and Gathering Inc. faces a maximum fine of $500,000 or twice monetary gain or loss for the conspiracy count and $50,000 per day, twice the gain or loss, or $500,000, whichever is higher, for the RCRA count. Kessel and Pettijohn face up to eight years in prison and a fine of up to $500,000. U.S. District Court Judge Keith P. Ellison scheduled the sentencing hearing for Sept. 15, 2009.
The charges against the Alvin, Texas-based company and its two officers involved the fraudulent representation to a Rosharon, Texas, injection well that the wastewater the company was disposing at the well came from an oil well Kessel had leased and was developing. In reality the wastewater came from the company’s reclamation process involving the distillation of various liquids from refineries and chemical plants.
Between January 2000 and January 2003, Kessel and Pettijohn directed subordinates to truck its oil and water waste from distillation to the class II injection well and fill out disposal forms indicating it came from an oil well leased by Kessel. A class II injection well is permitted to accept only oil and gas production wastes generated from the exploration of oil and gas. Usually the wastes consist primarily of brine mixed with some crude oil or gas distillate. In this case the waste water was mixed with refined products and chemicals not usually found in oil and gas production wastes such as higher concentrations of toluene and xylene.
The government’s investigation began in January 2003, when the injection well exploded and killed three workers. Although the explosion was not caused by the defendants, a closer review of the waste that went to the injection well led to their prosecution.
"The Safe Water Drinking Act and the regulations overseeing oil and gas related injection wells are designed to ensure safe sources of drinking water. Violations of these laws will be investigated and prosecuted to the fullest extent of the law," said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division.
"We remain committed to protecting the precious natural resources of Texas and hope that today’s conviction sends a clear message to everyone in the industrial community that the government will investigate and prosecute anyone who attempts to circumvent our nation’s anti-pollution laws," said Tim Johnson, Acting U.S. Attorney for the Southern District of Texas.
"The defendants tried to make an illegal end run around our environmental laws in order to increase their bottom line," said Warren Amburn, Special Agent-in-Charge of EPA's criminal enforcement office in Dallas. "These guilty pleas serve as a reminder that senior company executives who decide to commit environmental crimes will be prosecuted—not just the company."
The investigation was conducted by the EPA-Criminal Investigation Division, the Texas Commission on Environmental Quality and the Texas Environmental Enforcement Task Force. It was prosecuted by Senior Counsel Rocky Piaggione, Trial Attorney Leslie Lehnert of the Justice Department’s Environmental Crimes Section and Special Assistant U.S. Attorney William Miller of the EPA’s Region Six Office of Regional Counsel.
Justice Department Requests Extension of Microsoft Final JudgmentRead the Press Release
WASHINGTON — The Department of Justice told the U.S. District Court for the District of Columbia today that it is necessary to extend the term of certain portions of the Microsoft final judgment by at least 18 months. The Department said that an extension is necessary to ensure the quality of the technical documentation Microsoft provides to licensees.
The Department’s Antitrust Division made its views known today as part of its Joint Status Report to Judge Colleen Kollar-Kotelly of the U.S. District Court for the District of Columbia. The Antitrust Division enforces the final judgment in conjunction with antitrust enforcers from 17 states and the District of Columbia, which along with Microsoft joined in today’s filing with the court.
In 2006, Microsoft agreed to a two-year extension of the communications protocol licensing program contained in Section III.E of the final judgment, along with all of the final judgment’s enforcement provisions. Microsoft also agreed that the Department and state antitrust enforcement agencies may, at their discretion, apply to the court for an additional extension of all or part of the extended provisions of the final judgment for a period of up to three additional years, through November 2012. The United States is exercising its right under this provision to seek an extension of Section III.E and its supporting provisions through May 12, 2011. Without this action, the final judgment would have expired on Nov. 12, 2009.
Section III.E of the final judgment requires that Microsoft make available to competing server software developers, on reasonable and non-discriminatory terms, certain technology used by Microsoft to make its server operating systems interoperate with client PCs running the Windows operating system. Microsoft must provide licensees with technical documentation that is designed to enable them to use this technology in their own server products so that those products work better with Windows.
In past status reports, the Department reported to the court its concerns with the quality of the technical documentation Microsoft provides to licensees under this program and with the length of time it is taking Microsoft to improve that documentation.
The Department today also submitted the necessary papers to the court for its consideration.
Justice Department Reaches Settlement with Philadelphia Regarding Polling Place Access for People with DisabilitiesRead the Press Release
WASHINGTON - The Justice Department today announced a settlement under the Americans with Disabilities Act (ADA) with the city of Philadelphia to greatly improve accessibility for individuals with mobility disabilities at the city’s 1,200 polling places. Today’s settlement is the first settlement by the Justice Department with a city focused solely on accessible polling places.
Under the terms of the settlement, the city of Philadelphia recognizes that accessible polling places are the cornerstone of its voting accessibility program and will make its polling places accessible to persons with disabilities. The settlement will give people with mobility disabilities the opportunity to vote at polling places, rather than through the use of an absentee-type ballot. The city will also pay for an independent expert, who will assess the accessibility of nearly half the polling places and make recommendations to make polling places accessible on Election Day. The Justice Department will evaluate the remaining polling places for accessibility. The settlement also requires that accessibility based on ADA standards will be a major criterion in the city’s selection of future polling places. In addition, the settlement agreement requires the city to provide access to alternate means of voting for individuals with disabilities until their polling places are made accessible.
"The right to vote is the foundation of our democracy. This agreement will help ensure that persons with mobility disabilities have the opportunity to exercise their right and cast their ballot in person, at the polls, near their homes and alongside their neighbors," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "The Justice Department is committed to continued, vigorous enforcement of the Americans with Disabilities Act."
A separate, class-action lawsuit (Kerrigan v. The City of Philadelphia) filed by certain voters with disabilities against Philadelphia regarding the accessibility of the city’s polling places has been resolved along with the Department’s investigation.
More information about this settlement and the ADA is available at the Justice Department’s toll-free ADA Information Line at (800) 514-0301 or (800) 514-0383 (TTY), and via the ADA Web site at http://www.ada.gov.
Iraqi-Born Dutch Citizen Sentenced to 25 Years in Prison for Terrorism Conspiracy Against Americans in IraqRead the Press Release
WASHINGTON – An Iraqi-born Dutch citizen was sentenced to 25 years in prison today for conspiring to murder Americans overseas, including by planting roadside bombs targeting U.S. soldiers in Fallujah, Iraq, and by demonstrating on video how these explosives would be detonated to destroy American vehicles and their occupants.
The sentencing of Wesam al-Delaema, age 36, was announced today by David Kris, Assistant Attorney General for National Security; Jeffrey A. Taylor, U.S. Attorney for the District of Columbia; and Joseph Persichini, Jr., Assistant Director in Charge of the Federal Bureau of Investigation (FBI) Washington Field Office.
At a hearing today in U.S. District Court for the District of Columbia, Judge Paul Friedman imposed the 25-year sentence against al-Delaema for conspiracy to murder U.S. nationals outside the United States. Al-Delaema pleaded guilty to this charge on Feb. 25, 2009. The Court made a finding that this offense was a federal crime of terrorism. In addition, video materials referenced in al-Delaema’s factual proffer were played in court for the first time.
On Tuesday, in a separate case, al-Delaema was sentenced in Superior Court for the District of Columbia to 18 months imprisonment for aggravated assault. Al-Delaema pleaded guilty to this charge on March 3, 2009, admitting that he kicked a D.C. prison guard to the point of unconsciousness while the guard was prone on the ground during an incident at the D.C. jail in 2007. The prison guard sustained significant injuries, including a subdural hemorrhage, during the incident.
The sentences for these separate offenses are to be served concurrently and were agreed upon as part of the global plea agreement. According to an agreement between the United States and the Netherlands, al-Delaema will serve out his sentence in the Netherlands.
According to the plea agreement and factual proffers filed in court, between October 2003 and May 2, 2005, al-Delaema entered into an agreement with several co-conspirators to murder U.S. nationals in Iraq. As part of the conspiracy, al-Delaema travelled to Fallujah in October 2003. There, al-Delaema and his co-conspirators -- calling themselves the "Mujahideen from Fallujah" -- declared their intentions to kill Americans in Iraq using improvised explosive devices (IEDs).
As part of the conspiracy, al-Delaema and his co-conspirators discussed and demonstrated, on video, the way in which the IEDs they had buried in a road near Fallujah would be detonated and would destroy American vehicles driving on the road and kill the American occupants of those vehicles.
According to the factual proffer that he agreed to, al-Delaema not only created "how-to" and recruitment videos, but also filmed the effects of roadside attacks in Iraq. Furthermore, after his return to the Netherlands, al-Delaema continued to attempt to obtain propaganda videos for those seeking to kill Americans in Iraq, frequently attempting to obtain raw footage of attacks on Americans in Iraq.
Al-Delaema was arrested by Dutch law enforcement authorities on May 2, 2005, and he initially faced similar charges in that country. Following his arrest, Dutch law enforcement and prosecution authorities worked cooperatively with the FBI in its investigation of al-Delaema’s terrorist activities.
In September 2005, the United States filed a formal request with the Netherlands seeking al-Delaema’s extradition. The extradition request was subsequently granted by a Dutch court and then by the Dutch Ministry of Justice. In December 2006, the extradition request was sustained on appeal in the Netherlands. In January 2007, al-Delaema was flown to the United States, arrested and taken into custody by the FBI.
"This case represents the first use of U.S. criminal courts to prosecute an individual for terrorism offenses against Americans in Iraq," said David Kris, Assistant Attorney General for National Security. "The sentence imposed today should serve notice that the United States will use all available tools to pursue those who would plot attacks against our men and women serving in Iraq."
"The actions of this defendant were repugnant and contributed to the considerable violence against Americans in Iraq," stated U.S. Attorney Jeffrey A. Taylor. "This case, which represents the first use of the United States criminal courts to prosecute an individual for terrorism offenses against Americans in Iraq, demonstrates our resolve to use every tool at our disposal to defend Americans, both at home and abroad."
"The FBI is prepared at a moments notice to vigorously investigate injuries and threats to citizens, whether they occur in or outside the United States," said FBI Assistant Director in Charge Joseph Persichini, Jr. "We would particularly like to thank our Dutch law enforcement partners who worked with us for the past four years to bring this case to fruition."
The investigation into this matter was conducted by the FBI’s Washington Field Office, with assistance from the Dutch National Police Agency and the National Office of the Public Prosecutor in the Netherlands. The Office of International Affairs in the Criminal Division of the U.S. Department of Justice coordinated the extradition efforts on behalf of the United States.
The prosecutors handling the case are Assistant U.S. Attorneys Gregg Maisel and Rachel Lieber of the U.S. Attorney’s Office for the District of Columbia, and Trial Attorney David I. Miller of the Counterterrorism Section of the Justice Department’s National Security Division.
Former Gary, Indiana, Police Chief Sentenced<br /> for Federal Civil Rights ViolationRead the Press Release
WASHINGTON – Acting Assistant Attorney General Loretta King of the Civil Rights Division announced today that Thomas Houston, former Chief of the Gary, Ind., Police Department, was sentenced to 41 months in prison followed by two years of supervised release for violating the civil rights of a Gary resident in June 2007.
Houston was convicted in Sept. 2008 of assaulting the victim, identified in court documents as V.A., by striking and kicking him in the stomach while he was handcuffed, resulting in contusions to his face, head, chest and abdomen. Houston, a 42-year veteran of the department, had been chief for just seven days when he committed the assault. He resigned from the post shortly after being indicted in March 2008.
Evidence presented during the six-day trial revealed that Houston’s home was burglarized on June 1, 2007, and that he incorrectly believed that a neighbor was responsible for the burglary. Houston summoned on-duty officers to leave their posts and accompany him to the neighbor’s home. V.A., who was visiting a friend in the home, was handcuffed, dragged out of the home and assaulted by Houston. He was then jailed for four days before being released. No evidence was found linking the victim to the burglary, which remains unsolved.
"Police officers are given tremendous authority and responsibility so that they can protect and serve the public trust," said Loretta King, Acting Assistant Attorney General of the Civil Rights Division. "Those who abuse that authority face serious consequences. The Civil Rights Division is committed to prosecuting all cases of official misconduct and to bringing these individuals to justice."
The case was prosecuted by Trial Attorneys Betsy Biffl and Erin Aslan from the Civil Rights Division of the Justice Department.
Federal Court Bars Bloomfield, Connecticut Tax Preparer from Preparing Tax ReturnsRead the Press Release
WASHINGTON - A federal court has permanently barred Donald Morris of Bloomfield, Conn., from preparing federal income tax returns for others, the Justice Department announced today. Morris consented to the permanent injunction order, which was entered by U.S. District Court Judge Jane C. Hall in the U.S. District Court for the District of Connecticut.
According to the government complaint, Morris prepared over 1,000 federal income tax returns from 2003 through 2008. The complaint alleges that returns prepared by Morris claimed deductions for fictitious or inflated un-reimbursed employee expenses, deductions for fictitious or inflated job search expenses, fictitious or inflated education credits and fictitious or inflated credits for child care expenses.
In the past decade, the Justice Department’s Tax Division has obtained more than 380 injunctions against tax return preparers and tax fraud promoters. Information about these cases is available the Justice Department’s Tax Division Web site.
Department of Justice Releases Four Office of Legal Counsel OpinionsRead the Press Release
In connection with ongoing litigation, the Department of Justice today released four previously undisclosed Office of Legal Counsel ("OLC") opinions – one that OLC issued to the Central Intelligence Agency in August 2002 and three that OLC issued to the CIA in May 2005.
"The President has halted the use of the interrogation techniques described in these opinions, and this administration has made clear from day one that it will not condone torture," said Attorney General Eric Holder. "We are disclosing these memos consistent with our commitment to the rule of law."
Holder also stressed that intelligence community officials who acted reasonably and relied in good faith on authoritative legal advice from the Justice Department that their conduct was lawful, and conformed their conduct to that advice, would not face federal prosecutions for that conduct.
The Attorney General has informed the Central Intelligence Agency that the government would provide legal representation to any employee, at no cost to the employee, in any state or federal judicial or administrative proceeding brought against the employee based on such conduct and would take measures to respond to any proceeding initiated against the employee in any international or foreign tribunal, including appointing counsel to act on the employee’s behalf and asserting any available immunities and other defenses in the proceeding itself.
To the extent permissible under federal law, the government will also indemnify any employee for any monetary judgment or penalty ultimately imposed against him for such conduct and will provide representation in congressional investigations.
"It would be unfair to prosecute dedicated men and women working to protect America for conduct that was sanctioned in advance by the Justice Department," Holder said.
After reviewing these opinions, OLC has decided to withdraw them: They no longer represent the views of the Office of Legal Counsel.
15 April 2009
Quest Diagnostics to Pay U.S. $302 Million to Resolve Allegations That<br /> a Subsidiary Sold Misbranded Test KitsRead the Press Release
WASHINGTON – Quest Diagnostics Incorporated and its subsidiary, Nichols Institute Diagnostics (NID), have entered into a global settlement with the United States to resolve criminal and civil claims concerning various types of diagnostic test kits that NID manufactured, marketed and sold to laboratories throughout the country until 2006, the Justice Department announced today. The payment of $302 million will resolve these allegations and represents one of the largest recoveries ever in a case involving a medical device.
As part of the criminal resolution, NID pleaded guilty today before U.S. District Judge Sterling Johnson Jr. in Brooklyn to a felony misbranding charge in violation of the Food, Drug and Cosmetic Act relating to NID’s Nichols Advantage Chemiluminescence Intact Parathyroid Hormone Immunoassay, a test that was used by laboratories throughout the country to measure parathyroid hormone (PTH) levels in patients. As part of the plea, NID will pay a criminal fine of $40 million. Quest has also entered into a non-prosecution agreement with the United States.
As part of the civil settlement, Quest and NID will pay the United States $262 million plus interest to resolve False Claims Act allegations relating to the Advantage Intact PTH assay and four other assays manufactured by NID that allegedly provided inaccurate and unreliable results. Quest has agreed to pay various state Medicaid programs approximately $6.2 million to resolve similar civil claims. The company has also entered into a Corporate Integrity Agreement with the Office of Inspector General of the U.S. Department of Health and Human Services.
The United States commenced its civil and criminal investigation after the filing of a qui tam or whistleblower suit brought by Thomas Cantor. As a result of today’s settlement, Mr. Cantor will share in the proceeds of the False Claims Act recovery and will receive approximately $45 million.
The criminal resolution focuses solely on the Advantage Intact PTH Assay. As alleged in the information, there were periods of time in which the Advantage Intact PTH Assay provided elevated results. The marketing materials that NID distributed regarding the Advantage Intact PTH Assay described that product as having "excellent correlation" to the IRMA Assay. Additionally, the directional insert for the Intact PTH Assay, in a section entitled "Accuracy," described a study in which the IRMA Assay and the Advantage Intact PTH Assay produced nearly identical results when used to test PTH levels in samples of human blood. Contrary to the claims in NID’s directional inserts and marketing materials, however, in about May 2000, and at various times thereafter, NID was aware that the Advantage Intact PTH Assay was not consistently providing results that were equivalent to those of the IRMA Assay.
Additionally, during some of the periods of time after May 2000, NID was also aware that the Advantage Intact PTH Assay provided elevated PTH results. Nonetheless, NID continued to indicate, in its directional inserts and marketing materials, that the Advantage Intact PTH Assay and the IRMA Assay provided nearly identical results. As part of the guilty plea, NID admitted that in or about May 2000 and at various times thereafter, the company knowingly, intentionally and with intent to mislead, introduced into interstate commerce, and caused the introduction into interstate commerce of the Advantage Intact PTH Assay, that was misbranded.
The civil settlement resolves allegations that NID manufactured, marketed and sold the Intact PTH and Bio-Intact PTH test kits, despite knowing that between May 1, 2000, and April 30, 2006, some of these kits produced results that were materially inaccurate and unreliable, thereby causing: (a) some clinical laboratories that purchased and used the Intact PTH and Bio-Intact PTH test kits to submit false claims for reimbursement to federal health programs; and (b) some medical providers to submit false claims for reimbursement to federal health programs for unnecessary treatments.
The civil settlement also resolves allegations that NID manufactured, marketed and sold test kits, some of which produced results that were materially inaccurate and unreliable, thereby causing some clinical laboratories that purchased and used these test kits to submit false claims for reimbursement to federal health programs.
"This settlement provides further evidence that the Department will vigorously prosecute cases involving violations of the Food, Drug, and Cosmetic Act, and will pursue recovery of taxpayer dollars resulting from fraudulent marketing campaigns by medical device manufacturers," said Michael F. Hertz, Acting Assistant Attorney General for the Civil Division. "Pursuing this case was particularly important in light of the potential for adverse health consequences to beneficiaries of federal healthcare programs."
"The American public has the right to expect medical device manufacturers to make accurate claims in their labeling, especially when the failure to meet those claims could indicate that the performance of the device is suspect," stated U.S. Attorney Benton J. Campbell. "In order to safeguard public health, and when appropriate, to recover taxpayer dollars, the government will vigorously investigate allegations that a manufacturer knowingly sold medical devices, such as test kits, that were materially unreliable or provided significantly inaccurate results."
Besides the Justice Department’s Civil Division and the U.S. Attorney’s Office for the Eastern District of New York, the Department of Health and Human Services Office of Inspector General; FBI: U.S. Postal Inspection Service; and the Food and Drug Administration, Office of Criminal Investigations assisted in the matter.
Minnesota Man Pleads Guilty to Running Ponzi SchemeRead the Press Release
WASHINGTON - A Rosemount, Minn., man has pleaded guilty in connection with running a Ponzi scheme involving commodity pools, Acting Assistant Attorney General Rita M. Glavin and U.S. Attorney Frank J. Magill for the District of Minnesota announced today.
Charles "Chuck" E. Hays, 56, pleaded guilty before U.S District Court Judge Donovan Frank on April 14, 2009, in St. Paul, Minn., to one count of mail fraud, one count of wire fraud, and one count of structuring transactions to avoid financial reporting requirements. Hays was arrested Feb. 5, 2009, and charged in a criminal complaint with mail fraud and wire fraud. Shortly after Hays’ arrest, the government seized a $3 million yacht Hays purchased with investor funds, as well as two of Hays’ bank accounts, which contain approximately $1 million in funds obtained through the fraudulent scheme. The government estimates in court documents that investors lost more than $20 million in the scheme.
According to the plea agreement, Hays admitted to devising and participating in a scheme in which he solicited individuals to invest money with him and his company, Crossfire Trading LLC (Crossfire), from January 2001 through February 2009. Hays told potential investors he was a day trader in stock index futures and other futures contracts. Hays also admitted falsely representing to potential investors that his trading was consistently profitable and earned approximately three percent per month. According to court documents, many people chose to invest money with Hays and Crossfire based on these misrepresentations.
Once an individual invested money, Hays admitted he provided the investor with a document that outlined the purported terms of the agreement with Crossfire. Hays admitted the investment agreements misrepresented the goal and activities of Crossfire and how investor profits and losses would be handled. According to the investor agreements, Crossfire was falsely presented as a day-trading company whose primary activity was short-term trading of futures. However, instead of using investor funds to trade in the equities listed in the investor agreement, Hays admitted he diverted and converted those funds for his personal use and other unauthorized purposes.
Hays also admitted that he instructed investors to mail him a check or to wire money to Crossfire’s bank account. Hays admitted he then created and sent investors fraudulent monthly summaries purportedly showing investments and any gains clients supposedly realized.
When investors asked Hays for details regarding his trading or investment philosophy, Hays admitted he misrepresented to them that Crossfire traded through an account at a registered brokerage firm in Chicago, where he said investors’ funds were maintained. To support those misrepresentations, Hays admitted he showed several investors a fraudulent statement that reflected a $37 million balance in Crossfire’s account at the registered brokerage firm, when in reality Crossfire did not have an account with the firm. According to court documents, Hays used funds received from new investors to make payments to earlier investors in order to give legitimacy to the scheme.
At sentencing, Hays faces a maximum penalty of 20 years in prison on the mail fraud count, 20 years on the wire fraud count and 10 years on the structuring count. Hays also faces a maximum fine of $250,000 or the greater of twice the gross gain or loss for both the mail and wire fraud counts and a maximum fine of $500,000 on the structuring count. Additionally, as part of the plea agreement, Hays has agreed to forfeit all assets that constitute the proceeds of his offenses. A sentencing date has not yet been scheduled.
In a related action, the U.S. Commodity Futures Trading Commission (CFTC) filed a civil enforcement action against Hays and Crossfire on Feb. 5, 2009.
The case was investigated by the U.S. Postal Inspection Service. The case is being prosecuted by Assistant Chief Robertson Park and Trial Attorney Laura Perkins of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Ann Anaya for the District of Minnesota. Significant assistance was also provided by Assistant U.S. Attorney Jim Alexander for the District of Minnesota. The Department acknowledges the substantial assistance provided by the CFTC in connection with this investigation.
Information
Statement of Offense
GSA Contractor NetApp Agrees to Pay U.S. $128 Million to Resolve Contract Fraud AllegationsRead the Press Release
WASHINGTON – The United States has reached a settlement with NetApp Inc. and NetApp U.S. Public Sector Inc. (collectively NetApp), following an investigation of alleged false claims and contract fraud, the Justice Department announced today. NetApp has agreed to pay the United States $128 million, plus interest. This is the largest contract fraud settlement the General Services Administration (GSA) has obtained to date.
The settlement relates to contracts entered into by NetApp, a computer storage and data management solutions company, to sell hardware, software and storage management services for computer network environments to government entities through GSA’s Multiple Award Schedule (MAS) program. The MAS program provides the government and other GSA- authorized purchasers with a streamlined process for procurement of commonly-used commercial goods and services. To be awarded a MAS contract, and thereby gain access to the broad government marketplace and the ease of administration that comes from selling to hundreds of government end users under one central contract, contractors must agree to disclose commercial pricing policies and practices, and to abide by the contract terms when selling to purchasers under the MAS contract.
The settlement resolves allegations that in contract negotiations and over the course of the contracts’ administration, NetApp knowingly failed to meet its contractual obligations to provide GSA with current, accurate and complete information about its commercial sales practices, including discounts offered to other customers, and that NetApp knowingly made false statements to GSA about their sales practices and discounts. The settlement further resolves allegations that NetApp knowingly failed to comply with the price reduction clauses of their GSA contracts by failing to disclose to GSA discounts NetApp gave to its commercial customers when they were higher than the discounts that NetApp had disclosed to GSA, and by failing to pass those discounts on to government purchasers. Because of these allegedly fraudulent dealings, it is alleged that the United States accepted lower discounts and paid far more than it should have for NetApp products.
"This settlement shows that the United States will not tolerate misconduct in the pricing of government contracts," said Michael F. Hertz, Acting Assistant Attorney General for the Department of Justice’s Civil Division.
The settlement resolves the lawsuit filed on behalf of the U.S. government by former NetApp employee, Igor Kapuscinski, who will receive a $19,200,000 share of the recovery in the case. Under the False Claims Act, private citizens can bring suit on behalf of the United States and share in any recovery obtained by the government.
"Especially in these difficult economic times of stretched government budgets, we will ensure that government contractors provide the government with the price it has been promised and all of the discounts to which it is entitled," said Jeffrey A. Taylor, U.S. Attorney for the District of Columbia.
This settlement was the result of a coordinated effort by the Department of Justice, Civil Division, Commercial Litigation Branch; the U.S. Attorney’s Office for the District of Columbia; and the General Services Administration, Office of Inspector General, in investigating and resolving the allegations.
This case was investigated as part of a National Procurement Fraud Initiative. In October 2006, the Deputy Attorney General announced the formation of a National Procurement Fraud Task Force 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 Procurement Fraud Task Force is chaired by the Assistant Attorney General for the Criminal Division and includes the Civil Division, the U.S. Attorneys’ Offices, the FBI, the U.S. Inspectors General community and a number of other federal law enforcement agencies. This case, as well as others brought by members of the task force, demonstrate the Justice Department’s commitment to helping ensure the integrity of the government procurement process.
Former Oklahoma Deputy Sheriff Indicted for <br /> Federal Civil Rights and Obstruction of Justice ViolationsRead the Press Release
WASHINGTON – Acting Assistant Attorney General for the Civil Rights Division Loretta King and U.S. Attorney for the Eastern District of Oklahoma Sheldon J. Sperling announced today that Ben Milner, a former deputy sheriff with the Choctaw County, Okla., Sheriff’s Department, has been indicted by a federal grand jury for violating the civil rights of a man during a traffic stop and the civil rights of two inmates at the Choctaw County Jail. The grand jury also indicted Milner on two counts of obstructing justice in connection with the incident involving the inmates.
The indictment charges that on or about Oct. 31, 2005, Milner, then a sheriff’s deputy of the Choctaw County Sheriff’s Department, assaulted an individual causing him bodily harm. The indictment also charges that on or about Oct. 18, 2007, Milner assaulted two inmates at the Choctaw County Jail, causing them bodily harm. Finally, the indictment charges that on or about Oct. 18 and 19, 2007, Milner wrote reports relating to the assaults against the inmates in which he provided false justification for the force he used against them. If convicted, Milner faces a maximum term of imprisonment of 10 years on each excessive force count and 20 years on each count of obstruction of justice. Each count also carries up to three years of supervised release and a fine up to $250,000.
The charges set forth in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
This matter was investigated by Special Agent Jeffrey Youngblood of the Oklahoma City Division of the FBI and is being prosecuted by Assistant U.S. Attorney Dean Burris for the Eastern District of Oklahoma and Trial Attorneys Roy Conn III and Michael Khoury of the Civil Rights Division of the Justice Department.
Department of Justice Asks Court to Serve Summons for Offshore RecordsRead the Press Release
WASHINGTON – The Department of Justice today asked a federal court in Denver to approve service of a John Doe summons on First Data Corporation. "John Doe" summonses allow the IRS to obtain information about United States taxpayers whose identities are not yet known. The information expected in response to the summons will help the IRS identify merchants who use offshore accounts to evade their United States tax liabilities. The petition alleges that the merchants have opened bank accounts in offshore jurisdictions and directed their payment card processor, in this instance First Data, to deposit the proceeds from their debit or credit card transactions directly into the offshore accounts.
The courts have previously approved numerous John Doe summonses on credit card companies and third-party credit card processors allowing the IRS to identify individuals who were using debit and credit cards issued by offshore banks to evade their taxes. With this summons, the Department of Justice ratchets up the pressure on tax evaders by seeking the identities of merchants who attempt to hide their business income in offshore accounts.
"Some United States taxpayers are evading billions of dollars per year in United States taxes through the use of offshore accounts. The Department of Justice will ensure that the IRS obtains all the necessary information to identify these taxpayers, whether they are individuals or businesses," said John DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division.
"The IRS will not hesitate to use all the tools available to combat offshore tax evasion by individuals and businesses," said Linda Stiff, IRS Deputy Commissioner for Services and Enforcement.
More information about the Justice Department’s Tax Division is available at www.usdoj.gov/tax.
14 April 2009
UBS Client Pleads Guilty to Filing False Tax Return Hid Assets Worth $3 Million in Secret Swiss Bank AccountRead the Press Release
WASHINGTON - Robert Moran, of Lighthouse Point, Fla., pleaded guilty today to a criminal information charging him with filing a false income tax return, the Justice Department and Internal Revenue Service (IRS) announced. Moran appeared today before Judge James I. Cohn in Ft. Lauderdale and accepted responsibility for concealing more than $3 million in assets in a secret bank account at UBS in Switzerland.
According to court records, on or about Oct. 14, 2008, Moran, a Ft. Lauderdale yacht broker, filed a U.S. Individual Income Tax Return Form 1040 for tax year 2007, which he signed under the penalties of perjury. The tax return failed to report that Moran had an interest in, or signature authority over, a financial account at UBS in Switzerland. Additionally, Moran failed to report the income he earned on any UBS Swiss bank accounts.
According to court records, Moran was the beneficial owner of a UBS account in the name of Winter Drive Investments S.A., a nominee Panamanian corporation. From 2001 through 2008, Moran communicated with bankers at UBS via email, telephone and in person about the purchase and sale of securities, and the conversion of investments from U.S. dollars to Euros.
Judge Cohn scheduled sentencing for June 26, 2009. Moran faces a maximum sentence of three years in prison and a maximum fine of $250,000.
"With the filing deadline imminent, most American taxpayers are filing their tax returns and paying the taxes that they owe," said John A. DiCicco, Acting Assistant Attorney General of the Justice Department’s Tax Division. "Honest taxpayers should rest assured that those who hide assets and income from the IRS face investigation, prosecution, and steep fines and jail time."
In February 2009, UBS entered into a deferred prosecution agreement in which the bank admitted to helping U.S. taxpayers hide accounts from the IRS. As part of their agreement, UBS agreed to provide the U.S. government with the identities of, and account information for, certain United States customers of UBS’s cross-border business.
On April 2, 2009, another UBS client, Steven Michael Rubinstein, was charged with filing a false income tax return via a criminal complaint. Rubinstein, of Boca Raton, Florida, is alleged to have failed to report income and assets in a secret Swiss bank account.
"Just two weeks ago, the Southern District of Florida and the Tax Division charged the first UBS client with filing a false tax return. This week, we charge yet another," said R. Alexander Acosta, U.S. Attorney for the Southern District of Florida. "We will continue to prosecute those who use offshore schemes to avoid paying their taxes. If you are hiding income abroad, I suggest you approach us."
"Combating offshore tax evasion continues to be one of the IRS's top priorities," said IRS Deputy Commissioner Linda Stiff. "With each passing day, it is increasingly clear the IRS is committed to pursuing people hiding income offshore. Anyone in this situation needs to immediately come in through our voluntary disclosure process before it's too late. It's better to come clean now instead of waiting and facing a heavier price later."
Acting Assistant Attorney General DiCicco and U.S. Attorney Acosta commended the investigative efforts of the IRS agents involved in this case. The prosecution is being handled by Senior Litigation Counsel Kevin M. Downing and Trial Attorney Michael P. Ben’Ary of the Tax Division, and Assistant U.S. Attorney Jeffrey A. Neiman.
United States citizens who have an interest in, or signature or other authority over, a financial account in a foreign country with assets in excess of $10,000 are required to disclose the existence of such account on Schedule B, Part III of their individual income tax return.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at http://www.usdoj.gov/tax/.
Three Current and One Former Lucas County, Ohio, Sheriff Officials Indicted on Civil Rights ChargesRead the Press Release
WASHINGTON – Four individuals have been indicted on charges of federal civil rights violations relating to the in-custody death of a detainee at the Lucas County Jail in Ohio and an alleged subsequent four-year cover-up of the role that jail personnel played in the death.
The indictment returned by a federal grand jury in Toledo, Ohio, was returned today and announced by Acting Assistant Attorney General Loretta King of the Civil Rights Division.
The indictment alleges that on May 30, 2004, former Deputy Sheriff John E. Gray assaulted and strangled a detainee in a cell at the Lucas County Jail and then left the detainee lying unconscious without seeking medical help for him, actions which resulted in the detainee’s death. The indictment also alleges that, shortly prior to the incident that resulted in the detainee’s death, Deputy Sheriff Jay M. Schmeltz struck and assaulted the same detainee, causing bodily injury. Thereafter, according to the charges, Deputies Gray and Schmeltz wrote false reports concealing the incidents and made false statements to the FBI. Finally, the indictment alleges that Lt. Robert McBroom of the jail’s Internal Affairs Department and Sheriff James Telb concealed their knowledge of Deputy Gray’s felonies from federal authorities and that McBroom and Telb made false statements to the FBI during the course of its investigation of the detainee’s death.
"Police officers are given tremendous authority and responsibility so that they can protect and serve the public trust. Those who abuse that authority face serious consequences," said Loretta King, Acting Assistant Attorney General of the Civil Rights Division. "The Civil Rights Division is committed to prosecuting all cases of official misconduct and to bringing these individuals to justice."
If convicted, Gray will face a maximum sentence of life in prison, Schmeltz will face a maximum sentence of ten years, and McBroom and Telb will each face a maximum sentence of three years.
This case is being investigated by the FBI’s Cleveland Division. The case is being prosecuted by Special Litigation Counsel Kristy Parker and Trial Attorney Ryan McKinstry of the Civil Rights Division’s Criminal Section.
Six Defendants Sentenced for Participation<br /> in International Child Exploitation EnterpriseRead the Press Release
WASHINGTON and PENSACOLA, Fla. – Six U.S. defendants convicted for their activity in a global child pornography trafficking enterprise were sentenced today in the Northern District of Florida, Acting Assistant Attorney General of the Criminal Division Rita M. Glavin, U.S. Attorney for the Northern District of Florida Thomas F. Kirwin and FBI Executive Assistant Director J. Stephen Tidwell announced.
Five of the defendants were convicted following a six-day trial in January 2009 on multiple charges, including engaging in a child exploitation enterprise; conspiracy to advertise, transport, ship, receive and possess child pornography; advertising child pornography; transporting child pornography; receiving child pornography and obstruction of justice.
The defendants sentenced today by Senior U.S. District Judge Lacey A. Collier were Daniel Castleman of Lubbock, Texas; Gary Lakey of Anderson, Ind.; Marvin Lambert of Indianapolis; Neville McGarity of Medina, Texas; Stepan Bondarenko of Philadelphia; and Ronald White of Burlington, N.C. Five additional U.S. defendants also indicted in the case were sentenced on March 10, 2009.
According to evidence introduced at trial, the defendants were members of a highly-sophisticated international network. The group was a well-organized criminal enterprise whose purpose was to proliferate child sex abuse images to its membership during a two-year period.
The defendants were found guilty of participating in an illegal organization that utilized Internet newsgroups - large file-sharing networks where text, software, pictures and videos can be traded and shared - to traffic in illegal images and videos depicting prepubescent children, including toddlers, engaged in various sexual and sadistic acts. Specifically, an Australian constable who infiltrated the group in August 2006 testified at trial about how group members employed a complex system of pseudonyms, screening tests for new members and sophisticated encryption methods to avoid detection. He also testified that the group traded more than 400,000 images and 1,000 videos of child sexual abuse before it was dismantled by law enforcement.
Stepan Bondarenko was sentenced today to 20 years in prison. Bondarenko pleaded guilty on April 28, 2008, to four counts related to his criminal activities as a member of the child exploitation enterprise. The charges alleged in these counts included engaging in a child exploitation enterprise; conspiracy to advertise, transport, ship, receive and possess child pornography; advertising child pornography; and receiving child pornography.
Daniel Castleman, Gary Lakey, Marvin Lambert, Neville McGarity and Ronald White were all sentenced to terms of life in prison.
Castleman, Lakey, Lambert and McGarity, a registered sex offender, were all found guilty following a six-day trial on six counts relating to their criminal activities as a member of the child exploitation enterprise. The charges alleged in these counts included engaging in a child exploitation enterprise; conspiracy to advertise, transport, ship, receive and possess child pornography; advertising child pornography; transporting child pornography; receiving child pornography and obstruction of justice.
White was found guilty following trial on four counts relating to his criminal activities as a member of the child exploitation enterprise. The charges alleged in these counts included engaging in a child exploitation enterprise; conspiracy to advertise, transport, ship and possess child pornography; receiving child pornography and obstruction of justice.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse, launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The case is being prosecuted by Assistant U.S. Attorney David Goldberg of the Northern District of Florida and Trial Attorney LisaMarie Freitas of CEOS. The case is being investigated by the Innocent Images Unit of the FBI and the Queensland, Australia, Police Service, with the assistance of the Bundeskriminalamt (BKA) Child Pornography Unit in Germany and the Child Exploitation and Online Protection Centre in the United Kingdom.
Justice Department Resolves Lawsuit Alleging Disability-Based Housing Discrimination at 12 Multifamily Housing Complexes in Louisville, KentuckyRead the Press Release
WASHINGTON – The Justice Department today announced that a federal district court judge in Louisville, Ky., approved a settlement of the Department’s lawsuit alleging that those involved in the design and construction of 12 multifamily housing complexes discriminated on the basis of disability. The complexes contain more than 800 units covered by the Fair Housing Act’s accessibility provisions.
Under the settlement, the defendants will pay all costs related to making the apartment complexes accessible to persons with disabilities and pay $255,000 to compensate individuals harmed by the inaccessible housing. The defendants will also pay a $25,000 civil penalty to vindicate the public interest and undergo training on the requirements of the Fair Housing Act.
"The civil rights laws require equal access to housing, including equal access for persons with disabilities," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "This comprehensive resolution will ensure that the equal housing opportunities required by law are provided in these housing complexes, and compensate those injured by the builders’ and designers’ failure to provide accessible housing."
"The U.S. Attorney’s Office for the Western District of Kentucky commends the defendants in this action for agreeing to change their plans and construction to assure their developments are accessible to all," said Acting U.S. Attorney Candace G. Hill of the Western District of Kentucky. "The residents of these developments deserve quality housing that complies with Fair Housing Accessibility Guidelines and the Americans with Disabilities Act. The consent decree is a good resolution for the parties and for the people of this community."
The defendants responsible for the payments and retrofits are DKCD Inc. d/b/a Renaissance Development d/b/a Renaissance Homes and d/b/a Renaissance Realty Investments; William M. Carroll, Jr.; Eric Claypool; Cooper Creek Village LLC; Deering Road LLC; Glenmary Village LLC; Hawk Design Inc.; Heritage Engineering LLC; Land Design & Development Inc.; Mindel, Scott & Associates Inc.; Renaissance/Audubon Woods II LLC; Renaissance/Deering Road LLC d/b/a Woodridge Lake; Renaissance-Glenmary Village Apartments LLC; Renaissance Homes LLC; Renaissance/LS LLC d/b/a Springs of Glenmary Village; Renaissance Realty Investments I LLC; Renaissance/St. Andrews LLC; Renaissance/Valley Farms LLC; Renaissance/VFA LLC; Tucker & Booker Inc.; Woodridge Lake Builders LLC; and Woods of St. Andrews LLC. These defendants will retrofit the following complexes in Louisville, Ky.:
1. Audubon Woods Condominiums, Cardinal Dr.
2. Cooper Creek Village Apartments, Cooper Village Terrace
3. Gardens of Glenmary Village Condominiums, Bardstown Rd.
4. Glenmary Village Apartments, Bardstown Rd.
5. Glenmary Village Overlook Condominiums, Bardstown Rd.
6. Renaissance St. Andrews Apartments, Renwood Blvd.
7. Renaissance St. Andrews Condominiums, Renwood Blvd.
8. Springs of Glenmary Village Condominiums, Bardstown Rd.
9. Valley Farms Apartments, Valley Station Rd.
10. Valley Farms Condominiums, Valley Station Rd.
11. Woodridge Lake Patio Homes, Deering Rd.
12. Woods of St. Andrews Condominiums, St. Andrews Woods Cir.
The retrofitting includes modifying walkways, removing steps, providing accessible curb ramps and parking, and providing accessible walks to site amenities, such as the clubhouses, pools, mailboxes and trash facilities. It also requires the defendants to replace inaccessible knob door hardware with levers, lower thermostats to accessible heights, and reconfigure bathrooms and kitchens.
The lawsuit arose as a result of a complaint to the Justice Department by the Fair Housing Council, then a local Louisville non-profit organization that received funding from the Department of Housing and Urban Development. The Fair Housing Council ceased operations in 2007. The Department conducted its own investigation and subsequently filed the lawsuit in September 2007.
The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status. More information about the Civil Rights Division and the laws it enforces is available at http://www.usdoj.gov/crt. Individuals who believe that they may have been victims of housing discrimination can call the Housing Discrimination Tip Line at 1-800-896-7743, email the Justice Department at [email protected], or contact HUD at 1-800-669-9777.
Border Patrol Agent Pleads Guilty for Attempting to Receive Protected Leopard TortoisesRead the Press Release
WASHINGTON—Rene Soliz of Alice, Texas, pleaded guilty today in U.S. District Court in Corpus Christi, Texas, to a violation of the Lacey Act for attempting to receive fifteen Tanzanian leopard tortoises that were transported into the United States in violation of a law, regulation or treaty, specifically, the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), the Justice Department announced.
According to statements made in court, in March 2006, Soliz, a U.S. Border Patrol agent, contacted an individual in Dar-Es Salaam, Tanzania, who was selling leopard tortoises. Soliz asked to buy eight of the tortoises and indicated an interest in buying more at a later date as part of a long-term business relationship. On April 7, 2006, a U.S. Customs inspector at John F. Kennedy International Airport intercepted the package containing the tortoises being sent to Soliz. The package was labeled as containing 50 live scorpions. When a U.S. Fish and Wildlife inspector opened the package, he found 14 live leopard tortoises and one dead leopard tortoise.
Leopard tortoises are listed in Appendix II of CITES. The CITES Appendices list species afforded different levels or types of protection from over-exploitation. Appendix II lists species that are not necessarily now threatened with extinction but that may become so unless trade is closely controlled. International trade in specimens of Appendix II species may be authorized by the granting of an export permit from the exporting country. No export permit accompanied the tortoises bought by Soliz.
“Soliz traded in a threatened tortoise species in violation of laws, designed to protect wildlife from extinction,” said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division, “Today’s guilty plea affirms the Justice Department’s intention to investigate and prosecute individuals who choose to undermine federal wildlife laws and contribute to the endangerment of protected species.”
Soliz faces a maximum sentence of one year in prison and a $100,000 fine. As part of the plea agreement, Soliz will resign from the U.S. Border Patrol.
The case is being prosecuted by Senior Trial Attorney Claire Whitney of the Justice Department’s Environmental Crimes Section. The case was investigated by the U.S. Fish and Wildlife Service’s Office of Law Enforcement.
Attorney General Announces Increased Training, Review of Process for Providing Materials to Defense in Criminal CasesRead the Press Release
WASHINGTON – Attorney General Eric Holder today announced comprehensive steps to enhance the Justice Department’s compliance with rules that require the government to turn over certain types of evidence to the defense in criminal cases.
"I am committed to ensuring that our prosecutors are provided sufficient training to understand fully their discovery obligations, and that they receive the support and resources necessary to do their jobs in a manner consistent with the proud traditions of this Department," Attorney General Holder said.
"The actions we are taking today are part of an ongoing process to ensure justice is served in every case the Department brings. We will continue to review how cases are managed before, during and after charges are filed, and where there is room for improvement, we will make additional changes," Holder said.
Actions initiated by the Department today include:
- Providing supplemental training to federal prosecutors throughout the Department on their discovery obligations in criminal cases. Training will begin in the coming weeks.
- Establishing a working group of senior prosecutors and Department officials from each component to review the discovery practices in criminal cases. The working group, to be headed by the Assistant Attorney General of the Criminal Division and the Chair of the Attorney General’s Advisory Committee, will review the need for:
- Improvements to practices and policies related to the government’s obligations to provide material to the defense in criminal matters;
- Additional resources, including staffing and information technology, needed to help prosecutors fulfill their discovery obligations;
- Additional discovery-related training for other Department prosecutors.
13 April 2009
United States Announces Largest Settlement Under Environmental Protection Agency’s Audit PolicyRead the Press Release
WASHINGTON— Invista will pay a $1.7 million civil penalty and spend up to an estimated $500 million to correct self-reported environmental violations discovered at facilities in seven states, the Justice Department and U.S. Environmental Protection Agency (EPA) announced today. The company disclosed more than 680 violations of water, air, hazardous waste, emergency planning and preparedness, and pesticide regulations to EPA after auditing 12 facilities it acquired from DuPont in 2004.
“This settlement is a significant achievement, as it will reduce air pollution in numerous communities, and demonstrates the United States’ commitment to ensuring that all facility owners come into compliance with environmental requirements,” said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “This settlement reflects an effective use of EPA’s audit policy and the value of companies performing audits and working with the United States to correct violations found at their facilities.”
“By correcting these violations, Invista will reduce harmful air pollution by nearly 10,000 tons per year,” said Catherine R. McCabe, acting assistant administrator of EPA's Office of Enforcement and Compliance Assurance. “Invista is making a clean start in a settlement that achieves significant environmental benefits, and we encourage other new owners to do the same.”
The settlement resolves violations disclosed under Invista’s corporate audit agreement with EPA. Invista conducted 45 separate audits of environmental practices and compliance at facilities located in Seaford, Del.; Athens, Calhoun, and Dalton, Ga.; Kinston, N.C.; Camden, S.C.; Chattanooga, Tenn.; LaPorte, Orange, and Victoria, Texas; and Martinsville and Waynesboro, Va.
As part of its corrective action requirements agreed to in the settlement, Invista will install pollution control equipment to treat air pollutants at its Seaford, Del.; Camden, S.C.; Chattanooga, Tenn.; and Victoria, Texas facilities. The company has also applied for applicable air and water permits, has installed adequate secondary containment for oil storage areas, and has notified state and local emergency planning and response organizations of the presence of hazardous substances.
To ensure continued compliance and minimization of the benzene wastes generated at the Victoria and Orange, Texas facilities, Invista is required under the settlement to either upgrade control equipment or make major changes to its processes used to handle these wastes. EPA estimates that these actions will reduce air emissions of benzene by more than nine tons annually and eliminate 25 to 750 tons per year of benzene from wastewater.
The emission reductions resulting from correcting these violations will result in estimated annual human health benefits valued at over $325 million, including 30 fewer premature deaths per year, 2,000 fewer days/year when people would miss school or work, and over 9,000 fewer cases of upper and lower respiratory symptoms.
Invista is a multi-national manufacturer of a wide range of polymer-based fibers, including Lycra, Stainmaster, and Coolmax.
This is the largest settlement under EPA’s audit policy, which was launched in 1995. The policy provides incentives to companies that voluntarily discover, promptly disclose, and expeditiously correct environmental violations. The companies must also take steps to prevent future violations. EPA may reduce or waive penalties for certain violations if the facility meets the conditions of the policy. Consistent with the audit policy, EPA waived a large portion of the penalty in this case.
EPA’s experience with Invista guided the development of a national interim audit policy for new owners—announced in August 2008—designed to encourage other new owners to make a “clean start” at their recently acquired facilities.
The states of Delaware, South Carolina and the Chattanooga-Hamilton County Air Pollution Control Board in Tennessee have also joined in today’s consent decree and will share portions of the civil penalty with EPA.
The consent decree, lodged in the U.S. District Court for the District of Delaware, is subject to a 30-day public comment period and approval by the federal court. A copy of the consent decree is available on the Justice Department Web site at http://www.usdoj.gov/enrd/Consent_Decrees.html.
St. Louis Woman Pleads Guilty to Federal Sex Trafficking ChargeRead the Press Release
WASHINGTON – Acting Assistant Attorney General Loretta King and U.S. Attorney for the Eastern District of Missouri Catherine L. Hanaway today announced that defendant Waquita Wallace pleaded guilty to the federal civil rights charge of sex trafficking. Wallace admitted to forcing a young woman to engage in commercial sex acts through a combination of force, fraud and coercion. Defendant Wallace also benefitted financially from the sex trafficking. She faces a maximum sentence of life in prison and a fine of up to $250,000. The court announced that sentencing will take place on July 7, 2009.
"The defendant brutally forced a young woman to sell her body by which the defendant profited," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "This type of crime is an affront to the dignity of the victim and the free society in which we live. The Department of Justice will continue to vigorously prosecute these cases."
"Ms. Wallace took advantage of the victim, brutally exploiting her," said U.S. Attorney Catherine L. Hanaway "We have an obligation to protect the most vulnerable members of our community."
Human trafficking prosecutions are a top priority of the Justice Department. In the last seven fiscal years, the Civil Rights Division, in conjunction with the U.S. Attorneys’ Offices, has increased by nearly seven-fold the number of human trafficking cases filed in court as compared to the previous seven fiscal years.
In announcing the plea, Acting Assistant Attorney General King and U.S. Attorney Hanaway commended the FBI and the St. Louis Metro Police Department for their work in this cooperative investigation and prosecution. Assistant U.S. Attorney Howard Marcus and Civil Rights Division attorney Jim Felte are prosecuting this case for the government.
Oregon Corporation Sentenced for Clean Water Act ViolationRead the Press Release
WASHINGTON— California Shellfish Company Inc., doing business as Point Adams Packing Co. (PAPCO), was sentenced today by U.S. District Court Judge Garr M. King in Portland, Ore., to pay $75,000 for a felony violation of the Clean Water Act for unpermitted discharges of wastewater into the Columbia River, the Justice Department announced.
As part of the criminal fine, $26,250 will be placed in the congressionally-established National Fish and Wildlife Fund in order to fund various environmental projects in the state through the Oregon Governor’s Fund for the Environment. Projects funded by these grants serve to reduce pollution and otherwise cleanup Oregon rivers, streams, and coastal areas and restore and preserve fish, wildlife, and plant resources critical to those rivers, streams and coastal areas.
PAPCO pleaded guilty on March 27, 2008 and admitted to violating the Clean Water Act, which makes it a crime to knowingly discharge pollutants in violation of a National Pollution Discharge Elimination System (NPDES) permit by discharging unpermitted chicken processing wastewater from its Hammond, Ore., facility. The former manager of the facility, Thomas Libby, was previously sentenced for a misdemeanor violation of the Clean Water Act. Modesto Tallow Co., doing business as California Spray Dry (CSD), which operated PAPCO’s plant, has also pleaded guilty and been sentenced for a felony Clean Water Act violation.
According to documents filed with the court, PAPCO had obtained a NPDES permit to discharge fish processing wastewater from its facility and in June 2003 leased a portion of its facility to CSD. CSD intended to process chicken carcasses at the PAPCO facility for the production of various by-products including flavoring for pet foods. Neither CSD nor PAPCO obtained a modification to the NPDES permit to allow the discharge of chicken processing wastewater into the Columbia River. As a result there were unpermitted discharges beginning in December 2003 and lasting until approximately June 2004. The Environmental Protection Agency (EPA) was prompted to investigate the matter as a result of complaints from several neighbors about odors from the discharges.
“PAPCO knowingly discharged pollutants into the Columbia River without regard for the law or the environment,” said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “This case underscores the Justice Department’s commitment to enforce the nation’s laws that protect the public and the environment from pollution.”
Karin Immergut, U.S. Attorney for the District of Oregon, stated, “Corporations that don't play by the rules will be held accountable. We are pleased that the corporation, as part of its criminal penalty, will contribute to protecting the environment here in Oregon.”
“The defendants’ illegal discharges broke some of the most basic laws put in place to protect the Columbia River,” said Acting Special Agent in Charge Tyler Amon with the EPA’s Criminal Investigation Division, Seattle, WA. “The Oregon Environmental Crimes Task Force did an excellent job of investigating and prosecuting this case, and it will continue to pursue criminal charges against those companies and individuals that pollute Oregon’s waterways.”
The case was investigated by the EPA’s Criminal Investigation Division and prosecuted by Assistant U.S. Attorney Dwight C. Holton and Senior Trial Attorney J. Ronald Sutcliffe of the Justice Department’s Environmental Crimes Section.
Justice Department Highlights FY 2008 Tax Enforcement ResultsRead the Press Release
WASHINGTON - The Department of Justice Tax Division today announced highlights of its work during the past year to defend and enforce the nation’s tax laws.
The Tax Division has assisted the Internal Revenue Service (IRS) in tracking down tax cheats who use offshore accounts, combating abusive tax shelters, stopping tax defiers and shutting down tax schemes and scams. During FY 2008, the Tax Division also successfully defended refund suits against the United States representing claims of nearly $803 million, and collected, through affirmative litigation, over $178 million. The Division’s budget in that period was less than $93 million.
"It is important for the vast majority of taxpayers who pay their tax liabilities on time and in full, to know that those taxpayers who don’t will be held fully accountable, either civilly or criminally or both" said Acting Assistant Attorney General John A. DiCicco.
Combating Offshore Tax Evasion
The Tax Division has devoted significant resources this past year to combating offshore tax evasion and locating hidden offshore assets. In June 2008, Bradley Birkenfeld pleaded guilty to conspiring with an American billionaire real estate developer, Swiss bankers and his co-defendant, Mario Staggl, to help the developer evade payment of $7.2 million in taxes by assisting in concealing $200 million of assets in Switzerland and Liechtenstein.
In February 2009, the Tax Division, together with the U.S. Attorney’s Office for the Southern District of Florida, entered into an unprecedented deferred prosecution agreement (DPA) with UBS AG, Switzerland’s largest bank. As part of the agreement, UBS agreed to provide the U.S. government with the identities of, and account information for, certain U.S. customers of UBS’s cross-border business. UBS also admitted in the agreement, in great detail, how it had conspired to defraud the United States by impeding the IRS. UBS also agreed to promptly exit its cross-border business with U.S. clients, to provide continuing cooperation with the government’s investigation, and to pay the United States $780 million.
As part of its continuing review of offshore account information received, in April 2009, the Tax Division, together with the U.S. Attorney’s Office for the Southern District of Florida, charged Steven Michael Rubinstein, of Boca Raton, Fla., with filing a false income tax return. According to court records, Rubinstein, a chartered accountant, failed to disclose in his 2007 Form 1040 that he had an interest in, or signature authority over, a financial account at UBS in Switzerland. Additionally, Rubinstein failed to report the income he earned on any UBS Swiss bank accounts. According to court records, from 2001 through 2008, it is alleged that Rubinstein repatriated approximately $3 million into the United States to purchase property and build a personal residence in Boca Raton. Additionally, it is alleged that Rubinstein deposited and sold more than $2 million in South African Krugerrands through his UBS Swiss bank accounts.
The Tax Division is also seeking from UBS approximately 52,000 additional names and account information of United States taxpayers. In February 2009, the Tax Division filed United States v. UBS (S.D. Fla.), a petition to enforce an IRS summons issued to UBS to obtain this information.
Curbing High-End Tax Shelters
During the past year, the Justice Department and the IRS have continued their civil and criminal enforcement efforts against the promoters and facilitators of abusive tax shelters. Abusive shelters for large corporations and high-income individuals have cost the U.S. Treasury many billions annually, according to Treasury Department estimates. The Tax Division also has had great success in federal court defending the U.S. Treasury against tax shelter-related claims of large companies and individual investors. The Tax Division is currently litigating approximately 94 civil tax shelter cases or groups of cases. Among the successes during the past year in this area are the following:
- In September 2008, attorney Peter Cinquegrani pleaded guilty to conspiracy to commit tax fraud, aiding and abetting tax evasion, and aiding in the submission of false and fraudulent documents to the IRS, in connection with a fraudulent tax shelter called PICO.
- The Tax Division prevailed in a pair of the first LILO/SILO tax shelter cases to be tried, AWG v. United States and Fifth-Third Bank v. United States. The government victories in these civil cases helped lay the groundwork for an IRS settlement initiative in which hundreds of taxpayers settled similar cases involving tens of billions of dollars, on terms extremely favorable to the government.
- The Tax Division prevailed in Enbridge Midcoast Energy Inc. v. United States, the first so-called intermediary transaction to be decided. The decision in this civil case upheld a 20 percent penalty and will be extremely helpful in the dozens more intermediary tax shelters that are either pending in court or before the IRS, involving tens of millions of dollars.
- The Tax Division was victorious in numerous civil cases involving so-called "Son of BOSS" tax shelters, including Jade Trading LLC v. United States, Stobie Creek Investments v. United States, and Salman Ranch v. United States.
Stopping Tax Defiers
The Tax Defier Initiative, which the Tax Division announced in April 2008, targets persons who attempt to undermine our entire tax system. Tax defier cases traditionally involve individuals who spout rhetoric denying the fundamental validity of the tax laws as an excuse for not paying taxes, while also availing themselves of the benefits and rights that the United States provides to its citizens and residents. The number of tax defier cases referred for investigation or prosecution increased significantly during fiscal year 2008.
The success rate in tax defier prosecutions is very high. Some examples:
- In January 2009, Michael C. Irving (D.D.C.), a District of Columbia police officer, was sentenced to 14 months in prison, following his conviction in May 2008 of two counts of tax evasion. Irving had fraudulently arranged for the police department to stop withholding taxes on his paychecks, and had filed a 2002 tax return alleging he earned zero wages, despite earning wages of $155,211 that year.
- In September 2008, Robert B. Beale (D. Minnesota), the founder and former chief executive officer of Comtrol Corp., was sentenced to over 11 years in prison and ordered to pay a $175,000 fine, following his conviction for conspiracy to defraud the IRS and tax evasion. Beale failed to pay income tax on more than $5 million in income and used a shell corporation to conceal his income.
- In August 2008, Hamlet Bennett (D. Hawaii) was sentenced to a term of 78 months in prison and ordered to pay more than $1.3 million in restitution and $35,330 in costs of prosecution, after his conviction for tax evasion for the years 1999 through 2003. Evidence at trial revealed that Bennett purchased "products" from convicted tax offender Royal Lamar Hardy and Hardy’s organization, The Research Foundation, which promoted wide-scale "non-filing" of federal income tax returns.
- In May 2008, Louis Genard (W.D. Louisiana), a dentist, was sentenced to 30 months in prison and ordered to pay $155,683 in restitution, following his conviction on three counts of willful failure to file income tax returns. Genard had claimed that he revoked his U.S. citizenship and declared himself a "citizen of the Republic of Louisiana."
- In April 2008, the court sentenced actor Wesley Snipes (M.D. Fla.), to three years in prison; co-defendants Eddie Kahn and Douglas Rosile received 10 years and four and a half years, respectively.
Halting the Promotion of Tax Fraud Schemes
Because ongoing tax scams cause continuing harm to the U.S. Treasury and leave participants owing taxes, interest, and often, penalties, the government does not wait until a criminal case has been developed to take action to stop the scam. Rather, the Justice Department brings civil injunction suits to stop both the promotion of tax scams and the preparation of false or fraudulent returns. In appropriate cases, the Justice Department brings criminal charges against the promoters, preparers and scam participants to punish them for their unlawful conduct.In the past decade, the Justice Department has sought and obtained injunctions against over 300 promoters of tax fraud schemes, including a record 71 promoters in fiscal year 2008. These injunctions have stopped promoters from selling tax evasion schemes on the Internet, at seminars, or though other means. The tax scam promoters the government has sought to enjoin have cost the U.S. Treasury several billion dollars, and have had hundreds of thousands of customers. Among the government’s results in this area are:
- In November 2008, a federal court in California ordered Edwin Lichtig III and his firm, GSL Advisory Solutions, to stop promoting unlawful tax fraud schemes involving Individual Retirement Accounts (IRAs) that helped customers improperly avoid federal income tax on tens of million of dollars.
- In October 2008, a federal court in California ordered Scott Cathcart to stop promoting a so-called "90 Percent Stock Loan" program that falsely purported to enable customers to avoid paying income tax on any capital gains, by treating the sale of appreciated stocks or other securities as a loan, in a scheme that allegedly cost the government hundreds of millions in lost tax dollars.
- In May 2008, a federal court in Florida shut down Pinnacle Quest International, which the court found knowingly sponsored "tax fraud trade shows" at offshore locations.
Further details about these and other tax enforcement cases are available on the Tax Division’s Web site http://www.usdoj.gov/tax/, on the IRS’s Web site http://www.irs.gov/, and on the IRS Criminal Division’s Web site http://www.ustreas.gov/irs/ci/.
The Justice Department encourages anyone who has information about suspected tax fraud to report it to the IRS Web site at http://www.irs.gov and click on the links "Contact IRS" and "How Do You Report Suspected Tax Fraud Activity."
Disbarred Maryland Attorney Pleads Guilty to Preparing False Tax ReturnsRead the Press Release
WASHINGTON - Tax return preparer Lawrence Sperling pleaded guilty today to aiding in the preparation of false tax returns, the Justice Department and Internal Revenue Service (IRS) announced. Sperling was scheduled to begin trial on April 14, 2009 before Judge Deborah Chasanow in Greenbelt, Md.
According to the indictment and the plea agreement, Sperling, who is a disbarred former attorney, owned and operated a tax preparation business in Silver Spring, Md., from at least 2002 through 2003. The business operated under several names, including American Tax Service, American Tax Institute, JAMAR LLC, and American Tax Professional Associates Inc. (ATPA).
According to the indictment and the plea agreement, Sperling knowingly prepared tax returns for his clients that contained false and fraudulent items, including inflated medial expenses, charitable contributions, miscellaneous employment-related expenses, and child care credits. The tax loss associated with false returns prepared by Sperling is $804,335.
According to the indictment and the plea agreement, beginning in 1988, Sperling failed to file tax returns for eleven years. In 2001, the IRS penalized Sperling and fined him $10,000 for "willful or reckless understatement of taxpayer’s tax liability" with respect to his tax preparation business. The IRS sent him more than two dozen notices of taxes and penalties due, notice of intent to levy, and other warning letters.
Beginning in at least 1998, Sperling arranged for another individual (the nominee) to file the tax returns of Sperling’s clients and to collect Sperling’s preparation fees. The nominee subsequently held these funds in bank accounts in the nominee’s name. The nominee made disbursements of these funds to Sperling or others at Sperling’s request. Sperling never declared or paid taxes on these funds, although he used a portion of them to pay business expenses. As a result of this conduct, Sperling caused an additional tax loss of $130,847.
Judge Chasanow scheduled sentencing of Sperling for July 31, 2009. Sperling faces a maximum sentence of three years in prison and a fine of $250,000 for the aiding in the preparation of false returns conviction.
Acting Assistant Attorney General John A. DiCicco thanked the special agents from IRS-Criminal Investigation who investigated the case, as well as Tax Division trial attorneys Jerrod Patterson, Shawn Noud, and Tino Lisella, who prosecuted the case.
Bronx Return Tax Preparer Indicted for Aiding in Preparation of False Tax ReturnsRead the Press Release
WASHINGTON – Alexander Tajong, a Bronx, N.Y.-based return preparer, was charged today with twenty counts of willfully aiding and assisting in the preparation and filing of false income tax returns for 10 of his clients during the 2002 and 2003 tax years, the Justice Department and Internal Revenue Service (IRS) announced.
According to the indictment, from approximately 2002 to April 2004, Tajong, operating under the name "Tajong Accounting and Tax Services," prepared tax returns for his clients based upon identification, Forms W-2, and Forms 1099 provided by the clients. Tajong then falsified the taxpayers’ returns by including inflated and fictitious deductions, exemptions, credits and losses on the returns. All 20 fraudulent returns charged in the indictment include falsified Schedule A deductions and expenses. This false information lowered the taxpayers’ tax liabilities and resulted in thousands of dollars of unwarranted tax refunds.
An indictment is merely a formal charge by the grand jury. Each defendant is presumed innocent unless and until proven guilty in U.S. District Court. If convicted, the defendant faces maximum potential sentences of 60 years in prison and millions of dollars in fines.
The case is being prosecuted by Tax Division attorneys Nanette L. Davis, who is an Assistant Chief in the Northern Criminal Enforcement Section, and Diana Beinart. The case was investigated by the IRS, Criminal Investigation Division.
Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at http://www.usdoj.gov/tax/. Additional information about tax fraud schemes to watch out for may be found on the IRS Criminal Investigation Web site.