Latest Records
Newest first across public DOJ and U.S. Attorney press releases.
10 April 2009
Two More Commercial Fisherman Plead Guilty to Illegal Harvesting of RockfishRead the Press Release
WASHINGTON—Two commercial fisherman pleaded guilty today in U.S. District Court in Greenbelt, Md., to violations of the Lacey Act, the federal law that prohibits individuals from transporting, selling or buying illegally harvested fish, in this case striped bass or rockfish, the Justice Department announced.
Jerry Decatur Sr. of Stafford, Va., pleaded guilty to a one count criminal information for illegally taking and over-harvesting striped bass. Additionally, Kenneth Dent of Dumfries, Va., pleaded guilty to a one count criminal information for trafficking illegally taken striped bass.
According to documents filed with the court, on at least 13 occasions between 2004 through 2007, Decatur Sr. illegally harvested more than 10,000 pounds of striped bass from the Potomac River. The commercial fisherman fished out of season, kept over-sized fish or used nets that violated applicable regulations. He then sold the catch to two fish wholesalers in Washington, D.C. Additionally, he failed to affix tags to the majority of the striped bass that he caught thereby exceeding their limit by thousands of pounds. In April and May 2003 through 2007, Decatur harvested more than 65,000 beyond his limit. The fair market retail value of the over- and illegally- harvested rockfish was in excess of $329,000.
According to the documents, on multiple occasions, Dent sold hundreds of pounds of rockfish that were illegally harvested or tagged to an undercover special agent with the Virginia Marine Police, who told Dent that the fish were being transported to Pennsylvania. On one occasion, Dent illegally harvested 400 pounds of fish from Virginia tributaries of the Potomac River and sold it to the undercover agent for $990. He knowingly tagged much of the fish with incorrect tags to exceed his limit of Virigina-caught fish. The majority of these fish were also not within the legal size limit. On a second occasion, Dent sold the undercover agent 430 pounds of rockfish for $1000 that were larger than the legal size limit. On a third occasion, he sold the agent 480 pounds of fish for $1,375. All of these fish were more than the legal size limit. The fair market retail value of the transactions was in excess of $5,000. Further Dent illegally sold the undercover agent 100 striped bass tags despite a prohibition against private sales.
Decatur Sr. and Dent both face maximum penalties of up to five years in prison, a fine of $250,000 and three years supervised release for the Lacey Act violations.
Today’s guilty pleas are the result of the investigation by an interstate task force formed by the U.S. Fish and Wildlife Service, the Maryland Natural Resources Police and the Virginia Marine Police, Special Investigative Unit in 2003. The task force conducted undercover purchases and sales of striped bass in 2003, engaged in covert observation of commercial fishing operations in the Chesapeake Bay and Potomac River area, and conducted detailed analysis of area striped bass catch reporting and commercial business sales records from 2003 through 2007. The investigation is continuing, and charges against others are possible.
As part of the investigation and prosecution to date, a total of 11 individuals and one company have been charged including today’s defendants. Nine of those have pleaded guilty to wildlife crimes for their involvement in illegally harvesting and trafficking in striped bass. Two fishermen, Joseph Peter Nelson Jr., of Great Mills, Md., and his father Joseph Peter Nelson, of Avenue, Md., are awaiting trial, and one other commercial fisherman is awaiting arraignment and entry of a plea.
Sentencing dates in U.S. District Court in Greenbelt for five Maryland fishermen who pleaded guilty in this case are listed below.
Thomas L. Hallock April 22, 2009 9:30 AM
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
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.
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.
New York Woman Pleads Guilty to Conspiracy to File False Claims for Tax RefundsRead the Press Release
WASHINGTON - A woman from the Bronx, N.Y., pleaded guilty today to conspiracy to making false claims and mail fraud, the Justice Department announced. The indictment alleged that between approximately May 1, 2003, and Feb. 28, 2005, Sharon Smith and others participated in a scheme to file false and fraudulent individual income tax returns in the names of individuals who were not entitled to the refunds that were claimed.
Sharon Smith, along with Odell Folks, Tanya Smith and Keith Terry were indicted on Nov. 26, 2008, for a scheme to file false claims for refunds with the Internal Revenue Service (IRS) using names of clients of the New York City Human Resources Administration (HRA) and the Center for Employment Opportunities (CEO). Terry, a resident of Dallas, Ga., pleaded guilty to the false claims conspiracy and a false return charge on Jan. 29, 2009. On March 6, 2009, Folks and Tanya Smith pleaded guilty. Folks pleaded guilty to the false claims conspiracy and mail fraud counts as well as to a count of making and subscribing a false return. Tanya Smith pleaded guilty to the false claims conspiracy count.
The refund checks were mailed to addresses selected by Odell Folks. Folks, Sharon Smith, Tanya Smith and Keith Terry conspired to deposit the checks, conceal the nature, source, location, ownership or control of the proceeds, and keep all or a portion of the proceeds for themselves. The indictment further alleged that Folks failed to report the income that he received from his scheme on the income tax returns that he filed for 2003, 2004 and 2005.
Acting Assistant Attorney General John A. DiCicco thanked Tax Division Trial Attorney Mark F. Daly and Assistant U.S. Attorney Shreve Ariail of the Eastern District of New York. This case was investigated by the IRS Criminal Investigation Division office in Bridgeport, Conn., and the U.S. Postal Inspection Service in New Haven, Conn.
More information about the Justice Department’s Tax Division is available at www.usdoj.gov/tax.
Louisiana Tax Defier Convicted on Federal Tax ChargesRead the Press Release
WASHINGTON – Following three and a half days of trial and 19 minutes of deliberations, a Gulfport, Miss., federal jury yesterday convicted Paul Richard Arceneaux, a resident of Church Point, La., of tax crimes, the Justice Department announced. Arceneaux, who owned and operated Speedy Cash Inc. in Gulfport, was convicted of all counts of the indictment charging him with corruptly interfering with the Internal Revenue laws and failing to file his income tax returns for 2003 and 2004.
U.S. District Judge Walter J. Gex III, scheduled sentencing for July 15, 2009. Arceneaux faces potential maximum sentences totaling five years’ in prison followed by one year of supervised release, $450,000 in criminal fines and costs of prosecution.
According to the indictment, Arceneaux, formerly of Long Beach, Miss., filed fictitious liens for millions of dollars against the Chancery Clerk for Harrison County, an employee of the Chancery Clerk’s office and an employee of the IRS. Arceneaux also filed frivolous lawsuits against the Commissioner of Internal Revenue Service and an IRS employee, and Arceneaux filed false tax returns or amended tax returns for tax years 1998 through 2002 on which he falsely claimed he earned no income.
On July 12, 2004, U.S. District Judge Louis Guirola Jr. dismissed Arceneaux’s frivolous lawsuits. In those lawsuits, Arceneaux had asserted that he was a citizen of the state of Mississippi, not the United States, and therefore the Internal Revenue code did not apply to him. Judge Guirola wrote that Arceneaux’s arguments that he is not subject to this nation’s federal tax laws "have been considered and uniformly rejected by the courts." In this criminal trial, Arceneaux testified that he relied upon the advice of a number of individuals, including Irwin Schiff, who is now serving time in prison for tax crimes.
"Honest, hard-working taxpayers have a right to expect that all will pay their fair share of taxes. Yesterday’s verdicts make it crystal clear that those thinking about avoiding their federal tax obligations should think twice," said John A. DiCicco, Acting Assistant Attorney General of the Justice Department’s Tax Division. "Together, the Justice Department and the I.R.S. are aggressively enforcing the federal tax laws."
"We should not forget that the ultimate victim of tax fraud is the honest taxpayer," said Eileen C. Mayer, Chief, Criminal Investigation, Internal Revenue Service. "The jury and the courts have once again held that there are no legal grounds for failure to file or pay your taxes."
Acting Assistant Attorney General DiCicco thanked Tax Division attorney Jed Silversmith and Assistant U.S. Attorney Mike Hurst, who prosecuted the case. He also thanked the Internal Revenue Service Criminal Investigation agents in the Gulfport office, who investigated the case.
Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at http://www.usdoj.gov/tax.
Former Jackson County, Missouri, Deputy Indicted for Civil Rights ViolationRead the Press Release
WASHINGTON – A former Jackson County, Mo., sheriff’s deputy was indicted on April 7, 2009, by a federal grand jury for violating the civil rights of a teenage girl whom he forced to perform sexual acts in his patrol car, the Justice Department announced.
The indictment alleges that Steven W. Burgess, 35, of Independence, Mo., then a deputy sheriff with the Jackson County Sheriff’s Department, while acting under color of law, deprived a minor child of her Constitutional rights on July 24, 2007. According to the indictment, Burgess violated the victim’s right not to be deprived of liberty without due process of law, which includes the right to bodily integrity. The indictment alleges that Burgess committed acts that include aggravated sexual abuse, using force against his victim and placing her in fear of death, serious bodily injury and kidnaping.
The indictment was returned by a federal grand jury in Kansas City. The charges contained in the indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
This case is being prosecuted by Assistant U.S. Attorney K. Michael Warner and Eric L. Gibson, a trial attorney with the Criminal Section of the Civil Rights Division. It was investigated by the Jackson County, Mo., Sheriff’s Department and the Federal Bureau of Investigation.
9 April 2009
Two Department of Defense Contractors Charged in Bribery Conspiracy Related to DOD Contracts in AfghanistanRead the Press Release
WASHINGTON — Two Department of Defense (DOD) contractors were charged with conspiracy and bribery relating to their roles involving DOD contracts in Afghanistan, the Department of Justice today announced. A Lebanese contracting company is also charged with participating in the same conspiracy.
The criminal complaint, unsealed today and originally filed on April 3, 2009, in U.S. District Court in Alexandria, Va., charges Dinorah Cobos with bribery and conspiracy to commit bribery. Cobos, a U.S. citizen living in Dubai, United Arab Emirates, worked as a contractor with the U.S. Army Corps of Engineers at the Afghanistan Engineer District in Kabul, Afghanistan. The criminal complaint also charged Afghanistan Engineer District contractor Raymond Azar, a citizen of Lebanon, with conspiracy to commit bribery, and Sima Salazar Group, a Lebanese military contracting company, with bribery and conspiracy to commit bribery.
Cobos and Azar were located in Afghanistan at the time the charges were filed. They were taken into U.S. custody and transferred to the United States, with the authorization of Afghan authorities. Cobos and Azar made their initial appearance on Thursday, April 9, 2009, in front of U.S. Magistrate Judge T. Rawle Jones Jr., in Alexandria, Va.
According to the court documents, beginning in 2008, Cobos and Azar conspired to bribe a U.S. Army Corps of Engineers contracting officer in exchange for approval of payment of fraudulent invoices on contracts that Sima Salazar Group held with the U.S. Army Corps of Engineers in Afghanistan. The court documents allege that Cobos offered to pay the contracting officer up to 1.5 percent of any payments made by U.S. Corps of Army Engineers to Sima Salazar Group and that $16,789 in bribe money was, in fact, wired to the contracting officer in the United States.
"We will aggressively prosecute military contractors who attempt to bribe government officials in order to line their own pockets," said Scott D. Hammond, Acting Assistant Attorney General in charge of the Department’s Antitrust Division. "The alleged conduct is particularly egregious because the contracts at issue were intended to assist U.S. soldiers abroad serving their country."
"The FBI remains committed to ensuring a fair and honest procurement process," said Assistant Director Kenneth W. Kaiser of the FBI’s Criminal Investigative Division. "Working with our partners, we will continue to pursue all individuals who engage in bid rigging, bribery or other criminal conduct that impact our U.S. military operations and soldiers overseas."
"Today’s announcement is a testament to our solid and continued partnership with the Department of Justice and other law enforcement agencies in the fight against fraud and greed here and abroad," said Brig. Gen. Rodney Johnson, commander of the U.S. Army’s Criminal Investigation Command.
"The Department of Defense requires contractors to adhere to ethical standards designed to guarantee the integrity of the acquisition process," said Sharon Woods, Director of the Defense Criminal Investigative Service. "Individuals who engage in disreputable activity which compromises the process undermine principles of fair and open competition government agencies strive to support. The Defense Criminal Investigative Service remains committed to ensuring military contractors who engage in fraudulent activity are held firmly accountable."
"As part of its continuing work to prevent fraud, the Afghanistan Engineer District of the U.S. Army Corps of Engineers actively supported these agencies in their investigation. The developments of this case should serve as a warning to other contractors of the consequences they face for criminal actions aimed at the United States and the people of Afghanistan," said Col. Thomas E. O’Donovan, Commander of the Afghanistan Engineer District of the U.S. Army Corps of Engineers.
Cobos faces up to 15 years in prison and a fine of $250,000 or twice the thing of value offered for the bribery count, and Cobos and Azar each face up to five years in prison and a fine of $250,000 for the conspiracy count. Sima Salazar Group faces fines of up to $500,000 for bribery and $500,000 for conspiracy. The maximum fine for each of these violations 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.
This case is being prosecuted by the Antitrust Division’s National Criminal Enforcement Section, with assistance from the Criminal Division’s Office of International Affairs and the U.S. Attorney’s Office for the Eastern District of Virginia. The investigation of this case is being conducted by the FBI’s Washington Field Office, U.S. Army Criminal Investigation Command, Defense Criminal Investigative Service, and members of the International Contract Corruption Task Force (ICCTF). 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. Additional assistance was provided by the U.S. Army Corps of Engineers.
Today’s charges reflect the Department’s commitment to protecting U.S. taxpayers from procurement fraud through its creation of the National Procurement Fraud Task Force. The National Procurement Fraud Initiative, announced in October 2006, is designed to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in contracting activity for national security and other government programs.
Anyone with information concerning bid rigging, bribery or other criminal conduct regarding DOD contracts is urged to call the Antitrust Division’s National Criminal Enforcement Section at 202-307-6694; the FBI at 800-225-5324; Defense Criminal Investigative Service at 800-424-9098 or [email protected]; or Army Criminal Investigation Division at www.cid.army.mil.
Three International Airline Companies Agree to Plead Guilty to Price Fixing on Air Cargo ShipmentsRead the Press Release
WASHINGTON — Three international airline companies —Luxembourg-based Cargolux Airlines International S.A., Japan-based Nippon Cargo Airlines Co. Ltd. (NCA), and Korea-based Asiana Airlines Inc. —have each agreed to plead guilty and pay criminal fines totaling $214 million for conspiring to fix prices in the air cargo industry. In addition, Asiana was charged with fixing the passenger fares charged on flights from the United States to Korea.
According to the charges filed today in the U.S. District Court for the District of Columbia, Cargolux engaged in a conspiracy in the United States and elsewhere to eliminate competition by fixing the cargo rates charged to customers for international air shipments, including to and from the United States, from as early as September 2001 and continuing until Feb. 14, 2006. The company has agreed to pay a $119 million criminal fine.
NCA engaged in a conspiracy to eliminate competition by fixing the cargo rates charged to customers in the United States and elsewhere for international air shipments, from in or about April 2000 until at least Feb. 14, 2006. NCA has agreed to pay a $45 million criminal fine.
Asiana engaged in a conspiracy to eliminate competition by fixing both cargo rates and passenger fares from at least as early as January 2000 until at least Feb. 14, 2006. Asiana has agreed to pay a $50 million criminal fine.
Under the plea agreements, which are subject to court approval, Cargolux, NCA and Asiana have agreed to cooperate with the Department’s ongoing investigation.
"Fifteen airlines and three executives have been prosecuted to date for their participation in price-fixing agreements that inflicted a heavy toll on American businesses and consumers as well as the global economy," said Scott D. Hammond, Acting Assistant Attorney General in charge of the Department’s Antitrust Division. "The Department will continue its investigation into this criminal conduct until all co-conspirators are brought to justice."
These cases arise from an ongoing investigation into the air transportation industry. Including Cargolux, NCA, and Asiana’s pleas, 15 companies have pleaded or agreed to plead guilty in the Justice Department’s investigation into price fixing in the air transportation industry. British Airways Plc, Korean Airlines Ltd, Qantas Airways Limited, Japan Airlines International Co. Ltd., Martinair Holland N.V., Cathay Pacific Airways Limited, SAS Cargo Group A/S, Société Air France and Koninklijke Luchtvaart Maatschappij N.V. (KLM Royal Dutch Airlines), LAN Cargo S.A., Aerolinhas Brasileiras S.A., and EL AL Israel Airlines Ltd. have also pleaded guilty. Additionally, three individuals have previously pleaded guilty for their involvement in the illegal activity. Collectively, the companies have paid or agreed to pay fines totaling more than $1.6 billion and all three executives have been sentenced to serve jail time.
Cargolux, NCA, and Asiana are charged with carrying out the air cargo price-fixing conspiracy with co-conspirators by:
- Participating in meetings, conversations and communications in the United States and elsewhere to discuss the cargo rates to be charged on certain routes to and from the United States;
- Agreeing, during those meetings, conversations and communications, on certain components of the air cargo rates to charge for shipments on certain routes to and from the United States;
- Levying cargo rates in the United States and elsewhere in accordance with the agreements reached; and
- Engaging in meetings, conversations and communications in the United States and elsewhere for the purpose of monitoring and enforcing adherence to the agreed-upon cargo rates.
In addition, Asiana is charged with carrying out the air passenger price-fixing conspiracy with co-conspirators by:
- Participating in meetings, conversations and communications in the United States to discuss wholesale and passenger fares to be charged on flights from the United States to Korea;
- Agreeing, during those meetings, conversations and communications, on the wholesale fares and passenger fares to charge on flights from the United States to Korea;
- Levying wholesale and passenger fares on flights from the United States to Korea in accordance with the agreements reached; and
- Engaging in meetings, conversations and communications in the United States for the purpose of monitoring and enforcing adherence to the agreed-upon passenger fares and wholesale fares.
Cargolux, NCA and Asiana are charged with price fixing in violation of the Sherman Act, a violation that 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.
The ongoing investigation is being conducted by the Antitrust Division’s National Criminal Enforcement Section, the Federal Bureau of Investigation (FBI), the Department of Transportation Office of Inspector General and the U.S. Postal Service Office of the Inspector General.
Anyone with information concerning price fixing or other anticompetitive conduct in the air transportation industry is urged to call the National Criminal Enforcement Section of the Antitrust Division at 202-307-6694 or the FBI Washington Field Office, Northern Virginia Resident Agency at 703-686-6000.
Justice Department and Fort Bend County, Texas, Resolve Claims Alleging Voting Rights ViolationsRead the Press Release
WASHINGTON - The Justice Department today announced the filing of a lawsuit and the settlement of its claims against Fort Bend County, Texas, alleging violations of the Voting Rights Act of 1965, as amended, and the Help America Vote Act (HAVA).
The complaint, which was filed in the U.S. District Court for the Southern District of Texas, alleges that Fort Bend County failed to implement an effective bilingual election program for Spanish-speaking voters in violation of 4(f)4 of the Voting Rights Act and that the county prevented eligible voters from receiving assistance from the persons of their choice. The complaint also alleges that Fort Bend County failed to offer eligible voters in federal elections the use of provisional ballots, and it failed to provide provisional voters information on whether their provisional ballots were counted.
"The Voting Rights Act requires Fort Bend County to provide meaningful and equal electoral access to its Hispanic citizens who have limited English proficiency. HAVA allows the use of provisional ballots by registered voters who find themselves inadvertently left off voting lists and requires a free mechanism by which voters can learn whether their provisional votes were counted and, if not, the reasons why," said Acting Assistant Attorney General Loretta King for the Civil Rights Division. "I am pleased that Fort Bend County officials have agreed to measures that will protect these important rights and will put in place important electoral safeguards."
The agreement, which must still be approved by a federal court, provides for trained bilingual election officials to be available at polling places where language assistance is needed. In addition, the county will train all poll officials and other election personnel present at the polls or early voting locations regarding the language assistance requirements of the Voting Rights Act and on the provisional balloting requirements of HAVA. The agreement also permits the Justice Department to monitor future elections in Fort Bend County.
Complaints about discriminatory voting practices may be reported to the Voting Section of the Justice Department's Civil Rights Division at 1-800-253-3931. More information about the Voting Rights Act and other federal voting laws is available on the Justice Department Web site at http://www.usdoj.gov/crt/voting .Justice Department Settles Lawsuit Against <br /> the City of Ecorse, Michigan, Alleging Sex DiscriminationRead the Press Release
WASHINGTON — The Justice Department announced today that it has entered into a consent decree with the City of Ecorse, Mich., that, if approved by the U.S. District Court for the Eastern District of Mich., will resolve the Department’s complaint against Ecorse filed in July 2008.
The complaint alleged that Ecorse discriminated against Katina Haynes and Tresa Thomas, two former employees of the city, on the basis of their gender in violation of Title VII of the Civil Rights Act of 1954, as amended (Title VII), among other ways, by subjecting them to sexual harassment by a male supervisor, and by failing or refusing to take appropriate action to prevent and promptly correct the harassment. Title VII prohibits discrimination in the workplace on the basis of race, color, sex, national origin and religion. The complaint was based on a charge of discrimination filed by Ms. Haynes with the Equal Employment Opportunity Commission.
Under the terms of the consent decree, Ecorse must distribute to all its employees copies of city policies prohibiting sex discrimination and the procedures by which its employees may submit complaints of sex discrimination. The city also must provide mandatory training to all its employees on Title VII’s prohibition against discrimination based on sex, the city’s policies prohibiting sex discrimination, and the procedures by which employees may submit complaints of sex discrimination. Further, Ecorse must pay Ms. Haynes $15,000 in compensatory damages; Ms. Thomas settled all her claims separately with the city.
"Women in the workplace have the right to earn a living without being subjected to sexual harassment, especially from their supervisors," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "The Civil Rights Division is pleased that the City of Ecorse has adopted a policy against sex discrimination, agreed to provide training to its employees as to the requirements of Title VII, and provide Ms. Thomas with the relief to which she is entitled."
More information about Title VII and other federal employment laws is available on the Department of Justice Web site at http://www.usdoj.gov/crt/emp/index.html.
Former Texas Department of Public Safety Trooper Arrested on Civil Rights ChargesRead the Press Release
WASHINGTON – Acting Assistant Attorney General for Civil Rights Loretta King and Acting U.S. Attorney for the Southern District of Texas Tim Johnson today announced the arrest of a former trooper with the Texas Department of Public Safety who is charged with depriving multiple Latino motorists of their civil rights. According to the four count indictment returned by a federal Grand Jury in Corpus Christi, Texas, on April 8, 2009, Michael Anthony Higgins violated federal law by willfully stealing money from Latino motorists that he had stopped on the highway while working as a trooper.
"The brave work of our nation’s law enforcement officers must always be guided by adherence to the laws they are sworn to uphold," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "The Civil Rights Division will vigorously investigate and prosecute allegations where a law enforcement officer may have violated the rights of an individual."
"Whenever a law enforcement officer uses his or her position to violate the rights of a victim, quick action will be taken by this office," said Tim Johnson, Acting U.S. Attorney for the Southern District of Texas. "When there are vulnerable victims as in this case, we will advocate for the strictest punishment allowed by law."
If convicted, Higgins faces a maximum sentence of up to four years in prison, restitution and a $400,000 fine. An indictment is merely an accusation, and a defendant is presumed innocent unless and until proven guilty.
The case was investigated by the FBI, the Texas Rangers and Officers of the Texas Department of Public Safety. The case is being prosecuted by Ruben Perez of the U.S. Attorney’s Office for the Southern District of Texas and Jim Felte from the Civil Rights Division.
Former Shelby County, Tenn., Deputy Sheriff Pleads Guilty to Civil Rights ViolationsRead the Press Release
WASHINGTON – Adam S. Pretti, 31, a former deputy with the Shelby County Sheriff’s Office, pleaded guilty today in federal court in Memphis, Tenn., to using excessive force during an encounter with a citizen, the Justice Department announced.
During his plea hearing, Pretti acknowledged that he abused his authority as a law enforcement officer when, in March 2006, he willfully and without justification used excessive force by striking a man in the head. Pretti came into contact with the man while responding to a residence in Cordova, Tenn. Pretti agreed that his conduct violated federal law and the constitutional rights of the victim.
"This former law enforcement officer betrayed his oath of office and committed a crime," said Acting Assistant Attorney General Loretta King, "and now justice has been served."
A sentencing date for Pretti is scheduled for July 6, 2009. Based on the terms of his plea agreement, Pretti faces a maximum sentence of 18 months in prison.
The Civil Rights Division is committed to the vigorous enforcement of every federal criminal civil rights statute, such as those laws that prohibit the willful use of excessive force or other acts of misconduct by law enforcement and other government officials. In FY2008, the Division filed the largest-ever number of federal criminal civil rights cases in a single year in the Criminal Section’s history, and the second-highest ever number of official misconduct prosecutions.
The case was investigated by the Tarnished Blue Task Force, a multi-agency task force led by the FBI and staffed with investigators from the Shelby County Sheriff’s Office, the Memphis Police Department and the Memphis office of the FBI. The case was prosecuted by Assistant U.S. Attorney Joseph Murphy of the U.S. Attorney’s Office for the Western District of Tennessee and Trial Attorney Erin Aslan of the Justice Department’s Civil Rights Division.
Federal Court Blocks Chicago Tax Preparation Firm from Claiming Improper Tax CreditsRead the Press Release
WASHINGTON - A federal court has barred a Chicago tax preparation firm, El Caminante, Inc. and its principal operator, Maria Colica, from preparing federal income tax returns claiming false tax credits, the Justice Department announced today. The company and Colica agreed to the injunction.
The Government civil injunction complaint filed in the case alleged that Colica fraudulently claimed fuel tax credits for customers who were not entitled to them. The fuel tax credit is available only to taxpayers who operate farm equipment or off-highway business vehicles. Colica allegedly claimed large credits by falsely reporting purchases of huge quantities of gasoline where, in most cases, the cost of the gasoline was greater than the customers’ annual income.
Fuel credit scams were on last year’s Internal Revenue Service’s list of the Dirty Dozen Tax Scams. In the past few years the Justice Department has obtained injunctions shutting down many tax preparers who claim the phony credits on customers’ returns.
Colica also claimed bogus earned income tax credits for her customers, according to the complaint. She allegedly claimed false filing statuses on her customers’ returns to enlarge the size of their credits.
Acting Assistant Attorney General John DiCicco thanked Justice Department trial attorney Grayson Hoffman and Shauna Henline of the Internal Revenue Service's Small Business/Self Employed Division for their efforts in obtaining these injunctions for the government.
In the past decade, the Justice Department’s Tax Division has obtained more than 380 injunctions against tax fraud promoters and dishonest 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.
Federal Court Bars Homewood, Illinois, Tax Preparers from Preparing Federal Tax Returns for OthersRead the Press Release
WASHINGTON – U.S. District Court Judge Robert W. Gettlemen entered an order barring tax preparers, Michael J. Singleton and his wife, Ladonna Singleton, from preparing federal tax returns for others, the Justice Department announced today. The court’s ruling came after the Singletons failed to defend against the government’s allegations.
The government alleged in its complaint that the Homewood, Ill., couple operated a tax return preparation service under the name ITA Services Inc. The government’s complaint states the Singletons prepared approximately 700 federal income tax returns during the years 2005 through 2007, many of which claimed fabricated or inflated deductions for their customers resulting in an understatement of their clients’ tax liabilities. As part of the scheme to reduce their customers’ tax liabilities, some returns prepared under Mr. Singleton’s preparer tax identification number allegedly contained false Schedule C businesses and false Schedule E rental properties.
The court’s order also requires the Singletons to provide the government with a list of everyone for whom they have prepared or helped to prepare a federal income tax return for the income tax years 2005 through 2008. Additionally, they are required to mail a copy of the complaint and the injunction order to all persons or entities for whom they have prepared tax returns or other federal tax documents since January 1, 2006.
Acting Assistant Attorney General John DiCicco thanked Justice Department trial attorney Lisa Bellamy and Agent Peter Chlimon of the Internal Revenue Service’s Abusive Tax Avoidance Transaction Group in Chicago for their efforts in obtaining this injunction for the government.
In the past decade, the Justice Department’s Tax Division has obtained more than 380 injunctions against tax fraud promoters and dishonest 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.
8 April 2009
Six Former Executives of California Valve Company Charged in $46 Million Foreign Bribery ConspiracyRead the Press Release
WASHINGTON – Six former executives of an Orange County, Calif.-based valve company were charged today in connection with a conspiracy to secure contracts by paying bribes to officials of foreign state-owned companies as well as officers and employees of foreign and domestic private companies, Acting Assistant Attorney General Rita M. Glavin of the Criminal Division, U.S. Attorney Thomas P. O’Brien of the Central District of California and Joseph Persichini Jr., Assistant Director in Charge of the FBI’s Washington Field Office, announced. The contracts resulted in net profits to the company of approximately $46.5 million.
According to the indictment, the defendants allegedly engaged in a bribery conspiracy from approximately 1998 through 2007. In the period from 2003 through 2007, the defendants caused the valve company to pay approximately $4.9 million in bribes, in violation of the Foreign Corrupt Practices Act (FCPA), to officials of foreign state-owned companies and approximately $1.95 million in bribes, in violation of the Travel Act, to officers and employees of foreign and domestic privately owned companies. The alleged corrupt payments were made to foreign officials at state-owned entities including Jiangsu Nuclear Power Corp. (China), Guohua Electric Power (China), China Petroleum Materials and Equipment Corp., PetroChina, Dongfang Electric Corporation (China), China National Offshore Oil Corporation, Korea Hydro and Nuclear Power, Petronas (Malaysia), and National Petroleum Construction Company (United Arab Emirates). According to court documents, the valve company designs and manufactures service control valves for use in the nuclear, oil and gas, and power generation industries worldwide.
In total, the indictment alleges that from approximately 2003 through 2007, the defendants and others caused the valve company to make approximately 236 corrupt payments in more than 30 countries, which resulted in net profits to the valve company of approximately $46.5 million from sales related to those corrupt payments.
The six former executives charged in the indictment are:
- Stuart Carson, 70, of San Clemente, Calif., the former chief executive officer of the valve company, is charged with one count of conspiracy to violate the FCPA and the Travel Act, and two counts of violating the FCPA;
- Hong (Rose) Carson, 45, of San Clemente, Calif., the former director of sales for China and Taiwan of the valve company and Stuart Carson’s wife, is charged with one count of conspiracy to violate the FCPA and the Travel Act, five counts of violating the FCPA, and one count of destruction of records in connection with a matter within the jurisdiction of a department or agency of the United States;
- Paul Cosgrove, 61, of Laguna Niguel, Calif., the former director of worldwide sales for the valve company, is charged with one count of conspiracy to violate the FCPA and the Travel Act, six counts of violating the FCPA and one count of violating the Travel Act;
- David Edmonds, 56, of San Clemente, Calif., the former vice president of worldwide customer service at the valve company, is charged with one count of conspiracy to violate the FCPA and the Travel Act, three counts of violating the FCPA and two counts of violating the Travel Act;
- Flavio Ricotti, 47, of Italy, the former vice-president and head of sales for Europe, Africa and the Middle East, is charged with one count of conspiracy to violate the FCPA and the Travel Act, one count of violating the FCPA and three counts of violating the Travel Act; and
- Han Yong Kim, 47, of Korea, the former president of the valve company’s Korean office, is charged with one count of conspiracy to violate the FCPA and the Travel Act, and two counts of violating the FCPA.
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 FCPA counts each carry a maximum penalty of five years in prison and a fine of the greater of $100,000 or twice the value gained or lost. The Travel Act counts each carry a maximum penalty of five years in prison and a fine of the greater of $250,000 or twice the pecuniary gain or loss. The destruction of records count carries a maximum penalty of 20 years in prison and a fine of $250,000.
In related cases, two defendants previously pleaded guilty to conspiring to bribe officers and employees of foreign state-owned companies on behalf of the Orange County valve company. On Jan. 8, 2009, Mario Covino, the former director of worldwide factory sales for the valve company, pleaded guilty to one count of conspiracy to violate the FCPA and admitted to causing the payment of approximately $1 million in bribes to officers and employees of several foreign state-owned companies. On Feb. 3, 2009, Richard Morlok, the former finance director for the valve company, pleaded guilty to one count of conspiracy to violate the FCPA and admitted to causing the payment of approximately $628,000 in bribes to officers and employees of several foreign state-owned companies. Sentencing for both Covino and Morlok is scheduled for July 20, 2009.
The case is being prosecuted by Assistant Chief Hank Bond Walther and Trial Attorney Andrew Gentin of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Douglas McCormick of the U.S. Attorney’s Office for the Central District of California. The case was investigated by the FBI’s Washington Field Office, and its team of special agents dedicated to the investigation of foreign bribery cases.
An indictment is merely an accusation and the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.
Indictment
Senior Executives of Auto Parts Retailer Charged with Scheme to Manipulate Corporate EarningsRead the Press Release
WASHINGTON – Two former senior executives of CSK Auto Corp. (CSK), have been charged in a 31-count indictment for a scheme to manipulate the company’s reported earnings, Acting Assistant Attorney General Rita M. Glavin of the Criminal Division announced today.
The indictment, returned on April 7, 2009, by a federal grand jury in Phoenix, charges Martin G. Fraser, 53, of Glendale, Ariz., and Don W. Watson, 53, of Gilbert, Ariz., with conspiracy, securities fraud, mail fraud, false filings with the U.S. Securities and Exchange Commission (SEC), false books and records, and false statements to its auditor. Watson is charged separately with falsely certifying financial reports.
Fraser, the former president and chief operating officer, and Watson, the former chief financial officer, allegedly engaged in a scheme from 2001 to 2006 to misstate CSK’s income by, primarily, concealing that the company had tens of millions of dollars of uncollectible receivables that it should have written off. Uncollectible receivables are funds that a company reports as income because it expects to collect the funds, but later determines the funds not to be collectable. According to the indictment, during the scheme, CSK operated under the brand names Checker Auto Parts, Schucks Auto Supply and Kragen Auto Parts. At the time the alleged earnings manipulation occurred, CSK was the largest specialty retailer of auto parts and accessories in the western United States and one of the largest such retailers in the entire United States.
According to the indictment, CSK purchased hundreds of millions of dollars worth of auto parts every year, and its vendors gave CSK allowances, or rebates, for products CSK purchased in exchange for CSK using the allowances, generally, for marketing of the vendors’ products for sale in its stores. The vendor allowances reduced CSK’s expenses and thus increased its income. As the indictment alleges, instead of writing off these uncollectible receivables, the conspirators concealed them by moving vendor allowance collections from later years to cover the shortfalls in prior years; by moving uncollectible receivable balances to subsequent years to hide them; and by billing vendors to try to collect allowances CSK was not owed. As a result of the scheme, CSK allegedly misstated its receivables and pre-tax income in its annual reports (Forms 10-K) in fiscal years 2002, 2003 and 2004 by approximately $10 million, $24 million and $19 million, respectively.
The conspiracy charge carries a maximum penalty of five years in prison and a $250,000 fine. Each charged count of securities fraud, false filings, false books and records, and false statements to auditors carries a maximum penalty of 20 years in prison and a $5 million fine. Each charged count of mail fraud carries a maximum prison sentence of 20 years and a $250,000 fine. Each charged count of falsely certifying financial reporters carries a maximum penalty of 10 years in prison and a $1 million fine.
In related actions, Edward William O’Brien III, the former controller of CSK, pleaded guilty on April 7, 2009, to obstruction of justice. According to court documents, in approximately summer 2006, O’Brien corruptly made material false statements and omitted material information during an internal investigation interview in order to influence, obstruct and impede the SEC’s investigation. O’Brien admitted that at the time of the interview, he knew the SEC was investigating allegations of fraud in connection with financial disclosures by his employer. A sentencing date has not yet been set for O’Brien. In addition, a criminal information was unsealed on April 7, 2009, against Gary Michael Opper, the former director of credits and receivables at CSK, charging him with obstruction of justice. In another related action, the SEC filed a civil enforcement action against Fraser, Watson, O'Brien and Opper on March 5, 2009.
An indictment is merely an accusation, and the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.
The case is being prosecuted by Senior Trial Attorney Patrick Stokes and Trial Attorney Andrew Warren of the Criminal Division’s Fraud Section. The case is being investigated by the FBI, the IRS-Criminal Investigation and the U.S. Postal Inspection Service. The Department of Justice acknowledges the SEC’s substantial assistance in its investigation.
Former Asbestos Monitoring Contractor Pleads Guilty to Making False StatementsRead the Press Release
WASHINGTON — A former owner of an asbestos monitoring contractor that provided services to New York Presbyterian Hospital (NYPH) pleaded guilty today for making false statements to FBI agents and representatives of the Department’s Antitrust Division, the Department of Justice today announced.
Stephen E. McAnulty, of Brooklyn, N.Y., pleaded guilty in U.S. District Court in Manhattan, for lying about his knowledge of a kickback and fraud conspiracy that took place at NYPH.
According to the charge, on Nov. 20, 2007, during an interview with agents of the FBI and representatives of the Antitrust Division, McAnulty falsely claimed that he was not aware that any purchasing official at NYPH received kickbacks in return for asbestos monitoring and asbestos removal contracts at NYPH. In fact, at the direction of the owner of an asbestos removal company, McAnulty negotiated the amount of the kickbacks with a purchasing official in order for McAnulty’s company to be the asbestos monitoring company at NYPH. McAnulty understood that the kickbacks to that purchasing official totaled at least $28,000, the Department said.
"This criminal charge serves to underscore the seriousness with which the Justice Department views attempts to compromise the integrity of our investigations," said Scott D. Hammond, Assistant Attorney General in charge of the Department’s Antitrust Division. "Today’s filing should send a clear signal that the Division is, and will continue to be, committed to prosecuting these violations."
The crime that McAnulty is charged with carries a maximum penalty of five years in prison, three years of supervised release and a $250,000 fine. 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.
In April 2007, as part of the same investigation, Michael Theodorobeakos and two maintenance and insulation companies he co-owned —Monosis Inc. and STU Associates Inc. —pleaded guilty to conspiring to rig bids on the supply of maintenance and insulation services to NYPH and Mount Sinai Medical Center (Mount Sinai). In addition, Michael Vignola and Mister AC Ltd. pleaded guilty in November 2007 to conspiring to rig bids on heating, ventilation and air conditioning services provided to NYPH and paying kickbacks to former NYPH purchasing officials. In April 2008, Aaron S. Weiner pleaded guilty for participating in a conspiracy wherein Weiner acted as a conduit in another million-dollar kickback scheme also involving one of the same former NYPH purchasing officials involved with the Vignola kickback schemes. On March 25, 2009, Mariusz Debowski pleaded guilty to participating in a conspiracy at NYPH to defraud the Internal Revenue Service. Krzysztof Koczon pleaded guilty to participating in that same tax fraud conspiracy on April 2, 2009.
Today’s charge arose from an ongoing federal antitrust investigation of fraud, bribery, tax-related offenses and bidding irregularities relating to contracts administered by the Facilities Operations Department and Engineering Department at NYPH and in the Engineering Department at Mount Sinai. The investigation is being conducted by the Antitrust Division’s New York Field Office, the FBI and the Internal Revenue Service Criminal Investigation’s New York Field Office.
Anyone with information concerning bid rigging or other fraudulent conduct relating to contracts administered by the Facilities Operations Department at NYPH or the Engineering Department at NYPH or Mount Sinai should contact the New York Field Office of the Antitrust Division at 212-264-9308 or the New York Office of the FBI at 212-384-4467.
Attorney General Eric Holder Names New Leadership for ATF, Executive Office for U.S. Attorneys, and Office of Professional ResponsibilityRead the Press Release
WASHINGTON — Attorney General Eric Holder today announced that he will appoint Kenneth E. Melson to serve as acting head of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), H. Marshall Jarrett to head the Executive Office for United States Attorneys (EOUSA), and Mary Patrice Brown to serve as acting head of the Office of Professional Responsibility (OPR).
"These extremely experienced and capable long time career prosecutors are uniquely qualified to lead these important offices," said Attorney General Holder. "I am pleased that these dedicated public servants, Ken, Marshall, and Mary Pat, have accepted their new challenges with enthusiasm. I know that they will lead their new offices with their usual high standards of professionalism, integrity and dedication."
The Bureau of Alcohol, Tobacco, Firearms and Explosives, is one of the Department’s principal law enforcement agencies dedicated to preventing terrorism, reducing violent crime and enforcing federal criminal laws and regulations in the firearms and explosives industries.
Since 2007, Melson has been the Director of the Executive Office for U.S. Attorneys. Previous to that, he was the First Assistant for the U.S. Attorneys Office for the Eastern District of Virginia. From 1991 to 2001, Melson served as Acting and Interim U.S. Attorney of that office during various periods of time. He began his career as a federal prosecutor in the Eastern District of Virginia in 1983 where he was an Assistant U.S. Attorney until he became First Assistant in 1986.
From 1975 to 1983, Melson served in different positions for the Commonwealth’s Attorney, Arlington County, Va. From 1980 to 1983, he was the Deputy Commonwealth’s Attorney, from 1978 to 1980, he was the Chief Assistant, and from 1975 to 1978 he was an Assistant. He served in private law practice in Arlington, Va., from 1974 to 1975.
Melson is a past President and Distinguished Fellow of the American Academy of Forensic Sciences, and currently participates on behalf of the Department on the American Society of Crime Laboratory Directors/Laboratory Accreditation Board. He has been an adjunct professor at George Washington University for almost 30 years teaching both law and forensic science courses.
Melson received his B.A. from Denison University in 1970 and his J.D. from George Washington University in 1973.
"Ken’s more than 25 years of career federal prosecutor service and his knowledge in forensic science will make him a valuable asset to ATF," said Attorney General Holder. "I am pleased that he will provide his talents to such an important Department of Justice agency."
"As the head of ATF, I am looking forward to using my management and prosecutorial experience, as well as my knowledge of crime labs and forensic science to combat violent crime," said Melson.
The Executive Office for U.S. Attorneys acts as a liaison between the Department and the 94 U.S. Attorneys offices throughout the 50 states, the District of Columbia, Guam, the Marianas Islands, Puerto Rico and the U.S. Virgin Islands.
Since 1998, Marshall Jarrett has been the Counsel for Professional Responsibility. Prior to directing OPR, in1997, Jarrett served in the Office of the Deputy Attorney General as an Associate Deputy Attorney General participating in the formulation of federal criminal law enforcement policy and supervising the prosecution of corrupt officials, violent drug gangs, white collar criminals, and international terrorists. In 1988, he served in the U.S. Attorney’s Office for the District of Columbia as Chief of the Criminal Division. In 1980, he joined the Public Integrity Section of the Department of Justice and rose to become a Deputy Chief. He joined the U.S. Attorney’s Office for the Southern District of West Virginia in 1975, as a trial attorney and ascended to the office’s Criminal Chief and First Assistant.
From 1979 to1980, Jarrett worked at the Commodity Futures Trading Commission as Deputy Director of the Enforcement Division, and as a Deputy Attorney General for the Commonwealth of Pennsylvania from 1973 to 1975. He is the recipient of the Edmund J. Randolph Award for outstanding service to the Department of Justice. Jarrett received his B.S. in 1966 from West Virginia University and his J.D. from West Virginia University College of Law in 1969.
"I have had the privilege of working with Marshall over the years and I have the highest regard for his experience, talents and capabilities," said Attorney General Holder. He has been a tremendous leader in OPR, and I believe that his more than 30 years of career prosecutorial and legal experience, his leadership skills and the respect he receives from his colleagues, make him the ideal individual to oversee the 94 U.S. Attorneys offices at this time."
"I am honored to serve with Attorney General Holder, and I am looking forward to this exciting challenge with the opportunity to build and work with the U.S. Attorney team, offer my unique perspective from working in various positions within the Department, and providing legal advice to the 94 offices," said Jarrett.
The Office of Professional Responsibility is responsible for investigating allegations of professional misconduct involving Department attorneys.
Mary Patrice Brown has been with the U.S. Attorney’s Office of the District of Columbia since 1989. She became the Chief of the office’s Criminal Division in 2007, where she oversaw all aspects of prosecuting criminal cases in the U.S. District Court for the District of Columbia. In that capacity, she supervised 80 attorneys and five sections, including National Security, Fraud and Public Corruption, Organized Crime and Narcotics Trafficking, Asset Forfeiture, and Major Crimes. From 2004 to 2007, Brown was the Executive Assistant U.S. Attorney Operations where she managed and directed the oversight of significant civil and criminal cases and special operations. As Deputy Chief of the Fraud and Public Corruption Section (2002-2004), she oversaw allegations of criminal misconduct by police officers, public officials, and attorneys. She was the Deputy Chief of the Appellate Division (1997-2002), and was an Assistant U.S. Attorney from 1989 to 1997.
During her tenure at the U.S. Attorney’s Office for the District of Columbia, Brown served on the D.C. Circuit’s Committee on Admissions and Grievances for four years, investigating on behalf of the D.C. Circuit allegations of misconduct by attorneys licensed to practice in the Circuit. She also served as one of the office’s Professional Responsibility Officers, and on the "Lewis Committee," which reviews allegations of police misconduct for purposes of Brady and Giglio disclosures.
Previous to her work at the Department, Brown was a litigation associate at the Washington, D.C. office of Dickstein, Shapiro & Morin (now Dickstein Shapiro) from 1984 to 1989.
Brown received her B.S. in Foreign Service from Georgetown University in 1978 and her J.D. from Georgetown Law Center in 1984.
"Mary Pat has a stellar reputation and the highest integrity," said Attorney General Holder. "I have had the privilege of working alongside of Mary Pat in the U.S. Attorney’s office for the District of Columbia and she can always be counted on to do what’s right. I trust her sense of fairness and judgment implicitly."
"I am honored that Attorney General Holder would grant me the opportunity to use my years of experience as an Assistant U.S. Attorney and supervisor to provide guidance and leadership to my colleagues in the Department and in the field as we work together to maintain the highest standards of professional conduct," said Brown.
7 April 2009
Virginia Physicist Sentenced to 51 Months in Prison for Illegally Exporting Space Launch Data to China and Offering Bribes to Chinese OfficialsRead the Press Release
WASHINGTON – A physicist in Newport News, Va., was sentenced to 51 months in prison today for illegally exporting space launch technical data and defense services to the People’s Republic of China (PRC) and offering bribes to Chinese government officials.
The sentence was announced today by Dana Boente, Acting U.S. Attorney for the Eastern District of Virginia; David Kris, Assistant Attorney General for National Security; Rita M. Glavin, Acting Assistant Attorney General of the Criminal Division; Arthur M. Cummings, II, Executive Assistant Director, FBI National Security Branch; and Alex J. Turner, Special Agent-in-Charge, FBI Norfolk Division.
Shu Quan-Sheng (Shu), 68, a native of China, naturalized U.S. citizen and Ph.D. physicist, was sentenced by Judge Henry C. Morgan, Jr. in U.S. District Court for the Eastern District of Virginia, Norfolk Division. Shu has already forfeited $386,740 to the federal government in connection with the case.
Shu is the President, Secretary and Treasurer of AMAC International Inc. (AMAC), a high-tech company that is based in Newport News and has offices in Beijing. AMAC performs research through grants funded by the Small Business Research program on behalf of the Department of Energy and the National Aeronautics and Space Administration (NASA).
On Nov. 17, 2008, Shu pleaded guilty to a three-count criminal information. Count one alleges that from January 2003 through October 2007, Shu violated the Arms Export Control Act by willfully exporting a defense service from the United States to the PRC without first obtaining the required export license or written approval from the State Department.
Specifically, Shu provided the PRC with assistance in the design and development of a cryogenic fueling system for space launch vehicles to be used at the heavy payload launch facility located in the southern island province of Hainan, PRC. The space launch facility at Hainan will house liquid-propelled heavy payload launch vehicles designed to send space stations and satellites into orbit, as well as provide support for manned space flight and future lunar missions, according to a criminal complaint filed in the case. Among those PRC government entities involved in the Hainan facility are the People's Liberation Army's General Armaments Department and the 101st Research Institute (101 Institute), which is one of many research institutes that make up the China Academy of Launch Vehicle Technology, as overseen by the Commission of Science Technology and Industry for the National Defense.
Count two of the criminal information alleges that on Dec. 20, 2003, Shu violated the Arms Export Control Act by willfully exporting a defense article to the PRC without first obtaining the required export license or written approval from the State Department. Specifically, Shu illegally exported to the PRC controlled military technical data contained in a document entitled "Commercial Information, Technical Proposal and Budgetary Officer – Design, Supply, Engineering, Fabrication, Testing & Commissioning of 100m3 Liquid Hydrogen Tank and Various Special Cryogenic Pumps, Valves, Filters and Instruments."
Count three of the criminal information alleges that Shu offered, paid, promised and authorized the payment of bribes to Chinese government officials to influence their decisions and secure an improper advantage, in violation of the Foreign Corrupt Practices Act. Specifically, Shu, acting on behalf of his company, AMAC, and a French company he represented, offered to pay money to foreign officials of the PRC’s 101 Institute to obtain a contract for the development of a 600 liter per hour liquid hydrogen tank system, according to the information.
The criminal information indicates that Shu offered money on three occasions to three PRC officials with the 101 Institute to secure the contract. In February 2006, he offered "percentage points" worth approximately $56,800. In April 2006, he offered "percentage points" worth some $56,800, and in May 2006, he offered "percentage points" worth approximately $75,700, for a total of $189,300, according to the criminal information. In January 2007, the $4 million hydrogen liquefier project was awarded to the French company that Shu represented.
This investigation was conducted by the FBI, with assistance from U.S. Immigration and Customs Enforcement and the U.S. Department of Commerce, Office of Export Enforcement.
The prosecution is being handled Assistant U.S. Attorney Alan M. Salsbury from the U.S. Attorney’s Office for the Eastern District of Virginia and Assistant Chief Robertson Park from the Criminal Division’s Fraud Section. The Counterespionage Section of the Justice Department’s National Security Division provided critical assistance.
Latin Node Inc., Pleads Guilty to Foreign Corrupt Practices Act Violation and Agrees to Pay $2 Million Criminal FineRead the Press Release
WASHINGTON – Latin Node Inc. (Latinode), a privately held Florida corporation, pleaded guilty today to violating the Foreign Corrupt Practices Act (FCPA) in connection with improper payments in Honduras and Yemen, Acting Assistant Attorney General Rita M. Glavin of the Criminal Division announced.
At a hearing before U.S. District Judge Paul Courtney Huck in the Southern District of Florida, Latinode pleaded guilty to a one-count information charging a criminal violation of the FCPA’s anti-bribery provisions. As part of the plea agreement, Latinode agreed to pay a $2 million fine during a three-year period.
According to court documents, Latinode provided wholesale telecommunications services using Internet protocol technology in a number of countries throughout the world, including Honduras and Yemen. In plea documents, Latinode admitted that from approximately March 2004 through June 2007, it paid or caused to be paid approximately $1,099,889 in payments to third parties, knowing that some or all of those funds would be passed on as bribes to officials of Hondutel, the Honduran state-owned telecommunications company. Latinode admitted it made these payments in exchange for obtaining an interconnection agreement with Hondutel, as well as for reducing the rate per minute under the interconnection agreement. According to court documents, each of the payments was made from Latinode’s Miami bank account, and each payment was approved by senior executives of Latinode. The payment recipients included, but were not limited to, a member of the evaluation committee responsible for awarding Hondutel interconnection agreements, the deputy general manager (who later became the general manager) of Hondutel and a senior attorney for Hondutel.
In addition, from approximately July 2005 to April 2006, court documents show that Latinode made 17 payments totaling approximately $1,150,654 to a third-party consultant with the knowledge that some or all of the money would be passed on to Yemeni officials in exchange for favorable interconnection rates in Yemen. Each of those payments was made from Latinode’s Miami bank account. According to court documents, company e-mails indicate that company executives believed potential payment recipients included Yemeni government officials. Court documents do not allege or refer to evidence showing that the son of the Yemeni president received any payments from Latin Node. No foreign government officials are the subjects of U.S. investigations of this matter.
The resolution of the criminal investigation of Latinode reflects, in large part, the actions of Latinode’s corporate parent, eLandia International Inc. (eLandia), in disclosing potential FCPA violations to the Department after eLandia’s acquisition of Latinode and post-closing discovery of the improper payments. eLandia’s counsel voluntarily disclosed the unlawful conduct to the Department promptly upon discovering it; conducted an internal FCPA investigation; shared the factual results of that investigation with the Department; cooperated fully with the Department in its ongoing investigation; and took appropriate remedial action, including terminating senior Latinode management with involvement in or knowledge of the violations.
The case is being prosecuted by Trial Attorney Lori A. Weinstein of the Criminal Division’s Fraud Section. The case was investigated by the FBI’s Miami Field Office, and U.S. Immigration and Customs Enforcement, Miami Field Office.
6 April 2009
Ship Operator Pleads Guilty and Agrees to Pay $2.5 Million Fine for Concealing Vessel PollutionRead the Press Release
WASHINGTON—Consultores De Navegacion, a Spanish company that operates the M/T Nautilus, an ocean-going chemical tanker ship, pleaded guilty today in U.S. District Court in Boston and has agreed to pay a fine of $2.5 million for criminal violations related to the overboard discharge of oil-contaminated bilge waste on the high seas, the Justice Department announced.
The company pleaded guilty to conspiracy, falsification of records, false statements, obstruction, and two violations of the Act to Prevent Pollution from Ships for failing to maintain an accurate oil record book. The practice of improperly handling and disposing of oil-contaminated waste from the tanker as charged in the indictment took place from at least June 2007 until March 2008.
As part of the plea agreement, Consultores De Navegacion will serve three years of probation and implement a comprehensive environmental compliance plan to ensure there are no future violations of the law. The charges against Cyprus-based Iceport Shipping Co., the owner of the ship, have been dismissed. U.S. District Court Judge Douglas P. Woodlock scheduled sentencing for June, 30, 2009.
Engine room operations on board large oceangoing vessels such as the M/T Nautilus generate large amounts of waste oil and oil-contaminated bilge waste. International and U.S. law prohibit the discharge of waste containing more than 15 parts per million of oil and without treatment by an oily water separator—a required pollution prevention device. Federal law also requires ships to accurately record each disposal of oil-contaminated bilge water in an oil record book and to have the Oil Record Book available for inspection by the U.S. Coast Guard within the internal waters of the United States.
According to the government, between June 2007 and March 2008, senior engineers on the M/T Nautilus directed subordinate engine room crew members to use a metal pipe to bypass the ship’s oil water separator and instead to discharge oil-contaminated waste directly overboard. On two occasions in August 2007, Vadym Tumakov, a Ukrainian who at that time served as chief engineer of the M/T Nautilus, directed the discharge of pollution overboard. In addition, in February 2008, Carmelo Oria, a Spanish citizen who served as chief engineer at that time, directed a discharge directly overboard from the ship’s bilge wells.
The government’s investigation began in March 2008, when inspectors from the U.S. Coast Guard conducted an examination of the M/T Nautilus, following the ship’s arrival in St. Croix, U.S. Virgin Islands, and subsequently in the Port of Boston. The inspections uncovered evidence that crewmembers aboard the ship had improperly handled and disposed of the ship’s oil-contaminated bilge water and falsified entries in the ship’s official oil record book to conceal these activities.
Oria, who was the chief engineer on the M/T Nautilus between January and March 2008 pleaded guilty on March 9, 2009, to maintaining an oil record book that concealed the improper discharge of untreated waste directly from the ship’s bilges. Vadym Tumakov, who was the chief engineer on the M/T Nautilus in August 2007 pleaded guilty to using falsified records that concealed improper discharges of oil-contaminated bilge waste from the ship. They are both scheduled to be sentenced on April 13, 2009 and face up to 6 years in prison, three years of supervised release and a fine of up to $250,000.
As chief engineers, Oria and Tumakov were responsible for all engine room operations. Charges against Tumakov were originally filed in the District of New Jersey and the case was subsequently transferred to the District of Massachusetts.
"Corporate entities and individual crewmembers that deliberately bypass required environmental controls and pump untreated bilge water directly into the ocean should expect to be investigated and prosecuted. Consultores De Navegacion violated the law and today they are facing the consequences," said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. "As long as individuals and maritime companies ignore this nation’s environmental laws, the Justice Department will continue to bring cases and seek justice for those involved."
"We remain committed to protecting our precious natural resources, and hope that today’s conviction sends a clear message to everyone in the worldwide maritime community that the Government will investigate and prosecute anyone who attempts to circumvent our nation’s anti-pollution laws," said U.S. Attorney Michael J. Sullivan.
"This is a clear victory in our ongoing effort to stop intentional or negligent pollution and ensure those responsible are brought to justice," said Rear Admiral Dale G. Gabel, Commander of the First Coast Guard District in Boston, MA. "The Coast Guard remains committed to working with the maritime industry and federal, state and local law enforcement partners to protect the environmental resources of our nation."
The case was investigated by the U.S. Coast Guard, Coast Guard Investigative Service. It was prosecuted by Assistant U.S. Attorney Linda M. Ricci of the U.S. Attorney’s Economic Crimes Unit, Trial Attorney Todd Mikolop of the Justice Department’s Environmental Crimes Section, and Special Assistant U.S. Attorney Christopher Jones of the U.S. Coast Guard First District Legal Office.
Munitions Dealer Arrested and Charged in Conspiracy to Export Military Aircraft Parts to IranRead the Press Release
WASHINGTON – An Iranian national has been arrested and charged, along with ten other defendants, with participating in a conspiracy to export U.S.-made military aircraft parts to Iran, the Justice Department announced today.
The arrest and indictment were announced by R. Alexander Acosta, U.S. Attorney for the Southern District of Florida; David Kris, Assistant Attorney General for National Security; Michael Johnson, Special Agent in Charge, U.S. Department of Commerce, Office of Export Enforcement; Anthony V. Mangione, Special Agent in Charge, U.S. Immigration and Customs Enforcement, Office of Investigations; Amie R. Tanchak, Resident Agent in Charge, U.S. Department of Defense, Defense Criminal Investigative Service; and James M. Foster, Special Agent in Charge, U.S. Department of State, Diplomatic Security Service.
Defendant Baktash Fattahi, an Iranian national and legal U.S. resident, was arrested in California, on April 3, 2009, on charges of conspiring to export military aircraft parts to Iran. Federal agents arrested Fattahi at his apartment in Lancaster, Calif. He remains in federal custody in California and will be removed to Miami to face the charges in the Indictment.
Baktash Fattahi and ten other defendants were indicted on April 2, 2009, by a federal grand jury sitting in Miami on charges of conspiring to violate the International Emergency Economic Powers Act, the U.S. Iran Embargo, and the Arms Export Control Act for their participation in a conspiracy to export U.S.-made military aircraft parts to Iran.
The other defendants charged in the indictment are Amir Hosein Atabaki, an Iranian national; Mohammad Javad Mohammad Esmaeil, an Iranian national; Abbas Haider, an Indian citizen residing in Dubai; Mohammed Javid Yahya Saboni, an Iranian national residing in Dubai; Reza Zahedi Pour, an Iranian national; Mahdi Electronic Trading Co, an Iranian business; Planet Commercial Brokerage, a Dubai business; Raht Aseman Co, Ltd, an Iranian business; Sahab Phase, an Iranian business; and Sea Speed UAE, a Dubai business.
The Arms Export Control Act prohibits the export of military items designated as "defense articles" on the U.S. Munitions List (USML) without a license or authorization from the Department of State, Directorate of Defense Trade Controls (DDTC).
The U.S. Iran Embargo (the Embargo) prohibits the exportation from the United States to Iran of any goods, technology, or services, with limited exceptions, unless authorized by the Department of Treasury, Office of Foreign Assets Controls (OFAC). The Embargo is enforced through the International Emergency Economic Powers Act (IEEPA).
According to the indictment, the defendants conspired to and did export thirteen different types of aircraft parts designated as defense articles on the USML from the United States to Iran by way of Dubai, United Arab Emirates. Among the aircraft parts the defendants are alleged to have obtained and illegally shipped to buyers in Iran are parts for the F-5 ("Tiger") Fighter Jet, the Bell AH-1 ("Cobra") Attack Helicopter, the CH-53 Military Helicopter, the F-14 ("Tomcat") Fighter Jet, and the UH-1 ("Huey") Military Helicopter.
All of these aircraft are known to be used primarily, if not exclusively, by the Iranian military. Moreover, all of the military parts exported by the defendants are manufactured in the United States, are designed exclusively for military use, and have been designated by the U.S. Department of State as "defense articles" on the USML, thus requiring registration and licensing with the DDTC. None of the defendants are registered or had the required license to ship defense articles to Iran.
According to the Indictment, defendants in Iran sent orders by email to a co-conspirator in Novato, Calif., for specific aircraft parts. The co-conspirator in Calif. then requested quotes, usually by e-mail, from another co-conspirator in Plantation, Fla., and made arrangements with that co-conspirator in Plantation for the sale and shipment of the parts to one of several defendants in Dubai. From Dubai, the parts were then shipped on to Iran.
If convicted, the defendants face statutory maximum sentences ranging from ten years’ imprisonment to twenty years’ imprisonment, and face fines of up to $1 million.
Mr. Acosta commended the U.S. Department of Commerce, Office of Export Enforcement; U.S. Immigration and Customs Enforcement, Office of Investigations; the U.S. Department of Defense, Defense Criminal Investigative Service; and the U.S. Department of State, Diplomatic Security Service, for their work on this investigation. Acosta also thanked the Office of Foreign Assets Control (OFAC) and the U.S. Department of State, Directorate of Defense Trade Controls, for their assistance in this matter. The case is being prosecuted by Assistant U.S. Attorney Melissa Damian.
Mexican Man Sentenced to 24 Years for Sex Trafficking of Minors and Transportation for the Purpose of Commercial SexRead the Press Release
WASHINGTON – Today, Jorge Flores-Rojas, 44, an undocumented Mexican national, was sentenced to 24 years in prison by Chief Judge Robert J. Conrad, Jr. in Charlotte, N.C., for two counts of sex trafficking of minors and one count of interstate transportation of an adult for purposes of commercial sex, announced Acting Assistant Attorney General Rita M. Glavin of the Criminal Division and Acting U.S. Attorney Edward R. Ryan of the Western District of North Carolina.
Flores-Rojas pled guilty to the charges on Oct. 7, 2008.
According to testimony at today’s sentencing hearing, in approximately November 2007, Flores-Rojas trafficked a 16-year-old girl between Washington, D.C., and Charlotte for the purpose of causing her to engage in commercial sex acts in the Charlotte area. According to the testimony, the defendant forced the victim, an undocumented Honduran national, to go to Charlotte with him. Also according to the testimony, the defendant repeatedly sexually and physically abused her in order to force her to perform commercial sex acts.
Testimony at the hearing also revealed that in approximately November 2007, Flores-Rojas trafficked a 17-year-old girl and an adult woman between Charlotte and Washington, D.C., for the purpose of causing them to engage in commercial sex acts in the Washington area. Flores-Rojas had previously paid other persons to smuggle these victims from Mexico into the United States, testimony indicated.
In addition to the sentence of 24 years in prison, the court ordered Flores-Rojas to pay $117,000 in restitution to one of the victims, and he will be required to register as a sex offender for the rest of his life. Flores-Rojas will be deported to Mexico upon his release from prison.
The case was prosecuted by Trial Attorney Elizabeth Yusi of the Criminal Division’s Child Exploitation and Obscenity Section and Assistant U.S. Attorneys Kenny Smith and Cortney Escaravage of the Western District of North Carolina. Assistance was provided by Trial Attorney Kayla Bakshi and Special Litigation Counsel Hilary Axam of the Civil Rights Division’s Human Trafficking Prosecution Unit, as well as Assistant U.S. Attorney Catherine Connelly of the District of Columbia. The case was investigated by U.S. Immigration and Customs Enforcement, the Washington Metropolitan Police Department and the Myrtle Beach, S.C., Police Department.
Justice Department to Monitor Election in Kane County, IllinoisRead the Press Release
WASHINGTON - The Justice Department today announced that on April 7, 2009, it will monitor the election in Kane County, Ill., to ensure compliance with the Voting Rights Act of 1965, as amended.
Under the Voting Rights Act, the Justice Department is authorized to ask the Office of Personnel Management to send federal observers to areas that are specially covered in the act or by a federal court order. Federal observers will be assigned to monitor polling place activities in Kane County pursuant to a federal court order entered in 2007. The observers will watch and record activities during voting hours at polling locations in this county, and Civil Rights Division attorneys will coordinate the federal activities and maintain contact with local election officials.
Each year, the Justice Department deploys hundreds of federal observers from the Office of Personnel Management, as well as departmental staff, to monitor elections across the country. In calendar year 2008, for example, 1,060 federal observers and 344 Department personnel were sent to monitor 114 elections in 75 jurisdictions in 24 states. To file complaints about discriminatory voting practices, including acts of harassment or intimidation, voters may call the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.
More information about the Voting Rights Act and other federal voting laws is available on the Department of Justice Web site at http://www.usdoj.gov/crt/voting/index.htm.
Former Bristol-Myers Squibb Senior Executive Pleads Guilty for Role in Dishonest Dealings with the Federal GovernmentRead the Press Release
WASHINGTON — A former senior executive of Bristol-Myers Squibb Company (BMS), Andrew Bodnar, pleaded guilty for his role in BMS’s dishonest dealings with the federal government relating to a patent deal involving the popular blood-thinning drug Plavix, the Department of Justice announced today. This plea agreement follows BMS’s June 11, 2007, agreement to plead guilty and pay a $1 million criminal fine – the maximum fine permitted by statute – for misleading the government about the Plavix patent deal. The Department said that the illegal actions of BMS and its executive threatened to reduce competition that could have lowered the cost of blood-thinning drugs sold to heart attack, stroke and other patients.
According to the court papers filed today in the U.S. District Court for the District of Columbia, in 2006, BMS and another company, Apotex, were engaged in litigation over the validity of the patent for Plavix and were negotiating a settlement of that litigation. At the time, BMS was subject to a separate consent decree – for unrelated conduct – with the Federal Trade Commission (FTC) requiring BMS to submit any proposed patent settlements for review and approval by the FTC. The FTC warned BMS that it would not approve a settlement of the Plavix litigation if BMS agreed not to launch its own generic version of Plavix that would compete against Apotex for generic sales. Notwithstanding these warnings, Bodnar, BMS’s negotiator, made representations to Apotex to reassure it that BMS would not launch a generic version of Plavix if Apotex agreed to a settlement that would prevent Apotex from launching its Plavix generic until 2011. Bodnar pleaded guilty today for later falsely certifying to the FTC that he had not made these representations to Apotex.
"The prosecutions of BMS and its former senior executive, Andrew Bodnar, should send a strong message to the pharmaceutical community that attempts to undermine the federal government’s critical role of ensuring Americans have access to life-saving drugs, like Plavix, at the most competitive prices will not be tolerated," said Scott D. Hammond, Acting Assistant Attorney General in charge of the Department’s Antitrust Division. "Those who attempt to mislead the federal government or undermine the integrity of its functions should expect to face criminal prosecution."
Plavix, a patented pharmaceutical, remains the most widely prescribed blood-thinning drug in the world. Approximately 48 million Americans take Plavix daily to prevent potentially fatal blood clots. The drug was approved for sale in the United States in November 1997.
This case is part of an investigation conducted by the Antitrust Division’s National Criminal Enforcement Section with the assistance of the New York Field Office of the FBI. Anyone with information about this matter should contact the Antitrust Division’s National Criminal Enforcement Section at 202-307-6694.
Federal, State Partners Announce Multi-Agency Crackdown Targeting Foreclosure Rescue Scams, Loan Modification FraudRead the Press Release
WASHINGTON – As homeowners and communities throughout the country continue to face devastating consequences from the deep contraction in the economy and the housing market, the Obama Administration today announced a new coordinated effort across federal and state government and the private sector to target mortgage loan modification fraud and foreclosure rescue scams that threaten to hurt American homeowners and prevent them from getting the help they need during these challenging times. The new effort announced today aligns responses from federal law enforcement agencies, state investigators and prosecutors, civil enforcement authorities, and the private sector to protect homeowners seeking assistance under the Administration’s Making Home Affordable program from criminal actors looking to perpetrate predatory schemes.
The U.S. Department of the Treasury, the U.S. Department of Justice (DOJ), the Department of Housing and Urban Development (HUD), the Federal Trade Commission (FTC), and the Attorney General of Illinois today discussed new initiatives to coordinate information and resources across agencies to maximize targeting and efficiency in fraud investigations, alert financial institutions to emerging schemes, step up enforcement actions and educate consumers to help those in financial trouble avoid becoming the victims of a loan modification or foreclosure rescue scam.
Earlier this year, in an effort to stabilize the housing market and ensure responsible homeowners can afford to stay in their homes, the Administration announced Making Home Affordable, a program to help eligible homeowners refinance or modify their mortgages. The plan will help up to 7 to 9 million families restructure or refinance their mortgages to lower their monthly payments and make their mortgages affordable now and in the future – an opportunity for relief that unfortunately also brings greater opportunity for criminal actors to prey upon consumers seeking assistance.
The FTC recently surveyed online and print advertising for mortgage foreclosure rescue operations nationwide and identified approximately 71 distinct companies running suspicious ads. Treasury’s Financial Crimes Enforcement Network (FinCEN) also conducted recent studies on mortgage fraud that found that between July 2002 and June 2008, depository institutions filed nearly 180,000 mortgage fraud suspicious activity reports (SARs), with those involved in mortgage fraud often involved in other types of crime as well.
"The Administration’s Making Home Affordable program is a critical piece of our efforts to stabilize the financial system and ensure that it works with our efforts to grow the economy," said Treasury Secretary Tim Geithner. "American homeowners desperately need the relief this program offers, but the very last thing they need is to be taken advantage of as they try to hold on to their homes. This Administration is deeply committed not just to providing at-risk homeowners with assistance but also to cracking down on anyone who seeks to defraud them."
To this end, Treasury and FinCEN announced an advanced targeting effort already underway to combat fraudulent loan modification schemes and coordinate ongoing efforts across agencies to investigate fraud and assist with enforcement and prosecutions. In less than a week, FinCEN’s new targeting effort has produced leads that have helped various agencies to halt the illegal practices of those offering loan modification or foreclosure scams. In undertaking this effort, FinCEN will marshal information about possible fraudulent actors, drawing upon a variety of data available to law enforcement, regulatory agencies, and the consumer protection community, for the purpose of identifying and proactively referring potential criminal targets to participating law enforcement authorities.
Through FinCEN, Treasury is also issuing an advisory alerting financial institutions to the risks of emerging schemes related to loan modifications. The advisory identifies certain "red flags" that may indicate a loan modification or foreclosure rescue scam and warrant the filing of a SAR by a financial institution. Examples of possible signs of fraudulent activity, such as requiring that fees be paid before services are provided, are listed in the advisory. In addition, the advisory requests that financial institutions include the term "foreclosure rescue scam" in the narrative sections of all relevant SARs.
As part of the multi-agency effort, Attorney General Eric Holder outlined ways in which DOJ has been cracking down on mortgage fraud schemes, including several successful convictions of scam artists in recent months. He also emphasized the Justice Department’s commitment to working with federal and state law enforcement and regulatory partners to ensure a coordinated and comprehensive response to the problem, describing the department’s work with the FTC and state attorneys general to reinvigorate the Executive Working Group, which allows partners to coordinate and exchange intelligence on competition and consumer fraud issues. The Attorney General also discussed DOJ’s focus on investigating and prosecuting lenders who discriminate against borrowers based on race, national origin, or other prohibited factors.
"For millions of Americans, the dream of home ownership has become a nightmare because of the unscrupulous actions of individuals and companies who exploit the misfortune of others," Attorney General Eric Holder said. "The Department of Justice’s message is simple: if you discriminate against borrowers or prey on vulnerable homeowners with fraudulent mortgage schemes, we will find you, and we will punish you."
On the civil enforcement side, the FTC has filed five new cases to halt the illegal practices of individuals and companies offering loan modification or foreclosure scams – including one company that spent 9 million dollars on TV and radio ads in less than one year. The FTC is also joining forces with a wide array of government, non-profit, and mortgage industry members to launch a new consumer education campaign to help those in financial trouble avoid becoming the victims of a loan modification or foreclosure rescue scam.
"Today the FTC announced five law enforcement actions and sent 71 warning letters to operations using deceptive tactics to market their mortgage loan modification and home foreclosure relief services," said Jon Leibowitz, Chairman of the FTC. "We’re enforcing the law against these scam artists who are deceiving consumers while they’re down; we’re putting others on notice that unless they change their ways, they’re next; and we’re working with other government agencies, non-profits, and mortgage servicers to reach out to our neighbors in distress with the details of how and where to get help."
Under the new campaign, several private sector national loan servicers, including Chase Home Finance, Suntrust Mortgage, GMAC Mortgage, and American Home Mortgage Servicing, are distributing FTC consumer alerts that provide consumers with tips for avoiding mortgage relief scams and direct them to free, legitimate counseling services for at-risk homeowners. The servicers will distribute the materials in monthly statements, in correspondence to delinquent borrowers, in counseling sessions, and on their websites.
Bolstering new outreach efforts to protect homeowners against fraud, HUD Secretary Donovan announced that HUD would begin distributing literature today to all of its housing partners— HUD field offices and staff, housing authorities, state and local agencies, and non-profit organizations—warning consumers nationwide about loan modification fraud. This and other targeted outreach efforts will help alert communities hard-hit by foreclosure about the legitimate foreclosure assistance available to them.
"We have families on the edge of foreclosure that are being offered things that are too good to be true, and we will take every measure we can to educate and protect consumers and homeowners, bring these scams to light, and work to prevent con artists from exploiting the housing crisis," said HUD Secretary Donovan. "There are legitimate people, places, and agencies that American families can turn to when they are facing foreclosure, starting with www.MakingHomeAffordable.gov and the Homeowner’s HOPE Hotline at 1-888-995-HOPE for free foreclosure counseling assistance."
Under the new multi-agency initiative, there will also be strong coordination between federal and state governments that are battling foreclosure scams. The FTC released today a list of more than 20 states that have already taken law enforcement action on loan modification or foreclosure rescue scams. For example, today in Illinois, Attorney General Madigan is filing lawsuits against two Chicago-area mortgage rescue fraud schemes seeking temporary restraining orders to immediately stop the defendants from providing mortgage rescue services.
The numerous rescue fraud lawsuits filed in Illinois –24 to date– illustrate how Attorney General Madigan and other state attorneys general are using their enforcement authority to prosecute mortgage foreclosure rescue fraud across the country. On the state level, more than 150 enforcement actions have been brought against mortgage rescue companies.
"We have repeatedly found that these foreclosure rescue operations are swindling desperate homeowners out of money they can’t afford to lose," said Attorney General Madigan. "Struggling homeowners need to know that free help is available. The 24 lawsuits I have filed prove foreclosure rescue operators don’t help. They don’t call your lender, they don’t modify your loan, and they don’t represent you in court if you’re in foreclosure. All they do is take your money. By combining our powers, state and federal authorities are sending a clear message to these mortgage rescue scammers: It is not a question of if we’ll come after you; it is only a question of when."
PUBLIC AFFAIRS CONTACTS:
Treasury (202) 622-2960
DOJ (202) 514-2007
HUD (202) 708-0685
FTC (202) 326-2180
Illinois AG (312) 814-3118
3 April 2009
Statement from Department of Justice Regarding Federal Law Enforcement Response to Binghamton, N.Y., ShootingsRead the Press Release
WASHINGTON - “The Department of Justice, through the FBI and Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), is providing federal law enforcement assistance to the Binghamton Police Department in response to the shootings in Binghamton. The FBI’s Albany, N.Y., field office has sent hostage negotiators, an evidence response team and command post assistance. ATF is providing seven special agents from the Syracuse and Albany field offices. The Department will continue to provide assistance as requested in response to this rapidly developing situation.”
Lobbyist Sentenced for Destroying Evidence in Public Corruption InvestigationRead the Press Release
WASHINGTON - A partner in a Pennsylvania-based lobbying firm was sentenced today by U.S. District Judge Henry H. Kennedy Jr., to five months of home detention for destroying evidence in connection with a public corruption investigation, Acting Assistant Attorney General Rita M. Glavin of the Criminal Division, U.S. Attorney Jeffrey A. Taylor for the District of Columbia, Assistant Director of the FBI’s Washington Field Office Joseph Persichini Jr., and Special Agent in Charge C. André Martin of Internal Revenue Service (IRS) Criminal Investigation announced.
Cecelia Grimes, 43, of Parkesburg, Penn., was also sentenced to three years probation and ordered to pay a $3,000 fine. Previously, on July 25, 2008, Grimes pleaded guilty before Judge Kennedy in U.S. District Court for the District of Columbia. According to the evidence presented in court documents and at the plea hearing, Grimes was a registered lobbyist whose firm submitted requests for appropriations to the office of a member of the U.S. House of Representatives (Representative A). Beginning prior to October 2006, the FBI opened an investigation into certain activities of Representative A, including whether Representative A agreed to support appropriations requests made by Grimes’s firm in return for the payment of fees to Grimes’s firm by its clients.
As part of that investigation, on Oct. 16, 2006, FBI agents served Grimes with two grand jury subpoenas after questioning her in relation to the investigation. One subpoena was for her lobbying firm’s (Firm A) custodian of records and the other was for the custodian of records of another lobbying firm of which Grimes was the sole proprietor. Both subpoenas were issued on behalf of a grand jury of the U.S. District Court for the District of Columbia. The subpoenas instructed the custodians of records to produce by Oct. 27, 2006, a series of records, including all documents relating to: several of Firm A’s clients; Representative A; Representative A’s campaigns; or Grimes’s travel.
Evidence presented at the plea hearing revealed that within six days of the FBI’s service of the two grand-jury subpoenas, Grimes placed some documents that she had stored in her house into trash bags, which she then brought to the front of her house for collection as garbage. These documents included items related to Grimes’s travel and to Representative A’s campaigns. FBI agents retrieved the garbage bags that contained the discarded documents, which were never produced to law enforcement authorities.
Grimes also destroyed e-mails that were stored on her Blackberry device according to information presented at the plea hearing. In early November 2006, Grimes placed her Blackberry device in a trash can near a restaurant in southeastern Pennsylvania. Grimes discarded her Blackberry for the purpose of keeping the FBI from reviewing certain of her emails that would be of interest to the FBI.
The case was prosecuted by Howard Sklamberg, Deputy Chief of the U.S. Attorney’s Office’s Fraud and Public Corruption Section, Trial Attorney Armando O. Bonilla of the Criminal Division’s Public Integrity Section, Trial Attorney Gregory C.J. Lisa of the Criminal Division’s Organized Crime and Racketeering Section, and former Trial Attorney Natashia Tidwell of the Criminal Division's Public Integrity Section. The case was investigated by the FBI and IRS Criminal Investigation.
Justice Department Seeks Removal of Pittsburgh-Area Man Who Served as Nazi Concentration Camp GuardRead the Press Release
WASHINGTON – The Department of Justice has initiated removal proceedings against a Sharon, Penn., resident who served as an armed SS guard at two Nazi concentration camps in Germany during World War II.
The charging document, filed April 1, 2009, in U.S. Immigration Court in Philadelphia by the Criminal Division’s Office of Special Investigations (OSI) and U.S. Immigration and Customs Enforcement (ICE) alleges that during most of 1943 Anton Geiser served as an armed SS Death’s Head guard at the Sachsenhausen Concentration Camp near Berlin, Germany; that Geiser’s duties included escorting prisoners to slave labor sites and standing guard from the camp’s watch towers; and that he was under orders to shoot any prisoner attempting escape. The court document also alleges that Geiser served as a guard at the Buchenwald Concentration Camp and the Arolsen subcamp. In addition, the court document charges that Geiser guarded prisoners as they were transported from Buchenwald to Arolsen and as they were evacuated from Arolsen as Allied forces approached.
U.S. courts have described how prisoners held at Sachsenhausen and Buchenwald were forced to engage in grueling physical labor under extraordinarily inhumane conditions. Many prisoners died from exhaustion or disease or were shot or hanged. During the period when Geiser served at Sachsenhausen, more than 3,000 prisoners were murdered or died from the brutal treatment.
“Through his service as a Nazi concentration camp guard, Anton Geiser helped subject thousands of innocent civilians to inhumane and frequently lethal treatment,” said Acting Assistant Attorney General Rita M. Glavin of the Criminal Division. “The United States will not provide a safe haven for such individuals.”
Geiser, 84, immigrated to the United States from Austria in October 1956, and he was naturalized as a U.S. citizen in March 1962. A federal judge in Pittsburgh revoked his citizenship in 2006 because his service to Nazi Germany made him ineligible to enter the United States. The court concluded that Geiser “clearly assisted in the persecution of people because of race, religion and national origin,” and that he therefore was legally barred from receiving a visa to come to the United States.
“The Office of Special Investigations remains unswervingly committed to identifying perpetrators of human rights violations and having them removed from the United States,” said Eli M. Rosenbaum, director of OSI.
The proceedings to denaturalize Geiser were instituted in 2004 by OSI and the U.S. Attorney’s Office in Pittsburgh. The case is a result of OSI’s ongoing efforts to identify, investigate and take legal action against former participants in Nazi crimes of persecution who reside in the United States. Since OSI began operations in 1979, it has won cases against 107 individuals who participated in Nazi-sponsored persecution. In addition, more than 180 suspected participants in Nazi crimes who sought to enter the United States in recent years have been blocked from doing so as a result of OSI’s “Watchlist” program, which is enforced in cooperation with the Departments of State and Homeland Security.
The removal case against Geiser is being litigated by OSI Senior Trial Attorneys Christina Giffin and Edgar Chen. The Philadelphia office of ICE has provided assistance. Members of the public are reminded that the charging document contains only allegations and that the government will be required to prove its case before an immigration judge.
Former Member of U.S. Navy Sentenced to 10 Years in Federal Prison for Disclosing Classified InformationRead the Press Release
WASHINGTON -- Nora R. Dannehy, Acting U.S. Attorney for the District of Connecticut, and other federal officials announced that Hassan Abu-Jihaad, formerly known as Paul R. Hall, 33, of Phoenix, Arizona, was sentenced today by U.S. District Judge Mark R. Kravitz in New Haven to 120 months of imprisonment, followed by three years of supervised release, for disclosing previously classified information relating to the national defense.
“This defendant provided classified information to others with the understanding that it could be used to endanger the lives of hundreds of members of the United States Navy, and we are pleased that the court imposed the maximum prison term allowed under the law,” Acting U.S. Attorney Dannehy stated. “I want to acknowledge the efforts of all the agents, analysts and prosecutors involved in this matter who have worked diligently over the course of several years to bring this defendant to justice.”
According to the evidence provided at trial, in 2001, four or five months after the October 2000 attack on the U.S.S. Cole, Abu-Jihaad provided classified information regarding the movements of a United States Navy battle group, which was charged with enforcing sanctions against the Taliban and engaging in missions against Al Qaeda, to Azzam Publications, a London-based organization that is alleged to have provided material support and resources to persons engaged in acts of terrorism through the creation and use of various internet web sites, e-mail communications, and other means, including www.azzam.com .
Between approximately February 2000 and the end of 2001, the web site http://www.azzam.com was hosted on the computer web servers of a web hosting company located in Trumbull, Connecticut. At the time the classified information was disclosed to Azzam Publications, Abu-Jihaad was an enlistee in the United States Navy on active duty in the Middle East and was stationed aboard the U.S.S. Benfold, one of the ships in the battle group whose movements were disclosed.
Evidence presented at trial indicated that, in December 2003, British law enforcement officers recovered a computer floppy disk in a residence of one of the operators of Azzam Publications. Forensic analysis of the disk disclosed a password-protected Microsoft Word document setting forth previously classified information regarding the upcoming movements of a U.S. Naval battle group as it was to transit from San Diego to its deployment in the Persian Gulf in 2001. The document went on to discuss the battle group’s perceived vulnerability to terrorist attack.
According to the evidence at trial, subsequent investigation uncovered several email exchanges from late 2000 to late 2001 between members of Azzam Publications and Abu-Jihaad, including discussions regarding videos Abu-Jihaad ordered from Azzam Publications that promoted violent jihad and extolled the virtues of martyrdom; a small donation of money Abu-Jihaad made to Azzam Publications; and whether it was “safe” to send materials to Abu-Jihaad at his military address onboard the U.S.S. Benfold.
In another email exchange with Azzam Publications, Abu-Jihaad described a recent force protection briefing given aboard his ship, voiced enmity toward America, praised Usama bin Laden and the mujahideen, praised the October 2000 attack on the U.S.S. Cole – which Abu-Jihaad described as a “martyrdom operation,” – and advised the members of Azzam Publications that such tactics were working and taking their toll. The email response from Azzam Publications encouraged Abu-Jihaad to “keep up... the psychological warefare [sic].”
The evidence at trial also indicated that Abu-Jihaad’s contact information – namely, his Navy email account – was among the few saved in an Azzam Publications online address book.
The evidence at trial included the testimony of six Navy witnesses indicating, among other things, that as a Signalman in the Navigation Division of the U.S.S. Benfold during the 2001 deployment, Abu-Jihaad had access to certain classified information, including advance knowledge of the battle group’s movements.
The evidence at trial also included court-authorized wiretap recordings, during which Abu-Jihaad used coded conversation to refer to jihad; admonished others not to speak openly about jihad over the phone or on the Internet because it was “tapped”; and discussed having conversations with associates using a shredder and after frisking them for electronic components.
The calls played for the jury also included Abu-Jihaad’s use of the terms “hot meals” and “cold meals” in reference to his current and former ability, respectively, to provide inside information or intelligence about potential U.S. military targets. Abu-Jihaad told an associate that he “hadn’t been on that job in X amount of years . . . to see . . . what the fresh meal is,” and in 2006, told another associate that he had not “been in the field of making meals” for more than four years. The evidence established that Abu-Jihaad had left the U.S. Navy in 2002.
On March 5, 2008, a federal jury in New Haven found Abu-Jihaad guilty of one count of providing material support of terrorism, and one count disclosing previously classified information relating to the national defense. On March 4, 2009, Judge Kravitz partially granted a defense motion for a judgment of acquittal on the material support of terrorism charge. The charge of disclosing previously classified information relating to the national defense carries a statutory maximum term of imprisonment of 10 years.
Acting U.S. Attorney Dannehy commended the substantial efforts and cooperation of the several federal law enforcement agencies involved in the investigation including the U.S. Department of Homeland Security, Immigration and Customs Enforcement (“ICE”); the Federal Bureau of Investigation in New Haven, Phoenix and Chicago; the United States Attorney’s Offices in Phoenix and Chicago; the Naval Criminal Investigative Service; the Defense Criminal Investigative Service; and the Internal Revenue Service’ Electronic Crimes Program.
Acting U.S. Attorney Dannehy also praised the substantial efforts of law enforcement authorities from the Metropolitan Police Service’s Counter-Terrorism Command within New Scotland Yard, whose efforts and assistance have been essential in the investigation of this matter.
This case is being pursued by a Task Force out of Connecticut consisting of law enforcement officers from the Department of Homeland Security, U.S. Immigration and Customs Enforcement, the Federal Bureau of Investigation’s Joint Terrorism Task Force, the Internal Revenue Service’s Electronic Crimes Program; the Defense Criminal Investigative Service and the Naval Criminal Investigative Service.
The case is being prosecuted by a team of federal prosecutors including Assistant United States Attorneys Stephen Reynolds and William Nardini from the United States Attorney’s Office for the District of Connecticut, Trial Attorney Alexis Collins from the Counter-Terrorism Section of the U.S. Department of Justice’s National Security Division in Washington and Trial Attorney Rick Green from the Computer Crimes and Intellectual Property Section of the U.S. Department of Justice in Washington, with the assistance of Paralegal Specialist David Heath.
2 April 2009
Virginia Man Sentenced for Idaho Hunting ViolationsRead the Press Release
WASHINGTON—Paul L. Arnold was sentenced today by Judge Ronald Bush of the U.S. District Court for the District of Idaho to pay a $2,500 fine, serve two years probation, and perform 50 hours of community service for two misdemeanor violations of the Lacey Act, a federal wildlife enforcement statute, which occurred near Soda Springs, Idaho, the Justice Department announced.
Arnold was also sentenced to pay $2,500 in restitution to the Idaho State Fish and Game Department. Additionally, he was ordered to forfeit his hunting privileges for a period of two years, and the mounts of two elk and a bow used in a hunt that led to the charges. The judge also required Arnold to write a letter to Eastman’s Bowhunting Journal explaining the circumstances of his conviction.
The case arose from a U.S. Fish and Wildlife Service’s (FWS) investigation of several hunts Arnold undertook in 2002 and 2003. On Sept. 8, 2002, Arnold participated in a hunt while based at a lodge outside of Soda Springs where he shot a trophy-class elk with a distinct commercially available bow. At the time Arnold shot the elk, the bow he used had an illegal electronic sight mounted on it. The legal tension requirement on the bow also exceeded the 65 percent limit allowed under state of Idaho Fish and Game regulations at the time. He later transported the elk from Idaho to Virginia where he resides. An article by Arnold with accompanying photographs appeared in the May 2003 edition of Eastman’s Bowhunting Journal and alerted FWS to the illegal sight on the bow.
On Sept. 15, 2003, Arnold again participated in a hunt while based at the same lodge. Despite not possessing a valid Idaho elk tag, Arnold shot an elk with a bow from a tree stand around dusk but was unable to track it because of darkness. The next day, he tracked the elk and found the animal dead. After dressing the animal and bringing it to the lodge, Arnold drove to Soda Springs and purchased an elk tag. A search by FWS agents prevented Arnold from transporting the elk to Virginia.
As part of the investigation, FWS special agents in Virginia obtained a search warrant to seize a trophy elk illegally shot by Arnold in Idaho in 2002 and transported to Virginia where the elk was made into a mount. On June 22, 2004, the agents questioned Arnold about the location of the elk mount. Arnold told the agents the elk mount was in the possession of a friend, when in fact, the elk mount was in his cabin. FWS agents subsequently seized the elk mount.
“We take wildlife violations seriously. Not only do these crimes harm wildlife populations, but they violate existing laws that legitimate hunters are following,” said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division.“Through joint investigative efforts by Idaho Fish and Game, and the U.S. Fish and Wildlife Service this case has been a success,” said Robert Romero, Resident Agent in Charge, Office of Law Enforcement, U.S. Fish and Wildlife Service. “We hope that this conviction sends a strong message that the unlawful take of wildlife will not be tolerated.”
The case was investigated by the Fish and Wildlife Service and prosecuted by Assistant U.S. Attorney, Michael Fica and Senior Trial Attorney J. Ronald Sutcliffe of the Justice Department’s Environmental Crimes Section.
UBS Client Charged with Filing False Tax ReturnRead the Press Release
WASHINGTON - Steven Michael Rubinstein, of Boca Raton, Fla., has been charged, via criminal complaint, with filing a false income tax return, the Justice Department and Internal Revenue Service (IRS) announced today. Rubinstein made his initial appearance this morning before Magistrate Judge Barry S. Seltzer in Ft. Lauderdale, Fla. The defendant was temporarily detained, pending a bond hearing scheduled for Tuesday, April 7, 2009, at 10:00 a.m. before Magistrate Judge Seltzer.
According to court records, Rubinstein is a chartered accountant who works for an international company that assists clients to build, buy and sell yachts. On or about April 9, 2008, Rubinstein 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 Rubinstein 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, Rubinstein was the beneficial owner of UBS accounts in the name of Hybridge International Ltd., a nominee British Virgin Island corporation. From 2001 through 2008, it is alleged that Rubinstein communicated with bankers at UBS via e-mail, telephone and in person about the purchase and sale of securities worth more than 4.5 million Swiss Francs, the conversion of investments from U.S. dollars to British Pounds, the deposit and transfer of funds into and out of the UBS Swiss accounts and the repatriation of approximately $3 million into the United States to purchase property and build Rubinstein’s 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.
In Feburary 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 U.S. customers of UBS’s cross-border business.
"Six weeks ago, through the efforts of the Department of Justice and the Internal Revenue Service, UBS, the largest bank in Switzerland, admitted to illegally helping United States citizens evade their income taxes, and disclosed names of individual taxpayers. We expect that this prosecution is just the first of the prosecutions that will be brought, as we continue to review the information we have received from all sources," said Acting Assistant Attorney General John A. DiCicco of the Justice Department’s Tax Division. "The Tax Division is committed to helping the IRS to ferret out and hold accountable taxpayers who are hiding assets in undisclosed foreign accounts."
"On February 19, 2009, we reached an agreement with UBS that included, for the first time, the disclosure of the identities of taxpayers that were illegally using Swiss bank accounts to evade U.S. taxes. Today is the first of the prosecutions resulting from that disclosure, but it will not be the last," said R. Alexander Acosta, U.S. Attorney for the Southern District of Florida. "It is our duty to those who pay their legal share of taxes to ensure that others do not use offshore schemes to evade payment of their taxes."
"Combating offshore tax evasion has been and will continue to be one of the IRS's top priorities," said IRS Commissioner Doug Shulman. "Today’s actions show 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.
U.S. citizens who have an interest in, or signature or other authority over, a financial account in a foreign country with assets in excess of $10,000 are required to disclose the existence of such account on Schedule B, Part III of their individual income tax return.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at http://www.usdoj.gov/tax/.
U.S. Sues 32 Individuals, Alleging $30 Million Tax Credit Scam Based on Sham Sales from Non-Existent Methane Production Facilities at LandfillsRead the Press Release
WASHINGTON - The United States has sued four Certified Public Accounts (CPA), 27 tax preparers and one other individual, seeking to bar them from promoting an alleged tax scam involving bogus income tax credits claimed for sham sales of methane from landfills, the Justice Department announced today.
According to the civil injunction lawsuit, filed in Tampa with the U.S. District Court for the Middle District of Florida, George Calvert of Hernando Beach, Fla., and Gregory Guido of Lithia, Fla., concocted a scheme that involves creating bogus business records purportedly documenting sales of methane from landfills in Puerto Rico, Illinois, New York, Ohio and Connecticut. The suit alleges that there were no methane sales, but that the defendants helped their customers claim tax credits based on the purported sales. Federal law allows an income tax credit with respect to certain sales of fuel from non-conventional sources, including methane produced from landfills.
The government complaint alleges that Calvert and Guido promoted the scheme through tax preparers, who acted as sub-promoters. The tax preparers allegedly sold interests in the sham methane production facilities to thousands of customers in at least 14 states across the country and prepared income tax returns for their customers claiming more than $30 million in tax credits based on the sham methane sales.
Two of the larger sub-promoters, according to the complaint, were Louis and Elizabeth Powell, a married couple from Carthage, Texas. The suit alleges that the Powells sold the scheme to more than 1,800 customers, and then prepared tax returns for customers claiming more than $7.8 million of the improper credits.
Another large sub-promoter alleged to have promoted the scheme is Ronald Fontenot of Lake Charles, La. The complaint alleges that Fontenot is the president and CEO of Compro-Tax Inc., a tax preparation service with over 100 offices in the eastern and southern United States. According to the complaint, Fontenot promoted the credit scheme to all Compro-Tax store operators, and at least 54 of those Compro-Tax store operators sold interests in the scheme to customers and then prepared federal income tax returns for the customers claiming the improper tax credits.
The complaint further alleges that one sub-promoter, Sally Hand-Bostick, operator of National Express Tax in Carrollton, Texas, is a representative for Drake Software, a Franklin, N.C.-based company that sells tax preparation software to tax preparers in all 50 states. Hand-Bostick allegedly promoted the scheme to tax preparers who were her Drake Software customers. She also allegedly sold the scheme to her own tax preparation customers, and prepared returns for those customers claiming nearly $2.5 million of the improper tax credits.
A list of all defendants named in the suit is provided at the end of this release.
"Taxpayers need to choose their tax preparers carefully," said John DiCicco, acting assistant attorney general for the Justice Department’s Tax Division. "They should be particularly alert when a tax preparer steers them towards a scheme that seems too good to be true."
In the past decade, the Justice Department has obtained injunctions against more than 380 tax return preparers and tax-fraud promoters. Information about the Justice Department’s Tax Division and its efforts to enjoin unscrupulous tax return preparers and tax-fraud promoters is available on the Justice Department Web site.
Defendant Business Location George Calvert Calvert and Associates, Inc., GRP2, CH4, Green Earth, National Tax, Inc. Hernando County, FL Gregory Guido (CPA) GRP2, CH4, Green Earth, National Tax, Inc. Hernando County, FL Louis Powell The Income Tax Office, U.S. Energy Credits Carthage, TX Elizabeth Powell The Income Tax Office, U.S. Energy Credits Carthage, TX Carl Martin Stewart Virtual Professional Education Carthage, TX Larry Engelson Hiestand and Co. Grand Rapids, MI Edward W. Adams (enrolled agent) Mr. Tax of America Dallas, TX Timothy W. Adams (enrolled agent) Federal USTAXCO, Inc. Irving, TX Sally Hand-Bostick National Express Tax Plano, TX Ronald Fontenot Compro-Tax, Inc. Lake Charles, LA David M. Berger (CPA) David M. Berger, An Accountancy Corp. Studio City, CA David J. Geiger (enrolled agent) EK Williams and Co., St. Charles, MO Mark D. Johnson MDJ Business Services Mansfield, TX Defendant Business Location Ralph D. Johnson (enrolled agent) Complete Accounting Solutions Alton, IL William G. Neel (CPA, enrolled agent) Comprehensive Accounting Services; TA Neelco Inc. Clayton, MO Elizabeth Spinelli (CPA) sole-proprietor Plano, TX Vinson Stanphill Accurate Business Services Mesquite, TX Anthony Burrell Compro-Tax, Inc. Corrigan, TX Silas Anderson Compro-Tax, Inc. San Antonio, TX Ursa Bookman Compro-Tax, Inc. Camden, TX Clevon Harper Compro-Tax, Inc. Lufkin, TX Craig D. Johnson Compro-Tax, Inc. Beaumont, TX Jacqueline Levias Compro-Tax, Inc. Orange, TX Jackie E. Mayfield Compro-Tax, Inc. Orange, TX Carlos Metoyer Compro-Tax, Inc Lake Charles, LA Yusef A. Muhammed Compro-Tax, Inc. Beaumont, TX Joann Spooner Compro-Tax, Inc. Port Arthur, TX Gloria Toren Compro-Tax, Inc. Lufkin, TX Edward Trotty Compro-Tax, Inc. Lufkin, TX Denise White Compro-Tax, Inc. Beaumont, TX Walter Drakeford Drakeford and Drakeford, P.A. Tampa, FL; Fredricksburg, VA Robert Anderson A&N Energy Systems, Inc. Bloomington, ILTwo Individuals Convicted on Charges of Conspiracy and Bribery in Connection with a U.S. Army Corps of Engineers New Orleans Levee Reconstruction ProjectRead the Press Release
WASHINGTON — A former contract employee of the U.S. Army Corps of Engineers and a dirt, sand and gravel subcontractor were both convicted on charges of conspiracy and bribery in connection with a $16 million hurricane protection project for the reconstruction of the Lake Cataouatche Levee, south of New Orleans, the U.S. Department of Justice announced today. The Lake Cataouatche Levee is an eight mile section that currently represents the system’s lowest and most vulnerable stretch and protects the citizens of Jefferson and St. Charles Parishes.
Late yesterday, a federal jury found Durwanda Elizabeth Morgan Heinrich and Kern Carver Bernard Wilson each guilty of one count of conspiring to commit bribery. Additionally, Heinrich was found guilty of two counts of offering a bribe to a public official, and Wilson was found guilty of one count of demanding and agreeing to accept a bribe as a public official.The conduct centered on an attempt by Heinrich, Wilson and Raul Miranda, a previously charged former contract employee of the U.S. Army Corps of Engineers, to steer a dirt, sand and gravel subcontract on the levee project to Heinrich in return for Heinrich using part of the proceeds from the subcontract to pay bribes to Wilson and Miranda for their assistance. In August 2007, Miranda, of Houston, pleaded guilty to agreeing to accept this bribe.
“We are pleased that after being presented with the government’s evidence, the jury found these individuals guilty of conspiracy and bribery,” said Scott D. Hammond, Acting Assistant Attorney General in charge of the Department’s Antitrust Division. “Neither the greedy conduct of corrupt officials, nor the contractors who bribe them, will be ignored, and this conviction shows that those who engage in illegal conduct will be held accountable for their actions.”
The convictions are the result of an ongoing investigation of fraud in the procurement of levee reconstruction contracts let by the U.S. Army Corps of Engineers being conducted by the Antitrust Division’s Dallas Field Office, the U.S. Attorneys Office for the Eastern District of Louisiana, the Vicksburg Fraud Resident Agency of the U.S. Army Criminal Investigation Command and the Department of Defense’s Criminal Investigative Service through the Hurricane Katrina Fraud Task Force.
“These convictions are further compelling evidence of the absolute commitment of the U.S. Department of Justice and our partners in federal law enforcement to maintain a zero tolerance for any public corruption in the Eastern District of Louisiana, which is so critical to our rebuilding in the wake of the devastation wrought by Hurricane Katrina,” said U.S. Attorney Jim Letten. “This office and our law enforcement partners will continue to stand guard over this region, its people and our rebuilding process.”
Sentencing for Heinrich and Wilson is scheduled for July 8, 2009, before the Honorable Judge Carl J. Barbier. The conspiracy charge carries a maximum penalty of five years in prison and a maximum fine of not more than three times the amount of the bribe. The bribery charges each carry a maximum penalty of 15 years imprisonment and a maximum fine of not more than three times the amount of the bribe. Heinrich and Wilson may also be disqualified from holding any position in the U.S. government.
In September 2005, the Hurricane Katrina Fraud Task Force, now the Disaster Fraud Task Force, was created to deter, investigate and prosecute disaster-related federal crimes. To date, the Task Force has charged 1245 defendants in 1160 cases. Anyone with information concerning anticompetitive conduct, fraud, or other allegations of illegal activity is urged to call the Disaster Fraud Hotline at 866-720-5721, the Antitrust Division’s Dallas Field Office at 214-661-8600, or the Atlanta Field Office at 404-331-7100.
Three Defendants Sentenced in "Advance-Fee" Fraud Scheme That Cost Victims More Than $1.2 MillionRead the Press Release
Three defendants were sentenced to prison today after pleading guilty in January 2008 to federal charges of running an “advance-fee” scheme that targeted U.S. victims with promises of millions of dollars, Acting Assistant Attorney General Rita M. Glavin of the Criminal Division and U.S. Attorney Benton J. Campbell of the Eastern District of New York announced. The defendants were sentenced by U.S. District Judge Dora L. Irizarry at the federal courthouse in Brooklyn, N.Y.
Nnamdi Chizuba Anisiobi (a/k/a Yellowman, Abdul Rahman, Michael Anderson, Edmund Walter, Nancy White, Jiggaman and Namo), 31, citizen of Nigeria, was sentenced to 87 months in prison.
Anthony Friday Ehis (a/k/a John J. Smith, Toni N. Amokwu and Mr. T), 34, citizen of France, was sentenced to 57 months in prison.
Kesandu Egwuonwu (a/k/a KeKe, Joey Martin Maxwell, David Mark and Helmut Schkinger), 35, citizen of Nigeria, was sentenced to 57 months in prison.
All three defendants each pleaded guilty to one count of conspiracy, eight counts of wire fraud and one count of mail fraud.
The investigation was initiated by Dutch law enforcement authorities. After identifying victims in the United States, Dutch authorities notified the U.S. Postal Inspection Service, which opened its own investigation, resulting in the charges against the defendants. Three of the defendants were arrested in Amsterdam on Feb. 21, 2006, and were subsequently extradited to the United States.
According to the indictment and an earlier filed complaint, the defendants sent “spam” e-mails to thousands of potential victims, in which they falsely claimed to control millions of dollars located abroad. Attempting to conceal their identities, the defendants admitted they used a variety of aliases, phone numbers and e-mail addresses. In one scenario, the defendants sent e-mails purporting to be from an individual suffering from terminal throat cancer who needed assistance distributing approximately $55 million to charity. In exchange for a victim’s help, the defendants offered to give a 20 percent commission to the victim or a charity of his or her choice. Subsequently, as part of the ruse, the defendants sent a variety of fraudulent documents, including a “Letter of Authority” or a “Certificate of Deposit,” making it appear that the promised funds were available, and pictures of an individual claiming to suffer from throat cancer. The evidence to the court established that Anisiobi telephoned victims, disguising his voice to give the impression that he was suffering from throat cancer.
After obtaining their victims’ trust, the defendants asked them to wire-transfer payment for a variety of advance fees, ostensibly for legal representation, taxes and additional documentation. In return, the victims received nothing. In a variation of the scheme, if the victims said they could not afford to pay the advance fees, the defendants admitted they would send them counterfeit checks, supposedly from a cancer patient, to cover those fees. Many victims deposited the checks and then drew on them to wire-transfer the advance fees. Subsequently, when the checks did not clear their accounts, the victims suffered substantial losses.
The case was investigated by the U.S. Postal Inspection Service and prosecuted by Fraud Section Trial Attorneys Mary (Kit) Dimke, Amanda Riedel, and Nicola Mrazek, Paralegal Pamela Johnson, and Assistant U.S. Attorney Tanya Y. Hill.
Northrop Grumman Corp. Settles False Claims Act Case for Defective Satellite PartsRead the Press Release
WASHINGTON – Northrop Grumman Corp., its subsidiary Northrop Grumman Space and Mission Systems Corp., and its predecessor TRW Inc. (collectively, Northrop) have agreed to settle for $325 million, False Claims Act allegations that Northrop provided and billed the National Reconnaissance Office (NRO) for defective microelectronic parts, known as Heterojunction Bipolar Transistors (HBTs), the Justice Department announced today.
The government’s investigation in the HBT Action concluded that Northrop and TRW failed to properly test and qualify certain HBTs manufactured by TRW from 1992 to 2002. As a result, Northrop and TRW integrated into NRO satellite equipment certain defective HBTs. The investigation further concluded that Northrop and TRW made misrepresentations about, and concealed certain material facts regarding the reliability of the HBTs.The settlement was announced today by Acting Assistant Attorney General for the Civil Division Michael F. Hertz and the U.S. Attorney for the Central District of California Thomas O’Brien.
“The settlement of the HBT case demonstrates that the Department of Justice will investigate even the most complex and challenging allegations,” said Michael F. Hertz, Acting Assistant Attorney General for the Justice Department’s Civil Division. “Today’s settlement demonstrates that defense contractors will be held accountable and that the government will aggressively pursue all allegations of misconduct in the procurement process.”
Today’s settlement resolves a qui tam or whistleblower lawsuit filed by Robert Ferro, Ph.D., an employee of The Aerospace Corporation. The government investigated Dr. Ferro’s allegations and intervened in the lawsuit against Northrop in November 2008. Ferro’s suit was filed in US. District Court in the Central District of California in 2002. Under the agreement reached today, Dr. Ferro will receive $48.75 million as his share of the recovery in the HBT action under the qui tam provisions of the False Claims Act.
At the same time, the Department, assisted by the Air Force General Counsel’s office, and Northrop also settled a Contract Disputes Act action brought by Northrop concerning its contract with the Air Force to develop and produce the Tri-Service Standoff Attack Missile (TSSAM), a low-cost, low-observable, tactical cruise missile. That suit, filed by Northrop in 1996 in the U.S. Court of Federal Claims in Washington, concerned the government’s decision to terminate Northrop’s TSSAM contract due to cost and schedule overruns. The TSSAM Action settled for $325 million and the settlement resolves Northrop’s claims in excess $1 billion, bringing to a close this 12-year litigation.
The TSSAM matter was handled by the Commercial Litigation Branch of the Department’s Civil Division, together with counsel for the Air Force. The HBT investigation was conducted by the Office of Inspector General for the NRO, with the assistance of the Defense Criminal Investigative Service, the Air Force Research Laboratory, Sensors Directorate at Wright Patterson Air Force Base, together with Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s office for the Central District of California.
The Department acknowledges the efforts of the late David W. Long, Senior Trial Counsel, Civil Division for his work while battling cancer in initiating, and the early development of, the HBT investigation for which work he received the Attorney General’s Mary C. Lawton award.
Former Jackson Police Department Officer Pleads Guilty to Civil Rights ViolationRead the Press Release
WASHINGTON - Jonathan Haynes, a former police officer with the Jackson Police Department, pleaded guilty today in federal court in Jackson, Miss., to stealing money from a citizen during an off-duty encounter.
During his plea, Haynes acknowledged that he abused his authority as a law enforcement officer when, on June 21, 2008, while he was off-duty but in uniform, he abused his police powers by stopping and searching two men without legal justification and by stealing $100 from one of the men. Haynes admitted today that his conduct violated the constitutional rights of the two men.
Haynes sentencing hearing is scheduled for June 15, 2009. Haynes faces a maximum penalty of up to one year in prison.
The case was investigated by the FBI. The case is being prosecuted by Trial Attorney Erin Aslan of the Justice Department's Civil Rights Division and Assistant U.S. Attorney Glenda Haynes of the U.S. Attorney's Office for the Southern District of Mississippi. The defendant is not related to Assistant U.S. Attorney Haynes.
Fact Sheet: Department of Justice Efforts to Combat Mexican Drug CartelsRead the Press Release
WASHINGTON – The increased efforts and reallocation of personnel recently announced by the Department of Justice builds on the foundation of expertise and experience gained from ongoing efforts to combat Mexican drug cartels in the United States and to help Mexican law enforcement battle cartels in its own country.
BUREAU OF ALCOHOL, TOBACCO, FIREARMS AND EXPLOSIVES (ATF)
ATF is on the frontline in the fight against violent crime, particularly firearms trafficking and gun-related violence associated with organized gangs and drug trafficking organizations. Working in conjunction with domestic and international law enforcement partners, ATF’s efforts deny the “tools of the trade” to the firearms trafficking infrastructure of criminal organizations operating in Mexico and along the border.
ATF is relocating 100 personnel to the Houston Field Division to support the new ATF intelligence-driven effort, known as Gunrunner Impact Teams (GRITs). The teams will focus ATF’s violent crime-fighting and firearms trafficking expertise, along with its regulatory authority and strategic partnerships, to combat violence along the U.S.-Mexico border.
Project Gunrunner:
Cooperation among federal, state and local law enforcement agencies and the government of Mexico is the foundation of Project Gunrunner, ATF’s national initiative to stem firearms trafficking to Mexico by organized criminal groups. Project Gunrunner has resulted in approximately 650 cases by ATF, in which more than 1,400 defendants were referred for prosecution in federal and state courts and more than 12,000 firearms were involved.
As part of the Recovery Act funding, ATF received $10 million for Project Gunrunner efforts, aimed at disrupting firearms trafficking between the U.S. and Mexico, to include hiring 25 new special agents, six industry operations investigators (IOIs), three intelligence research specialists and three investigative analysts. The funding will establish three permanent field offices, dedicated to firearms trafficking investigations, in McAllen, Texas; El Centro, Calif.; and Las Cruces, N.M (including a satellite office in Roswell, N.M.). Previously, approximately 148 special agents were dedicated to investigating firearms trafficking on a full-time basis and 59 IOIs were responsible for conducting regulatory inspections of federally licensed gun dealers, known as federal firearms licensees (FFLs) along the Southwest border.
As the sole federal agency that regulates FFLs, ATF’s cadre of IOIs work to identify and prioritize for inspection those FFLs with a history of noncompliance that represent a risk to public safety; who sell the weapons most commonly used by drug trafficking organizations in the region; and have numerous unsuccessful traces and a large volume of firearms recoveries in high-crime areas. Along the Southwest border, ATF inspected approximately 1,700 FFLs in FY 2007 and 1,900 in FY 2008.
eTrace:
The cornerstone of ATF’s Project Gunrunner is eTrace, which allows law enforcement agencies to identify trends of drug trafficking organizations. In 2008, ATF deployed eTrace technology to the nine U.S. consulates in Mexico to facilitate the paperless exchange of gun crime data in a secure Web-based environment. eTrace allows law enforcement representatives to electronically submit firearms trace requests, to monitor the progress of traces, to retrieve completed trace results and to query firearm trace related data in a real-time environment. In FY 2008, Mexico submitted more than 7,500 recovered guns for tracing, most of which were traced to sources in Texas, California and Arizona.
ATF has analyzed firearms recovered in Mexico from 2005-2008 and has identified the following weapons most commonly used by drug trafficking organizations: 9mm pistols; .38-caliber revolvers; 5.7mm pistols; .223-caliber rifles; 7.62mm rifles; and .50 caliber rifles.
ATF is developing a Spanish-language eTrace to make firearms tracing easier and more accessible to law enforcement partners in Mexico and Central America. ATF’s goal is to deploy the system to all 31 states in Mexico, giving law enforcement a better picture of firearms trafficking routes, trends and organizations throughout both nations.
Training and Awareness Efforts:
In calendar year 2008, ATF trained more than 750 law enforcement officers from various Mexican federal and state agencies on firearms identification, firearms trafficking, firearms tracing, eTrace, explosives identification and post-blast investigation. With the assistance of ATF’s Mexico City office and the Narcotics Affairs Section of the U.S. Department of State, ATF anticipates conducting numerous additional courses in these subject areas in 2009.
ATF will also concentrate training and industry awareness efforts on the Southwest Border. In partnership with the firearms industry association National Shooting Sports Foundation, ATF will conduct “Don’t Lie for the Other Guy” seminars in southern Texas, Arizona and California. The campaign educates licensed firearms dealers about the straw purchase of firearms, which is a federal felony offense, and helps them identify potential straw purchase transactions so they can confidently deny the sales.
ATF in Mexico:
ATF’s activities in Mexico are coordinated through the ATF attaché office located in Mexico City. ATF Southwest field divisions (Dallas, Houston, Los Angeles and Phoenix) have established border liaison special agent contacts with representatives from the Mexican Attorney General’s Office. The border liaisons meet regularly to coordinate firearms trafficking investigations. ATF has five personnel in Mexico at this time and will add an additional four personnel using a portion of the $10 million that ATF received in stimulus funding. The Mexican Attorney General’s office also has a representative in ATF’s Phoenix Field Division.
DRUG ENFORCEMENT ADMINISTRATION (DEA)
In collaboration with Mexican law enforcement, DEA is actively working to systematically dismantle the cartels. As the largest law enforcement presence in Mexico with 11 offices, and a decades-long history of working with the Mexican government, DEA has a strategic vantage point from which to assess the drug trafficking situation in Mexico, the related violence, its causes and its historical context. DEA is placing 16 new positions in its Southwest border field divisions. With this increase, 29 percent of DEA’s domestic agent positions (1,180 agents) are now allocated to its Southwest border field divisions. DEA is also forming four additional Mobile Enforcement Teams (METs) to specifically target Mexican methamphetamine trafficking operations and associated violence, both along the border and in U.S. cities impacted by the cartels. MET Teams will be placed in DEA’s El Paso, Texas; Phoenix; Chicago; and Atlanta Field Divisions.
Shortly after Congress approved the Sensitive Investigative Unit (SIU) program in 1996, the Mexico City SIU was established, and DEA now works with a number of trusted counterparts throughout the country. DEA works closely with these vetted units to collect and analyze sensitive law enforcement information and to further the case development against and the prosecution of major drug trafficking organizations.
Working with Mexican counterparts, DEA and U.S. interagency partnerships have taken the offensive against Mexico-based cartels on their own turf and sought to systematically identify and dismantle U.S.-based cells of these Mexican cartels. Project Reckoning and Operation Xcellerator are recent examples of this U.S.-Mexico collaboration. Both actions were investigated and prosecuted in multiple Organized Crime Drug Enforcement Task Forces (OCDETF) cases, involving DEA and other OCDETF investigative agencies, state and local law enforcement, numerous U.S. Attorneys’ Offices, and the Department’s Criminal Division.
Special Operations Division
The mission of the Special Operations Division (SOD), a multi-agency task force spearheaded by the DEA, is to establish seamless law enforcement coordination, strategies and operations aimed at dismantling national and international narco-trafficking, narco-terrorists and other criminal organizations by attacking their command and control structure. SOD is able to facilitate coordination and communication across and among multiagency networks with overlapping investigations to ensure that tactical and strategic intelligence is shared between all of SOD's participating agencies, including the U.S. Attorneys' Offices and various intelligence centers such as the El Paso Intelligence Center and the OCDETF Fusion Center.
Project Reckoning:
Project Reckoning was a 15-month operation targeting the Gulf Cartel and remains one of the largest, most successful joint law enforcement efforts ever undertaken between the United States and Mexico. Due to the intelligence and evidence derived from Project Reckoning, during 2008 the United States was able to secure indictments against Gulf Cartel leaders Ezekiel Antonio Cardenas-Guillen (brother of extradited Kingpin Osiel Cardenas-Guillen), Eduardo Costilla-Sanchez and Heriberto Lazcano-Lazcano, head of Los Zetas. Project Reckoning resulted in more than 600 arrests in the United States and Mexico, including 175 active Gulf Cartel/Los Zetas members, and the seizure of thousands of pounds of methamphetamine, tens of thousands of pounds of marijuana, nearly 20,000 kilograms of cocaine, hundreds of weapons, and $71 million.
Operation Xcellerator:
Operation Xcellerator began in May 2007 from an investigation in Imperial County, Calif., and targeted the Sinaloa Cartel. Operation Xcellerator was recently concluded and resulted in more than 700 arrests, the seizure of more than $59 million in U.S. currency, 1,200 pounds of methamphetamine, 12,000 kilograms of cocaine, 1.3 million ecstasy pills, three aircraft and three maritime vessels.
El Paso Intelligence Center (EPIC):
Led by the DEA, EPIC is a national tactical intelligence center that focuses its efforts on supporting law enforcement efforts in the Western Hemisphere, with a significant emphasis on the Southwest border. Through its 24-hour watch function, EPIC provides immediate access to participating agencies’ databases to law enforcement agents, investigators and analysts. This function is critical in the dissemination of relevant information in support of tactical and investigative activities, deconfliction and officer safety. EPIC also provides significant, direct tactical intelligence support to state and local law enforcement agencies, especially in the areas of clandestine laboratory investigations and highway interdiction efforts.
EPIC’s Gatekeeper Project is a comprehensive, multi-source assessment of trafficking organizations involved in and controlling movement of illegal contraband through “entry corridors” along the Southwest border. The analysis of Gatekeeper organizations not only provides a better understanding of command and control, organizational structure and methods of operations, but also serves as a guide for policymakers to initiate enforcement operations and prioritize operations by U.S. anti-drug elements.
Implementation of License Plate Readers (LPR) along the Southwest border has provided a surveillance method that uses optical character recognition on images that read vehicle license plates. The LPR Initiative combines existing DEA and other law enforcement database capabilities with new technology to identify and interdict devices being utilized to transport bulk cash, drugs, weapons, as well as other illegal contraband.
The National Seizure System (NSS) consists of seizure information relating to drugs, weapons, currency, chemicals and clandestine laboratory seizures reported to EPIC by federal, state and local law enforcement agencies from Jan. 1, 2000, to the present. The NSS database contains approximately 400,000 records of seizure events.
In support of the Bulk Currency Program, EPIC established a depository for detailed bulk currency seizure information from both domestic and foreign law enforcement agencies. In addition, EPIC analyzes volumes of bulk currency seizure data and develops various reports such as state link reports which are routinely sent to federal law enforcement agencies throughout the country to provide investigative leads. EPIC also responds to requests for bulk currency seizure data from agents and officers in the field.
The ATF Southwest Border Unit, which also houses the EPIC Gun Desk, serves as the focal point for the collection, analysis, and dissemination of weapons related investigative leads derived from federal, state, local and international law enforcement agencies.
DEA Work with Mexico
DEA and the Department of State, Bureau of International Narcotics and Law Enforcement Affairs have provided training to Mexican officials on a variety of investigative, enforcement and regulatory methods related to methamphetamine trafficking and enforcement. This training included instruction on clandestine laboratory investigations, precursor chemical investigations and drug identification. During FY 2008, 1,269 Mexican federal, state and local counterparts were trained. DEA has also donated eight refurbished trucks used in clandestine laboratory enforcement operations to Mexico.
DEA established a joint program with U.S. Customs and Border Patrol to monitor and investigate the importation of precursor chemicals into the United States, headed for Mexico. The program targets containerized cargo consignments and air cargo.
U.S. MARSHALS SERVICE (USMS)
USMS has stepped-up its efforts along the Southwest border, deploying 94 additional Deputy U.S. Marshals during the last eight months and sending four additional deputies to Mexico City to assist the USMS Mexico City Foreign Field Office (MCFFO).
Twenty-five new Criminal Investigators-Asset Forfeiture Specialists have been placed in USMS asset forfeiture units in the field. The new positions are unique in that they will be solely dedicated to the USMS Asset Forfeiture Division and will support U.S. Attorneys’ Offices and investigative agencies in investigations of cartels and other large-scale investigations.
International Fugitive Investigations:The USMS Investigative Operations Division (IOD) coordinates international investigations with USMS-led district and regional fugitive task forces, and other U.S. law enforcement, and provides guidance and direction on the international process.
In FY 2008, the USMS opened 790 international fugitive investigations, with 303 fugitive cases sent to Mexico. Of these cases, 206 were investigated and closed. For FY 2009 to date, the USMS has opened 376 international fugitive investigations, with 143 fugitive cases sent to Mexico. A total of 120 arrests have been made in Mexico through March 31, 2009.
Foreign Fugitive Investigations:
Once a foreign fugitive is located, an investigation is conducted to determine if the fugitive is in the United States legally. In FY 2008, the USMS opened 707 foreign fugitive investigations, with 290 requests from Mexico. Sixty-six individuals were arrested and returned to Mexico. For FY 2009 to date, the USMS has opened 180 foreign fugitive investigations, with 69 requests from Mexico. A total of 37 have been arrested through March 31, 2009. There has been nearly a 250 percent increase in the number of fugitive arrests since 2003.
Mexico Investigative Liaison Program (MIL):
The Mexico Investigative Liaison Program (MIL) was created to address international fugitive matters along the Southwest border. The purpose of this district-based, cross-border violent crime initiative is to enhance the effectiveness of the USMS in the investigation and apprehension of U.S. fugitives located in Mexico and to coordinate the location and apprehension of foreign fugitives from Mexico.
The MIL currently has 33 Deputy U.S. Marshals assigned to the five Southwest border districts, as well as two adjoining USMS districts, who operate under the auspices of the MCFFO and Chief of Mission when conducting cross-border investigations. They were responsible for investigating more than 240 cross-border investigations and 50 arrests in 2008.
Mexico Foreign Field Office (MCFFO):
The MCFFO program helps to coordinate, support and train foreign law enforcement in an aggressive approach to apprehending and extraditing international fugitives – particularly those wanted in the United States – with special attention given to violent criminals and upper-level drug trafficking fugitives.
Located at the U.S. Embassy, the MCFFO is staffed by three full-time criminal investigators. Deputy U.S. Marshals in foreign field offices serve as the primary liaisons for fugitive investigations, provisional arrest warrants, extraditions and deportations, oversight of USMS cross-border investigations, and international law enforcement training.
The Marshals Service’s chief law enforcement partners in Mexico are the Procuraduría General de la República (PGR-Mexico Attorney General’s Office), the Agencia Federal de Investigación (AFI-Mexico Federal Law Enforcement Agency), the Instituto Nacional de Migración (INM-Mexico Immigration), and various state judicial police entities, including the Sonora State Police.
International Law Enforcement Training:
USMS will also enhance efforts under the International Training Program to meet the training needs of Mexican law enforcement agencies on the federal and state level, in the areas of fugitive apprehension, tactical operations, judicial security and dignitary protection, witness protection, prisoner custody, housing and transportation and asset forfeiture. The next two training classes are scheduled for April and May 2009. The USMS has been providing training to its Mexican counterparts since 2001.
Eighteen officers from the Instituto Nacional de Migración (INM-Mexico Immigration), a Special Unit from the Mexico State of Tamaulipas, and the newly-formed Secretaría de Seguridad Pública del Distrito Federal (SSP) in Mexico were trained as part of this program during a two-week fugitive investigative course sponsored by IIB and the USMS Southern District of Texas, Laredo Division.
Since the inception of the Mexico Fugitive Investigators Training Program in 2001, 185 law enforcement officers from Mexico have been trained in fugitive apprehension techniques. As a result, there has been a 240 percent increase in the number of cross-border fugitive felon arrests since the inception of the program.
Domestic Fugitive Investigations – Southwest Border Districts:
Currently, the USMS is the lead agency for 82 district-managed fugitive task forces, and seven Regional Fugitive Task Forces (RFTFs), including the following task forces in the five Southwest Border districts:
- The Pacific Southwest Regional Fugitive Task Force (Southern California)
- The District of Arizona High Intensity Drug Trafficking Area (HIDTA) Enforcement Agencies Task Force
- The District of New Mexico Southwest Investigative Fugitive Team
- The Western District of Texas Lone Star Fugitive Task Force
- The Southern District of Texas Gulf Coast Violent Offenders Task Force
The task forces operate in areas ranging from major metropolitan cities to rural, isolated areas along the Mexican border. Most of the district task forces operating directly on the Southwest border are partnered with all federal agencies and specifically support the Southwest Border HIDTA and the initiatives sponsored by the various partner agencies. These partnerships permit the USMS to act as a force multiplier well beyond the traditional fugitive apprehension role.
For FY 2009 to date, these five task forces have arrested 6,912 federal, state and local fugitives, including 208 alleged gang members, 143 individuals wanted for murder, 376 individuals wanted on weapons charges and 2,242 individuals wanted on narcotics charges. Through March 31, 2009, the five task forces have closed 8,335 warrants. They also have seized 114 firearms, 19 vehicles, more than $84,000 in cash, and approximately 240 kilograms of narcotics. In FY 2008, these five task forces arrested 15,564 federal, state, and local fugitives, closed 19,157 warrants, and seized 267 firearms, $648,333 in cash, and more than 2,730 kilograms of narcotics.The USMS has apprehension authority for approximately 90 percent of all fugitives wanted under the OCDETF program, which is an important element of the Department’s drug supply reduction strategy. Of the more than 7,200 active OCDETF warrants nationwide, more than 1,100 originate in the Southwest region. In FY 2008, the OCDETF Program along the Southwest border cleared 189 fugitive warrants. In FY 2009 to date, the OCDETF Program along the Southwest border has cleared 44 fugitive warrants.
The USMS task force network is supported by the Technical Operations Group (TOG), which provides critical, state-of-the-art electronic and air surveillance in fugitive investigations, judicial security investigations and protection details, and supports other USMS missions. To increase its intelligence-gathering capabilities, the TOG has designed a radio system in response to a critical needs assessment in the Southern District of Texas with plans to begin construction soon along the Texas-Mexico border.
FEDERAL BUREAU OF INVESTIGATION (FBI)
The FBI is taking proactive measures to assess and confront this heightened threat to public safety on both sides of the U.S.-Mexico border, by creating a Southwest Intelligence Group (SWIG), which will serve as a clearinghouse of all FBI activities involving Mexico. The FBI will also increase its focus on public corruption, kidnappings and extortion relating to Southwest border issues.
In addition, the FBI is participating in multiple bi‑lateral multi‑agency meetings and working groups to hone strategies to address the problem. The FBI is well-equipped to deal with cartels, through established entities such as the National Gang Intelligence Center. The FBI has task forces throughout the country working to disrupt gang activity. The FBI’s San Antonio division currently operates two Safe Street/Gang task forces addressing border violence in San Antonio, Texas, and the Rio Grand Valley.
In calendar year 2008, the FBI’s offices in San Diego; Albuquerque, N.M.; Phoenix; El Paso, Texas; Houston; Dallas; Los Angeles; and San Antonio, Texas, maintained hundreds of Organized Drug Enforcement Task Forces Program (OCDETF) and criminal enterprise cases with a nexus to Mexican drug trafficking. The FBI has several hundred agents working these issues in these eight Divisions, resulting in thousands of arrests, indictments and convictions in FY2008.
The FBI has established six Border Corruption Task Forces focusing on drug and general border corruption tied to the southwest border, and is actively encouraging southwest border field offices to expand their use of Border Corruption Task Forces.
TAG Initiative: The Transnational Anti-Gang (TAG) Initiative was developed and implemented in October 2007 to enhance cooperation, coordination and augmenting investigative capabilities between the FBI and law enforcement agencies in El Salvador, Guatemala, Honduras and Mexico. The goal of the initiative is to aggressively investigate, disrupt and dismantle violent gangs whose activities rise to the level of criminal enterprises and who pose the greatest multi-jurisdictional threat.
Already, the TAG has seen successes, such as in September 2008, when TAG investigators arrested five MS-13 gang members who were transporting a cache of anti-tank weapons and military small arms. Also, FBI agents from Charlotte, N.C., worked with TAG investigators in actions that led to the indictment of 26 MS-13 gang members in June 2008, including Manual Ayala, who allegedly directed gang activities in the United States from his jail cell in El Salvador.
CAFÉ Initiative: The Central American Fingerprint Exploitation Initiative (CAFÉ), a criminal file/fingerprint retrieval initiative, was developed by the MS-13 National Gang Task Force and the Policia Nacional Civil (PNC) to store criminal fingerprints of gang members from Chiapas, Mexico, and the Central American countries of El Salvador, Guatemala, Belize and Honduras. This information is incorporated into the FBI’s Criminal Justice Information Services database and is available to all U.S. local, state and federal law enforcement agencies. By incorporating these records into a searchable database, law enforcement agencies like the PNC can access the data through their own Automated Fingerprint Identification Systems.
Since 2006, the FBI has searched, processed and incorporated more than 72,000 criminal records from El Salvador, Guatemala, Belize, Honduras and Chiapas, Mexico, into the FBI’s Integrated Automated Fingerprint Identification System.
CRIMINAL DIVISION
Office of International Affairs (OIA):
Mexico and the United States continue to make positive strides to increase the number of fugitives returned to the country where they committed serious crimes. Extradition records have been consistently broken for the past three years. In 2008, Mexico extradited a total 95 fugitives, 78 of whom were Mexican nationals, and 23 of whom were extradited for drug charges, to the United States. In addition, Mexico deported approximately 172 fugitives to the United States in 2008.
Extraditions from the United States to Mexico improved dramatically in 2008 as well. The United States surrendered 32 fugitives to Mexico in 2008, compared to 12 surrendered in 2007. Approximately 20 fugitives are currently undergoing extradition proceedings in U.S. courts.
In addition to achieving record numbers of extraditions from Mexico, OIA also increases the joint cooperation between Mexican and U.S. law enforcement authorities by responding to requests for mutual legal assistance from Mexico for evidence in hundreds of matters each year. OIA is represented at the U.S. Embassy in Mexico City by a Department of Justice attaché and deputy attaché.
Narcotic and Dangerous Drug Section (NDDS):
NDDS has a broad mission to combat domestic and international drug trafficking and narco-terrorism.
NDDS litigation unit attorneys prosecute those individuals and criminal organizations posing the most significant drug trafficking threat to the United States. NDDS attorneys recently indicted 17 members of the Gulf Cartel, including three leaders, for violations involving the extraterritorial manufacture or distribution of cocaine and marijuana destined for the United States. Also, in May 2008, NDDS attorneys were the first federal prosecutors to secure a conviction under the new narco-terrorism statute.
NDDS attorneys are responsible for the oversight of several classified projects, as well as the integration and dissemination of classified intelligence information to domestic criminal prosecutions. These attorneys coordinate the efforts of law enforcement and prosecutors worldwide to maximize the Department’s effectiveness against international narco-traffickers. NDDS attorneys assisted with the coordinated takedowns in Project Reckoning and Operation Xcellerator.
Merida Initiative:
The Merida Initiative was designed and presented to Congress as a U.S. interagency response to trans-border crime and security issues affecting the United States, Mexico and the countries of Central America. The Merida Initiative seeks to strengthen partner countries’ capacities to combat organized criminal activities that threaten the security of the region. Merida assistance is focused three main areas: counter-narcotics, counterterrorism and border security; public security and law enforcement; and institution building and the rule of law.
Through the Criminal Division and law enforcement components, the Department is working now on Merida project planning, design, assessment and implementation. In fact, the Arms Trafficking Prosecution and Enforcement Strategy Session underway now is a bi-lateral Merida program, in which the Department of Justice, working with Mexican and U.S. interagency partners, played a substantial role in developing and presenting. Additional working-level assistance is anticipated to focus on effectively combating illegal arms trafficking.
The Department is working with Mexican counterparts on Merida projects designed to strengthen tracking and management of seized and forfeited assets; to enhance polygraph capability; and to review and strengthen internal integrity mechanisms. Additionally, the Department will be working with Mexican counterparts on prosecutorial capacity building programs; evidence collection, preservation and admissibility; forensics; extradition; and victim/witness protection.
Asset Forfeiture and Money Laundering Section (AFMLS):
AFMLS and its Mexican counterpart co-chair the Anti-Money Laundering and Asset Forfeiture SLEP sub-working group where cooperation to combat money laundering and enhance asset forfeiture cooperation between the countries is discussed. Most recently, AFMLS provided a detailed paper with comments on draft Mexican legislation that would allow for non-conviction based forfeiture in Mexico and would enhance Mexico’s ability to cooperate on asset forfeiture matters with foreign countries, including the United States.
AFMLS is also working on a project to provide software and training to Mexican officials that will allow Mexico to better track and maintain assets it seizes and freezes so that it can maximize the value of those assets once it has lawfully forfeited them.
Office of Overseas Prosecutorial Development, Assistance and Training (OPDAT):
OPDAT has worked with Mexican counterparts since 2006 to develop greater collaboration and capacity in combating trafficking in persons. Most recently, an Assistant U.S. Attorney from Arizona has worked in Mexico City since October 2008 as an OPDAT Resident Legal Advisor (RLA) for Trafficking in Persons (TIP). The RLA is developing and coordinating workshops in collaboration with Mexican government officials and U.S. government partners (including DHS/ICE) to implement Mexico’s newly passed anti-human trafficking law. Focus areas include greater cooperation between prosecutors and investigators on trafficking in persons cases; task force development concepts to include prosecutors, investigators, victim/witness specialists and members of relevant non-governmental organizations; and the importance of victim detection, rescue and protection in trafficking in persons cases.
The RLA has coordinated training for approximately 200 Mexican government officials in basic human trafficking law, victim identification, victim interviewing techniques, and trafficking case development. The Department and ICE have coordinated with the PGR to develop a training calendar for FY 2009, which includes more advanced trainings specifically tailored to human trafficking cases that focus on victim attention and assistance, evidence collection and preservation, crime scene management, and investigative techniques. Moreover, the RLA and ICE and the Government of Mexico regularly contact U.S. prosecutors regarding bi-national case coordination, as well as intelligence and information sharing related to ongoing investigations and prosecutions.
The Senior Law Enforcement Plenary (SLEP):
The SLEP is a U.S.-Mexico working group that consists of representatives from DHS, State Department and ONDCP, as well as DEA, FBI, USMS and ATF. SLEP working groups allow for information sharing between U.S. and Mexico representatives in the areas of: law enforcement and counternarcotics; interdiction; chemical controls; fugitives and legal issues; asset forfeiture and money laundering; organized migrant smuggling and trafficking in persons; arms trafficking; prisoner transfer; cyber and intellectual property crimes; and law enforcement training and technical assistance.
U.S. ATTORNEYS’ OFFICES
The U.S. Attorneys’ Offices in the five Southwest border districts are on the frontlines of the national effort to prosecute criminal offenses arising at the border with Mexico, including the prosecution of narcotics trafficking, gun-smuggling, violent crimes and immigration offenses. The U.S. Attorneys’ Offices also coordinate with Mexican prosecutors to share evidence in appropriate cases to ensure that justice is achieved either in U.S. courts or in Mexican courts.
Each of the Southwest border U.S. Attorneys’ Offices work closely with ONDCP and federal, state, and local investigative agencies in initiatives such as the multi-agency Border Enforcement Security Task Forces, OCDETF Strike Forces, HIDTAs, and the Gatekeeper Initiative to attack complex criminal organizations; Project Gunrunner to reduce the smuggling of weapons across the border; bulk cash smuggling initiatives to restrict the flow of drug proceeds to Mexico; and the Border Fence Initiative, Tunnel Task Force, and maritime initiatives to detect illegal cross-border movement of people, drugs, money and guns.
ADDITIONAL PROGRAMS AND FUNDING
The Department’s Office of Justice Programs will be investing $30 million in stimulus funding to assist with state and local law enforcement to combat narcotics activity coming through the southern border and in high intensity drug trafficking areas. State and local law enforcement organizations along the border can apply for COPS and Byrne Justice Assistance grants from the $3 billion provided for those programs in the stimulus package.
The OCDETF Fusion Center (OFC):
OFC is a comprehensive intelligence data center containing drug and related financial data. Through SOD, it provides critical support for long-term and large-scale investigations. OFC conducts cross-agency and cross-jurisdictional integration and analysis of drug related data to create comprehensive pictures of targeted organizations.
National Drug Intelligence Center (NDIC)
National Drug Intelligence Center (NDIC) is the nation’s principal domestic strategic drug intelligence center. NDIC is responsible for providing policymakers resources allocators and senior law enforcement and intelligence community officials with strategic drug intelligence. NDIC closely monitors and assesses the threat posed by Mexican drug trafficking organizations’ activities in the United States and has published the following two reports, available on line, National Drug Threat Assessment 2009 http://www.usdoj.gov/ndic/pubs31/31379/index.htm and the Cities in Which Mexican DTOs Operate Within the United States Situation Report http://www.usdoj.gov/ndic/pubs27/27986/index.htm to inform policymakers of this threat. In addition, NDIC has published several sensitive reports concerning Mexican drug trafficking organizations involvement with arms and bulk cash smuggling, as well as drug related violence on the Southwest border.
Defendant Pleads Guilty to Conspiring to Export Military Aircraft Parts to IranRead the Press Release
WASHINGTON – Traian Bujduveanu has pleaded guilty in the Southern District of Florida to a charge of conspiring to illegally export military and dual use aircraft parts to Iran. Bujduveanu appeared on behalf of himself and his now defunct corporation, Orion Aviation, in federal court in Miami today to announce his guilty plea. Bujduveanu’s co-defendant, Hassan Keshari, and his corporation, Kesh Air International, pleaded guilty in January 2009, and are awaiting sentencing.
The guilty plea was announced by R. Alexander Acosta, U.S. Attorney for the Southern District of Florida; David Kris, Assistant Attorney General for National Security; Michael Johnson, Special Agent in Charge, U.S. Department of Commerce, Office of Export Enforcement; Anthony V. Mangione, Special Agent in Charge, U.S. Immigration and Customs Enforcement, Office of Investigations; and Amie R. Tanchak, Resident Agent in Charge, U.S. Department of Defense, Defense Criminal Investigative Service.
Count one of the Indictment, to which Bujduveanu pleaded guilty, charges conspiracy to export and cause the export of goods from the U.S. to the Islamic Republic Iran, in violation of the Embargo imposed upon that country by the United States and in violation of the International Emergency Economic Powers Act, Title 50, United States Code, 1705(a), and to export and cause to be exported defense articles, in violation of the Arms Export Control Act, Title 22, United States Code, Section 2778(b), all in violation of Title 18, United States Code, Section 371.
At sentencing on the conspiracy count, Traian Bujduveanu faces a maximum statutory term of five years imprisonment and a maximum fine of $250,000. Sentencing has been scheduled for June 11 at 8:30 a.m.
The Indictment alleges that Bujduveanu, a Romanian national and naturalized U.S. citizen, by and through his Plantation, Fla., corporation, Orion Aviation, sold aircraft parts to Keshari for purchasers in Iran and exported the aircraft parts to Iran by way of freight forwarders in Dubai, United Arab Emirates.
Among the aircraft parts illegally exported to Iran through the conspiracy were parts designed exclusively for the F-14 Fighter Jet, the Cobra AH-1 Attack Helicopter, and the CH-53A Military Helicopter. All of these aircraft are part of the Iranian military fleet, while the F-14 is known to be used exclusively by the Iranian military.
Moreover, all of the parts supplied by Bujduveanu as part of the conspiracy are manufactured in the U.S., are designed exclusively for military use, and have been designated by the U.S. Department of State as "defense articles" on the U.S. Munitions List, thus requiring registration and licensing with the Department of State, Directorate of Defense Trade Controls. Neither Bujduveanu nor his co-defendants are registered or had the required licenses to ship defense articles to Iran.
According to the Indictment, Bujduveanu received orders by email from Keshari requesting specific aircraft parts for buyers in Iran. Bujduveanu then provided quotes, usually by e-mail, to Keshari. After the receipt of payment for the parts from Keshari, Bujduveanu then shipped the parts to a company in Dubai through the use of false or misleading shipping document. From Dubai, the parts were then shipped on to the purchasers in Iran.
Bujduveanu has been in federal custody since his arrest in June 2008 and will remain in custody pending his sentencing. Co-defendant Keshari also remains in federal custody awaiting sentencing.
Mr. Acosta commended the investigative efforts of the U.S. Department of Commerce, Office of Export Enforcement, U.S. Immigration and Customs Enforcement, Office of Investigations, and the U.S. Department of Defense, Defense Criminal Investigative Service, for their work on this investigation.
The case is being prosecuted by Assistant U.S. Attorney Melissa Damian. Trial Attorney Ryan Fayhee of the Counterespionage Section of the Justice Department’s National Security Division, is providing assistance.
Connecticut Resident Pleads Guilty to Multi-Million Dollar Tax Fraud Conspiracy Involving New York City HospitalRead the Press Release
WASHINGTON — A Trumbull, Conn., resident who was involved in operating three businesses in Brooklyn, N.Y., pleaded guilty to conspiring to defraud the Internal Revenue Service (IRS), the Department of Justice announced today.
Krzysztof Koczon pleaded guilty in U.S. District Court in Manhattan to conspiracy to aid another in filing false tax returns. Between approximately 2000 and February 2005, Koczon conspired with others to falsify income tax returns through a fraudulent check cashing scheme for the owner of a corporation that was engaged in the business of providing maintenance and insulation services to New York Presbyterian Hospital (NYPH). According to the charge, Koczon provided false documentation to co-conspirators indicating that he had performed construction services and received more than $2.3 million in checks from the co-conspirators as payment for the construction services. Koczon cashed the checks but returned the bulk of the money to the co-conspirators in exchange for a fee. The co-conspirators then took false deductions for those payments made to Koczon’s businesses.
"Those who illegally profit from their participation in fraudulent schemes will be vigorously prosecuted," said Scott D. Hammond, Acting Assistant Attorney General in charge of the Department’s Antitrust Division.
The tax fraud conspiracy that Koczon is charged with carries a maximum penalty of five years in prison, three years of supervised release and a $250,000 fine. 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.
In April 2007, as part of the same investigation, Michael Theodorobeakos and two maintenance and insulation companies he co-owned —Monosis Inc. and STU Associates Inc. — pleaded guilty to conspiring to rig bids on the supply of maintenance and insulation services to NYPH and Mount Sinai Medical Center (Mount Sinai). In addition, Michael Vignola and Mister AC Ltd. pleaded guilty in November 2007 to conspiring to rig bids on heating, ventilation and air conditioning (HVAC) services provided to NYPH and paying kickbacks to former NYPH purchasing officials. In April 2008, Aaron S. Weiner pleaded guilty to participating in a conspiracy wherein Weiner acted as a conduit in another million-dollar kickback scheme also involving one of the same former NYPH purchasing officials involved with the Vignola kickback schemes. On March 25, 2009, Mariusz Debowski pleaded guilty to participating in the same tax fraud conspiracy at NYPH.
These charges arose from an ongoing federal antitrust investigation of fraud, bribery, tax-related offenses and bidding irregularities relating to contracts administered by the Facilities Operations Department and the Engineering Department at NYPH and the Engineering Department at Mount Sinai. The investigation is being conducted by the Antitrust Division’s New York Field Office, the FBI and the Internal Revenue Service Criminal Investigation’s New York Field Office.
Anyone with information concerning bid rigging, bribery, tax offenses or fraud related to contracts administered by the Facilities Operations Department at NYPH or the Engineering Departments at Mount Sinai or NYPH should contact the New York Field Office of the Antitrust Division at 212-264-9308 or the New York Office of the FBI at 212-384-4467.
1 April 2009
Statement of Attorney General Eric Holder Regarding United States V. Theodore F. StevensRead the Press Release
"In connection with the post-trial litigation in United States v. Theodore F. Stevens, the Department of Justice has conducted a review of the case, including an examination of the extent of the disclosures provided to the defendant. After careful review, I have concluded that certain information should have been provided to the defense for use at trial. In light of this conclusion, and in consideration of the totality of the circumstances of this particular case, I have determined that it is in the interest of justice to dismiss the indictment and not proceed with a new trial.
"The Department’s Office of Professional Responsibility will conduct a thorough review of the prosecution of this matter. This does not mean or imply that any determination has been made about the conduct of those attorneys who handled the investigation and trial of this case.
"The Department of Justice must always ensure that any case in which it is involved is handled fairly and consistent with its commitment to justice. Under oftentimes trying conditions, the attorneys who serve in this Department live up to those principles on a daily basis. I am proud of them and of the work they do for the American people."
Partner at Major International Accounting Firm Charged with Tax CrimesRead the Press Release
WASHINGTON – A Newark, N.J., federal grand jury has returned an indictment charging Stephen A. Favato, a resident of Point Pleasant Beach, N.J., and a partner at a major international accounting firm, with tax charges for attempting to assist one of his clients evade income taxes, the Justice Department and Internal Revenue Service (IRS) announced today.
Favato, a partner in the accounting firm’s Woodbridge, N.J., office, was charged with tax evasion regarding the federal income taxes of Daniel Funsch and his spouse. Funsch (the client) is the president of a corporate client of the accounting firm, a fragrance manufacturer with its headquarters in Norwood, N.J. Favato was also charged with one count of corruptly endeavoring to obstruct and impede the administration of the Internal Revenue laws and one count of willfully aiding and assisting in the preparation and filing of the client’s false 2002 tax return.
According to the indictment, from Fall 2001 through April 2005, Favato attempted to obstruct the IRS by, among other conduct, advising the client on how to include false items on the client’s 2002, 2003 and 2004 joint income tax returns. Additionally, Favato knowingly prepared and signed false joint tax returns for the client for these years.
According to the indictment, Favato advised the client to significantly reduce the salary payments that the client was receiving from the corporation and to instead have this compensation paid to the client’s limited liability company, Great Escape Yachts LLC, in the form of purported lease payments for the client’s yacht. However, the corporation had not leased the yacht. This recommended course of action enabled the client to fraudulently deduct personal yacht expenses as business expenses. In addition, the indictment alleges that Favato advised the client on how to fraudulently eliminate a portion of the gain on property that the client sold in 2002 and 2004. Finally, the indictment alleges that Favato advised the client to report inflated charitable contributions on the client’s 2003 tax return.
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 a maximum potential sentence of 11 years in prison and millions of dollars in fines.
The case is being prosecuted by Tax Division trial attorneys Patrick J. Murray and Daren H. Firestone. 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.
One Current and Two Retired Baltimore City Police Department Officers Indicted on Civil Rights ChargesRead the Press Release
WASHINGTON – A current Baltimore City Police Department officer and two retired officers were charged in a six-count federal indictment unsealed today with civil rights and obstruction of justice violations stemming from an April 2004 incident during which officers allegedly assaulted a handcuffed and shackled juvenile with a baton and pool stick, the Justice Department announced.
The indictment alleges that Officer Gregory Mussmacher assaulted the juvenile with a police-issued baton, and that retired Officer Guy Gerstel assaulted the same juvenile with a pool stick. The indictment also charges the officers with obstructing justice by providing false statements about the assault. In addition, the indictment charges Gerstel with making a false statement to the FBI about the case, and charges retired Sergeant Wayne Thompson with obstructing justice by allegedly writing a false statement and by corruptly persuading other officers not to fill out required reports about the incident.
An indictment is a formal accusation of criminal conduct, not evidence of guilt. The defendants are presumed innocent unless and until proven guilty.
"The Civil Rights Division takes very seriously any allegation of police misconduct," said Loretta King, Acting Assistant Attorney General of the Civil Rights Division. "The Division is committed to prosecuting all cases of official misconduct, and to bringing to justice any officer who abuses the tremendous authority and responsibility entrusted to him or her."
"Most law enforcement officers perform their duties with honor and integrity," said U.S. Attorney Rod J. Rosenstein of the District of Maryland. "Any police officers who abuse suspects, write false reports and obstruct justice must be held accountable so that citizens can have confidence in law enforcement agencies."
If convicted, the defendants face maximum penalties of 10 years in prison on each of the civil rights charges; 20 years in prison on each of the obstruction charges; and five years in prison on the false statement charge.
This case was investigated by the FBI and is being prosecuted by Special Litigation Counsel Jeffrey Blumberg and Trial Attorney Forrest Christian of the Civil Rights Division, with the assistance of the U.S. Attorney’s Office for the District of Maryland.
Massachusetts Man Convicted on Child Pornography ChargeRead the Press Release
WASHINGTON – Rudy Frabizio, 46, of Acton, Mass., was convicted today of possession of child pornography, announced Acting Assistant Attorney General Rita M. Glavin of the Criminal Division and U.S. Attorney Michael J. Sullivan of the District of Massachusetts.
Frabizio was found guilty after a seven-day jury trial in the U.S. District Court for the District of Massachusetts in Boston.
Evidence presented at trial by government prosecutors showed that the defendant stored images on an employer’s computer of children engaged in sexually explicit conduct. Evidence also showed the defendant used the Internet to acquire images of child pornography.
Frabizio may face up to five years in prison. His sentencing is scheduled for Aug. 5, 2009.
This case was brought as part of Project Safe Childhood. Created in February 2006, Project Safe Childhood is a nationwide initiative designed to protect children from online exploitation and abuse. Led by the U.S. Attorney’s Offices, 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 identify and rescue victims. For more information about Project Safe Childhood, please visit http://www.projectsafechildhood.gov.
The case is being prosecuted by Trial Attorney Michael Yoon of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) and Assistant U.S. Attorney Angel Kelley Brown of the District of Massachusetts. The case is being investigated by the FBI. The forensic examination of the computer evidence in the case was conducted by CEOS’ High Tech Investigative Unit.
Justice Department Asks Federal Court to Shut Down Iowa Tax Preparation FirmRead the Press Release
WASHINGTON - The United States has brought suit in federal court against Gayle Lemmon of Humboldt, Iowa, the Justice Department announced today. The lawsuit seeks to bar her and her firm from preparing federal tax returns for others. According to the government complaint in the case, Lemmon’s firm, Gayle’s Bookkeeping and Tax Service Inc., prepares federal income tax returns for customers that unlawfully understate tax liabilities by claiming improper deductions for the business use of the home and for non-deductible personal expenses.
The government complaint also accuses Lemmon of fabricating deductions on customers’ returns for charitable contributions and inflating deductions for un-reimbursed employee business expenses. According to the complaint, the Internal Revenue Service has examined approximately 243 returns that Lemmon prepared and found that 224 of them understated the customer’s tax liability. The complaint notes that the tax loss from Lemmon’s alleged misconduct between 2003 and 2008 could be as much as $17 million.
In the past decade, the Justice Department has obtained injunctions against more than 380 tax preparers and tax-fraud promoters. Information about these cases is available on the Justice Department’s Tax Division Web site.
Former Baton Rouge, Louisiana Police Officer Pleads Guilty to Civil Rights ViolationRead the Press Release
WASHINGTON – Nathan Davis, a former police officer with the Baton Rouge Police Department in Baton Rouge, La., pleaded guilty today to a felony civil rights violation for use of excessive force, announced David R. Dugas, U.S. Attorney for the Middle District of Louisiana, and Loretta King, Acting Assistant Attorney General for Civil Rights. At today’s court hearing, defendant Davis admitted that he intentionally used excessive force in March 2007 against a man who had been arrested, handcuffed and taken to a police department holding center.
Davis admitted that he purposefully used excessive and unreasonable force against B.T, a man who at the time of the abuse was handcuffed and sitting on the floor of a detention cell, by pepper spraying him in the face without any justification. Davis faces a maximum of ten years in prison. The court has not yet scheduled sentencing.
"When a police officer, like the defendant, misuses his authority to abuse a person entrusted to his care, he violates the public trust and he makes it more difficult for other law enforcement officers to do their very difficult jobs," Acting Assistant Attorney General King said. "The Civil Rights Division is committed to the vigorous enforcement of federal laws prohibiting this type of misconduct by law enforcement officials."
U.S. Attorney Dugas said "No one in this country, including law enforcement officers, is above the law."
This case was investigated by the FBI and the Baton Rouge Police Department and was prosecuted by Assistant U.S. Attorney Robert Piedrahita and Civil Rights Division Trial Attorney Kathleen Monaghan.
City of Independence, Missouri, Agrees to Major Sewer System UpgradesRead the Press Release
WASHINGTON—The city of Independence, Mo., has agreed to make major improvements to its sanitary sewer system, at an estimated cost of more than $35 million, to eliminate unauthorized overflows of untreated sewage into the Missouri River each year, the Justice Department and the U.S. Environmental Protection Agency (EPA) announced today.
Under the terms of the consent decree, lodged in Kansas City, Mo., Independence will also pay a civil penalty of $255,000 and will spend an additional $450,000 on supplemental environmental projects designed to enhance Missouri River watershed by improving storm waterdetention basins and stabilizing stream banks.
Independence will also be required to perform a comprehensive assessment of the sanitary sewer system, upgrade pump stations, and improve the sewer collection system and wastewater treatment plant. The improvements to the city’s sanitary sewer system will provide major public health and environmental benefits.
A complaint filed concurrently with a consent decree, alleges that Independence had numerous illegal discharges of untreated wastewater containing raw sewage from its sanitary sewer system. The sanitary sewer system transports the city’s sewage to a wastewater treatment plant, which serves approximately 55,000 residential and 3,500 commercial sanitary sewer customers, for treatment prior to discharging it into area rivers and streams. Based on inspections, responses to information requests and the city’s regular reporting activity, EPA was able to document numerous violations of the Clean Water Act, including 430 sanitary sewer overflows resulting in the discharge of millions of gallons of untreated sewage into the Missouri River since October 2000.
"With this settlement, the City of Independence is making a commitment to address its aging sewer system and comply with the Clean Water Act, which will improve water quality in the region," said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division.
"This is a major step forward by Missouri's fourth-largest city and it will result in some very significant improvements to overall water quality in the Missouri River watershed," said William Rice, Acting Regional Administrator for EPA’s Region 7.
The consent decree was lodged in the U.S. District Court for the Western District of Missouri and is subject to a 30-day public comment period and subsequent court approval. A copy of the consent decree is available on the Justice Department Web site at http://www.usdoj.gov/enrd/Consent_Decrees.html.
31 March 2009
United States Files Civil Lawsuit Against BP Exploration for Oil Spills on North Slope in AlaskaRead the Press Release
WASHINGTON—The United States has filed a civil complaint against BP Exploration (Alaska) Inc. (BPXA) alleging that the company violated federal clean air and water laws, the Justice Department, U.S. Environmental Protection Agency (EPA), and the U.S. Department of Transportation announced today.
According to the complaint, filed in U.S. District Court in Anchorage, Alaska, BPXA illegally discharged more than 200,000 gallons of crude oil from its pipelines onto the North Slope of Alaska during two major oil spills in the spring and summer of 2006. The complaint alleges that BPXA failed to prepare and implement spill prevention, countermeasure and control plans in accordance with good engineering practices, and failed to implement certain required spill prevention measures pursuant to the Clean Water Act.
The complaint also alleges that BPXA violated the Clean Air Act by improperly removing asbestos-containing materials from its pipelines and failed to comply in a timely manner with a Corrective Action Order that the Department of Transportation-Pipeline and Hazardous Materials Safety Administration (PHMSA) issued to BPXA pursuant to federal pipeline safety laws. PHMSA’s order required BPXA to conduct certain testing, inspection, maintenance and repair activities.
The lawsuit, filed by the Justice Department on behalf of EPA and PHMSA, asks the court to order BPXA to take all appropriate action to prevent spills in the future, including systemically inspecting its pipelines and associated facilities for corrosion. The United States also seeks civil penalties up to the maximum amount authorized by law.
This civil action follows a guilty plea by BPXA on Nov. 29, 2007, to one count of criminal negligent discharge of oil to the waters of the United States in violation of the Clean Water Act.
BPXA, a wholly-owned subsidiary of BP America, conducts oil exploration, drilling, and production in Alaska. Both major spills that are the subject of this case happened in Prudhoe Bay, which is the largest oil field in North America and one of the oldest on the North Slope.
Justice Department Files Voting Rights Lawsuit Against Town of Lake Park, FloridaRead the Press Release
WASHINGTON - The Justice Department filed a lawsuit today to challenge the at-large method of electing the Lake Park, Fla. Town Commission on the ground that it dilutes the voting strength of black citizens in violation of Section 2 of the Voting Rights Act.
The lawsuit, filed in the U.S. District Court in Miami, alleges that as a result of racially polarized voting patterns in town elections, candidates preferred by black voters are usually defeated. Indeed, no black candidate has ever won an election for town commission. In addition, the lawsuit alleges that under a single-member district plan to elect the four town commissioners, black persons would constitute a majority of the citizen voting age population in at least one of the districts. The lawsuit seeks injunctive relief in the form of a court order implementing a new method of electing the town commission.
"The at-large method of election has consistently denied black voters an equal opportunity to elect candidates of their choice to the Lake Park Town Commission," said Acting Assistant Attorney General Loretta King. "We hope that the Town of Lake Park will work with us to negotiate a settlement that would provide black citizens in Lake Park a meaningful electoral voice in town government."
U.S. Attorney R. Alexander Acosta of the Southern District of Florida stated, "The Voting Rights Act prohibits any practice on procedure that results in the denial or abridgement of the right to vote on the basis of race, color, and other improper factors. The civil complaint filed today alleges that the Lake Park Commission elections are characterized by the use of practices that impair black electoral success. Our goal is to enforce the Voting Rights Act to ensure that no citizen is denied access to the electoral process on the basis of race or color."
Complaints about discriminatory voting practices may be reported to the Voting Section of the Justice Department's Civil Rights Division at 1-800-253-3931. More information about the Voting Rights Act and other federal voting laws is available on the Department of Justice Web site at http://www.usdoj.gov/crt/voting.
Hitachi Executive Indicted for His Role in LCD Price-Fixing ConspiracyRead the Press Release
WASHINGTON – A federal grand jury in San Francisco returned an indictment today charging an executive at Hitachi Displays Ltd. with participating in a global conspiracy to fix the prices of Thin Film Transistor-Liquid Crystal Display (TFT-LCD) panels sold to Dell Inc., the U.S. Department of Justice announced today.
The indictment, filed in U.S. District Court in San Francisco, charges Sakae Someya with conspiring with unnamed co-conspirators to suppress and eliminate competition by fixing the price of TFT-LCD panels sold to Dell for use in notebook computers. Someya participated in the conspiracy from on or about Jan. 1, 2001, to on or about Dec. 31, 2004. In 2006, the worldwide market for TFT-LCD panels was approximately $70 billion.
Including today’s indictment, four companies and eight individuals have been charged in the Department’s ongoing antitrust investigation into the TFT-LCD industry. To date, more than $585 million in fines have been imposed as a result of the TFT-LCD investigation.
"Practically every American consumer has been impacted by the TFT-LCD conspiracies," said Scott D. Hammond, Acting Assistant Attorney General in charge of the Department’s Antitrust Division. "Today the Department is holding a high-level executive accountable for his conduct."
Someya was charged with participating with co-conspirators in a conspiracy accomplished by the following means:
- Attending bilateral meetings and engaging in conversations and communications in Japan, Korea and the United States to discuss the prices of TFT-LCD panels sold to Dell;
- Agreeing during those meetings, conversations and communications to charge prices of TFT-LCD panels sold to Dell at certain levels;
- Exchanging information on sales of TFT-LCD panels sold to Dell, for the purpose of monitoring and enforcing adherence to the agreed-upon prices;
- Authorizing, ordering and consenting to the participation of subordinate employees in the conspiracy;
- Issuing price quotations in accordance with the agreements reached;
- Accepting payment for the supply of TFT-LCD panels sold at collusive, noncompetitive prices to Dell; and
- Taking steps to conceal the conspiracy and conspiratorial contacts through various means.
Someya is charged with violating the Sherman Act, which carries a maximum fine of $1 million and 10 years imprisonment for individuals. 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.
On Dec. 15, 2008, LG Display Co. (LG) pleaded guilty to participating in a worldwide conspiracy to fix the price for TFT-LCD panels and was sentenced to pay a $400 million criminal fine – the second-largest fine in Antitrust Division history. On Dec. 16, 2008, Sharp Corp. pleaded guilty to participating in three separate conspiracies to fix the prices of TFT-LCD panels sold to Dell, Apple Computer Inc. and Motorola Inc. and was sentenced to pay a $120 million criminal fine. On Jan. 14, 2009, Chunghwa Picture Tubes Ltd. (Chunghwa) pleaded guilty to participating in the same worldwide conspiracy as LG, and was sentenced to pay a $65 million criminal fine.
In February 2009, former Chunghwa CEO Chieng-Hon "Frank" Lin and two Chunghwa executives, Chih-Chun "C.C." Liu and Hsueh-Lung "Brian" Lee, pleaded guilty to and were sentenced for participating in the same conspiracy as LG and Chunghwa. Lin was sentenced to serve nine months in prison and pay a $50,000 criminal fine. Liu was sentenced to serve seven months in prison and pay a $30,000 criminal fine. Lee was sentenced to serve six months in prison and pay a $20,000 criminal fine. Also in February 2009, LG executive Chang Suk "C.S." Chung pleaded guilty for his role in the same conspiracy as LG and Chunghwa. Chung was sentenced to serve seven months in prison and pay a $25,000 criminal fine.
On Feb. 3, 2009, a federal grand jury in San Francisco returned an indictment charging two former Chunghwa executives, Cheng Yuan Lin, aka C.Y. Lin, and Wen Jun Cheng, aka Tony Cheng, and one former executive from LG, Duk Mo Koo, for their participation in the same conspiracy as LG and Chunghwa. Warrants have been issued for the arrest of all three individuals.
On March 10, 2009, Hitachi Displays Ltd. agreed to plead guilty and pay a $31 million fine for its participation in a conspiracy to fix the prices of TFT-LCD panels sold to Dell for use in notebook computers from April 1, 2001, to March 31, 2004.
Someya’s indictment is the result of a joint investigation by the Department of Justice Antitrust Division’s San Francisco Field Office and the Federal Bureau of Investigation in San Francisco. Anyone with information concerning illegal conduct in the TFT-LCD industry is urged to call the San Francisco Field Office of the Antitrust Division at 415-436-6660.
Disaster Fraud Hotline Available to Report Flood-Related FraudRead the Press Release
WASHINGTON – In response to the Red River flooding in North Dakota and Minnesota and subsequent relief efforts, the National Center for Disaster Fraud is reminding members of the public to be aware of and report any instances of alleged fraudulent activity related to relief operations and funding for victims.
Members of the public can report fraud, waste, abuse or allegations of mismanagement involving disaster relief operations through the Disaster Fraud Hotline at 866-720-5721, the Disaster Fraud Fax at 225-334-4707 or the Disaster Fraud e-mail at [email protected]. Individuals can also report criminal activity to the FBI at 1-800-CALL-FBI.
In anticipation of an unprecedented amount of fraud associated with federal disaster relief programs that went into effect following Hurricanes Katrina, Rita and Wilma, a Joint Command Center was established in Baton Rouge, La., to coordinate the huge number of reports of fraud. The Command Center, now known as the National Center for Disaster Fraud, has received and screened more than 33,000 complaints of disaster fraud and referred more than 22,000 of those to law enforcement for investigation. The established infrastructure has helped victims of fraud related to Hurricanes Katrina, Rita, Wilma, Ike and Gustav, as well as the Iowa floods and California wildfires in 2008.
To date, the Hurricane Katrina Fraud Task Force has brought charges against 1,245 defendants in 46 judicial districts. The Task Force is chaired by the Assistant Attorney General of the Criminal Division.
30 March 2009
Rhode Island Machine Shop Owners Convicted of Tax FraudRead the Press Release
WASHINGTON - Bruce Lapierre, of Pascoag, R.I., and Albert Martin and Lorraine Martin, both of Woonsocket, R.I., were convicted of conspiracy to defraud the United States and tax evasion following 2 hours of deliberations and an 8-day trial before Chief Judge Mary M. Lisi in Providence, R.I., the Justice Department and Internal Revenue Service (IRS) announced today.
Lapierre, Albert Martin and Lorraine Martin, who were indicted in June 2008, were each convicted of one count of conspiracy to defraud the United States and two counts of tax evasion for years 2002 and 2003.
According to the indictment and evidence introduced at trial, Lapierre and the Martins used a series of ruses to conceal their income and avoid paying taxes. From 1997 to 2004, Lapierre and Albert Martin operated Classic Machine in Woonsocket. The two men engaged in an elaborate scheme to conceal from the IRS income that they earned through Classic Machine, and thus avoid paying taxes on that income. Rather than open business accounts for depositing business receipts and income, they allegedly used the personal account of Lorraine Martin to conceal business receipts, as well as an anonymous "private" banking service designed to conceal income from the IRS.
The evidence at trial also showed that in order to further conceal their assets and income from the IRS, Lapierre and Albert Martin used multiple business names, such as Banner Technologies, Circle Machine, Preferred Enterprises and Royal Enterprises, to conduct the machine shop business. The defendants also made extensive use of cash and money orders. For example, they allegedly cashed checks under $10,000 in order to avoid federal Currency Transaction Reports, which are required for currency transactions of $10,000 or more.
According to the indictment and evidence introduced at trial, Bruce Lapierre tried to obstruct an IRS investigation of the machine shop's income by renaming business assets by sending false and frivolous letters to the IRS claiming he was not required to file tax returns or pay taxes, and by directing a financial institution not to comply with an IRS summons for records.
Chief Judge Lisi scheduled sentencing for July 9, 2009. Each defendant faces a maximum of fifteen years in prison and a maximum fine of $750,000 fine.
Acting Assistant Attorney General John A. DiCicco commended the IRS Special Agents who investigated the case, as well as Tax Division trial attorneys John Kane and Jorge Almonte who prosecuted the case.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at http://www.usdoj.gov/tax/.