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27 March 2009
Wyoming Highway Patrol Trooper Arrested for Violating Civil Rights by KidnappingRead the Press Release
WASHINGTON – Agents with the FBI, Immigration and Customs Enforcement and the Wyoming Department of Criminal Justice arrested Wyoming Highway Patrol Trooper Franklin Joseph Ryle late yesterday in Douglas, Wyo., on criminal civil rights charges.
A federal criminal complaint charges that on Jan. 8, 2009, Ryle, while acting under color of law, unlawfully arrested and kidnapped a person, thereby willfully depriving the person of his right, protected by the Constitution, to be free from unreasonable seizures. The complaint also charges that Ryle knowingly possessed and brandished a firearm during the crime.
The charges in the complaint are only allegations, and Ryle remains innocent of the charges until proven guilty.
Jackson, Miss., Man Convicted of Receipt and Possession of Child PornographyRead the Press Release
WASHINGTON – A Jackson, Miss., computer systems administrator was found guilty late Thursday of receiving and possessing images of child pornography on his home computer, announced Acting Assistant Attorney General Rita M. Glavin of the Criminal Division and Acting U.S. Attorney for the Southern District of Mississippi Stan Harris.
Following a four-day jury trial in Natchez, Miss., Joseph McNealy was found guilty of three counts of receiving child pornography through the Internet and one count of possessing child pornography. McNealy was charged in a second superseding indictment returned on Aug. 20, 2008. At the time of his arrest, McNealy was working as a computer systems administrator for a company that provided Internet, telecommunications and network services.
Testimony at trial established that the charges resulted from Operation Falcon, a law enforcement task force composed of agents from U.S. Immigration and Customs Enforcement (ICE), the Internal Revenue Service, the FBI and the U.S. Postal Inspection Service. On Sept. 14, 2004, ICE agents searched McNealy’s home computer with his permission and uncovered evidence that he possessed child pornography and had received child pornography from Web sites and Internet newsgroups on or about Feb. 5, 2004, through on or about Sept. 14, 2004; on or about June 29, 2004; and on or about April 16, 2003, through on or about May 21, 2003.
Evidence presented at trial included child pornography images that had been saved to McNealy’s computers, as well as search terms he used relating to child pornography that were obtained from his Internet history records and Internet bookmarks. Finally, the prosecution presented records of Web sites associated with child pornography that had been visited by McNealy.
Following the verdict, McNealy was ordered to be detained by the U.S. Marshals Service without bond. His sentencing is scheduled for June 4, 2009, at 10:30 a.m. before U.S. District Court Judge David C. Bramlette, III. At sentencing, McNealy faces a mandatory minimum sentence of five years and a maximum of 20 years in prison, as well as a lifetime of supervised release. He may also face a possible fine.
The case was prosecuted by Barak Cohen of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) and Assistant U.S. Attorney Glenda R. Haynes of the U.S. Attorney’s Office in Jackson. CEOS’ High-Tech Investigative Unit and ICE provided forensic analysis of McNealy’s computer. The charges were the result of an investigation by ICE.
Former National Century Financial Enterprises CEO Sentenced to 30 Years in Prison, Co-Owner Sentenced to 25 Years in Prison for Conspiracy, Fraud and Money LaunderingRead the Press Release
WASHINGTON – Two former National Century Financial Enterprises (NCFE) executives were sentenced today for their roles in a scheme to deceive investors about the financial health of NCFE, Acting Assistant Attorney General Rita M. Glavin and U.S. Attorney Gregory G. Lockhart of the Southern District of Ohio announced. NCFE, formerly based in Dublin, Ohio, was one of the largest healthcare finance companies in the United States until it filed for bankruptcy in November 2002.
Lance K. Poulsen, 65, former president, owner and chief executive officer of NCFE was sentenced to 30 years in prison and three years of supervised release following the prison term. A federal jury convicted Poulsen on Oct. 31, 2008, of conspiracy, securities fraud, wire fraud and money laundering. Poulsen was also found guilty by a federal jury on March 26, 2008, of conspiring to interfere with a witness who was preparing to testify in the fraud trial against Poulsen and other NCFE executives. He is currently serving a 10-year prison sentence for that conviction. The court ordered Poulsen’s 30-year sentence to be served concurrently with the 10-year sentence for witness tampering.
Rebecca S. Parrett, 60, former vice chairman, secretary, treasurer, director and owner of NCFE was sentenced to 25 years in prison and three years of supervised release following the prison term. A federal jury convicted Parrett on March 13, 2008, of conspiracy, securities fraud, wire fraud and money laundering. Parrett fled after the conviction and remains at large.
U.S. District Court Judge Algenon Marbley also ordered Poulsen and Parrett to forfeit $1.7 billion of property representing the proceeds of the conspiracy and to pay restitution of $2.3 billion, jointly and severally with other defendants.
"Corporate executives who violate the law, as well as investors’ trust, can and will be held accountable for their illegal actions," said Acting Assistant Attorney General Rita M. Glavin. "The Department of Justice will continue to seek appropriate punishment, including jail time, for individuals who participate in financial frauds to the detriment of the investing public."
"Evidence showed that Poulsen knew the business model NCFE presented to the investing public differed drastically from the way NCFE did business within its own walls," U.S. Attorney Lockhart said. "Their actions were designed to hide a financial house of cards from investors, eventually costing investors $2 billion."
"When corporate officers elect to betray the public’s trust for personal gain, the very core of how and why our corporate system operates is immediately and negatively impacted," Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation Division Jose A. Gonzalez said. "As signified by today’s NCFE sentences, the IRS gives priority to investigations involving the alleged breach of the public trust by corporate officials at any level."
FBI Cincinnati Special Agent in Charge Keith L. Bennett noted the significant sentences imposed on both Poulsen and Parrett. "This should serve as a warning to those who might be tempted to manipulate the complexities of our financial systems to defraud others. The FBI stands ready to root out those who would do so, bring them to the judicial system and ensure they lose both their ill-gotten wealth and their freedom."
Witnesses testified at both trials that Poulsen, Parrett and other NCFE executives engaged in a scheme from 1995 until the collapse of the company to deceive investors and rating agencies about the financial health of NCFE and how investors’ money would be used. NCFE bought accounts receivable from healthcare providers using money NCFE obtained through the sale of asset-backed notes to institutional investors, including pension funds, insurance companies and churches.
Evidence at both trials showed that NCFE misused investors’ money and made unsecured loans to health care providers, including those owned in whole or in part by Poulsen, Parrett and another owner of NCFE, Donald H. Ayers. Former employees testified that Poulsen, Parrett and other NCFE executives covered up the fraud by lying to investors and rating agencies. The government presented evidence that Poulsen and others created investor reports containing fabricated data and moved money back and forth between programs in order to make it appear that NCFE was in compliance with its own governing documents. Evidence showed that Poulsen and Parrett knew the business model NCFE presented to the investing public differed significantly from the way NCFE actually conducted business.
Four other NCFE executives have been convicted in connection with the fraud. Donald H. Ayers, an NCFE vice chairman, chief operating officer, director and an owner of the company, was found guilty on charges of conspiracy, securities fraud and money laundering and was sentenced to 15 years in prison. Randolph H. Speer, NCFE’s chief financial officer, was found guilty on charges of conspiracy, securities fraud, wire fraud and money laundering and was sentenced to 12 years in prison. Roger S. Faulkenberry, vice president for client development, was found guilty on charges of conspiracy, securities fraud, wire fraud and money laundering and was sentenced to 10 years in prison. James E. Dierker, chief credit officer, was found guilty on charges of conspiracy and money laundering and was sentenced to five years in prison. In addition, four other former NCFE executives have pleaded guilty in connection with this fraud.
The cases were prosecuted by the U.S. Attorney’s Office for the Southern District of Ohio and the Criminal Division’s Fraud Section and investigated by FBI Special Agents Matt Daly, Ingrid Schmidt and Tad Morris; IRS Special Agents Greg Ruwe and Mark Bailey, U.S. Postal Inspector Dave Mooney; and Immigration and Customs Enforcement Agent Celeste Koszut. Assistant U.S. Attorney Douglas Squires of the Southern District of Ohio, Assistant Chief Kathleen McGovern and Senior Trial Attorney Wes R. Porter of the Criminal Division’s Fraud Section prosecuted Parrett, Ayers, Speer, Faulkenberry and Dierker. Assistant U.S. Attorney Douglas Squires of the Southern District of Ohio, Assistant Chief Kathleen McGovern, Trial Attorneys N. Nathan Dimock, and former Trial Attorney Leo Wise of the Criminal Division’s Fraud Section prosecuted Poulsen. Fraud Section Paralegal Specialists Crystal Curry and Sarah Marberg assisted with these cases.
26 March 2009
Miami Doctor and Chemist Plead Guilty in HIV Infusion Fraud SchemeRead the Press Release
WASHINGTON – Two Miami-area residents pleaded guilty today in connection with a $10 million Medicare fraud scheme involving HIV infusion clinics, Acting Assistant Attorney General Rita M. Glavin of the Criminal Division and U.S. Attorney R. Alexander Acosta of the Southern District of Florida announced.
Dr. Carmen Del Cueto, 65, and Alexis Dagnesses, 44, each pleaded guilty to one count of conspiracy to commit health care fraud before U.S. District Judge Paul C. Huck. Both defendants admitted to working at Midway Medical Center Inc. (Midway), a Miami clinic that purported to specialize in the treatment of patients with HIV.
According to plea documents, Del Cueto was a co-owner of and practicing physician at Midway. Del Cueto and her co-conspirators billed Medicare routinely for services that were medically unnecessary and, in many instances, never provided. Del Cueto admitted to purchasing only a small fraction of the medication that was purportedly being administered to Midway’s patients.
Most of the services allegedly provided to patients at Midway were billed to the Medicare program as treatments for a diagnosis of thrombocytopenia, a disorder involving a low count of platelets in the blood. According to court documents, none of Midway’s patients actually had low blood platelet counts. To make it appear that the patients actually had low platelet levels, Del Cueto admitted that she and her co-conspirators used chemists, including Dagnesses, to manipulate the blood samples drawn from Midway’s patients before the blood was sent to a laboratory for analysis. In her plea, Del Cueto admitted to ordering that patients at Midway receive medications to treat thrombocytopenia despite knowing that the laboratory results had been falsified and the patients did not actually have any such condition.
Midway was not the only clinic where Del Cueto purported to treat HIV patients with injection and infusion therapies. In her plea, Del Cueto admitted that she engaged in substantially similar fraudulent conduct at Diagnostic Medical Center Inc. (Diagnostic), another Miami-area infusion clinic. At Diagnostic, Del Cueto admitted that she and her co-conspirators also billed the Medicare program for HIV injection and infusion services that she knew were medically unnecessary and, in some instances, never actually provided. At the two clinics, Del Cueto admitted to causing the submission of approximately $9.5 million in fraudulent claims to Medicare.
Dagnesses admitted that he would obtain vials of blood drawn from Midway’s patients and place those vials in a blood centrifuge. After rotating the blood in the centrifuge for approximately 15 minutes, the blood would separate into its component parts, enabling Dagnesses to extract the platelets from the sample. Dagnesses would then return the adulterated blood to his co-conspirators at Midway, who would send it to a laboratory for testing. Dagnesses admitted that he was generally usually paid $1,000 for every vial of blood that he tainted for his co-conspirators at Midway. Dagnesses admitted he was aware that the purpose of tainting the blood was to obtain false laboratory reports for Midway’s medical files, which would make it appear that the medications allegedly provided at Midway were medically necessary, when in fact they were not necessary.
The case is being prosecuted by Trial Attorneys John K. Neal and Anthony Burba of the Criminal Division’s Fraud Section. The case is being investigated by the FBI and the Department of Health and Human Services-Office of Inspector General. The case was brought as part of the Medicare Fraud Strike Force, supervised by Deputy Chief Kirk Ogrosky of the Criminal Division’s Fraud Section and U.S. Attorney Acosta of the Southern District of Florida. Since the inception of MFSF operations, federal prosecutors have indicted 106 cases with 196 defendants in Miami and Los Angeles. Collectively, these defendants fraudulently billed the Medicare program for more than $577 million.
Justice Department Announces Public Education Campaign Grants to Fight Immigration-Related Employment DiscriminationRead the Press Release
WASHINGTON - The Justice Department announced today that it is making grant funding available for public education programs concerning immigration-related employment discrimination.
The Office of Special Counsel for Immigration Related Unfair Employment Practices (OSC), a section of the Justice Department’s Civil Rights Division, announced the availability of funds for public education programs regarding employees’ rights and employers’ obligations under the anti-discrimination provision of the Immigration and Nationality Act (INA). The program is open to public service organizations and others providing information services to employers and/or potential victims of immigration-related employment discrimination. Last year, grants ranging from $40,000 to $100,000 were awarded to 11 organizations serving communities throughout the country.
The INA prohibits discrimination against U.S. citizens and work authorized non-citizens on the basis of citizenship status or national origin in hiring, firing and recruiting or referring for a fee. In addition, the provision prohibits discriminatory over-documentation of workers in the employment eligibility verification process. It also prohibits retaliation for conduct protected under the INA.
The deadline for grant applications is 11:59 p.m. EDT, April 26, 2009. The grant announcement is available on OSC’s Web site at http://www.usdoj.gov/crt/osc or http://www.grants.gov.
Justice Department Announces Agreement to Protect Rights of Military and Overseas Voters in New York Special Congressional ElectionRead the Press Release
WASHINGTON – The Justice Department today announced that it has reached agreement with New York officials to help ensure that military service members and other U.S. citizens living overseas have the opportunity to vote in the state’s March 31, 2009, special election in the 20th Congressional District.
The lawsuit was filed in federal district court yesterday against the state of New York, Gov. David A. Paterson and the state board of elections under the Uniformed and Overseas Citizens Absentee Voting Act (UOCAVA). The action seeks emergency relief for the upcoming election and a permanent remedy to ensure UOCAVA voters are not disenfranchised in future special federal elections.
The agreement filed today, which must still be approved by the federal court, provides for additional time – until April 13, 2009 – for the receipt of overseas ballots for the March 31, 2009, election. The agreement also commits the state to explore whether changes need to be made to ensure UOCAVA voters are not disenfranchised in future special elections and provide a report to the Department of Justice on those efforts by May 15, 2009.
"Our uniformed service members and other overseas citizens deserve the opportunity to participate in elections of our nation’s leaders," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "I am pleased that New York’s officials have agreed to measures that will afford immediate relief to ensure that the state’s voters overseas, many of whom are members of our armed forces and their families serving our country around the world, will have a reasonable chance to vote in this special election."
The lawsuit was necessary because New York’s schedule for conducting the March 31, 2009, election did not permit officials to mail absentee ballots overseas in time for voters to receive, mark and return their ballots by the state’s April 7, 2009, deadline. Under New York law, absentee ballots must be postmarked by the day before the election and arrive by the seventh day after the election.
The counties in the 20th Congressional District did not mail requested absentee ballots to New York’s military and other citizens living abroad until March 12, 2009, and, in most cases, March 13, 2009. There are more than 1,300 overseas voters entitled to receive absentee ballots for the March 31, 2009, election, including at least 471 military voters presently stationed overseas.
UOCAVA requires states to allow uniformed service members and overseas citizens to register to vote and to vote absentee for all elections, including special elections, for federal office. The Justice Department has brought numerous suits under UOCAVA, including a number of actions in New York, to ensure that voters are not deprived of an opportunity to vote due to late mailing of absentee ballots by election officials.
More information about UOCAVA and other federal voting laws is available on the Department of Justice Web site at http://www.usdoj.gov/crt/voting/misc/activ_uoc.htm. Complaints about discriminatory voting practices may be reported to the Voting Section of the Civil Rights Division at 1-800-253-3931.
Hyannis, Mass., Man Sentenced to 84 Months for Receiving and Possessing Child PornographyRead the Press Release
WASHINGTON – Harris Taubman, of Hyannis, Mass., was sentenced today in U.S. District Court in Boston for receiving and possessing child pornography, Acting Assistant Attorney General Rita M. Glavin of the Criminal Division and U.S. Attorney Michael J. Sullivan for the District of Massachusetts announced.
Taubman, 48, was sentenced to 84 months in prison for three counts of receipt of child pornography and one count of possession of child pornography. He was indicted on those charges on Feb. 6, 2008, and pled guilty on Feb. 11, 2009.
Taubman was first identified by Barnstable, Mass., police as a result of a 911 call referencing a dispute during which Taubman allegedly pointed a loaded shotgun at a neighbor. According to court documents, when police arrived at Taubman’s residence, they found unlawful ammunition cartridges. A further search revealed numerous printed images of child pornography. The execution of additional search warrants resulted in the seizure of almost 2,000 computer disks containing child pornography, as well as more than 20 computer hard drives. In total, Taubman possessed tens of thousands of images and videos depicting prepubescent children engaged in sexually explicit conduct.
The case is being prosecuted by Trial Attorney Elizabeth M. Yusi of the Criminal Division’s Child Exploitation and Obscenity Section and Assistant U.S. Attorney Dana Gershengorn of the District of Massachusetts’ Major Crimes Unit. The case is being investigated by the FBI and the Barnstable Police Department.
Houstons Methodist Hospital to Pay U.S. More Than $9 Million to Resolve Allegations of Overcharging MedicareRead the Press Release
WASHINGTON – Methodist Hospital in Houston has agreed to pay the United States $9.99 million to settle allegations that it defrauded the federal Medicare program, the Justice Department announced today.
The settlement resolves allegations that Methodist improperly increased charges to Medicare patients in order to obtain enhanced reimbursement from Medicare. In addition to its standard payment system, Medicare pays supplemental reimbursement, called outlier payments, to hospitals in cases where the cost of care is unusually high. Congress enacted the supplemental outlier payment system to ensure that hospitals possess the incentive to treat inpatients whose care requires unusually high costs.
The government alleged that, between January 2001 and August 2003, Methodist improperly inflated charges for inpatient and outpatient care to make its costs for providing such care appear greater than they actually were, and thereby obtain outlier payments from Medicare that it was not entitled to receive.
"Today’s settlement demonstrates the continued commitment by the Justice Department to protect Medicare when it is overcharged by hospitals," said Acting Assistant Attorney General for the Civil Division, Michael F. Hertz. "The Department has brought numerous actions against hospitals alleged to have sought excessive outlier payments, and will remain vigilant in ensuring that hospitals do not file false claims for outlier payments in the future."
"Our ultimate goal is to make certain that every Medicare dollar is used for the benefit of Medicare recipients," said Tim Johnson, acting U.S. Attorney, Southern District of Texas. "We will continue in our efforts to assure that is done."
The settlement with Methodist was the result of a coordinated effort among the Justice Department’s Commercial Litigation Branch in the Civil Division; the U.S. Attorney’s Office for the Southern District of Texas, Affirmative Civil Enforcement Unit; the Department of Health and Human Services, Office of Inspector General and Office of Counsel to the Inspector General; and the Centers for Medicare and Medicaid Services, in investigating and resolving the allegations.
Former Michigan School Official Sentenced to Serve 46 Months in Jail<br /> for Role in Fraud SchemeRead the Press Release
WASHINGTON – A former Michigan school official was sentenced to serve 46 months in jail and to pay $1.34 million in restitution for his role in a fraudulent scheme to obtain millions of dollars from the Detroit-area Ecorse Public School District, the federal E-Rate program and TCF National Bank, the Department of Justice announced today.
Douglas Benit, a former assistant superintendent at Ecorse Public Schools (EPS), was sentenced in the U.S. District Court in Detroit today after pleading guilty on Nov. 24, 2008, to one count each of mail fraud and bank fraud. Douglas Benit and his wife, Mary Ann Elam Benit, were previously indicted by a federal grand jury in Detroit on May 23, 2006. Mary Ann Elam Benit is scheduled to be sentenced tomorrow.
"The children of the Ecorse Public School District as well as countless others around the nation rely on the federal E-Rate program to provide funding for internet access, telecommunication services, and computer and communication networks," said Scott D. Hammond, Acting Assistant Attorney General in charge of the Department’s Antitrust Division. "Douglas Benit exploited his position as a trusted school official and lined his own pockets with money that should have gone to these deserving children."
Among his duties at EPS, Douglas Benit was responsible for the management of the construction of multiple new facilities in the district. While hiding his affiliation with Coral Technology Inc. (Coral), an Ohio corporation under his control, Benit recommended to the school board the awarding of contracts to Coral, effectively steering those contracts to his own company. Funding for these contracts came from EPS general funds, EPS construction bond funds and the federal E-Rate program.
Additionally, Doug and Mary Ann Elam Benit obtained a $200,000 line of credit from Minnesota-based TCF National Bank through the submission of loan application and supporting documentation which vastly overstated and misrepresented their personal and corporate assets and income.
The E-Rate program subsidizes the provision of Internet access and telecommunications services, as well as internal computer and communications networks, to economically disadvantaged schools and libraries. The program was created by Congress in the Telecommunications Act of 1996 and is administered by Universal Service Administrative Company, a non-profit corporation, under the auspices of the Federal Communications Commission.
As a result of the Antitrust Division’s investigation into fraud and anticompetitive conduct in the E-Rate program, a total of seven companies and 18 individuals have pleaded guilty or have been convicted and found guilty or entered civil settlements. Those companies and individuals have paid, agreed to pay, or been sentenced to pay criminal fines and restitution totaling more than $40 million. Including today’s sentence, 12 individuals have been sentenced to serve jail time.
The investigation was conducted jointly by the Antitrust Division’s Cleveland Field Office and the Detroit office of the FBI. Anyone with information concerning fraud or anticompetitive conduct in the E-Rate program should contact the Cleveland Field Office of the Department’s Antitrust Division at 216-687-8400.
25 March 2009
Sikorsky Aircraft Pays $2.9 Million to Settle False Claims Act AllegationsRead the Press Release
WASHINGTON —Sikorsky Aircraft Company, a division of United Technologies Corporation, has agreed to pay the United States $2,941,000 to resolve fraud allegations in connection with its contract for the manufacture of Black Hawk helicopters for the Army, the Justice Department announced today.
Sikorsky, located in Stratford, Conn., manufactures the Black Hawk or variations of the Black Hawk for the Army, Navy, Air Force, and Marines, as well as for other nations. Under Sikorsky’s contract with the Army, Sikorsky was required to install armored plates in the Black Hawk to the left of the pilot and to the right of the co-pilot that were ballistically tested to ensure that the helicopters could withstand combat. The United States alleged that from 1991 to 2006, Sikorsky knowingly installed armored plates purchased from Ceradyne Corporation of Costa Mesa, Calif., that had not been ballistically tested as required under the contract. The Army knows of no injuries resulting from the untested plates. Under the False Claims Act, a contractor who knowingly claims payment for noncompliant goods is liable for three times the Government’s damages plus a $5,500 to $11,000 civil penalty for each false claim.
"This settlement sends a message that fraud, especially when it concerns the safety of our men and women in uniform, cannot and will not be tolerated in Government contracts," said Michael F. Hertz, Acting Assistant Attorney General for the Department of Justice’s Civil Division. "As demonstrated here, the Department, including the United States Attorneys’ offices, and investigative agencies such as the ones here, are committed to rooting out such fraud and prosecuting it."
"It is critically important that manufacturers perform all required testing of parts for equipment being used by our military personnel," stated John B. Hughes, Chief of the Civil Division for the U.S. Attorney’s Office in Connecticut. "The U.S. Attorney’s Office takes these matters very seriously and we will do all that we can to ensure the safety of the men and women in the military."
The investigation was conducted by the Defense Criminal Investigative Service, Army Criminal Investigative Division, Defense Contract Audit Agency, and Defense Contract Management Agency, in conjunction with the United States Attorney’s Office for the District of Connecticut.
Justice Department Settles Lawsuit Against the City of Portsmouth, Virginia, Alleging Discrimination Against African Americans in the Hiring of FirefightersRead the Press Release
WASHINGTON – The Department of Justice announced today that it has entered into a consent decree with the City of Portsmouth, Va., that, if approved by the court, will resolve the Department’s complaint that the City of Portsmouth engaged in a pattern or practice of employment discrimination against African Americans in its hiring of entry-level firefighters, in violation of Title VII of the Civil Rights Act of 1964 (Title VII).
The consent decree requires that Portsmouth no longer administer the written examination challenged by the United States, and that it implement new selection procedures for entry-level firefighters that comply with Title VII. Additionally, the consent decree requires the city to deposit $145,000 into a settlement fund that will be used to make awards of back pay to African Americans who were harmed by Portsmouth’s use of the written examination and who are determined to be eligible for relief. African American applicants determined to be eligible for relief under the consent decree may receive a priority offer of employment from Portsmouth, with retroactive seniority for all purposes except for time-in-grade required for promotion. The consent decree requires Portsmouth to hire up to 10 eligible African American claimants as firefighters. Under the consent decree, Portsmouth maintains the opportunity to screen the claimants eligible for consideration for priority hire to ensure that they otherwise meet the qualifications.
"The Department commends the City of Portsmouth for working cooperatively to resolve this matter without contested litigation. We are pleased that Portsmouth has agreed to put in place new selection practices for firefighters that comply with Title VII, and to take necessary steps to provide relief to those African Americans who have been harmed by the City’s hiring practices," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "Ending employment practices that have a discriminatory impact on the basis of race is a significant priority of the Department. This settlement sends a clear message that hiring practices with discriminatory impact on account of race will not be tolerated."
"We are grateful that the City is working with the Department to ensure every applicant has an equal opportunity to serve as a firefighter," said Dana J. Boente, Acting U.S. Attorney for the Eastern District of Virginia.
Title VII prohibits discrimination in employment on the basis of race, color, sex, national origin or religion. Title VII prohibits not only intentional discrimination, but also the use of employment practices, such as written examinations, which result in disparate impact, unless the employer can prove that such practices are job related and consistent with business necessity.
The complaint, which was filed today in federal district court in Norfolk, Va., alleges that Portsmouth’s use of a written examination in the selection of entry-level firefighters resulted in disparate impact employment discrimination against African American applicants for that position. According to the complaint, African American applicants passed the written examination at a rate of approximately 42 percent, while the corresponding pass rate for white applicants was approximately 86 percent. The complaint also alleges that Portsmouth cannot demonstrate that the written examination is job related for the firefighter position and consistent with business necessity, as required by Title VII.
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
Connecticut Resident Pleads Guilty to Multi-Million Dollar Tax Fraud ConspiracyRead the Press Release
WASHINGTON — A Newton, 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.
Mariusz Debowksi 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, Debowski 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, Debowski 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. Debowski 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 Debowski’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 Debowski 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 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.
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 Mt. 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.
24 March 2009
Sixth Aegis Company Principal Sentenced in Chicago to Ten Years in Prison for His Part in Firms $60 Million Tax Fraud ConspiracyRead the Press Release
WASHINGTON - Edward B. Bartoli, a Clearwater, Fla., resident and former attorney, was sentenced to 10 years in prison by U.S. District Judge Charles R. Norgle of Chicago, the Justice Department and Internal Revenue Service (IRS) announced today.
Bartoli is the last of six defendants to be sentenced after they were convicted of various tax crimes in May 2008. Prior to his conviction, Bartoli was a founder of Aegis and its legal director. Bartoli and his co-defendants were found to have carried out a nearly decade-long scheme to market and sell sham domestic and foreign trusts through the Aegis Company to some 650 wealthy taxpayer clients.
According to court documents and evidence introduced at trial, the tax fraud scheme used a network of promoters, sub-promoters, managers, attorneys and accountants and resulted in a $60 million dollar tax loss to the United States. Aegis, which is now defunct, was formerly based in Palos Hills, Ill.
In addition to 10 years in prison, Judge Norgle sentenced Bartoli to 3 years of supervised release. In addition to the tax fraud conspiracy, Bartoli was found guilty of and sentenced on twenty-four counts of aiding and assisting in the filing of false returns, four counts of tax evasion, seven counts of mail fraud, and two counts of wire fraud.
Bartoli and his five co-defendants were convicted following an 11-week trial. The defendants were indicted in 2004, following a lengthy undercover investigation by IRS agents, code-named "Operation Trust Me," and the seizure of roughly 1.5 million documents, computer files and related materials. Nationwide, the Chicago-based investigation has resulted in convictions of more than 30 defendants and charges against approximately 30 other defendants around the country, including in Florida, Illinois, New York, Ohio and West Virginia.
Five of Bartoli’s co-defendants already have been sentenced by Judge Norgle. Michael A. Vallone, of Orlando Park, Ill., was sentenced to 18 ½ years in prison in October 2008. Vallone was one of the founders and the executive director of Aegis. Also in October 2008, William S. Cover, of Naperville, Ill., a promoter and manager of Aegis trusts and the president of Sigma Resource Management Inc., which provided management services to purchasers of Aegis trusts, was sentenced to 13 years in prison and ordered to forfeit his home. Bartoli, Vallone, and Cover were also subject to an additional $4.125 million forfeiture order.
In November 2008, Michael T. Dowd, of Glenview, Ill., a promoter and manager of Aegis trusts who provided management services to purchasers of Aegis trusts through Aegis and Sigma Resource Management Inc., was sentenced to 10 years in prison. In December 2008, Timothy Shawn Dunn, a Chesterton, Ind., resident, was sentenced to 17 ½ years in prison. Dunn was a promoter and manager of Aegis trusts, who also owned and operated Moneyfacts, an investment advisory business in Highland, Ind. Also in December 2008, Gadsden, Ala. resident Robert W. Hopper, was sentenced to more than 16 years in prison. Hopper was an original founder of Aegis and its managing director.
Two other defendants in this case, David E. Parker, of Williamsville, N.Y., an attorney who was the legal director of the Aegis Management Company, and John C. Stambulis of Palos Heights, an attorney and a trust counsel of Aegis, both pleaded guilty and testified for the government at trial. They also are awaiting sentencing.
"Today’s sentence, as well as the sentences of Mr. Bartoli’s co-defendants, sends a strong message that those individuals who evade taxes or promote fraudulent tax evasion schemes face significant consequences," said Ronald A. Cimino, Acting Deputy Assistant Attorney General of the Justice Department’s Tax Division. "These penalties include substantial fines and lengthy prison sentences."
"Abusive trust schemes are a threat to our nation’s tax system," said Al Patton, Special Agent in-Charge of the IRS-Criminal Investigation in Chicago. "Establishing abusive trusts for the purpose of evading taxes is a crime for which promoters and investors will be prosecuted and sentenced to years of imprisonment. Today’s sentencing demonstrates the seriousness of the offenses related to these unlawful schemes."
Mr. Cimino thanked IRS-Criminal Investigation Division agents for their hard work, as well as Assistant U.S. Attorneys Stephen L. Heinze and Barry Rand Elden, and Tax Division trial attorney Thomas W. Flynn, who prosecuted the case.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at www.usdoj.gov/tax .
Puerto Rico Political Consultant Sentenced to Three Months in Prison and Three Months of Home DetentionRead the Press Release
WASHINGTON – Alberto Goachet, 67, a political consultant and aide to former Puerto Rico Sen. Jorge De Castro Font, was sentenced today to three months in prison, three months of home detention and three years of supervised release, announced Acting Assistant Attorney General Rita M. Glavin of the Criminal Division and U.S. Attorney for the District of Puerto Rico Rosa Emilia Rodríguez-Vélez.
Goachet was sentenced by U.S. District Judge Francisco Augusto Besosa in the District of Puerto Rico. Judge Besosa ordered Goachet to surrender no later than April 24, 2009, by noon, at the Metropolitan Detention Center in Guaynabo, Puerto Rico, where he will serve his sentence.
Goachet pleaded guilty on Dec. 4, 2008, to a one-count information charging him with conspiring with De Castro Font and others to launder money provided by a Puerto Rico businessman to De Castro Font. Goachet admitted that he, De Castro Font and others laundered the money through the use of fake invoices purporting to reflect legitimate payments to a political consulting firm owned by Goachet. The false invoices were meant to conceal the businessman’s illegal payments to De Castro Font
As part of his plea agreement, Goachet also admitted that in August 2008, he was asked by the FBI about the money laundering scheme, and during that interview he falsely claimed that the invoices were legitimately drafted for services rendered to the businessman. Goachet admitted that he had denied that the money was intended eventually for De Castro Font, when in fact he knew the invoices were fraudulent and the money was intended for De Castro Font.
De Castro Font pleaded guilty to 20 counts of honest services wire fraud and one count of conspiracy to commit extortion on Jan. 21, 2009. He is currently awaiting sentencing.
This case is being prosecuted by Trial Attorney Matthew L. Stennes of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorneys Timothy R. Henwood and Jacqueline Novas of the District of Puerto Rico. The case is being supervised by Section Chief William M. Welch II of the Public Integrity Section and U.S. Attorney Rosa Emilia Rodríguez-Vélez of the District of Puerto. The case is being investigated by the FBI’s San Juan Field Office.
Irish Trading Firm and Its Officers Charged in Scheme to Supply Iran with Sensitive U.S. TechnologyRead the Press Release
WASHINGTON – An Irish trading company and three of its officers have been charged with purchasing helicopter engines and other aircraft components from U.S. firms and illegally exporting them to Iran using companies in Malaysia and the United Arab Emirates. Among the alleged recipients of these U.S. goods was an Iranian military firm that has since been designated by the United States for being owned or controlled by entities involved in Iran’s nuclear and ballistic missile program.
The 25-count indictment, which was filed under seal in federal court in the District of Columbia in July 2008 and unsealed today, was announced by Matthew G. Olsen, Acting Assistant Attorney General for National Security; Jeffrey A Taylor, U.S. Attorney for the District of Columbia; Miguel Unzueta, Special Agent in Charge of the San Diego Office of Investigations, U.S. Immigration and Customs Enforcement, Department of Homeland Security; and Richard W. Gwin, Special Agent in Charge for the Defense Criminal Investigative Service, Western Field Office.
The defendants charged in the indictment include Mac Aviation Group, doing business as Mac Aviation Limited and Mac Aviation Nigeria (collectively "Mac Aviation"), which is a company registered in Ireland that brokers aircraft parts and related goods for foreign customers. The remaining defendants are Thomas McGuinn, also known as Tom McGuinn, a 72-year-old citizen and resident of Ireland who is the owner, director and principal officer of Mac Aviation; as well as his son, Sean McGuinn, a 40-year-old citizen and resident of Ireland, who serves as sales/procurement director of Mac Aviation; and Sean Byrne, who serves as the commercial manager of Mac Aviation.
The indictment charges each of the defendants with two counts of conspiracy, 19 counts of violating the International Emergency Economic Powers Act (IEEPA) and Iranian Transactions Regulations, four counts of false statements, and forfeiture allegations. If convicted, the defendants face a maximum sentence of 10-20 years in prison for each of the IEEPA counts, 5-20 years in prison for each of the conspiracy counts, and five years in prison for each of the false statement counts.
According to the indictment, beginning as early as August 2005 and continuing through July 2008, the defendants solicited purchase orders from customers in Iran for U.S.-origin aircraft engines and parts and then sent requests for aircraft components to U.S. companies. The defendants wired money to banks in the U.S. as payment for these parts and concealed from U.S. sellers the ultimate end-use and end-users of the purchased parts. The defendants caused these parts to be exported from the United States to third countries like Malaysia before causing them to be transshipped to Iran.
The object of the conspiracy, according to the indictment, was to make money for Mac Aviation and its employees; supply Iran with U.S. aircraft parts and engines; evade U.S. licensing requirements; and conceal these prohibited transactions from detection.
According to the indictment, the defendants purchased 17 model 250 turbo-shaft helicopter engines from Rolls-Royce Corp. in Indiana for $4.27 million on behalf of an Iranian trading company. The model 250 engine was originally designed for a U.S. Army light observation helicopter and has since been installed in numerous civil and military helicopters. The defendants concealed from Rolls-Royce the ultimate end-use and end-user of the helicopters engines. In one exchange, one defendant declared that Mac Aviation was not selling the engines to any military organization or government.
The indictment alleges that the engines were exported from the United States to third countries, including Malaysia, and later shipped to Iran. Among the recipients in Iran was the Iran Aircraft Manufacturing Industrial Company, known by its Iranian acronym as HESA. On Sept. 17, 2008, the Treasury Department designated several Iranian weapons of mass destruction proliferators and members of their support networks pursuant to Executive Order 13382. Among the entities designated was HESA, which the Treasury Department determined was controlled by Iran’s Ministry of Defense and Armed Forces Logistics and has provided support to the Iranian Revolutionary Guard Corps.
The indictment further alleges that the defendants caused aircraft components known as vanes to be exported from the United States to Iran. According to the indictment, the defendants caused United Technologies, Pratt & Whitney to export 50 "5th stage vanes" valued at approximately $141,750 from its Connecticut facility to Mac Aviation. The defendants falsely stated that final destination of the components was Belgium. Instead, these components were routed to Iran Aircraft Industries, known by its Iranian acronym as IACI, in Tehran.
The indictment alleges that the defendants also caused aircraft bolts valued at approximately $2,261 to be exported from the United States to Iran. According to the indictment, the defendants caused Uniflight LLC, a company in Texas, to ship 32 aircraft bolts to a representative of a trading company in Dubai, United Arab Emirates. Invoices referenced in the indictment indicate that the final destination of the aircraft bolts was Kish Island, Iran.
This investigation was conducted by special agents from the Department of Homeland Security’s U.S. Immigration and Customs Enforcement and the Department of Defense’s Defense Criminal Investigative Service. Special agents from the U.S. Department of Commerce, Office of Export Enforcement, also assisted in the investigation.
The case is being prosecuted by Assistant U.S. Attorneys Denise Cheung and Ann Petalas of the U.S. Attorney’s Office for the District of Columbia, and Trial Attorneys Jonathan Poling and Ryan Fayhee of the Counterespionage Section of the Justice Department’s National Security Division.
The details contained in an indictment are mere allegations. All defendants are presumed innocent unless and until proven guilty in a court of law.
Department of Justice Announces Resources for Fight Against Mexican Drug CartelsRead the Press Release
WASHINGTON – Today Deputy Attorney General David Ogden announced increased efforts and reallocation of DOJ personnel to combat Mexican drug cartels in the United States and to help Mexican law enforcement battle cartels in their own country. Deputy Attorney General Ogden was joined in announcing a comprehensive response to the situation on the Southwest border by Department of Homeland Secretary Janet Napolitano and Deputy Secretary of State Jim Steinberg.
"For more than a quarter century, U.S. law enforcement agencies have recognized that the best way to fight the most sophisticated and powerful criminal organizations is through intelligence-based investigations to target the greatest threats," said Deputy Attorney General David Ogden. "The Department’s Mexican Cartel Strategy confronts those cartels as criminal organizations. As we’ve found with other large criminal groups, if you take their money and lock up their leaders, you can loosen their grips on the vast organizations they use to carry out their criminal enterprises. The Department of Justice is committed to taking advantage of all available resources to target the Mexican cartels and to help our Mexican counterparts in their courageous effort to take on these criminal organizations."
Today the United States announced it will be investing $700 million this year in enhancing Mexican law enforcement and judicial capacity and working closely to coordinate efforts against the cartels. The Department of Justice, through the FBI, U.S. Drug Enforcement Administration (DEA), Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), U.S. Marshals Service (USMS), the Criminal Division and the Office of Justice Programs, will work to investigate and prosecute cartel members for their illegal activities in the United State and with law enforcement colleagues to disrupt illegal flows of weapons and bulk cash to Mexico.
The Mexican Cartel Strategy, led by the Deputy Attorney General, uses federal prosecutor-led task forces that bring together all law enforcement components to identify, disrupt and dismantle the Mexican drug cartels through investigation, prosecution and extradition of their key leaders and facilitators, and seizure and forfeiture of their assets. The Department is increasing its focus on investigations and prosecutions of the southbound smuggling of guns and cash that fuel the violence and corruption and attacking the cartels in Mexico itself, in partnership with the Mexican Attorney General’s Office (PGR) and the Secretariat of Public Security (SSP).
DEA, already the largest U.S. drug enforcement presence in Mexico with 11 offices in that country, 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.
ATF is increasing its efforts by relocating 100 personnel to the Houston Field Division in the next 45 days as part of a 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.
As part of the Recovery Act funding, ATF received $10 million for Project Gunrunner efforts, aimed at disrupting arms trafficking between the U.S. and Mexico, to include hiring 25 new special agents, six industry operations investigators, 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.). Project Gunrunner has resulted in ATF referring more than 1,500 defendants for prosecution involving more than 12,000 weapons.
ATF will also continue its eTrace initiative with Mexican officials, which allows law enforcement agencies to identify trafficking trends of drug trafficking organizations and other criminal organizations funneling guns into Mexico from the United States, as well as to develop investigative leads in order to stop firearms traffickers and straw purchasers (people who knowingly purchase guns for prohibited persons) before they cross the border. In FY08, Mexico submitted more than 7,500 recovered guns for tracing, showing that most originated in Texas, Arizona and California.
The FBI is stepping up its efforts along the Southwest 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.
Already, the FBI has undertaken successful initiatives in Mexico and Central America, including the Central American Fingerprint Exchange (CAFÉ) initiative. The FBI will continue this initiative, which was developed to collect, store, and integrate biometric data from El Salvador, Guatemala, Belize, Honduras, and the Mexican state of Chiapas into a central database accessible to U.S. law enforcement, as well as the Transnational Anti-Gang initiative, which coordinates the sharing of gang intelligence between the U.S. and El Salvador.
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 Marshals Service Mexico City Foreign Field Office.
USMS is increasing its efforts in the Southwest border region under the Mexico Investigative Liaison Program, a cross-border violent fugitive apprehension initiative where USMS personnel, through daily contact with Mexican law enforcement, provide a rapid international response to law enforcement agencies on both sides of the border in the apprehension of fugitives who commit crimes and flee across the international border.
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.
In addition, DOJ’s Organized Drug Enforcement Task Forces Program (OCDETF) is adding analyst personnel to its strike force capacity along the Southwest border and the 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.
California Couple Plead Guilty in Alien Smuggling Scheme in Which Some Were Forced to Work at Elder Care HomesRead the Press Release
WASHINGTON – The owner of two elder care homes in Long Beach, Calif., has pleaded guilty on March 23, 2009 to bringing undocumented aliens into the United States and forcing two of them to work at her businesses.
Evelyn Pelayo, 53, a resident of Long Beach, pleaded guilty on March 23, 2009 to forced labor and unlawful conduct of holding passports to further forced labor. Pelayo owned two residences in Long Beach where she operated elderly care and boarding facilities called Vernon Way Care Home and Walton Care Home.
In a plea agreement filed in federal court, Pelayo admitted that she paid a co-defendant $6,000 to smuggle two undocumented aliens into the United States from the Philippines and then forced them to work at her elder care homes after confiscating their passports and threatening to turn them over to authorities if they attempted to escape.
Pelayo’s husband, Darwin Padolina, 56, pleaded guilty on March 23, 2009 to harboring a third undocumented alien for private financial gain. Padolina admitted that he concealed the undocumented alien for 10 years while the person worked as a domestic servant.
"Defendant Pelayo practiced a modern-day form of slavery, coercing employees to work in deplorable conditions for unfair wages," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "The Civil Rights Division will remain vigilant in finding and prosecuting those who prey on foreign nationals in this manner."
"Using fear and threats of reprisal, the defendants in this case exploited the dreams of foreign nationals who sought a better life in the United States," said U.S. Attorney Thomas P. O’Brien. "Instead of realizing the American dream, the victims in this case were subjected to inhumane treatment that profited only the defendants. For forcing victims to work up to 24 hours a day, everyday, while keeping about half of their meager salaries, Ms. Pelayo is now facing a lengthy prison sentence commensurate with her crimes."
Two other defendants in the case, Rodolfo Ebrole Demafeliz Jr., 39, and Rolleta Riazon, 28, both of the Philippines, previously pleaded guilty for conspiracy to bring aliens into the United States. Demafeliz and Riazon have completed their sentences and have returned to the Philippines.
According to the court documents, Pelayo recruited potential workers in the Philippines, promising them jobs in her elder care facilities. Once the victims agreed, Pelayo contacted Demafeliz, a Taekwondo martial arts instructor, who would enter the undocumented aliens in Taekwondo tournaments in the United States as a ruse to bring them into the country. Demafeliz obtained visas for the victims and provided them with limited martial arts training to make the visas appear legitimate.
Once the aliens were brought to Southern California, Pelayo paid Demafliz $6,000 per victim. She then doubled that smuggling fee and charged each of the victims $12,000. Pelayo instructed the victims that they would have to work for her for a minimum of 10 years, and during that time they would be charged debt repayments. Pelayo confiscated the victims’ passports and verbally abused them, threatening to contact police with false allegations and immigration officials if they tried to escape.
The two elder care homes were shut down in April 2008, following the execution of the federal search warrants. At the time, 10 elderly patients were rescued and moved to other facilities.
Robert Schoch, Special Agent in Charge of the Immigration and Customs Enforcement Office of Investigations in Los Angeles, said: "Today’s guilty pleas are a disturbing reminder that even in today's modern society vestiges of slavery still exist. It is a sad reflection on human greed and heartlessness, when individuals believe they can egregiously exploit people from other countries and other cultures. ICE will continue to work aggressively to ensure that those who engage in these abusive practices are made to pay for their crimes."
Salvador Hernandez, Assistant Director in Charge of the FBI in Los Angeles, commented: "This case is only the latest example of modern-day slavery, and a grim reminder that this criminal behavior is practiced in our local neighborhoods. The Human Trafficking Task Force in Los Angeles has made consistent progress in identifying and dismantling trafficking organizations, as well as drawing much-needed attention to this abhorrent crime problem."
Pelayo and Padolina pleaded guilty before U.S. District Judge Gary A. Feess, who is scheduled to sentence the defendants on June 22, 2009. At sentencing, Pelayo faces a statutory maximum penalty of 25 years in federal prison, and Padolina faces a maximum possible penalty of 10 years in prison.
The case against Pelayo and her husband was investigated by the Los Angeles Metropolitan Area Task Force on Human Trafficking. The case was prosecuted by Assistant U.S. Attorney Sandy Leal and Civil Rights Division Trial Attorney Kayla Bakshi.
In Los Angeles, the FBI, U.S. Immigration and Customs Enforcement, the U.S. Department of Labor's Office of the Inspector General, the U.S. Attorney's Office and the Los Angeles Police Department, along with several community groups, comprise the Los Angeles Metropolitan Area Task Force on Human Trafficking, whose mission is to improve tactics for identifying and rescuing trafficking victims, provide assistance to victims and prosecute those responsible for human trafficking. The Human Trafficking Task Force in Los Angeles has established a toll-free hotline – (800) 655-4095 – that victims and individuals with information about victims are encouraged to call. Information may be provided anonymously and will be kept confidential.
23 March 2009
Veterans Affairs Official to Plead Guilty to Conspiracy and Wire FraudRead the Press Release
WASHINGTON – The Associate Director of the Department of Veterans Affairs (VA) Consolidated Mail Outpatient Pharmacy in Hines, Ill., agreed to plead guilty to being part of a conspiracy to defraud the VA and the Small Business Administration (SBA), the Department of Justice announced today. His wife and the temporary staffing company she founded agreed to plead guilty to participating in the same conspiracy.
In three separate plea agreements filed today in U.S. District Court in Chicago, William J. Brandt, the associate director of the VA facility from 1996 until April 2007, his wife, Esperanza A. Brandt and Pronto Staffing Inc. (Pronto) each agreed to plead guilty to one charge of conspiracy to commit wire fraud. William Brandt also agreed to plead guilty to one charge of wire fraud, which deprived the VA and the public of his honest services. The Outpatient Pharmacy in Hines, one of seven regional VA mail-out pharmacies, currently processes and sends out more than 90,000 prescriptions each day to veterans. Under the plea agreements, which are subject to court approval, the Brandts and Pronto have agreed to cooperate with the Justice Department’s ongoing investigation.
"The Department of Veterans Affairs supports and cares for our nation’s veterans and their families," said Scott D. Hammond, Acting Assistant Attorney General in charge of the Department’s Antitrust Division. "We are committed to pursuing prison terms for those who would corrupt the vital mission of the VA by misusing their official position for private gain."
The Brandts and Pronto admitted to conspiring with others to commit wire fraud in a scheme to fraudulently allow Pronto to provide temporary pharmacists to the Outpatient Pharmacy where William Brandt worked supervising pharmacists. Pronto was created by the Brandts in 2000 to provide pharmacists to the Hines Outpatient Pharmacy. The company later sought SBA certification as a woman –owned, minority –owned small disadvantaged business and 8(a) Program participant. As part of the conspiracy, the Brandts agreed to allow another company to fraudulently masquerade as Pronto and qualify for contracts set aside for SBA and 8(a) participants.
William Brandt also agreed to plead guilty to wire fraud for making materially false misrepresentations to the VA and other government officials to hide his involvement with Pronto. Brandt claimed that Pronto was solely managed by his wife in order to avoid conflict of interest laws governing federal employees. During the course of the scheme, William Brandt, working with others, secretly agreed that the billing rates charged to the VA for certain pharmacists provided by Pronto should be increased. Between 2000 and 2007, the Brandts and other unindicted co-conspirators used Pronto to bill the VA for more than $8 million in services to the Hines, Ill., Outpatient Pharmacy facility. This conduct deprived the VA and the public of Brandt’s honest service.
This is the second case involving the Hines Outpatient Pharmacy facility. On July 24, 2008, Joel M. Gostolmelsky, the director of the facility, pleaded guilty to conspiracy and to accepting illegal gratuities in connection with awarding staffing and supply contracts, including for temporary pharmacists.
William Brandt faces a maximum sentence of 20 years imprisonment and a fine of $250,000 for the wire fraud offense. William and Esperanza Brandt each face a maximum sentence of five years imprisonment and a fine of $250,000 for the conspiracy charge. Pronto faces a maximum fine of $500,000. 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. Their actual sentences will be determined by the court.
"The VA Office of Inspector General vigorously investigates every credible allegation against VA employees who betray the trust of our veterans and taxpayers by committing crimes related to the programs and operations of VA. Mr. Brandt is the fourth supervisory employee of VA’s Consolidated Mail Outpatient Pharmacy program, including his former supervisor at Hines, to be prosecuted since 2005 for abusing their government positions for private gain," said George J. Opfer, Inspector General of the Department of Veterans Affairs.
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, prosecution and prevention of procurement fraud associated with the increase in contracting activity for national security and other government programs.
The guilty pleas announced today resulted from an ongoing investigation of unlawful conduct concerning the VA’s Consolidated Mail Outpatient Pharmacies conducted jointly by the Department of Justice Antitrust Division’s Chicago Field Office and the Department of Veteran’s Affairs, Office of Inspector General, with assistance from the Small Business Administration, Office of Inspector General; the Department of Defense, Criminal Investigative Service; and the U.S. Secret Service.
Anyone with information concerning bid rigging, fraud, kickbacks, bribery or other crimes relating to violations of federal procurement laws meant to foster competition concerning any of the VA’s Consolidated Outpatient Pharmacies should contact the Chicago Field Office of the Antitrust Division at 312-353-7530 or the VA Office of Inspector General at 1-800-488-8244.
Two Doctors and Two Medical Assistants Plead Guilty in $10 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – Four Miami-area residents pleaded guilty today in connection with a $10 million Medicare fraud scheme involving HIV infusion clinics, Acting Assistant Attorney General Rita M. Glavin of the Criminal Division and U.S. Attorney R. Alexander Acosta of the Southern District of Florida announced today.
Dr. Roberto Rodriguez, 54; Dr. Carlos Garrido, 69; Gonzalo Nodarse, 38; and Alexis Carrazana, 41; all pleaded guilty before U.S. District Judge Paul C. Huck to one count of conspiracy to commit health care fraud. All four defendants admitted to working at Midway Medical Center Inc. (Midway), a Miami clinic that purported to specialize in the treatment of HIV patients.
According to the plea documents, Rodriguez was a co-owner of and practicing physician at Midway. Rodriguez admitted that he and his co-conspirators routinely billed the Medicare program for services that were medically unnecessary and, in many instances, never provided. Rodriguez admitted to purchasing only a small fraction of the medication that was purportedly being administered to Midway’s patients.
Most of the services provided to patients at Midway were billed to the Medicare program as treatments for a diagnosis of thrombocytopenia, a disorder involving a low count of platelets in the blood. According to the plea documents, none of Midway’s patients actually had low blood platelet counts. Rodriguez admitted that to make it appear that the patients actually had low platelet levels, he and his co-conspirators used chemists to manipulate the blood samples drawn from Midway’s patients before the blood was sent to a laboratory for analysis. In his plea, Rodriguez admitted to ordering that patients at Midway receive medications to treat thrombocytopenia despite knowing that the laboratory results had been falsified and the patients did not actually have that condition.
Midway was not the only clinic where Rodriguez purported to treat HIV patients with injection and infusion therapies. In his plea, Rodriguez admitted that he was listed as a medical director and practicing physician for five other Miami-area HIV infusion clinics between approximately October 2003 and February 2005, where he engaged in similar misconduct. Specifically, Rodriguez admitted he and his co-conspirators billed the Medicare program for HIV injection and infusion services that Rodriguez knew were medically unnecessary and, in some instances, never actually provided. Rodriguez admitted to causing more than $20 million in false claims to be submitted to the Medicare program at all of his clinics, including Midway.
Like Rodriguez, Garrido was a part-owner and practicing physician at Midway. In his plea, Garrido admitted that he and his co-conspirators routinely billed the Medicare program for services that were medically unnecessary and, in many instances, never provided. Garrido admitted to purchasing only a small fraction of the medication that was purportedly being administered to Midway’s patients. Garrido ordered that patients be treated with medications he knew they did not need and that, in many instances, he knew the clinic did not have available to provide to the patients. Garrido admitted to working at Midway for approximately eight months before the clinic closed, during which time he admitted to submitting more than $1 million in fraudulent claims to the Medicare program.
Nodarse and Carrazana worked at Midway as medical assistants. In their pleas, the two assistants admitted to making false entries in medical records indicating that they had provided medications on particular dates and in particular dosages to patients, when, in fact, they had not provided medications. The medical assistants also admitted to being fully aware that blood samples drawn from Midway’s patients were tainted to make it appear that the patients had conditions they did not have. Both assistants admitted to administering medications to patients that they knew the patients did not need. Nodarse, who worked at Midway throughout its existence, admitted to conspiring to submit more than $10 million in false and fraudulent claims for HIV infusion services allegedly provided at the clinic.
The case is being prosecuted by Trial Attorney John K. Neal of the Criminal Division’s Fraud Section. The FBI and the Department of Health and Human Services, Office of Inspector General, conducted the investigation. The case was brought as part of the Medicare Fraud Strike Force (MFSF), supervised by Deputy Chief Kirk Ogrosky of the Criminal Division’s Fraud Section and U.S. Attorney Acosta of the Southern District of Florida. Since the inception of MFSF operations, federal prosecutors have indicted 106 cases with 192 defendants in both Los Angeles and Miami. Collectively, these defendants fraudulently billed the Medicare program for more than half a billion dollars.
MS-13 Member Sentenced to 25 Years in Prison for Involvement in Rico ConspiracyRead the Press Release
WASHINGTON – A member of La Mara Salvatrucha, or MS-13, was sentenced today to 25 years in prison and five years of supervised release for his participation in a racketeering enterprise, Acting Assistant Attorney General Rita M. Glavin of the Criminal Division and U.S. Attorney Edward M. Yarbrough of the Middle District of Tennessee announced. Manuel Marquez, a/k/a "Morro," was sentenced in Nashville, Tenn., by Chief Judge Todd J. Campbell of the Middle District of Tennessee.
At his plea hearing on Dec. 17, 2007, Marquez admitted that he and others involved in the MS-13 gang conspired to participate in a pattern of racketeering activity in the Nashville metropolitan area that included murder, attempted murder and witness tampering. Marquez admitted that on April 12, 2006, he and other MS-13 gang members fired handguns at a rival gang member and his girlfriend. The rival gang member was struck several times and sustained permanent physical injuries. Marquez also admitted that on May 21, 2006, he and other MS-13 gang members fired a handgun at an individual who was suspected of being a member of the rival street gang Brown Pride. The victim was struck and wounded in the arm.
Marquez admitted that on June 17, 2006, he and other MS-13 gang members shot and killed two rival gang members sitting inside a car at a traffic light. Marquez also admitted that in August 2006, he and other MS-13 members discussed and planned the murder of a Brown Pride member who worked at a food processing facility outside Nashville. Marquez also admitted that on Aug. 26, 2006, he and other MS-13 gang members discussed and planned the murder of rival gang members outside a Nashville nightclub. Marquez further admitted that on Sept. 3, 2006, he and another MS-13 gang member shot at a crowd of suspected rival gang members outside a different Nashville nightclub, wounding two men. Finally, Marquez admitted that on Sept. 4, 2006, he and another MS-13 gang member shot a rival gang member several times in the back at Percy Priest Lake outside Nashville.
Marquez is the last of the defendants to be sentenced on RICO charges stemming from an indictment returned by a federal grand jury in Nashville on Jan. 10, 2007. The indictment charged 14 members of MS-13 with conspiring to participate in the affairs of a racketeering enterprise and related charges including murder, attempted murder, assault, weapons charges and obstruction of justice.
Thirteen other defendants were previously sentenced to prison after pleading guilty to the RICO conspiracy. Walter Hernandez was sentenced on March 31, 2008, to 324 months in prison. On Dec. 3 and Dec. 7, 2007, respectively, Henry Garballo-Vasquez and Jose Alfaro were sentenced to 240 months in prison. On Nov. 20, 2007, Geovanni Pena received a sentence of 235 months in prison. On Sept. 8, 2008, Ericka Cortez received a sentence of 46 months in prison. On Sept. 16, 2008, Escolastico Serrano received a sentence of 45 years in prison. On Sept. 25, 2008, Ronald Fuentes received a life prison sentence. On Oct. 3, 2008, Ernesto Mendez-Tovar received a sentence of 13 years in prison. On Oct. 6, 2008, Eliseo Iglesias received a sentence of 210 months in prison. On Oct. 7, 2008, David Alexander Gonzalez received a sentence of 235 months in prison. On Nov. 10, 2008, Oscar Serrano received a sentence of life plus 20 years in prison, to be served consecutively. On Nov. 14, 2008, Omar Hirbin Gomez was sentenced to 14 years in prison. And on Nov. 19, 2008, Francisco Dago Mendez was sentenced to 14 years in prison.
According to the indictment, the MS-13 gang is a violent international criminal organization composed primarily of immigrants or descendants of immigrants from El Salvador. The purpose of the racketeering enterprise was to preserve and protect the power, territory and profits of the MS-13 enterprise through violent assault, murder, threats of violence and intimidation.
The case was prosecuted by Assistant U.S. Attorney Jimmie Lynn Ramsaur of the Middle District of Tennessee and Trial Attorney John Han from the Criminal Division’s Gang Unit.
The case was investigated by the Criminal Division’s Gang Unit; the U.S. Attorney’s Office in the Middle District of Tennessee; the Nashville Metropolitan Police Department’s Gang Suppression Unit; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Department of Homeland Security’s Immigration and Customs Enforcement; and the Davidson County District Attorney General’s Office.
Former State Department Employee Sentenced for Illegally Accessing Confidential Passport FilesRead the Press Release
WASHINGTON – A former State Department employee was sentenced today to 12 months of probation and ordered to perform 100 hours of community service for illegally accessing more than 150 confidential passport application files, Acting Assistant Attorney General Rita M. Glavin of the Criminal Division announced. Dwayne F. Cross, 41, of Upper Marlboro, Md., was sentenced by U.S. Magistrate Judge John M. Facciola in Washington, D.C. On Jan. 14, 2009, Cross pleaded guilty to a one-count criminal information charging him with unauthorized computer access.
According to court documents, from August 2001 through February 2008, Cross served as an administrative assistant in the Bureau of Consular Affairs, Overseas Citizens Services, Children’s Issues for the State Department. From March 2008 through October 2008, Cross returned to the State Department as a contract employee working as a contract specialist for the acquisitions office. According to information contained in plea documents, Cross admitted he had access to official State Department computer databases in the regular course of his employment, including the Passport Information Electronic Records System (PIERS), which contains, among other data, all imaged passport applications dating back to 1994. The imaged passport applications on PIERS contain, among other things, a photograph of the passport applicant as well as certain personal information including the applicant’s full name, date and place of birth, current address, telephone numbers, parent information, spouse’s name and emergency contact information. These confidential files are protected by the Privacy Act of 1974, and access by State Department employees is strictly limited to official government duties.
In pleading guilty, Cross admitted that between January 2002 and August 2007, he logged onto the PIERS database and viewed the passport applications of more than 150 celebrities, actors, musicians, comedians, models, politicians, athletes, members of the media, family members, friends, associates and other individuals. Cross admitted that he had no official government reason to access and view these passport applications, but that his sole purpose in accessing and viewing these passport applications was idle curiosity.
Cross is one of three former State Department employees to plead guilty in this continuing investigation. On Sept. 22, 2008, Lawrence C. Yontz, a former foreign service officer and intelligence analyst pleaded guilty to unlawfully accessing hundreds of confidential passport files. Yontz was sentenced on Dec. 19, 2008, to 12 months of probation and ordered to perform 50 hours of community service. On Jan. 27, 2009, Gerald R. Leuders, a former foreign service officer, Office of Consular Affairs watch officer and recruitment coordinator pleaded guilty to unlawfully accessing more than 50 confidential passport files. Leuders’ sentencing has not yet been scheduled.
These cases are being prosecuted by Trial Attorney Armando O. Bonilla of the Criminal Division’s Public Integrity Section, headed by Section Chief William M. Welch II. These cases are being investigated by the State Department Office of Inspector General.
Federal Judge Shuts Down Two Dallas Tax PreparersRead the Press Release
WASHINGTON – A federal court has shut down two Dallas tax preparers during the height of tax-filing season, the Justice Department announced today. Chief Judge Sidney Fitzwater of the U.S. District Court for the Northern District of Texas signed a temporary restraining order barring Ethel Washington from preparing any tax returns. The court found that Washington continually and repeatedly prepared federal tax returns with false or inflated Schedule C business losses, even after the Internal Revenue Service (IRS) notified her that it was investigating her return preparation. The court noted that Washington has prepared returns with false or inflated business losses since 2004, and has already prepared 120 returns with claimed business losses during this tax-filing season, some of which were false or inflated. Washington operates Washington Income Tax Service in Dallas.
The court has also permanently barred Washington’s former employer, Tina Preston, and her firm, The Preston Group & Associates Inc., from preparing federal tax returns. Preston consented to the civil injunction order. The court required Preston to provide her customer list to the Justice Department and to post a copy of the court order on her website.
According to the government complaint, filed in the case last month, Preston Tax Services prepared federal income tax returns for thousands of individual customers. Tina Preston allegedly taught employees, including Ethel Washington, how to list phony businesses on customers’ returns in order to report false business losses to offset customers’ wage income. The complaint further alleged that the defendants sometimes used phony businesses to increase customers’ income in order to claim improper earned income tax credits, a benefit that is available under some circumstances to working people in certain income ranges. According to the complaint, the tax losses from the defendants’ misconduct could be as much as $60 million. The case against several other defendants remains pending.
"The court’s swift action shows that tax preparers can face serious consequences for misconduct," said John A. DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division. "The IRS and Justice Department are committed to putting fraudulent preparers out of business."
DiCicco thanked Justice Department trial attorney Michael Pahl, who handled the case, and Glenda Dziema, a revenue agent with the IRS’s Small Business/Self Employed Division, who handled the investigation.
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 Web site.
20 March 2009
Justice Department Files Lawsuit Against Symphony Diagnostic Services Inc., to Enforce the Employment Rights of N.Y. Army National GuardsmanRead the Press Release
WASHINGTON — The Department of Justice today filed a lawsuit in U.S. District Court in Philadelphia on behalf of Frantz Julien, a New York Army National Guard member, against the Symphony Diagnostic Services Inc., doing business as MobilexUSA (Mobilex), alleging violations of the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA).
Subject to certain limitations, USERRA requires that individuals who leave their jobs to serve in the U.S. military be promptly reemployed by their civilian employers in the same positions, or in comparable positions, as the positions that they would have held had they not left to serve in the military. USERRA also requires that civilian employers reemploy returning servicemembers in positions of like pay, status and benefits to the positions the servicemembers would have had if they had been continuously employed by their civilian employers.
The Justice Department’s complaint alleges that Julien, a staff mobile radiologic technologist for Mobilex, was called to active duty in March 2003 and deployed to aid soldiers serving in Operation Enduring Freedom. Upon his completion of active duty in March 2007, Julien began contacting Mobilex to seek reemployment. The complaint alleges Mobilex did not promptly reemploy Julien and only did so in April 2008, after he filed a complaint with the Department of Labor’s Veterans’ Employment and Training Service (VETS). VETS investigated the matter, determined that Julien’s claim had merit and, upon completion of conciliation efforts, referred the matter to the Justice Department.
"The Department is committed to vigorously enforcing federal laws that protect the employment rights of our servicemembers," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "Cases like this, on behalf of a servicemember who was not promptly reemployed following military service, further reinforce that commitment."
The Civil Rights Division of the Department of Justice has given a high priority to the enforcement of servicemembers’ rights under USERRA. Additional information about USERRA can be found on the Justice Department Web site: www.servicemembers.gov and www.usdoj.gov/crt/emp.
Elena Kagan Sworn in as Solicitor GeneralRead the Press Release
WASHINGTON – Elena Kagan was sworn in as Solicitor General of the United States today by Chief Justice John G. Roberts Jr., in a ceremony held in the Chief Justice’s chambers at the U.S. Supreme Court.
"Elena Kagan’s intelligence, experience and commitment to the rule of law will make her an exceptional Solicitor General," U.S. Attorney General Eric Holder said. "With the addition of Elena Kagan, we are building a strong, effective leadership team to enforce our nation’s laws."
Prior to her confirmation as Solicitor General, Elena Kagan served as Dean of Harvard Law School. She is a graduate of Princeton University (A.B. 1981), Worcester College, Oxford (M. Phil. 1983) and Harvard Law School (J.D. 1986). Kagan clerked for Judge Abner Mikva of the U.S. Court of Appeals for the D.C. Circuit and for Justice Thurgood Marshall of the Supreme Court of the United States. Kagan worked in private practice for Williams & Connolly from 1989 to 1991 and served in President Clinton’s White House as Associate Counsel to the President and as Deputy Assistant to the President for Domestic Policy and Deputy Director of the Domestic Policy Council from 1995 to 1999.
Kagan is the 45th person and first woman to serve as Solicitor General of the United States.
19 March 2009
Wisconsin Man Who Participated in 1943 Massacre of 8,000 Jews Is Deported to AustriaRead the Press Release
WASHINGTON – A former Nazi concentration camp guard who settled in Racine, Wis., after World War II and acquired U.S. citizenship, has been removed to Austria due to his participation in Nazi-sponsored acts of persecution during World War II, Acting Assistant Attorney General Rita M. Glavin of the Criminal Division and U.S. Immigration and Customs Enforcement (ICE) Acting Assistant Secretary John P. Torres announced today.
Josias Kumpf, 83, served as an armed SS Death’s Head guard at the Nazi-run Sachsenhausen Concentration Camp in Germany and at the Trawniki Labor Camp in German-occupied Poland. Kumpf also served at slave labor sites in Nazi-occupied France where prisoners under his watch built launching platforms for Germany’s V-1 and V-2 missile attacks on England. During his service at Trawniki, he participated in a mass shooting in which 8,000 men, women and children were murdered in a single day, on Nov. 3, 1943.
"Josias Kumpf, by his own admission, stood guard with orders to shoot any surviving prisoners who attempted to escape an SS massacre that left thousands of Jews dead," said Acting Assistant Attorney General Rita M. Glavin. "His court-ordered removal from the United States to Austria is another milestone in the government’s long-running effort to ensure that individuals who participated in crimes against humanity do not find sanctuary in this country."
Kumpf, who was born in Serbia, joined the SS Death’s Head guard forces at the Sachsenhausen Camp in October 1942 and served there for one year before transferring to the Trawniki Labor Camp in German-occupied Poland. During the Justice Department’s investigation of his activities, Kumpf admitted that he participated in a murderous November 1943 Nazi operation. Bearing the code name "Aktion Erntefest" (Operation Harvest Festival), the operation resulted in the murder of approximately 42,000 Jewish men, women and children at three camps in German-occupied eastern Poland in only two days. Kumpf helped guard approximately 8,000 Jewish prisoners – including approximately 400 children – who were shot and killed in pits at Trawniki. According to Kumpf, his assignment was to watch for victims who were still "halfway alive" or "convulsing" and prevent their escape. If any of the prisoners attempted to escape, he stated his job was to "shoot them to kill."
Kumpf immigrated to the United States from Austria in 1956 and became a U.S. citizen in 1964. In 2003, the Criminal Division’s Office of Special Investigations (OSI) and the U.S. Attorney’s Office for the Eastern District of Wisconsin brought suit to denaturalize Kumpf. The U.S. District Court for the Eastern District of Wisconsin revoked his citizenship in May 2005. OSI investigated that case, and litigated the subsequent removal action. ICE carried out the physical removal of Kumpf to Austria.
OSI Director Eli M. Rosenbaum stated, "The removal of Josias Kumpf to Austria has achieved a significant measure of justice on behalf of the victims of Nazi inhumanity and it reflects the unswerving commitment of the U.S. government to continuing that quest for justice."
ICE Acting Assistant Secretary John P. Torres stated, "Today’s removal brings justice to the families who were victimized by the reprehensible acts that this man committed. The U.S. government will work tirelessly to identify and arrest those who have committed crimes against humanity so that they may not seek to gain safe haven in the United States."
Kumpf’s removal to Austria was a result of combined efforts by the Departments of Justice, State and Homeland Security on various law enforcement and diplomatic fronts. Kumpf’s removal is part of OSI’s continuing efforts to identify, investigate and take legal action against participants in Nazi crimes of persecution who reside in the United States. Since OSI began operations in 1979, it has won cases against 107 individuals who participated in Nazi crimes of persecution. In addition, attempts to enter the United States by more than 180 individuals implicated in wartime Axis crimes have been prevented as a result of OSI’s "Watch List" program, which is enforced in cooperation with the Departments of State and Homeland Security.
Third Defendant Pleads Guilty to Money Laundering Scheme Involving Bribes for Contracts at Kuwait Army BaseRead the Press Release
WASHINGTON – The sister of a U.S. Army officer has pleaded guilty for her participation in a money-laundering scheme related to bribes paid for contracts awarded in support of the Iraq war, Acting Assistant Attorney General Rita M. Glavin of the Criminal Division and Acting Assistant Attorney General Scott D. Hammond of the Antitrust Division announced today.
Carolyn Blake, of Sunnyvale, Texas, pleaded guilty to one count of money laundering conspiracy after accepting more than $3 million in bribe proceeds on behalf of her brother, Major John Cockerham. Blake admitted she expected to keep 10 percent of the money she collected. Blake pleaded guilty on March 18, 2009, before U.S. Magistrate Judge John W. Primomo in the Western District of Texas, San Antonio Division. At sentencing, Blake faces up to 20 years in prison and a fine of up to $500,000 or two times the value of the laundered funds. A sentencing date has not yet been set by the court.
John Cockerham pleaded guilty in January 2008 to participating in a complex bribery and money laundering scheme while working as an Army contracting officer in Kuwait. According to court documents, he was responsible for awarding contracts for services to be delivered to troops in Iraq, including bottled water. In return for awarding illegal contracts, Cockerham admitted to receiving more than $9 million in bribe proceeds. Once Cockerham agreed to take money in exchange for awarding contracts, he admitted he directed the contractors to pay Blake, his wife Melissa Cockerham, and others in order to conceal the receipt of bribe payments. Melissa Cockerham pleaded guilty in January 2008 to accepting more than $1 million on John Cockerham’s behalf, and admitted that she stored the cash in safe deposit boxes at banks in Kuwait and Dubai.
"By accepting bribe proceeds, Carolyn Blake aided a scheme that steered contracts to those willing to make illegal payments for contracts," said Acting Assistant Attorney General Rita M. Glavin. "The Department of Justice is committed to protecting the integrity of contracts involving U.S. funds and supplies for men and women in uniform"
"The Antitrust Division is committed to rooting out corruption that threatens the competitive bidding process, particularly where public funds are involved," said Scott D. Hammond, Acting Assistant Attorney General in charge of the Department’s Antitrust Division. "Those who scheme to line their pockets with kickbacks made at the expense of U.S. taxpayer dollars will be vigorously prosecuted."
"Today’s plea agreement clearly demonstrates that the Special Agents from my command, along with our law enforcement and Department of Justice partners, will follow every lead and turn over every stone to bring those who commit crimes against the Army to justice," said Brigadier General Rodney Johnson, Commanding General of the U.S. Army Criminal Investigation Command. "We’ve had great success in investigating these cases and will continue to pursue those who choose to defraud the Army at such a critical time in our nation’s history."
"The public deserves assurances that tax dollars will be spent in a scrupulous manner," said Sharon Woods, Director, Defense Criminal Investigative Service. "When government representatives place personal gain above taxpayers’ interests, the legitimacy of public institutions is undermined. Corruption of the nature uncovered throughout the course of this investigation results in a pervasive atmosphere of distrust which causes Americans to question the integrity of all government employees and institutions. The Defense Criminal Investigative Service remains committed to working with law enforcement partners and the Department of Justice to ensure conspirators who willingly assist individuals who betray the public trust are held firmly accountable."
"This latest guilty plea by Carolyn Blake, a co-conspirator in a large contract fraud scheme, evidences SIGIR’s continuing commitment to root out corruption and enforce accountability within the Iraq program," said Stuart W. Bowen, Jr. Special Inspector General for Iraq Reconstruction (SIGIR). "In concert with our partner law enforcement agencies, SIGIR is pursuing cases of alleged criminal wrongdoing in Iraq, ranging from kickbacks and bribery to theft and double billing. With the support of Department of Justice prosecutors, we expect significant progress on these cases."
The National Procurement Fraud Initiative announced in October 2006 is designed to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in contracting activity for national security and other government programs. The National Procurement Fraud Task force is currently chaired by Acting Assistant Attorney General Rita M. Glavin for the Criminal Division.
The case is being prosecuted by Trial Attorney Richard B. Evans of the Criminal Division’s Public Integrity Section, and Trial Attorneys Mark W. Pletcher and Emily W. Allen of the National Criminal Enforcement Section of the Antitrust Division. These cases are being investigated by the Army Criminal Investigations Division, the Defense Criminal Investigative Service, the FBI, the IRS, SIGIR, and U.S. Immigration and Customs Enforcement at the Department of Homeland Security in support of the Justice Department’s National Procurement Fraud Task Force and the International Contract Corruption Initiative.
Plea Agreement
Attorney General Issues New FOIA Guidelines to Favor Disclosure and TransparencyRead the Press Release
WASHINGTON – Attorney General Eric Holder issued comprehensive new Freedom of Information Act (FOIA) guidelines today that direct all executive branch departments and agencies to apply a presumption of openness when administering the FOIA. The new guidelines, announced in a memo to heads of executive departments and agencies, build on the principles announced by President Obama on his first full day in office when he issued a presidential memorandum on the FOIA that called on agencies to "usher in a new era of open government." At that time, President Obama also instructed Attorney General Holder to issue new FOIA guidelines that reaffirm the government’s commitment to accountability and transparency. The memo rescinds the guidelines issued by the previous administration.
"By restoring the presumption of disclosure that is at the heart of the Freedom of Information Act, we are making a critical change that will restore the public’s ability to access information in a timely manner," said Attorney General Holder. "The American people have the right to information about their government’s activities, and these new guidelines will ensure they are able to obtain that information under principles of openness and transparency."
The new FOIA guidelines address both application of the presumption of disclosure and the effective administration of the FOIA across the government. As to the presumption of disclosure, the Attorney General directs agencies not to withhold records simply because they can technically do so. In his memo, the Attorney General encourages agencies to make discretionary disclosures of records and to release records in part whenever they cannot be released in full.
The Attorney General also establishes a new standard for the defense of agency decisions to withhold records in response to a FOIA request. Now, the Department will defend a denial only if the agency reasonably foresees that disclosure would harm an interest protected by one of the statutory exemptions, or disclosure is prohibited by law. Under the previous defensibility standard of the rules rescinded today, the Department had said it would defend a denial if the agency had a "sound legal basis" for its decision to withhold.
In addition to establishing criteria governing the presumption of disclosure, the Attorney General’s FOIA guidelines emphasize that agencies must be sure to have in place effective systems for responding to requests. In the memo, the Attorney General calls on each agency to be fully accountable for its administration of the FOIA.
The Attorney General’s memo also emphasizes that FOIA is the responsibility of everyone in each agency, and that in order to improve FOIA performance, agencies must address the key roles played by a broad range of personnel who work with each agency’s FOIA professionals. The memo highlights the key role played by agency Chief FOIA Officers who will now be reporting each year to the Department of Justice on their progress in improving FOIA administration. And, the Attorney General also directs FOIA professionals to work cooperatively with FOIA requesters and to anticipate interest in records before requests are made and to make requested records available promptly.
The Office of Information Policy will conduct training and provide guidance on the new FOIA guidelines to executive branch departments and agencies, as well as to interested groups, in order to maintain a comprehensive approach to greater government transparency.
Today’s memo rescinds the guidelines issued on Oct. 12, 2001, by former Attorney General John Ashcroft.
18 March 2009
U.S. Sues Union Pacific R.R. for $37 Million for Allegedly Failing to Prevent Use of Rail Cars to Smuggle Narcotics Across BorderRead the Press Release
WASHINGTON – The government has filed two lawsuits against the Union Pacific Railroad Company for allegedly failing to prevent the use of its rail cars to smuggle large quantities of narcotics into the United States, the Justice Department announced today. The complaints, filed in San Diego and Houston, seek more than $37 million in monetary penalties. The government alleges the rail cars were brought across the border at the ports of entry at Calexico, Calif., and Brownsville, Texas.
According to the complaints, Union Pacific Railroad, the largest provider of rail transportation services in North America, has substantial Mexico rail operations, serving border gateways in California, Arizona and Texas. It is alleged in the complaints that Union Pacific has a substantial ownership-interest in the privatized Mexican railroad company Ferrocarril Mexicano (FM). Union Pacific also partners with FM to offer Union Pacific’s customers the ability to move merchandise north- and south-bound between Mexico and the United States.
In accordance with Title 19, United States Code, Section 1584, the owner or person in charge of a vehicle bound to the United States is required to submit to Department of Homeland Security, Customs and Border Protection (CBP), a manifest that accurately identifies all merchandise on board the vehicle. A violation of this section mandates the imposition of civil monetary penalties.
"It is imperative for transportation providers to be vigilant in determining the nature of cargo they bring into the United States from other countries," said Michael F. Hertz, Acting Assistant Attorney General for the Justice Department’s Civil Division. "These laws were established to protect the American people."
The complaint, filed in the Southern District of California, alleges that on 37 separate occasions, from November 2001 to October 2006, after Union Pacific submitted its manifests, CBP officials found a total of over 4,000 pounds of marijuana on Union Pacific rail cars north-bound from Mexico for travel throughout the United States. According to the complaint, CBP imposed mandatory monetary penalties of $33,595,112 for Union Pacific’s violations but to date, Union Pacific has failed and refused to pay the civil penalties.
The government’s complaint filed in the Southern District of Texas alleges that on June 16, 2003, Union Pacific submitted a manifest to CBP for entry at the Port of Entry at Brownsville, Texas. According to the government complaint, the railroad manifest indicated that the rail cars were empty. However, the suit states that CBP officials, during a routine inspection, found a total of 99 packages containing 117 kilograms of cocaine within a false wall on the bottom side of the rail car. The suit, filed in the Southern District of Texas, seeks $4,128,000.
"Railroad companies and other freight carriers must take seriously their obligations under the law to take appropriate action to prevent the use of their vehicles to smuggle narcotics and other contraband into the United States," said Karen P. Hewitt, U.S. Attorney for the Southern District of California. "This civil complaint marks an important step toward addressing the repeated failure of the largest railroad company in North America to prevent rail cars bound for travel throughout the United States from being used to smuggle significant amounts of narcotics."
"Along with the profits of doing an international transportation business comes the legal obligation to ensure contraband is not also brought into our country," said Tim Johnson, Acting U.S. Attorney for the Southern District of Texas. "The consequences of failing to meet that obligation are what this suit is all about."
"Securing the nation’s rail system against the threat of cross border smuggling requires the compliance and cooperation of the rail industry," said Jayson P. Ahern, Acting Commissioner of U.S. Customs and Border Protection, Department of Homeland Security. "Failure to comply with reasonable security measures leads to vulnerabilities that are simply unacceptable when considering the consequences of illegal cross border activity."
The case is being handled in San Diego by Assistant U.S. Attorneys Joseph P. Price, Jr., and Joseph J. Purcell; in Houston by Assistant U.S. Attorney Nancy L. Masso; in Washington by Civil Division Trial Attorneys, David S. Silverbrand and Lauren A. Weeman; and with the assistance of Shelby L. Stuntz and Julie Koller, Attorneys, Department of Homeland Security, Customs and Border Protection.
Justice Department Settles Sexual Harassment Lawsuit Against Muskegon County, MichiganRead the Press Release
WASHINGTON - The Department of Justice announced that it has entered into a consent decree today with Muskegon County, Mich., that, if approved by the court, will resolve the Department’s lawsuit against the county alleging that a former employee was subjected to sexual harassment that caused a hostile work environment, in violation of Title VII of the Civil Rights Act of 1964. Title VII prohibits discrimination in employment on the basis of race, color, sex (including sexual harassment), national origin or religion.
The complaint, filed in December 2008 in U.S. District Court for the Western District of Michigan, alleges that Muskegon County violated Title VII by failing to take adequate remedial measures to remedy ongoing sexually harassing behavior perpetrated by the former employee’s coworker. According to the terms of the consent decree, Muskegon County will pay $120,000 in damages to the former female employee on whose behalf the United States filed the lawsuit. In addition, Muskegon County will modify its policies and procedures to provide clearer guidance to supervisors and employees regarding the handling and reporting of sexual harassment. Muskegon County also will provide equal employment opportunity training to all supervisory employees within the county’s circuit and district courts, where the conduct outlined in the underlying facts of the lawsuit took place. Muskegon County has advised the Justice Department that it has already begun implementing some of these corrective measures.
"The Department of Justice commends Muskegon County for working cooperatively to resolve this case without protracted litigation, and for taking positive steps to provide a workplace free of harassment for its employees," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division.
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 Memphis Police Officers Sentenced for Conspiracy to Violate Civil RightsRead the Press Release
WASHINGTON — Two former Memphis police officers were sentenced today in U.S. District Court in Memphis for their roles in a conspiracy to rob drug dealers, the Department of Justice announced.
Former Memphis police officer Antoine Owens, who in August 2007 pleaded guilty to one count of conspiracy to violate civil rights, was sentenced to 63 months in prison.
Alexander Johnson, a former Memphis police officer who pleaded guilty to one count of conspiracy to violate civil rights in April 2007, received a sentence of 30 months in prison and two years of supervised released.
Laterrica Woods, a civilian co-conspirator who pleaded guilty to one count of conspiracy to violate civil rights in September 2007, is scheduled to be sentenced on April 22, 2009.
Another former Memphis police officer, Harold McCall, is scheduled to be sentenced on March 23, 2009, after pleading guilty to one count of conspiracy to violate civil rights.
All four men admitted to conspiring with other former Memphis police officers, including Arthur Sease, who was tried and convicted in January 2009 of 44 counts including conspiracy to violate civil rights, conspiracy to distribute drugs, robbery, civil rights violations, drug distribution and firearms charges. Sease is scheduled to be sentenced on May 14, 2009.
Sease and his co-conspirators used their police authority to stop and detain drug dealers, often after Sease arranged a drug deal to lure a dealer to a particular location. They would then steal drugs and money from the dealers, and Sease would resell the stolen drugs. At Sease’s trial, the government introduced proof of 16 separate robberies, as well as one attempted robbery.
"Police officers are given tremendous authority and responsibility so that they can protect and serve the public trust," said Loretta King, Acting Assistant Attorney General of the Civil Rights Division. "Those who abuse that authority face serious consequences. The Civil Rights Division is committed to prosecuting all cases of official misconduct and to bringing these individuals to justice."
Assistant U.S. Attorney Steve Parker of the Western District of Tennessee and Trial Attorney Jonathan Skrmetti from the Civil Rights Division prosecuted the case.
The Civil Rights Division is committed to the vigorous enforcement of every federal criminal civil rights statute, such as those laws that prohibit unreasonable search and seizure, deprivation of property without due process of law, or other acts of misconduct by law enforcement and other government officials.
17 March 2009
South Florida Stock Trader Pleads Guilty to Market Manipulation SchemeRead the Press Release
WASHINGTON – A stock trader from Jupiter, Fla., pleaded guilty today to engaging in a market manipulation scheme involving several publicly traded companies, Acting Assistant Attorney General Rita M. Glavin of the Criminal Division announced.
Earlier today, Paul M. Gozzo, 33, pleaded guilty before U.S. District Judge Donald L. Graham in Miami to one count of conspiracy to commit securities fraud and one count of securities fraud. In his plea, Gozzo admitted to engaging in a market manipulation scheme with two co-conspirators for the purpose of artificially inflating the prices of several publicly traded stocks. Gozzo also admitted that he and his co-conspirators manipulated the stock price of several stocks by, among other things, creating the false appearance that there was a greater investor interest in the stocks than actually existed and by creating the false appearance that there was greater liquidity in the stocks than actually existed. In return for his assistance in manipulating the stock prices of these companies, Gozzo admitted that he received approximately $540,000.
According to the information contained in plea documents, Gozzo conspired with a purported investment banker, who owned large amounts of stock in several public companies, and the investment banker’s son to artificially increase the stock price of those companies. They did so, according to court documents, by creating the false appearance that there was a greater investor interest in the stock prices they were manipulating by providing support bids for shares of those companies and by engaging in coordinated trades with each other and others for the purpose of keeping the stock price artificially inflated and further inflating the stock price. This created the impression that there was a greater investor interest in the stock than truly existed, which allowed Gozzo and his co-conspirators to sell that stock at an artificially high price. Gozzo admitted that he and his co-coconspirators also bought and sold stock through numerous broker-dealers to make it appear that there were several investors trading in the stocks they were manipulating, when in fact there were not additional investors. In return for Gozzo’s assistance in manipulating the stock prices of these companies, the investment banker compensated Gozzo in the form of cash retainer payments and both free-trading and restricted stock.
Gozzo faces a maximum sentence of five years in prison on the conspiracy charge and five years in prison on the securities fraud charge. Sentencing is scheduled for June 5, 2009.
The case is being prosecuted by Assistant Chief Hank Bond Walther of the Criminal Division’s Fraud Section and is being investigated by the FBI’s Washington Field Office. Significant assistance was provided by the U.S. Securities and Exchange Commission.
Information
Justice Department Settles Allegations of Disability Discrimination Against Town of St. John, IndianaRead the Press Release
WASHINGTON – The Justice Department today announced a settlement resolving allegations that the town of St. John, Ind., violated the Fair Housing Act when it denied a petition for a zoning variance based on the disability of a prospective resident.
In a lawsuit filed in September 2007, the U.S. government charged that the town of St. John intentionally discriminated against persons with disabilities when it refused to provide a St. John resident a variance to allow one unrelated individual with multiple sclerosis to live with the resident in his home. The complaint also alleged that the requested variance was reasonable and necessary to afford prospective residents with disabilities an equal opportunity to use and enjoy a dwelling in a residential neighborhood in St. John. Under the town’s zoning regulations at that time, unrelated persons could not live together in a dwelling in a single-family district. After the town denied the variance, the resident filed a complaint with the U.S. Department of Housing and Urban Development (HUD), which referred the matter to the Department of Justice.
"Local governments have the right to enforce their zoning laws, but they cannot allow their zoning decisions to be influenced by discriminatory bias," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "The Department will continue to vigorously enforce the rights of persons with disabilities to live in homes of their choice."
"The path to diverse, inclusive communities begins with zoning," said Bryan Greene, General Deputy Assistant Secretary for Fair Housing and Equal Opportunity. "HUD works in partnership with the Department of Justice to respond to local government decisions that can sometimes exclude whole classes of persons from communities."
The settlement, which must still be approved by the court, requires the town to grant the requested variance, provide training on fair housing laws to town officials involved in making zoning and land-use decisions and provide periodic reports to the Justice Department. The town will also pay a $10,000 civil penalty to the United States.
The Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status. More information about the Civil Rights Division and the laws it enforces is available at http://www.usdoj.gov/crt. Individuals who believe that they may have been victims of housing discrimination can call the Housing Discrimination Tip Line (1-800-896-7743), email the Justice Department at [email protected], or contact HUD at 1-800-669-9777.
Jury Convicts Two Doctors and Two Medical Assistants in $5.3 Million Medicare Fraud ScamRead the Press Release
WASHINGTON – A federal jury in Miami today convicted two physicians and two medical assistants in connection with a $5.3 million Medicare fraud scheme, Acting Assistant Attorney General Rita M. Glavin of the Criminal Division and U.S. Attorney R. Alexander Acosta of the Southern District of Florida announced.
After a two-week trial in federal court in Miami, a jury found David Rothman, M.D., 66; Keith Russell, M.D., 65; Eda Marietta Milanes, 43; and Jorge Luis Pacheco, 50; guilty on all charged counts, including conspiracy to commit health care fraud and multiple counts of health care fraud for submitting claims to Medicare for unnecessary medications.
According to evidence presented at trial, the defendants worked as doctors and medical assistants at two Miami clinics, Medcore Group LLC (Medcore) and M&P Group of South Florida Inc. (M&P Group), that purported to specialize in the treatment of human immunodeficiency virus (HIV). Evidence at trial established that Rothman was the medical director for both Medcore and M&P Group between May 2004 and January 2006. Russell took over as medical director at M&P Group after January 2006. Pacheco and Milanes worked as medical assistants for Russell at M&P Group.
One of the owners of the clinics, Tony Marrero, testified at trial that the clinics were established for the sole purpose of defrauding Medicare. Marrero testified that the scheme was to submit claims for medically unnecessary HIV infusion and injection treatments. Evidence at trial showed that Medcore and M&P Group billed Medicare for $5,300,186 and were paid $2,511,387 during two years of operations. Marrero testified that the unnecessary medicines were not administered to patients, and that the clinics were only operated to create the appearance of legitimacy. Marrero stated that he had an arrangement with a pharmaceutical wholesale company, Lifecare Medical, to buy invoices showing the purchase of large amounts of medications, when only minor amounts were actually bought. Marrero; his wife, Belkis Marrero; his brother-in-law, Orlando Pascual; the owner of Lifecare Medical, Harold Sio; a patient recruiter and clinic employee, Alberto R. Gonzalez; and a medical assistant at Medcore, Luz Borrego; each previously pleaded guilty in connection with this scheme.
Borrego testified that she manipulated the patients’ blood samples at Medcore to ensure that lab results would appear to support the Medicare claims. Borrego stated that she would not give the medications ordered by Rothman because she knew the medications could harm the patients.
Trial testimony established that every patient who went to Medcore and M&P Group was paid a cash kickback of up to $200 per visit. The scheme relied upon 20 patients during the two-year period at both clinics. Four patients testified that they took kickbacks and never received any medication at the clinics. One patient testified that he used his payments from the clinics to support his cocaine addiction. Another patient testified that he did not have HIV, even though the clinics’ documents showed he was being infused with medication to treat HIV.
Evidence introduced at trial documented that Rothman worked at other Miami-area infusion clinics, which billed Medicare for more than $60 million between 2004 and the end of 2005. Trial evidence also established that Russell worked at Tendercare Medical Center (Tendercare), another fraudulent infusion clinic, with Pacheco and Milanes at the same time as M&P Group. Further, two of the patients who testified at trial received kickbacks from both Tendercare and M&P Group.
According to evidence presented at trial, Milanes was paid extra by Marrero at M&P Group to manipulate blood samples to justify the false claims. Pacheco worked directly for Marrero to determine what drugs would be falsely billed to Medicare through M&P Group. Trial testimony established that Pacheco was a physician in Cuba prior to coming to the United States.
On March 14, 2009, while trial was ongoing, Pacheco attempted to flee the United States, according to evidence presented in court. He was apprehended heading south on Krome Avenue in Miami-Dade County with $12,600 in cash and a false Florida driver’s license in the name of Jose Luis Falcon. Evidence presented to the court proved that prior to being apprehended, Pacheco cut off his ankle monitor in violation of the terms of his pre-trial release. Documents seized from Pacheco at the time of his apprehension contained multiple contacts in the Dominican Republic. According to evidence presented at court, Pacheco stated to officers that he was "going fishing." Judge Ungaro revoked his bond and remanded him into custody for the remainder of the trial.
"The jury’s verdict shows that medical professionals, trusted to provide necessary care and medicine to their legitimate patients, can and will be held accountable when they defraud the Medicare program," said Acting Assistant Attorney General Rita M. Glavin of the Criminal Division. "The Department of Justice will continue our vigorous pursuit of those who steal from Medicare for their own personal benefit."
"The Medicare program relies on physicians to be the first line of defense against fraud," said Bernardo Rodriguez, Acting Special Agent-in-Charge of the Miami Office of Inspector General, Department of Health and Human Services. "As in this case, when doctors shirk that responsibility and steal from Medicare, we have to prosecute them to the fullest extent of the law."
This case was investigated by the FBI and the Department of Health and Human Services (HHS), Office of Inspector General, Office of Investigations. The Homestead, Fla., Police Department, along with the FBI and HHS, were critical in the apprehension of Pacheco during his attempted flight during trial.
Pacheco and Milanes were remanded into custody following the verdicts. Rothman and Russell were required to post bond and are under house arrest until sentencing. Rothman faces a maximum of 50 years in prison. Russell, Milanes and Pacheco each face a maximum of 30 years in prison. Sentencing for all defendants has been scheduled for June 26, 2009.
The case was prosecuted by Deputy Chief Kirk Ogrosky, Assistant Chief John S. (Jay) Darden and Trial Attorney Charles D. Reed of the Criminal Division’s Fraud Section, with the investigative assistance of HHS and the FBI. The case was brought as part of the Medicare Fraud Strike Force (MFSF), supervised by the Criminal Division’s Fraud Section and U.S. Attorney Acosta of the Southern District of Florida. Since the inception of MFSF operations, federal prosecutors have indicted 106 cases with 192 defendants in both Los Angeles and Miami. Collectively, these defendants fraudulently billed the Medicare program for more than half a billion dollars.
Former Accounting Firm Vice Chairman/Board Member Pleads Guilty to Tax Fraud Related to Tax SheltersRead the Press Release
WASHINGTON – Adrian Dicker, a United Kingdom chartered accountant and former vice chairman and board member at a major international accounting firm, pleaded guilty today to conspiring with certain tax shelter promoters to defraud the United States in connection with tax shelter transactions involving clients of the accounting firm and the law firm Jenkens & Gilchrist (J&G), the Justice Department and Internal Revenue Service (IRS) announced. In the hearing before U.S. Magistrate Judge Theodore H. Katz in the Southern District of New York, Dicker, who is a resident of Princeton Junction, N.J., also pleaded guilty to tax evasion in connection with a multi-million dollar tax shelter that Dicker helped sell to a client of the accounting firm.
According to the information and the guilty plea, between 1995 and 2000, Dicker was a partner in the New York office of the accounting firm (which he identified during his guilty plea as BDO Seidman) and which maintained offices in among other places, Chicago and Los Angeles. From early 1999 through October 2000, Dicker was on the firm’s Board of Directors, and through October 2003 he served as a retired partner director. From 1998 until 2000, Dicker was one of the leaders of the firm’s "Tax Solutions Group" (TSG), a group led by the firm’s chief executive officer, Dicker and another New York-based tax partner. The activities of the TSG were devoted to designing, marketing, and implementing high-fee tax strategies for wealthy clients, including tax shelter transactions.
According to the information and the guilty plea, Dicker and the other two TSG managers used a bonus structure that handsomely rewarded the accounting firm personnel involved in the design, marketing, and implementation of the TSG’s transactions, including: the individual who referred the client to TSG personnel; the TSG member who pitched and closed the sale; other TSG members; and TSG management. From July 1999, Dicker, the CEO, and the other TSG manager earned and shared equally 30% of the net profits of the TSG. Dicker earned approximately $6.7 million in net TSG profits, as well as salary and bonuses between 1998 and 2000. In addition, the CEO of the firm doled out additional bonuses from the profits earned as a result of the sale of the tax shelter products. Moreover, the firm made the sale of the tax shelter products a focal point of its aggressive "value added" product promotion activities, using a "Tax $ells" logo and other marketing hype to induce employees to generate additional tax shelter sales.
According to the information and the guilty plea, while serving as a manager of the TSG, Dicker, along with other TSG partners, engaged in the design, marketing, and implementation of two different tax shelter transactions with the Chicago office of the law firm of Jenkens & Gilchrist, as well as an international bank with its U.S. headquarters in New York. As a member of TSG and the accounting firm’s tax opinion committee – which reviewed the tax opinions issued in connection with tax shelter transactions sold by the accounting firm and J&G – Dicker knew that the tax shelter transactions he helped vet and sell would be respected and allowed by the IRS only if the client had a substantial non-tax business purpose for entering the transaction, and the client had a reasonable possibility of making a profit through the transaction. Dicker and his co-conspirators knew and understood that the clients entering into the tax shelter transactions being marketed and sold with J&G had neither a substantial non-tax business purpose nor a reasonable possibility of earning a profit, given the large amount of fees being charged by the accounting firm and J&G to enter the transaction. Those fees were set by the co-conspirators as a percentage of the tax loss being sought by the tax shelter clients. Dicker also knew that the clients who purchased the tax shelter had no non-tax business reasons for entering into the transactions and their pre-planned steps.
According to the information and the guilty plea, in order to make it appear that the tax shelter clients of Dicker, other TSG members, and J&G had the requisite business purpose and possibility of profit, Dicker and his co-conspirators reviewed and approved the use of a legal opinion letter issued by J&G that contained false and fraudulent representations purportedly made by the clients about their motivations for entering into the transactions. In addition, Dicker and his co-conspirators created and used, or approved of the creation and use of, other documents in the transactions that were false, fraudulent, and misleading in order to paint a picture for the IRS that was patently untrue – that is, that the clients had a legitimate non-tax business purpose for entering the transaction and executing the preplanned steps of the transaction. Dicker also admitted during his plea that TSG members created and placed into client files certain paperwork that falsely conveyed fabricated business purposes and rationales for clients entering into the shelters. The false paperwork was created to mislead and defraud the IRS.
Dicker and his co-conspirators caused the clients to file false and fraudulent tax returns reporting the tax benefits flowing from the shelter transactions. In total, the fraudulent tax shelters implemented by Dicker, the accounting firm, J&G, and the financial institution that assisted them, caused clients to report over $1 billion in false and fraudulent tax losses, resulting in the evasion of over $200 million.
Dicker admitted during the plea proceeding that he and other TSG members pitched tax shelter transactions to clients as a way for the client to eliminate the taxes they were facing from taxable events, such as the sale of businesses or stock. Dicker assisted in selling a particular client a tax shelter known as the "short option" transaction, for which the client was charged approximately $133,000 by the accounting firm and $201,000 by J&G in order to produce losses to offset the taxes due to the IRS on the $6.7 million the client received in connection with the sale of certain stock. The short option transaction of the client, however, had the reasonable possibility only to net a profit of $67,000 – the cost the client was required to pay to Bank A for the options transaction. Thus, there could be no profit to the client. The client ulitimately filed tax returns with the IRS reporting false and fraudulent losses purportedly generated from his short options shelter, thus evading a substantial amount of taxes that he would otherwise have had to pay.
According to the information and the guilty plea, the client ultimately filed tax returns with the IRS reporting false and fraudulent losses purportedly generated from his short options shelter, thus evading a substantial amount of taxes that he would otherwise have had to pay.
Dicker faces a maximum sentence of five years in prison on the conspiracy charge and five years in prison on the tax evasion charge. On each count, the maximum fine is the greatest of $250,000 or twice the gross gain or gross loss from the offense. Restitution to the IRS can be imposed on all the charges.
Co-conspirator Michael Kerekes, a principal of BDO Seidman and also a former member of BDO’s TSG and tax opinion committee, pleaded guilty on Feb. 13, 2009, to similar conspiracy and tax evasion charges.
Dicker is scheduled to be sentenced on Dec. 11, 2009, by U.S. District Judge Gerald E. Lynch.
John A. DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division, commended the IRS agents who investigated the case, as well as Tax Division trial attorney Nanette L. Davis and Assistant U.S. Attorney Stanley Okula of the Southern District of New York, who are prosecuting the case.
16 March 2009
U.S. Department of Justice Makes Available $1 Billion in Recovery Act Funds for COPS ProgramRead the Press Release
WASHINGTON – U.S. Attorney General Eric Holder announced today that the Department of Justice is now accepting applications for $1 billion in Recovery Act Funds for the Community Oriented Policing Services (COPS) Program. Approximately 5,500 law enforcement officer jobs will be created or saved in law enforcement agencies across the country through funding provided by the Department of Justice.
"This investment of Recovery Act funds will pump new resources into our communities through a program with a proven track record," said U.S. Attorney General Holder. "We will not just create and preserve jobs, but also increase community policing capacity and crime-prevention efforts."
Funds awarded to law enforcement agencies by the COPS Office provide 100 percent of entry-level salary and benefits for each officer for three years. All jurisdictions that receive funding must plan to retain COPS-funded officer positions for at least one year after the grant ends.
The COPS Office is a federal agency responsible for advancing community policing nationwide. Since 1995, COPS has awarded more than $10 billion to advance community policing, including grants awarded to more than 13,300 state, local and tribal law enforcement agencies to fund the hiring and redeployment of nearly 117,000 officers. In addition to funding law enforcement positions, the Office of Community Oriented Policing Services has been the catalyst for innovations in community policing, and the broad implementation of this effective law enforcement strategy. Currently, departments that employ community policing serve 87 percent of American communities.
The American Recovery and Reinvestment Act of 2009 (H.R.1) includes $4 billion in Department of Justice grant funding to enhance state, local, and tribal law enforcement efforts, including the hiring of new police officers, to combat violence against women, and to fight internet crimes against children. The Justice Department also recently announced the allocation of $2 billion in Recovery Act funding for state and local law enforcement and criminal justice assistance through the Edward Byrne Justice Assistance Grant (JAG) Program. Similar to the JAG awards, COPS Recovery Act funds can also be used to hire new officers or rehire recently laid off officers, fill unfunded vacancies and help prevent scheduled layoffs within law enforcement agencies.
Unlike JAG funds, COPS funds are allocated directly to the local level governments and law enforcement agencies and provide a three-year period of funding. COPS hiring grants will be awarded through a competitive application process that will take into account the impact of the current economic crisis on applicant agencies, as well as crime statistics and plans for initiating and advancing community policing. The procedure for allocating JAG grants is based on a formula of population and violent crime statistics, in combination with a minimum allocation to each state and territory.
Attorney General Holder's Remarks at the National League of Cities Conference.
Justice Department Seeks to Shut Down Florida Tax PreparerRead the Press Release
WASHINGTON – The United States has sued a Port Richey, Fla., tax preparer, Frank Lighty, and his tax-preparation firm – Lighty & Associates Inc. – seeking to bar them permanently from the tax preparation business, the Justice Department announced today. The civil injunction suit was filed in Tampa with the U.S. District Court for the Middle District of Florida.
According to the government complaint, Lighty prepares federal income tax returns for hundreds of individual customers. The complaint alleges that Lighty claims false or inflated deductions for medical expenses, charitable contributions and other items. In one example cited in the complaint, Lighty falsely claimed almost $13,000 in charitable contributions when receipts that his customers had given him showed charitable contributions of only $2,500. According to the complaint the tax loss from Lighty’s misconduct could be as much as $6 million.
The complaint also alleges that Lighty falsely represented to customers that he is a former IRS agent and has a Masters Degree in Tax Administration.
"Tax preparer fraud is a serious problem," said John A. DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division. "The IRS and Justice Department are committed to putting fraudulent preparers out of business. Taxpayers should choose their preparer carefully and review their return closely before signing, to ensure it is correct."
In the past decade, the Justice Department has obtained injunctions against more than 380 tax return preparers and tax-fraud promoters. Information about these cases is available on the Justice Department Web site.
Justice Department Files Lawsuit Against Indianapolis Law Firm<br /> to Enforce the Employment Rights of Indiana Army National GuardsmanRead the Press Release
WASHINGTON — The Department of Justice today filed a lawsuit in U.S. District Court in Indianapolis on behalf of Mathew B. Jeffries, an Indiana National Guard member, against the Indianapolis law firm of Mike Norris & Associates, alleging that the law firm refused to promptly reemploy Jeffries in violation of the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA).
Subject to certain limitations, USERRA requires that individuals who leave their jobs to serve in the U.S. military be timely reemployed by their civilian employers in the same position, or in a comparable position to the position that they would have held had they not left to serve in the military.
In February 2003, Jeffries, a staff attorney with Mike Norris & Associates, was called to active duty and deployed to serve in Operation Enduring Freedom in Iraq. Upon his completion of active duty in April 2004, Jeffries contacted Mike Norris & Associates to seek reemployment. The firm refused to reemploy him, so Jeffries filed a complaint with the Department of Labor’s Veterans’ Employment and Training Service (VETS). VETS investigated the matter, determined that Jeffries’ claim had merit and, upon completion of conciliation efforts, referred the matter to the Department of Justice.
"The Uniformed Services Employment and Reemployment Rights Act protects men and women from being disadvantaged in their civilian careers because of their service in the armed forces," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "The Civil Rights Division is committed to vigorously enforcing federal laws that protect the employment rights of men and women who are serving in the military."
The Civil Rights Division of the Department of Justice has given a high priority to the enforcement of service members’ rights under USERRA. Additional information about USERRA can be found on the Justice Department Web site: www.servicemembers.gov and www.usdoj.gov/crt/emp.
Justice Department Asks Court to Close Georgia Tax Preparation Firms<br /> Allegedly Involved in Fuel Credit Tax ScamRead the Press Release
WASHINGTON - The United States has asked a federal court in Savannah, Ga., to permanently bar Ophelia Kelley of Vidalia, Ga., from preparing federal income tax returns for others, the Justice Department announced today. According to the government complaint, Kelley operates two return preparation firms in Vidalia – Kelley Tax Service, and City and Country Girl Tax Service.
The civil injunction suit alleges that Kelley, through her businesses, has repeatedly and intentionally engaged in fraudulent conduct by claiming improper deductions and tax credits for customers. According to the complaint, Kelley allegedly claims bogus fuel tax credits for customers who are not entitled to the credit. The fuel credit is available only to taxpayers who operate farm equipment or off-highway business vehicles. It is not available for trucks driven on highways.
The complaint further alleges that Kelley fraudulently claims the credit for truck drivers, claiming absurdly large credits by falsely reporting purchases of huge quantities of fuel where, in most cases, the cost of the fuel purportedly purchased was greater than the customer’s annual income. Fuel credit scams were on last year’s IRS 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.
According to the complaint Kelley also fabricates false deductions for such things as medical expenses and charitable gifts. The complaint also says that Kelley failed to sign at least 100 tax returns she prepared for customers. Paid tax preparers are required by law to sign all returns they prepare.
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.
Iranian Man and His Company Charged in International Scheme to Supply Iran with Sensitive U.S. TechnologyRead the Press Release
WASHINGTON – An Iranian citizen and his Tehran business have been charged with purchasing helicopter engines and advanced aerial cameras for fighter bombers from U.S. firms and illegally exporting them to Iran using companies in Malaysia, Ireland and the Netherlands. Among the alleged recipients of these U.S. goods was an Iranian military firm that has since been designated by the United States for being owned or controlled by entities involved in Iran’s nuclear and ballistic missile program.
The charges against Hossein Ali Khoshnevisrad, 55, and his Iranian company, Ariasa, AG (Ariasa), were announced today by Matthew G. Olsen, Acting Assistant Attorney General for National Security; Jeffrey A Taylor, U.S. Attorney for the District of Columbia; Kevin A. Delli-Colli, Acting Assistant Secretary for Export Enforcement, U.S. Department of Commerce; Joseph Persichini, Jr., Assistant Director in Charge, FBI Washington Field Office; Mark X. McGraw, Special Agent in Charge, Washington Field Office, U.S. Immigration and Customs Enforcement, Department of Homeland Security; and Special Agent in Charge Edward Bradley of the Defense Criminal Investigative Service Northeast Field Office.
Khoshnevisrad was arrested on Saturday, March 14, after he arrived at San Francisco International Airport on a flight from abroad. He made his initial appearance earlier today in federal court in San Francisco.
A criminal complaint filed under seal in federal court in the District of Columbia in August 2008 and unsealed today, charges the defendants each with two counts of unlawfully exporting U.S. goods to Iran and two counts of conspiracy to unlawfully export U.S. goods to Iran in violation of the International Emergency Economic Powers Act and the Iranian Transactions Regulations. If convicted, Khoshnevisrad faces a maximum sentence of 20 years in prison on each of the first three counts of the complaint and a maximum sentence of five years in prison on the fourth count of the complaint.
According to the affidavit in support of the complaint, from January 2007 through December 2007, Khoshnevisrad and Ariasa caused and instructed a trading company in Ireland to purchase several model 250 turbo-shaft helicopter engines from Rolls-Royce Corp. in Indiana. The model 250 engine was originally designed for a U.S. Army light observation helicopter and has since been installed in numerous civil and military helicopters. In 2007, the Irish trading company purchased 17 of the model 250 helicopter engines from Rolls-Royce for $4.27 million, falsely stating that the helicopters would be used by the Irish trading company or by fake companies.
The affidavit alleges that these helicopter engines were then exported from the United States to a purported "book publisher" in Malaysia, at a Malaysian freight forwarding company address, and later shipped on to Iran. Among the recipients in Iran was the Iran Aircraft Manufacturing Industrial Company, known by its Iranian acronym as HESA.
On Sept. 17, 2008, the Treasury Department designated several Iranian weapons of mass destruction proliferators and members of their support networks pursuant to Executive Order 13382. Among the entities designated was HESA, which the Treasury Department determined was controlled by Iran’s Ministry of Defense and Armed Forces Logistics and has provided support to the Iranian Revolutionary Guard Corps.
In addition to the alleged illegal export of helicopter engines, the affidavit alleges that Khoshnevisrad and Ariasa also caused to be exported to Iran several aerial panorama cameras from the United States. These specific cameras were designed for the U.S. Air Force for use on bombers, fighters and surveillance aircraft, including the F-4E Phantom fighter bomber, which is currently used by the Iranian military.
According to the affidavit, in 2006, Khoshnevisrad instructed a Dutch aviation parts company to place an order for these cameras with a U.S. company located in Pennsylvania and to ship them to an address in Iran.
According to the affidavit, the Dutch company ordered the aerial panorama cameras from the Pennsylvania firm, falsely stating that the Netherlands would be the final destination for the cameras. In an email to the Dutch company, Khoshnevisrad provided the following instructions: "Regarding the end user as you know USA will not deliver to Iran in any case. You should give them an end user by yourself."
In August 2006, a representative of the Dutch company notified Khoshnevisrad that he had received the cameras from the United States and that the cameras would soon be shipped to Tehran aboard an Iran Air flight, according to the affidavit.
Despite these alleged transactions, neither Khoshnevisrad nor Ariasa has ever sought, obtained or possessed any authorization or license from the U.S. Department of Treasury to export any goods or technology to Iran, according to the affidavit.
This investigation was conducted by special agents from the Department of Commerce’s Bureau of Industry Security, Office of Export Enforcement; the Federal Bureau of Investigation; the Department of Homeland Security’s U.S. Immigration and Customs Enforcement; and the Defense Criminal Investigative Service. U.S. Customs and Border Protection provided assistance in the arrest.
The case is being prosecuted by Assistant U.S. Attorneys Denise Cheung and Ann Petalas of the U.S. Attorney’s Office for the District of Columbia, and Trial Attorneys Johnathan Poling and Ryan Fayhee of the Counterespionage Section of the Justice Department’s National Security Division. Local coordination is being provided by Assistant U.S. Attorney Candace Kelly of the U.S. Attorney’s Office for the Northern District of California.
The details contained in a criminal complaint are mere allegations. All defendants are presumed innocent unless and until proven guilty in a court of law.
General Maritime Management (Portugal) Fined $1 Million for Enviromental CrimesRead the Press Release
WASHINGTON— A federal judge in Corpus Christi, Texas, has sentenced General Maritime Management (Portugal), the operator of a fleet of tanker vessels, and two crewmembers of the motor tanker Genmar Defiance for making false statements to the U.S. Coast Guard and failing to maintain an accurate Oil Record Book designed to prevent pollution of the world’s oceans as required by United States and international law, the Justice Department announced.
The court sentenced General Maritime Management (Portugal) LDA, late Friday, to pay a $1 million fine. In addition, the company was sentenced to serve five years of probation. Special conditions of the probation require the company to rehire the whistleblowers if they reapply for employment; submit monthly reports, under oath, regarding compliance; and allow a court appointed official to perform three audits of each vessel and three audits of its shore side office during the probation period. Violations of the terms of probation could result in one or more of the company’s ships being banned from U.S. territorial waters during the term of the probation.
Chief Engineer Antonio Rodrigues was previously sentenced for the same violations on Feb. 10, 2009 to three months of confinement in a half-way house, a $500 fine, a special assessment of $200 and five years of probation. First Engineer Cavadas was likewise sentenced on Feb. 10, 2009 to six months of confinement in a half-way house, a $500 fine, a special assessment of $200 and five years of probation.
During the hearing, the court awarded $250,000 to the five whistleblowers to be divided on a proportional basis for their actions and cooperation.
The company and two crewmembers were found guilty on all counts by a jury on Nov. 25, 2008. The trial and sentencing were presided over by the Honorable Janis Graham Jack, U.S. District Judge for the Southern District of Texas.
Engine room operations on-board large oceangoing vessels such as the Genmar Defiance generate large amounts of waste oil. International and U.S. law prohibit the discharge of waste oil above 15 parts per million oil to water; which can be achieved by the proper operation of an oil-water separator. The law also requires that all of the oil transferred onto, off of, or between tanks within a ship be recorded in the Oil Record Book so all the oil on a ship can be accounted for when the ship is inspected by the U.S. Coast Guard and other port state control authorities around the world.
The criminal convictions were related to events occurring on board the Genmar Defiance during a voyage to Corpus Christi in November 2007. On Nov. 24, 2007, engine room crew members were directed by First Engineer Cavadas to assist in hooking-up a flexible hose between the ship’s bilge pump and the overboard discharge valve bypassing the vessel’s pollution prevention equipment—its oil-water separator—and allowed crewmembers to pump the contents of the bilge tank directly into the Straits of Florida and the Gulf of Mexico.
Further, on Nov. 26, 2007, one of the crew members working in the ship’s engine room was ordered by First Engineer Cavadas and Chief Engineer Rodrigues to assist in connecting a hose from the vessel’s fresh water supply to the oil content meter on the ships oil-water separator. The connection allowed the engineers to “trick” the oil content meter and prevent it from shutting a valve that would re-circulate oily water to the bilge tank where it would be treated through the oil-water separator before being discharged overboard. By tricking the oil content meter, the oily water was permitted to be discharged directly overboard in violation of international law. Two engine room crewmen secretly photographed the illegal connection and provided the photographs to the Coast Guard during a boarding of the vessel on Nov. 28, 2007 while the Genmar Defiance was docked at the Valero refinery.
“This significant criminal fine along with the maximum term of probation requiring audits and regular reporting sends a strong signal that companies will be punished severely, will be required to prove to the court that they have learned their lesson and taken actual steps to reform their corporate practices and are complying with the law,” said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “Illegal pollution from ships is a continuing problem and the Justice Department will continue to work with the Coast Guard and the Environmental Protection Agency to prosecute those who violate our nation’s laws designed to protect the environment and candor with investigators.”
“The Coast Guard places a high priority on its stewardship of the marine environment,” said Captain John H. Korn, Chief of Staff of the Eighth Coast Guard District. “We appreciate the dedicated efforts of the Department of Justice; the successful investigation and prosecution of cases like the GenMar Defiance takes considerable coordination among interagency partners. Efforts such as this are key to protecting the environment for all.”
“The oceans must be protected and commercial vessels must operate safely and lawfully,” said Warren Amburn, Special Agent in Charge for EPA’s Criminal Investigation Division in Dallas. “Today's sentences send a clear message that those who violate the law and pollute the seas will be prosecuted.”
This case was investigated by the U.S. Coast Guard, and the Environmental Crimes Task Force, which includes the U.S. Environmental Protection Agency, the Texas Commission on Environmental Quality Investigations Division, and the Texas Parks and Wildlife Department. The case was prosecuted by the Justice Department’s Environmental Crimes Section.
13 March 2009
U.S. Border Patrol Agent Indicted on Federal Civil Rights Charge for Assault in Federal Detention FacilityRead the Press Release
WASHINGTON – A U.S. Border Patrol agent has been indicted by a federal grand jury in Tucson, Ariz., on federal civil rights charges related to an alleged assault on a detainee at a federal detention facility, announced Acting Assistant Attorney General Loretta King of the Civil Rights Division and U.S. Attorney for the District of Arizona Diane J. Humetewa.
The two-count indictment, returned on March 11, 2009, alleges that on May 10, 2006, Eduardo Moreno violated the civil rights of a federal detainee by assaulting and causing bodily injury to the individual while Moreno was on duty at the U.S. Border Patrol processing facility in Nogales, Ariz. The indictment also alleges that Moreno made false entries in a U.S. Customs and Border Protection memorandum that described the incident.
If convicted, Moreno faces a maximum prison sentence of 15 years and a fine of $500,000. An indictment is merely an accusation and the defendant is presumed innocent unless proven guilty.
The FBI and U.S. Immigration and Customs Enforcement’s Office of Professional Responsibility are investigating this matter. The case is being jointly prosecuted by Assistant U.S. Attorney Sandra M. Hansen of the U.S. Attorney’s Office for the District of Arizona and Trial Attorney Edward Chung of the Civil Rights Division.
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 or other government officials.
Justice Department Sues West Memphis, Ark.Landlords for Sexual HarassmentRead the Press Release
WASHINGTON The Justice Department today filed a lawsuit against Bobby L. Hurt, the former property manager for numerous mobile homes in and around West Memphis, Ark., alleging a pattern or practice of sexual harassment. The lawsuit also names Bobby Hurt's wife, Sue Hurt, as a defendant.
The complaint, filed in U.S. District Court in the Eastern District of Arkansas, alleges that Bobby Hurt, while providing property management services, entered the dwellings of female tenants without permission or notice, touched female tenants in an unwelcome sexual manner, made verbal sexual advances, and threatened and took steps to evict female tenants when they refused or objected to his sexual advances. The complaint also alleges that, while engaging in this harassment, Bobby Hurt acted on behalf of Sue Hurt, his wife and the former owner of the mobile homes.
"A woman should not have to experience unwelcome verbal and physical sexual advances in her own home from her housing provider," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "The Justice Department will vigorously prosecute any landlord who engages in sexual harassment in violation of the Fair Housing Act."
Today's lawsuit seeks monetary damages to compensate the victims, civil penalties and a court order barring future discrimination. The U.S. Attorney's Office for the Eastern District of Arkansas, in Little Rock, will work with the Justice Department's Civil Rights Division in litigating the lawsuit.
Fighting illegal housing discrimination is a top priority of the Justice Department. More information about the Civil Rights Division and the laws it enforces is available at http://www.usdoj.gov/crt. Individuals who have information related to this lawsuit should contact the Justice Department at 1-800-896-7743, mailbox 92. Individuals who believe that they may have been victims of housing discrimination unrelated to this lawsuit can call the Housing Discrimination Tip Line at 1-800-896-7743, mailbox 1, email the Justice Department at [email protected], or contact the U.S. Department of Housing and Urban Development at 1-800-669-9777.
The complaint is an allegation of unlawful conduct.
Justice Department Files Lawsuit Against Americraft Carton Inc., to Enforce the Employment Rights of Michigan Army National GuardsmanRead the Press Release
WASHINGTON - The Department of Justice announced today that it has filed a lawsuit on behalf of David D. Sweatt, a Michigan Army National Guard member currently serving in Iraq, against Americraft Carton Inc. (Americraft), alleging violations of the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA).
USERRA was enacted in 1994 to protect service members from being disadvantaged in their civilian careers due to serving in the uniformed services. Subject to certain limitations, USERRA requires that individuals who leave their jobs to serve in the U.S. armed forces be timely reemployed by their civilian employers in the same positions, or comparable positions, as the positions that they would have held if they had not left to serve in the military. USERRA also prohibits discrimination in employment based on an employee’s performance, application, or obligation to perform military service.
The complaint, filed in U.S. District Court in Grand Rapids, Mich., alleges that Americraft violated USERRA by discriminating against Sweatt, by failing or refusing to reemploy him in his previous position as a production worker when he returned from his National Guard duty, or, in the alternative, by terminating him without cause. After returning home from National Guard duty, Sweatt was later deployed to Iraq, where he is currently serving.
"Employers must not evade their responsibilities to employees who serve in the uniformed services," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "The Civil Rights Division works to uphold the rights of those who serve in the military to be free from discrimination and other violations of USERRA."
The Civil Rights Division has given a high priority to the enforcement of service members’ rights under USERRA. Additional information about USERRA can be found on the Justice Department Web site at: http://www.servicemembers.gov and www.usdoj.gov/crt/emp.
Jury Convicts Former Social Worker of Defrauding the Department of Veterans Affairs and Obstructing JusticeRead the Press Release
WASHINGTON – A former Department of Veterans Affairs (VA) social work associate was convicted yesterday by a jury on four counts of honest services mail fraud, violating the criminal conflict of interest statute and making a false statement to agency officials, Acting Assistant Attorney General Rita M. Glavin and U.S. Attorney David E. Nahmias of the Northern District of Georgia announced.
On Nov. 14, 2006, Bridgette L. Davidson, 37, and her ex-boyfriend, Darrick O. Frazier, 33, both of Atlanta, were charged in a six-count indictment alleging that the two created and engaged in a scheme to defraud the VA of Davidson’s honest services. Davidson was also charged with one count of violating the conflict of interest statue and one count of making a false statement to VA officials investigating the fraudulent scheme. On Sept. 2, 2008, Frazier pleaded guilty to one count of honest services mail fraud and entered into a plea agreement with the government. In December 2008, he was sentenced to twelve months and one day in prison and ordered to pay $20,200 in restitution.
According to court documents, from September 2000 through September 2002, Davidson was employed as a social work associate with the Atlanta VA Medical Center. Among her duties, Davidson was entrusted with finding suitable housing and living arrangements for mentally ill and disabled military veterans. According to evidence presented at trial, rather than place the veterans entrusted to her care in independently owned and licensed assisted living facilities, from November 2001 through mid-April 2002, Davidson, assisted by Frazier, secretly rented a home in Marietta, Ga., a city located several miles northwest of Atlanta, to house the mentally ill and disabled military veterans in exchange for monthly federal subsidy payments. During this time, trial evidence showed that Davidson falsely represented to VA officials and to the military veterans’ legal guardians and custodians that the facility was an independently owned personal care home suitable to house and care for the veterans. Evidence at trial showed that Davidson and Frazier used the rental income obtained from the veterans housed at the facility to pay some of the rent, utilities and related expenses on the rental property, and then kept the excess revenue for their own personal benefit.
Evidence at trial revealed that in April 2002, a veteran died in the home and the facility was shut down. The VA launched an internal investigation into Davidson’s connection to the facility. When interviewed under oath by VA officials, trial testimony proved that Davidson falsely denied that she had any ownership or financial interest in the personal care home she and Frazier secretly owned and operated.
At sentencing, Davidson faces a maximum sentence of 26 years in prison and a $250,000 fine on each count, as well as $23,400 in restitution. A sentencing date has not yet been scheduled by U.S. District Judge Richard W. Story.
The case is being prosecuted by Trial Attorney Armando O. Bonilla of the Criminal Division’s Public Integrity Section, headed by Section Chief William M. Welch II, and Assistant U.S. Attorney Teresa D. Hoyt of the Northern District of Georgia. The case is being investigated by the VA Office of Inspector General.
Director of Singapore Firm Pleads Guilty to Illegally Exporting Controlled Aircraft Components to IranRead the Press Release
BROOKLYN, N.Y. – Laura Wang-Woodford, a U.S. citizen who served as a director of Monarch Aviation Pte, Ltd. ("Monarch"), a Singapore company that imported and exported military and commercial aircraft components for more than 20 years, pled guilty today in federal court in Brooklyn to conspiring to violate the U.S. trade embargo by exporting controlled aircraft components to Iran.
The guilty plea was announced by Benton J. Campbell, United States Attorney for the Eastern District of New York, Matthew G. Olsen, Acting Assistant Attorney General for National Security, Kevin Delli-Colli, Acting Assistant Secretary of Commerce for Export Enforcement, and John Torres, Acting Assistant Secretary of Homeland Security for U.S. Immigration and Customs Enforcement.
Wang-Woodford was arrested on Dec. 23, 2007, at San Francisco International Airport after arriving on a flight from Hong Kong, and has remained incarcerated since then. She and her husband, Brian D. Woodford, a U.K. citizen who served as chairman and managing director of Monarch, were originally charged in a 20-count indictment returned in the Eastern District of New York on Jan. 15, 2003. Brian Woodford remains a fugitive. A superseding indictment charging Wang-Woodford with operating Jungda International Pte. Ltd ("Jungda"), a Singapore-based successor to Monarch, was returned on May 22, 2008.
According to the superseding indictment, between January 1998 and December 2007, the defendants exported controlled U.S. aircraft parts from the United States to Monarch and Jungda in Singapore and Malaysia and then re-exported those items to companies in Tehran, Iran, without obtaining the required U.S. government licenses. As part of the charged conspiracy, the defendants falsely listed Monarch and Jungda as the ultimate recipients of the parts on export documents filed with the U.S. government. The aircraft parts illegally exported to Iran include aircraft shields, shears, "o" rings, and switch assemblies. The superseding indictment further charged that the defendants arranged for the illegal export of U.S. military aircraft components, designed for use in Chinook military helicopters, to Monarch in Singapore.
At the time of her arrest in San Francisco, Wang-Woodford possessed catalogues from a Chinese company, the China National Precision Machinery Import and Export Corporation ("CPMIEC"), containing advertisements for military technology and weaponry. The products advertised included surface-to-air missile systems and rocket launchers. CPMIEC has been sanctioned by the United States Treasury Department, Office of Foreign Assets Control, based, in part, on CPMIEC’s history of selling military hardware to Iran. All United States persons and entities are prohibited from engaging in business with CPMIEC.
As a result of her guilty plea, Wang-Woodford faces a maximum sentence of five years incarceration and a fine of up to $250,000. In addition, in conjunction with her guilty plea Wang-Woodford agreed to forfeit $500,000 to the United States Treasury Department.
"By illegally shipping U.S. military components to Iran, Laura Wang-Woodford pursued profits at the expense of the security of her country and her fellow citizens," said United States Attorney Campbell. "We will utilize all resources at our disposal to prevent the dangerous and illegal export of our military technology." Mr. Campbell thanked the Department of Commerce Bureau of Industry and Security (BIS) and the Department of Homeland Security, U.S. Immigration and Customs Enforcement (ICE), the agencies responsible for conducting the government’s investigation.
"As today’s guilty plea demonstrates, those who provide American military technology to state sponsors of terror will be held accountable for their actions. Keeping sensitive weapons components and other restricted technology from falling into the wrong hands is a top priority for the Justice Department," said Acting Assistant Attorney General for National Security Olsen.
"Ms. Woodford, through her company Monarch Aviation, was one of the largest diverters of U.S. origin aircraft parts to Iran," said Acting Assistant Secretary of Commerce for Export Enforcement Delli-Colli. "Her conviction and sentencing should amplify the U.S. Government’s resolve to combat illegal transshipment wherever it occurs."
"The illegal export of U.S. military technologies through deception poses a threat to the national security of the U.S. and to the men and women who serve in our armed forces, said Acting Assistant Secretary of Homeland Security for U.S. Immigration and Customs Enforcement Torres. "Today’s guilty plea serves as an example of how ICE’s counter proliferation investigations and our federal law enforcement partners aggressively pursue those who violate U.S. arms control laws and ensure sensitive U.S. military equipment does not fall in the wrong hands, especially while our country is at war."
The government’s case is being prosecuted by Assistant United States Attorneys Daniel S. Silver, Cristina M. Posa, and Claire Kedeshian.
Department of Justice Withdraws Enemy Combatant Definition for Guantanamo DetaineesRead the Press Release
In a filing today with the federal District Court for the District of Columbia, the Department of Justice submitted a new standard for the government’s authority to hold detainees at the Guantanamo Bay Detention Facility. The definition does not rely on the President’s authority as Commander-in-Chief independent of Congress’s specific authorization. It draws on the international laws of war to inform the statutory authority conferred by Congress. It provides that individuals who supported al Qaeda or the Taliban are detainable only if the support was substantial. And it does not employ the phrase "enemy combatant."
The Department also submitted a declaration by Attorney General Eric Holder stating that, under executive orders issued by President Obama, the government is undertaking an interagency review of detention policy for individuals captured in armed conflicts or counterterrorism operations as well as a review of the status of each detainee held at Guantanamo. The outcome of those reviews may lead to further refinements of the government’s position as it develops a comprehensive policy.
"As we work towards developing a new policy to govern detainees, it is essential that we operate in a manner that strengthens our national security, is consistent with our values, and is governed by law," said Attorney General Holder. "The change we’ve made today meets each of those standards and will make our nation stronger."
In its filing today, the government bases its authority to hold detainees at Guantanamo on the Authorization for the Use of Military Force, which Congress passed in September 2001, and which authorized the use of force against nations, organizations, or persons the president determines planned, authorized, committed, or aided the September 11 attacks, or harbored such organizations or persons. The government’s new standard relies on the international laws of war to inform the scope of the president’s authority under this statute, and makes clear that the government does not claim authority to hold persons based on insignificant or insubstantial support of al Qaeda or the Taliban.
The brief was filed in habeas litigation brought by numerous detainees at Guantanamo who are challenging their detention under the Supreme Court’s decision last summer in Boumediene v. Bush. A copy of the brief is attached.
Memo Regarding the Government’s Detention Authority
Declaration of Attorney General Eric Holder
Attorney Indicted for Conspiracy and Wire Fraud in Stock Registration and Manipulation SchemeRead the Press Release
WASHINGTON – A securities attorney was charged in an indictment unsealed today with participating in a stock registration evasion scheme involving nine different publicly traded companies and with defrauding investors in a manipulation scheme related to three of the companies, Acting Assistant Attorney General Rita M. Glavin of the Criminal Division and Acting U.S. Attorney Dana J. Boente for the Eastern District of Virginia announced.
Phillip Windom Offill, Jr., of Dallas, was indicted on Thursday, March 12, 2009, in U.S. District Court in the Eastern District of Virginia. The defendant is charged with one count of conspiracy to commit registration violations, securities fraud and nine counts of wire fraud. The indictment also seeks approximately $15 million in forfeiture from the defendant.
In related actions, the U.S. Securities and Exchange Commission (SEC) has enforcement actions against Offill pending in federal district courts in Michigan and Texas.
Offill was taken into custody in Dallas this morning. He is scheduled for arraignment on Friday, March 27, 2009, at the federal courthouse in Alexandria, Va.
According to the indictment, Offill, an attorney in Dallas, was retained by David Stocker, a Phoenix attorney who pleaded guilty earlier this week to conspiracy to commit securities fraud in the Eastern District of Virginia. The indictment charges that Offill and Stocker employed a method to evade federal securities registration requirements in order to provide co-conspirators with millions of unregistered and "free-trading" shares of nine companies’ common stock that the co-conspirators could not have otherwise legally obtained. The indictment alleges many of the shares were subsequently sold by co-conspirators to the general investing public. By evading the registration requirements, the co-conspirators were able to hide from the investing public the actual financial condition and business operations of the companies. The companies included Emerging Holdings Inc.; MassClick Inc.; China Score Inc.; Auction Mills Inc.; Custom-Designed Compressor Systems Inc.; Ecogate Inc.; Media International Concepts Inc.; Vanquish Productions Inc.; and AVL Global Inc.
The indictment also alleges that, in connection with Emerging Holdings, MassClick, and China Score, Offill knowingly participated in a conspiracy known as a "pump-and-dump" scheme to manipulate the price of these companies’ securities. The indictment alleges that co-conspirators falsely manipulated the price and volume of some of the companies’ stock by making materially false and misleading statements in press releases and in spam emails distributed by co-conspirator Justin Medlin and other spammers to tens of millions of email addresses throughout the United States in an effort to create artificial demand for the three companies’ stock. After fraudulently "pumping" the market price and demand for the companies’ stock, co-conspirators allegedly "dumped" shares by selling them for large profits to the general investing public in the over-the-counter market through listings on Pink Sheets, an inter-dealer electronic quotation and trading system. These shares were purchased by unsuspecting investors, including investors in the Eastern District of Virginia, and were often rendered virtually worthless.
If convicted on all charges, Offill would face a maximum prison sentence of 185 years.
An indictment is merely a charge and a defendant is presumed innocent until proven guilty.
Nine other defendants have pleaded guilty and eight of them have been sentenced in federal court in Alexandria, Va., for their roles in related stock manipulation schemes. David B. Stocker pleaded guilty on Wednesday, March 11, 2009, and will be sentenced on November 6, 2009. Michael R. Saquella was sentenced to 10 years in prison; Justin Medlin was sentenced to six years in prison; Steven P. Luscko and Gregory A. Neu were each sentenced to five years in prison; Lawrence Kaplan was sentenced to three years in prison; Brian G. Brunette was sentenced to a one year in prison; Anthony Tarantola was sentenced to six months in prison; and Henry "Hank" Zemla was sentenced to three months in prison.
The case, which was referred by the Financial Industry Regulatory Authority (FINRA), was investigated by the FBI and the U.S. Postal Inspection Service, with assistance from the Virginia Securities Division. The case is being prosecuted by Assistant U.S. Attorneys Patrick Stokes and Ed Power of the Eastern District of Virginia and Deputy Chief Steve Linick of the Criminal Division’s Fraud Section. The Department of Justice acknowledges the substantial assistance of FINRA and the SEC in its investigation. It would also like to thank the Virginia State Corporation Commission, Division of Securities and Retail Franchising, for its assistance.
12 March 2009
San Mateo County, California, to Pay U.S. $6.8 Million to Resolve False Claims AllegationsRead the Press Release
WASHINGTON - San Mateo County, Calif., has agreed to pay the United States $6.8 million to resolve allegations that the San Mateo Medical Center (SMMC) submitted false claims to the United States in connection with payments from the Medicare and Medicaid programs, the Justice Department announced today.
The government alleges that SMMC falsely inflated its bed count to Medicare in order to receive higher payments under Medicare’s Disproportionate Share Hospital (DSH) adjustment. The DSH adjustment is an extra Medicare payment available to hospitals that meet certain requirements, including having 100 or more acute care beds.
In addition, the government alleges that San Mateo County improperly obtained federal payments under the Medicaid program for services provided to patients at Institutes of Mental Disease (IMDs) who were between the ages of 22 and 64. Such services are ineligible for federal funding, and San Mateo County was required to separately report them to the California Department of Mental Health so that the state could ensure that no federal funds were used to pay for them. Medicaid (known as Medi-Cal in California) is a program funded jointly by federal and state funds. The settlement covers conduct from 1997 to 2007.
The settlement resolves allegations that were filed in San Francisco by Ronald M. Davis, a former employee of San Mateo County. The lawsuit was filed under the qui tam or whistleblower provisions of the False Claims Act, which permit private individuals called "relators" to bring lawsuits on behalf of the United States and receive a portion of the proceeds of a settlement or judgment awarded against a defendant. The relator in this action will receive $1,020,000 as his statutory share of the proceeds of this settlement.
"Today’s settlement demonstrates the government’s ongoing commitment to protect the integrity of federal health care programs," commented Acting Assistant Attorney General Michael F. Hertz.
The settlement was the result of a coordinated effort among the Commercial Litigation Branch of the Justice Department’s Civil Division; the U.S. Attorney’s Office for the Northern District of California, Affirmative Civil Enforcement Unit; and the U.S. Department of Health and Human Services, Office of Inspector General.
Assistant U.S. Attorney Sara Winslow handled the matter on behalf of the U.S. Attorney’s Office, with the assistance of Legal Assistant Kathy Terry, together with Civil Division attorney Arthur S. Di Dio. Auditor Jeff McVicker of the U.S. Attorney’s Office for the Central District of California also assisted in the matter.
Four Arrested in Killings of Eagles and Other Protected BirdsRead the Press Release
WASHINGTON—Four men have been arrested by special agents of the U.S. Fish and Wildlife Service as the result of an undercover investigation into the illegal killing and trade of bald and golden eagles and other protected birds, the Justice Department and the Fish and Wildlife Service announced today. The men are charged in four complaints with alleged violations of the Bald and Golden Eagle Protection Act, the Migratory Bird Treaty Act, and the Lacey Act.
Ricky Sam Wahchumwah of Granger, Wash., Alfred L. Hawk Jr. of White Swan, Wash., William Wahsise also of White Swan, and Reginald Dale Akeen also known as J.J. Lonelodge of Anadarko, Okla., were arrested.
The charging documents, unsealed in U.S. District Court for the Eastern District of Washington and the District of Oregon, collectively allege that the individuals were involved in killing eagles and selling feathers and other bird parts in violation of the law.
According to an affidavit filed along with the complaints, special agents working undercover were able to document the sales of protected migratory bird parts. One complaint alleges that a single covert purchase from Hawk Jr. yielded a bald eagle tail, two golden eagle tails, one set of golden eagle wings, four red-shafted northern flicker tails, four rough-legged hawk tails and two northern harrier tails for a total of $3,000. According to the documents, Hawk, Jr. and Wahsise allegedly hunted and killed three bald eagles the morning of the sale by sitting near some wild horses killed to bait and attract eagles. A third complaint alleges that Wahchumwah sold one golden eagle tail in violation of the law. The sworn affidavit accompanying the complaint states that Wahchumwah sold the tail to an undercover special agent for $500.
A fourth complaint, filed in the District of Oregon, alleges that Akeen made several sales to an undercover agent, including two fans made from juvenile golden eagle feathers worth over $3,000.
Eagles and other protected migratory birds are viewed as sacred in many Native American cultures, and the feathers of the birds are central to religious and spiritual Native American customs. By law, enrolled members of federally-recognized Native American tribes are entitled to obtain permits to possess eagle parts for religious purposes but federal law strictly prohibits selling eagle parts under any circumstances. The Fish and Wildlife Service operates the National Eagle Repository, which collects eagles that die naturally or by accident, to supply enrolled members of federally recognized tribes with eagle parts for religious use. The Service has worked to increase the number of salvaged eagles sent to the Repository and make it easier to send birds to the facility by providing shipping materials at no charge. The Repository obtains eagles from state and federal agencies as well as zoos.
The charges and allegations contained in the complaints are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
The maximum penalty for a violation of the Migratory Bird Treaty Act, as charged, includes up to two years in prison and a $250,000 fine. The maximum penalty for a first time violation of the Bald and Golden Eagle Protection Act includes one year in prison and $250,000 fine and the maximum penalty for a felony violation of the Lacey Act includes up to five years in prison and a $250,000 fine.
The Fish and Wildlife Service is the principal federal agency responsible for conserving, protecting and enhancing fish, wildlife and plants and their habitats for the continuing benefit of the American people. The arrests announced today are part of an on-going investigation into the illegal killing of bald and golden eagles and other protected birds and the sale of their feathers and parts. The agency is conducting the investigation with the help and cooperation of state, federal and tribal law enforcement agencies.
The cases are being prosecuted by the U.S. Attorney’s Offices of the Eastern District of Washington, the District of Oregon and the Justice Department’s Environmental Crimes Section.
Former Alaska State Representative Pleads Guilty to Public Corruption ChargesRead the Press Release
WASHINGTON – Beverly L. Masek, a former elected member of the Alaska House of Representatives, pleaded guilty today to conspiracy to commit bribery, Acting Assistant Attorney General Rita M. Glavin of the Criminal Division announced.
Masek pleaded guilty before U.S. District Judge Ralph Beistline in Anchorage to one count of conspiracy to commit bribery concerning programs receiving federal funds. In court documents, Masek admitted to conspiring with Bill J. Allen, the former chief executive officer of VECO Corporation (VECO), a now-defunct multinational oil field services company, and Richard L. Smith, a former VECO vice president, to soliciting and accepting bribes. Masek admitted that in 2003 she received cash payments from Allen and solicited a consulting position with VECO in exchange for agreeing to perform and actually performing official acts that benefitted Allen and VECO’s business interests. Allen and Smith both pleaded guilty to multiple federal corruption charges in May 2007 and both are awaiting sentencing.
At sentencing, Masek faces a maximum of five years in prison and a $250,000 fine. Sentencing has been scheduled for May 28, 2009.
Including Masek’s guilty plea and those of Allen and Smith, there have been 11 criminal convictions to date arising out of the ongoing investigation into public corruption in the state of Alaska. Thomas T. Anderson, a former elected member of the Alaska House of Representatives, was convicted in July 2007 and sentenced to five years in prison for extortion, conspiracy, bribery and money laundering for soliciting and receiving money from an FBI confidential source in exchange for agreeing to perform official acts to further a business interest represented by the source. Peter Kott, a former speaker of the Alaska House of Representatives, was convicted in September 2007 and sentenced to six years in prison for extortion, bribery and conspiracy. Victor H. Kohring, a former elected member of the Alaska House of Representatives, was convicted at trial in November 2007 for attempted extortion, bribery and conspiracy, and was sentenced to three and a half years in prison. In March 2008, James Clark, chief of staff to a former governor of Alaska, pleaded guilty to conspiracy to commit honest services mail and wire fraud. Former Anchorage lobbyist William Bobrick pleaded guilty in May 2007 to felony public corruption charges. U.S. Sen. Theodore F. Stevens was convicted at trial on Oct. 27, 2008, of making false statements regarding his required U.S. Senate financial disclosures for 2001 through 2006. Former Alaska businessman William Weimar was sentenced to six months in prison on Nov. 12, 2008, after pleading guilty on Aug. 12, 2008, to conspiracy to commit honest services mail and wire fraud and structuring financial transactions. John Cowdery, a former elected member of the Alaska State Senate, was sentenced to six months home confinement and a $25,000 fine on March 10, 2009, after pleading guilty on Dec. 19, 2008, to conspiring to bribe another Alaska state legislator.
The case was prosecuted by trial attorneys Nicholas A. Marsh and Edward P. Sullivan of the Criminal Division's Public Integrity Section, headed by Chief William M. Welch, II, and Assistant U.S. Attorneys Joseph W. Bottini and James A. Goeke from the District of Alaska. The case was investigated by the FBI and the Internal Revenue Service Criminal Investigative Division.