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11 March 2009
U.S. Department of Justice Promotes International Network to Combat Intellectual Property CrimeRead the Press Release
BANGKOK, THAILAND – Building upon the successes of earlier efforts, the U.S. Department of Justice today announced the opening in Bangkok of a regional conference of approximately 100 key law enforcement and industry officials from more than a dozen nations with the goal of strengthening international cooperation in fighting large-scale intellectual property crimes. The Justice Department organized the gathering with the assistance of the U.S. Patent and Trademark Office and the U.S. Department of State. Justice Department prosecutors will be joined at the conference by officials from the FBI and the Department of Homeland Security, Immigration and Customs Enforcement.
High-level prosecutors, police and customs officials from the United States, Brunei, Cambodia, Hong Kong, Indonesia, Japan, Laos, Macao, Philippines, Singapore, South Korea, Thailand and Vietnam are participating in the conference, which seeks to enhance cross-border cooperation in the fight against intellectual property theft through the enhancement of the IP Crimes Enforcement Network (IPCEN), which was established in 2007.
The IPCEN serves two primary functions. First, the network facilitates the exchange of successful investigation and prosecution strategies in combating domestic piracy and counterfeiting crimes. In private sessions this week, panels of law enforcement experts will share best practices and lessons learned in addressing retail counterfeiting and piracy, the mass production and distribution of counterfeit goods, theft of trade secrets, Internet-based intellectual property theft and border enforcement strategies. Second, the IPCEN will strengthen communication channels to promote coordinated, multinational prosecutions of the most serious offenders.
In recognition that effective prosecution of intellectual property crime depends heavily on cooperation between victims and law enforcement authorities, industry representatives will also address the conference regarding the scope and severity of counterfeiting crimes in Asia, and discuss ways to collectively enhance enforcement efforts.
The IPCEN conference reflects the continuing outreach efforts of the Justice Department’s Attaché and IP Law Enforcement Coordinator for Asia, Christopher P. Sonderby, and the Criminal Division’s Computer Crime and Intellectual Property Section. More information about the Department’s efforts to combat intellectual property and computer crime can be found at www.cybercrime.gov.
Individual Indicted in Connection with Costa Rica-based Business Opportunity Fraud VenturesRead the Press Release
WASHINGTON – A British citizen was charged in connection with the operation of a series of fraudulent business opportunities on March 10, 2009, by a Miami federal grand jury, the Justice Department and the U.S. Postal Inspection Service announced today. Sirtaj Mathauda was indicted on charges that he and his co-conspirators purported to sell vending machine, beverage and greeting card business opportunities, including assistance in establishing, maintaining and operating such businesses. The charges form part of the government’s continued nationwide crackdown on business opportunity fraud.
Beginning in June 2004, Mathauda is alleged to have fraudulently induced purchasers in the United States to buy business opportunities in Apex Management Group, Inc., USA Beverages, Inc., Omega Business Systems, Incorporated, and Nation West Distribution Company. According to the indictment, the business opportunities the defendant and his co-conspirators sold cost thousands of dollars each, and most purchasers paid at least $10,000. Typically, each company operated for several months, and after one company closed, the next opened. The various companies used bank accounts, office space and other services in the Southern District of Florida, New Mexico, Wisconsin and Colorado.
The defendant, using an alias, and his co-conspirators employed Voice Over Internet Protocol (VoIP) phone service and virtual offices in the U.S. to handle mailings to make it appear to potential purchasers that the defendant was located in the United States. In reality, Mathauda operated out of Costa Rica to fraudulently induce potential purchasers in the United States to buy the purported business opportunities.
According to the indictment, the companies made numerous false statements to potential purchasers of the business opportunities. Among the misrepresentations alleged in the indictment are that purchasers would likely earn substantial profits; that prior purchasers of the business opportunities were earning substantial profits; that purchasers would sell a guaranteed minimum amount of merchandise, such as greeting cards and beverages; and that the business opportunity worked with locators familiar with the potential purchaser’s area who would secure or had already secured high-traffic locations for the potential purchaser’s merchandise stands. Potential purchasers also were falsely told that the profits of the companies were based in part on the profits of the business opportunity purchasers, thus creating the false impression that the companies had a stake in the purchasers’ success.
In addition, potential purchasers were falsely told that the companies were established years earlier, had a significant number of distributors across the country, and had a track record of success. Potential purchasers also were told that they would receive their merchandise racks, merchandise and locations promptly, even though many purchasers received nothing at all. Potential purchasers were referred to references who, according to the indictment, told false tales of their success as business opportunity owners.
"Business opportunity fraud is a very serious crime. We will continue to work with the Postal Inspection Service and use our law enforcement resources to investigate and uncover business opportunity fraud," said Michael F. Hertz, Acting Assistant Attorney General for the Justice Department’s Civil Division.
"Business opportunity promoters need to realize that this type of fraud will be detected and prosecuted vigorously," said R. Alexander Acosta, U.S. Attorney for the Southern District of Florida. "This is true even if they operate from abroad, as the charges allege this defendant did."
According to the indictment:
- Apex Management Group, Inc. was registered as a Florida corporation and rented office space in Ft. Lauderdale, Fla. Apex purportedly offered a vending machine business opportunity.
- USA Beverages, Inc. was registered as a Florida and New Mexico corporation and rented office space in Las Cruces, N.M. USA Beverage purportedly offered a coffee beverage business opportunity.
- Omega Business Systems, Incorporated was registered as a Wisconsin and Florida corporation and rented office space in Madison, Wis. Omega purportedly offered a greeting card business opportunity.
- Nation West Distribution Company was registered as a Colorado corporation and rented office space in Denver, Colo. Nation West purportedly offered a "mini-mall" vending machine business opportunity.
According to the indictment, Mathuada and his co-conspirators misled potential purchasers by renting office space in the United States for USA Beverages, Omega, and Nation West, and otherwise making it appear that these companies’ operations were fully within the United States. However, these companies actually operated from Costa Rica.
Mathauda was charged with conspiracy and with committing his offense via telemarketing. He was also charged with 13 counts of mail fraud and two counts of wire fraud.
If convicted, Mathauda faces a maximum statutory term of 25 years’ imprisonment, a possible fine and mandatory restitution on the conspiracy count. He also faces a maximum statutory term of imprisonment of 25 years on each of the mail and wire fraud counts, a possible fine and mandatory restitution.
"We will not allow criminals abroad to use modern communication devices to commit fraud on the American public. This international and domestic investigation illustrates our resolve to protect the American public from investment scams, wherever they occur," said U.S. Postal Inspector in Charge, Henry Gutierrez, based in Miami.
"The Postal Inspection Service is vigilant in investigating and rooting out fraudulent schemes. Consumers must be aware that false references and empty promises of assistance locating vending and sales displays are extremely common in this type of scam," said U.S. Postal Inspector in Charge Pete Zegarac, based in Phoenix. "These companies took over the corporate identities of older businesses – so even claims of being in business for many years must be viewed with caution."
Acting Assistant Attorney General Hertz and U.S. Attorney Acosta commended the investigative efforts of the Postal Inspection Service, as well as the Federal Trade Commission, which brought a related civil suit earlier and made a criminal referral. The case is being prosecuted by trial attorneys Jeffrey Steger and Alan Phelps of the U.S. Department of Justice Office of Consumer Litigation.
An indictment is merely an allegation, and every defendant is presumed innocent until proven guilty beyond a reasonable doubt.
Federal Court Shuts Down North Carolina Tax PreparerRead the Press Release
WASHINGTON -- A federal court has permanently barred Raymond A. Renfrow of Elm City, N.C., from preparing federal income tax returns for others, the Justice Department announced today. The U.S. District Court for the Eastern District of North Carolina entered the civil injunction order, which also stops Renfrow from promoting a tax fraud scheme that used sham trusts to falsely deduct customers’ non-deductible personal expenses. The court found that Renfrow prepared tax returns for customers that have caused an estimated loss to the U.S. Treasury of more than $1.4 million.
The court said that Renfrow’s false tax returns were based on three tax schemes he promoted for Concept Marketing International (CMI), a company that operated a multi-level marketing scheme involving the sale of American Eagle silver coins. The court stated that the tax schemes falsely purported to enable participants to take tax deductions for the cost of coins they bought, to deduct non-deductible personal living expenses, and to use sham trusts to exempt income and assets from taxation.
James E. Aldridge Jr., a founder of CMI, was found guilty of tax-related criminal charges in 2007 by a federal jury in Kansas City, Mo. He is currently serving a prison sentence.
The court found that CMI’s trust scheme was promoted in conjunction with Trust Education Services and National Trust Services. Information on injunctions involving those businesses is available at http://www.usdoj.gov/tax/prtax/txdv03332.htm and http://www.usdoj.gov/tax/txdv04081.htm.
The court also required Renfrow to give the Justice Department a list of his customers’ names, addresses, e-mail addresses and Social Security numbers.
John DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division, thanked former Tax Division trial attorney Frederick Noyes, who handled the case for the government, and Kathy A. Grimaldi, a revenue agent with the Internal Revenue Service’s Small Business/Self-Employed Division, who investigated the case.
Over 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.
Attorney Pleads Guilty to Conspiracy to Commit Securities FraudRead the Press Release
WASHINGTON – A securities attorney pleaded guilty today to defrauding investors in stock manipulation schemes involving 19 different publicly traded 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 today.
David B. Stocker, 49, of Phoenix pleaded guilty in U.S. District Court in Alexandria, Va., for his participation in a stock manipulation conspiracy known as a "pump-and-dump" scheme. Stocker is scheduled to be sentenced on Nov. 6, 2009, by U.S. District Judge Liam O’Grady. The maximum penalties for the conspiracy charge are five years in prison and a $250,000 fine.
Stocker pleaded guilty to a criminal information charging him with one count of conspiracy to commit securities fraud involving 19 publicly traded companies including: eDollars Inc; Emerging Holdings Inc.; MassClick Inc.; China Score Inc.; American Television and Film Company Inc.; Auction Mills Inc.; Custom-Designed Compressor Systems Inc.; Ecogate Inc.; Media International Concepts Inc.; Vanquish Productions Inc.; AVL Global Inc.; Motion DNA Corp.; PokerBook Gaming Corp.; TKO Holding Ltd; Body Scan Inc.; Integrity Messenger Corp.; Beverly Hills Film Studios; IFINIX Inc.; and V3 Global Inc.
In related actions, the U.S. Securities and Exchange Commission (SEC) has enforcement actions against Stocker pending in federal district courts in Arizona, Michigan and Texas.
According to the plea agreement and criminal information, the stock manipulation scheme employed by Stocker and his co-conspirators followed a common pattern. Stocker admitted that he acted as securities counsel for companies, and he and others fraudulently caused the companies to issue millions of "free-trading" shares to co-conspirators in transactions that had not been registered with the SEC. As Stocker acknowledged in his plea, after the unregistered and free-trading shares had been issued, co-conspirators began to manipulate, or "pump," the trading value of the companies’ stock through a number of deceptive and manipulative means to entice members of the investing public to invest in the stock. For example, according to court documents, members of the conspiracy engaged in coordinated trades to manipulate the price of the stock.
Stocker also admitted 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 companies’ stock. After fraudulently "pumping" the market price and demand for the companies’ stock, co-conspirators "dumped" millions of 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.
Eight other defendants have pleaded guilty and have been sentenced in federal court in Alexandria, Va., for their roles in related stock manipulation schemes. 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 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.
Attorney General Appoints Officials to Lead Task Force Reviews on Interrogation and Detention PolicyRead the Press Release
WASHINGTON – Attorney General Eric Holder today announced the appointment of two individuals to lead interagency task forces established under separate Executive Orders issued on Jan. 22 calling for a review of the government’s interrogation and transfer policies, as well as a review of detention policy.
"These appointments reflect our commitment to develop sound options for handling detainees in the future as well as policies on interrogation and transfer that uphold American values and national security interests," said Attorney General Holder. "Having served in critical legal and national security positions over their careers, J. Douglas Wilson and Brad Wiegmann have the experience and judgment necessary to help us carry out these important tasks."
J. Douglas Wilson has been designated to lead the Special Task Force on Interrogation and Transfer Policies. In accordance with the President’s Executive Order, this interagency task force is charged with conducting a review to determine whether the Army Field Manual interrogation guidelines, when employed by departments or agencies outside the military, provide an appropriate means of acquiring the intelligence to protect the nation, and whether different or additional interrogation guidance is necessary.
The task force is also responsible for examining the transfer of individuals to other nations in order to ensure that such practices comply with all domestic and international legal obligations and are sufficient to ensure that such individuals do not face torture or inhumane treatment.
The Order provides that the Attorney General or his designee shall serve as the Chair of the task force and that the Director of National Intelligence and the Secretary of Defense, or their designees, shall serve as Co-Vice-Chairs. Other members of the task force include representatives of the Secretaries of State and Homeland Security, the Director of the Central Intelligence Agency, the Chairman of the Joint Chiefs of Staff and other officials as determined by the Chair.
Mr. Wilson is the Chief of the National Security Unit in the U.S. Attorney’s Office for the Northern District of California. Previously he served as Appellate Chief and Criminal Chief in that office and as Special Counsel in the Office of Intelligence Policy and Review at the Department of Justice.
The Attorney General also announced that Brad Wiegmann, together with a representative of the Department of Defense, will lead the Special Task Force on Detention Policy. In accordance with the President’s Executive Order, this interagency task force is charged with conducting a review of the lawful options available to the federal government for the apprehension, detention, trial, transfer, release or other disposition of individuals captured or apprehended in connection with armed conflicts and counterterrorism operations.
The Order provides that the Attorney General and the Secretary of Defense, or their designees, will co-chair the Task Force. Other task force participants include representatives of the Secretaries of State and Homeland Security, the Director of National Intelligence, the Director of the Central Intelligence Agency, the Chairman of the Joint Chiefs of Staff, and other officials as determined by the Co-Chairs.
Mr. Wiegmann serves as the Principal Deputy and Chief of Staff in the National Security Division of the Department of Justice. Previously he has served in legal positions in the Departments of State and Defense and on the staff of the National Security Council.
Both task forces are charged with providing a report to the President within 180 days of the January 22 Executive Orders, unless the chairs determine that an extension of time is necessary.
10 March 2009
Shipping Line Pays $1.4 Million for Environmental CrimesRead the Press Release
WASHINGTON—Holy House Shipping AB, a Swedish corporation, was sentenced today in U.S. District Court in Camden, N.J., to pay a $1 million fine, a special assessment of $400,000 in community service payments and serve three years of probation for failing to maintain an accurate oil record book in an attempt to conceal illegal discharges of oil-contaminated waste directly into the ocean from one of its ships, the Justice Department announced.
Under the terms of the plea agreement approved by U.S. District Judge Jerome B. Simandle, the $400,000 special assessment will go to the congressionally-established National Fish and Wildlife Foundation to be used for projects to restore and protect fragile marine habitats in New Jersey.
According to documents filed in the case, on Feb. 27, 2008, U.S. Coast Guard inspectors from Coast Guard Sector Delaware Bay boarded the M/V Snow Flower, a 568-foot, Cook Island flagged ocean-going ship, at the marine terminal in Gloucester, N.J., to conduct a routine inspection. Coast Guard inspectors reviewed the ship’s oil record book, a required log in which ship engineers must record all transfers and discharges of oil. Inspectors identified a number of discrepancies related to the capacity and use of the ship’s oil water separator. In addition, the inspectors identified a pipe that was believed to be used to discharge oil contaminated waste directly to the sea, bypassing the oil water separator.
Prior to the vessel entering the Gloucester Marine Terminal, crewmembers who worked in the Snow Flower’s Engine Room Department, contacted members of the Coast Guard Sector Bay and reported that the ship’s chief engineer had ordered the discharge of oily water and oil sludge overboard on the vessel’s most recent voyage from Los Angeles to Chile and again on the return voyage to the United States. The crewmembers stated that the discharges were ordered in the Pacific and/or Atlantic Oceans and were accomplished by using a metal pipe connected to the vessel’s starboard bilge holding tanks. During today’s hearing, Judge Simandle ordered $375,000 be awarded to the two whistle blowers for their efforts.
The chief engineer, Igor Krajacic, pleaded guilty to failing to maintain an accurate record book on Nov. 3, 2008, and was sentenced on Jan. 16, 2009, to an $8,000 fine.
"Holy House Shipping violated our nation’s environmental laws and today the company is paying for it," said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. "Deliberate pollution from ocean-going ships is a continuing problem. Today’s fine sends the message that we will continue to prosecute those who ignore laws meant to protect the environment."
"The Coast Guard is committed to aggressive enforcement of U.S. laws and international requirements designed to prevent pollution at sea. We thoroughly investigate credible reports of alleged illegal discharges of oil and/or tampering with shipboard anti-pollution equipment or falsifying oil discharge records," said Captain David Scott, Commanding Officer of the U.S. Coast Guard’s Sector Delaware Bay. "We work closely with appropriate state and other Federal law enforcement agencies to prosecute environmental crimes, to promote compliance with these important environmental protection statutes."
"We work closely with the U.S. Coast Guard to investigate those who take shortcuts and dump waste oil and contaminated bilge water directly into the ocean," said William Lometti, Special Agent in Charge of Environmental Protection Agency’s Criminal Investigation Division in New York. "Today's sentence should send a clear message that those who violate the law and pollute the ocean will be vigorously investigated and prosecuted."
As part of its probation, Holy House Shipping must implement an Environmental Management System/Compliance Plan (EMS) to ensure there is no future dumping from the ships it operates and manages that conduct business in U.S. ports. The company must hire a third party auditor to ensure it is following all procedures identified in the EMS. The auditor will have access to all of the company’s ships and records. Additionally, each of the auditor’s reports will be sent to the Coast Guard, the probation office, the U.S. Attorney’s Office and the Justice Department’s Environmental Crimes Section, at the same time the report is sent to the company.
The case was investigated by the U.S. Coast Guard Investigative Special Agents, U.S. Coast Guard Delaware Bay, and the Environmental Protection Agency’s Criminal Investigation Division, and was prosecuted by Assistant U.S. Attorney Ronald Chillemi and Trial Attorney Gary Donner of the Environmental Crimes Section.
Mississippi Lawyer Sentenced to 18 Months in Prison for Failure to File Tax ReturnsRead the Press Release
WASHINGTON – Marshall E. Sanders, an attorney based in Vicksburg, Miss., was sentenced to 18 months in prison for failure to file tax returns by Magistrate Judge James C. Sumner, the Justice Department and Internal Revenue Service (IRS) announced today. In addition, Judge Sumner ordered Sanders to pay restitution to the IRS of $1,025,453.
In November 2008, Sanders pleaded guilty to failing to file tax returns for years 2001 and 2002. According to the formal charging information and the court’s findings at sentencing, Sanders earned gross income of over $2 million in 2001 and almost $500,000 in 2002. Moreover, Sanders failed to file individual income tax returns since 1995 and owed over $1.4 million in taxes to the IRS.
As part of his plea agreement, Sanders agreed to cooperate with the IRS in making a correct determination of his income tax liabilities for years 1995 through the present and to file complete and accurate tax returns for those years.
"As the tax filing deadline approaches, individuals are reminded that the failure to file tax returns can have serious legal consequences," said Ronald A. Cimino, Acting Deputy Assistant Attorney General for Criminal Matters for the Justice Department’s Tax Division. "The Department of Justice and IRS continue to protect the U.S. Treasury and the interests of honest taxpayers by prosecuting those who willfully violate our tax laws."
"Failing to file an income tax return is not a victimless crime, and all Americans have a duty to pay their fair share," stated Michael J. De Palma, Special Agent in Charge, IRS Criminal Investigation, New Orleans Field Office. "Honest, hardworking Americans pay the price when others choose not to file their tax returns and pay their tax obligations. Special Agents of IRS Criminal Investigation will continue to work with the Justice Department in an effort to protect the public's confidence in our tax system. If you suspect someone of committing fraud, do the right thing - contact your local IRS office."
In accordance with the plea agreement, the Government moved to dismiss the indictment which was filed against Sanders in May 2008.
Acting Deputy Assistant Attorney General Cimino commended the IRS special agents who investigated the case, as well as Tax Division trial attorneys Kevin Lombardi and Michelle Petersen who prosecuted the case.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at http://www.usdoj.gov/tax/.
Hitachi Displays Agrees to Plead Guilty and Pay $31 Million Fine for Participating in LCD Price-Fixing ConspiracyRead the Press Release
WASHINGTON – Japanese electronics manufacturer Hitachi Displays Ltd., agreed to plead guilty and pay a $31 million fine for its role in a conspiracy to fix prices in the sale of Thin Film Transistor-Liquid Crystal Display panels (TFT-LCD) sold to Dell Inc., the U.S. Department of Justice announced today.
A one-count felony charge filed today in U.S. District Court in San Francisco charges Hitachi Displays Ltd., a subsidiary of Hitachi Ltd., with participating in a conspiracy to fix the prices of TFT-LCD sold to Dell for use in desktop monitors and notebook computers from April 1, 2001, through March 31, 2004. According to the plea agreement, which is subject to court approval, Hitachi Displays has agreed to cooperate with the Department’s ongoing antitrust investigation.
"Hitachi joins three other multinational companies who have admitted to their involvement in fixing prices for LCD panels sold to U.S. companies and that have already paid criminal fines totaling more than $585 million," said Scott D. Hammond, Acting Assistant Attorney General in charge of the Department’s Antitrust Division. "This case should send a strong message to multinational companies operating in the United States that when it comes to enforcing the U.S. antitrust laws we mean business."
Including today’s filing, four companies and seven individuals have been charged in the Department’s ongoing antitrust investigation into the TFT-LCD industry. To date, more than $585 million in criminal fines have been imposed as a result of this investigation, and four individuals have pleaded guilty and have been sentenced to serve jail time.
TFT-LCD panels are used in computer monitors and notebooks, televisions, mobile phones and other electronic devices. In 2006, the worldwide market for TFT-LCD panels was approximately $70 billion. Hitachi Displays Ltd., based in Tokyo, Japan, reported $1.75 billion in total revenue for the fiscal year ending March 2008.
Hitachi Displays is charged with carrying out the conspiracy by:
- Participating in bilateral meetings, conversations and communications in Japan, Korea and the United States to discuss the prices of TFT-LCD to be sold to Dell;
- Agreeing, during those bilateral meetings, conversations and communications, to charge prices of TFT-LCD to be sold to Dell at certain predetermined levels;
- Issuing price quotations in accordance with the agreements reached; and
- Exchanging information on sales of TFT-LCD sold to Dell, for the purpose of monitoring and enforcing adherence to the agreed-upon prices.
This is the fourth plea agreement by a company charged with participating in conspiracies to fix the prices for TFT-LCD. On Dec. 15, 2008, LG Display Co. (LG) pleaded guilty to participating in a worldwide conspiracy to fix the price for TFT-LCD and was sentenced to pay a $400 million criminal fine – the second-largest fine in Antitrust Division history. On Dec. 16, 2008, Sharp Corp. pleaded guilty to participating in three separate conspiracies to fix the prices of TFT-LCD sold to Dell, Apple Computer Inc. and Motorola Inc. and was sentenced to pay a $120 million criminal fine. On Jan. 14, 2009, Chunghwa Picture Tubes Ltd. (Chunghwa) pleaded guilty to participating in the same worldwide conspiracy as LG, and was sentenced to pay a $65 million criminal fine.
In February 2009, former Chunghwa CEO Chieng-Hon "Frank" Lin and two Chunghwa executives, Chih-Chun "C.C." Liu and Hsueh-Lung "Brian" Lee, pleaded guilty to and were sentenced for participating in the same conspiracy as LG and Chunghwa. Lin was sentenced to serve nine months in prison and pay a $50,000 criminal fine. Liu was sentenced to serve seven months in prison and pay a $30,000 criminal fine. Lee was sentenced to serve six months in prison and pay a $20,000 criminal fine. Also in February 2009, LG executive Chang Suk "C.S." Chung pleaded guilty for his role in the same conspiracy as LG and Chunghwa. Chung was sentenced to serve seven months in prison and pay a $25,000 criminal fine.
On Feb. 3, 2009, a federal grand jury in San Francisco returned an indictment charging two former Chunghwa executives, Cheng Yuan Lin, aka C.Y. Lin and Wen Jun Cheng, aka Tony Cheng, and one former executive from LG, Duk Mo Koo, for their participation in the same conspiracy as LG and Chunghwa. Warrants have been issued for the arrest of all three individuals.
Today’s charge is the result of a joint investigation by the Department of Justice Antitrust Division’s San Francisco Field Office and the Federal Bureau of Investigation in San Francisco.
Anyone with information concerning illegal conduct in the TFT-LCD industry is urged to call the San Francisco Field Office of the Antitrust Division at 415-436-6660.
Former Congressional Staffer Pleads Guilty to Conspiracy to Commit Honest Services FraudRead the Press Release
WASHINGTON – A former congressional staffer pleaded guilty today to conspiring with others to commit honest services fraud, Acting Assistant Attorney General Rita M. Glavin of the Criminal Division announced.
Ann Copland, 52, pleaded guilty before U.S. District Judge Richard W. Roberts in the District of Columbia. According to the factual basis filed with the court, Copland worked on the staff of a U.S. senator from 1979 until 2008. From 2002 through 2004, Copland worked as an assistant on legislative and administrative matters, particularly those legislative matters involving Native American tribes.
In her plea agreement, Copland admitted being lobbied by Jack Abramoff, Todd Boulanger and another lobbyist on matters involving a Native American tribe located in Mississippi. Copland admitted that she took and agreed to take a variety of official actions beneficial to the lobbyists and their clients, including the Mississippi tribe, at the request of Abramoff, Boulanger and others, based in part on the fact that she was receiving and wanted to continue receiving thousands of dollars in tickets to concerts, sports and other entertainment events, from the lobbyists. Specifically, Copland admitted to receiving more than $25,000 worth of tickets, meals and drinks from March 2002 through May 2004, during which time she understood that the lobbyists were giving her those things of value in order to influence her in the performance of her official actions.
The case is part of the ongoing investigation into the activities of former lobbyist Jack Abramoff and his associates. Boulanger pleaded guilty on Jan. 30, 2009, for his role in the scheme. Nineteen individuals, including lobbyists and public officials, have pleaded guilty or are awaiting trial as a result of the investigation, including Abramoff, who was sentenced in September 2008 to 48 months in prison.
This case is being prosecuted by trial attorneys M. Kendall Day and Peter C. Sprung of the Public Integrity Section, headed by Section Chief William M. Welch II. The investigation is being conducted by the FBI.
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Factual Basis
Former Alaska State Senator Sentenced on Public Corruption ChargesRead the Press Release
WASHINGTON – John Cowdery, a former elected member of the Alaska state senate, was sentenced today to three years probation with a special condition requiring him to serve six months of home confinement for conspiring to bribe another Alaska state legislator, Acting Assistant Attorney General Rita M. Glavin of the Criminal Division announced.
U.S. District Judge Ralph Beistline for the District of Alaska also ordered Cowdery to pay a $25,000 fine.
On Dec. 19, 2008, Cowdery pleaded guilty to one count of conspiracy to commit bribery concerning programs receiving federal funds. In court documents, Cowdery 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 offer at least $10,000 in purported campaign contributions to State Senator A in exchange for State Senator A’s support of a proposed petroleum profits tax, or PPT, that VECO wanted the Alaska state legislature to pass in 2006. Cowdery admitted that he and Allen met State Senator A on June 25, 2006, at an Anchorage restaurant to offer State Senator A the bribe. Cowdery admitted that he and Allen specifically conditioned receipt of the bribe, which State Senator A did not accept, on State Senator A’s support for the PPT legislation sought by VECO and Allen. Allen and Smith both pleaded guilty to multiple federal corruption charges in May 2007 and both are awaiting sentencing.
Including Cowdery’s guilty plea and those of Allen and Smith, there have been ten 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.
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.
Five Defendants Sentenced for Participation in International Child Exploitation EnterpriseRead the Press Release
WASHINGTON and PENSACOLA, Fla. – Five U.S. defendants convicted for their activity in a global child pornography trafficking enterprise were sentenced today in the Northern District of Florida, Acting Assistant Attorney General of the Criminal Division Rita M. Glavin, U.S. Attorney for the Northern District of Florida Thomas F. Kirwin and FBI Executive Assistant Director J. Stephen Tidwell announced.
The defendants had pled to multiple charges, including engaging in a child exploitation enterprise; conspiracy to advertise, transport, ship, receive and possess child pornography; advertising child pornography; transporting child pornography; and receiving child pornography.
The defendants sentenced by Senior U.S. District Judge Lacey A. Collier today were Ruble Keys of Spokane, Wash., John Mosman of Waterbury, Conn., Raymond Roy of San Juan Capistrano, Calif., Eric Wayerski of Leander, Texas, and Warren Weber of Boise, Idaho. Seven additional U.S. defendants also indicted in the case were convicted on Jan. 14, 2009, following a six-day jury trial. Those defendants will be sentenced on April 14, 2009.
According to a 40-count superseding indictment handed up on March 19, 2008, the defendants were members of a highly-sophisticated international network. The group was a well-organized criminal enterprise whose purpose was to proliferate child sex abuse images to its membership during a two-year period.
According to their plea agreements, members of the illegal organization used Internet newsgroups - large file-sharing networks where text, software, pictures and videos can be traded and shared - to traffic in illegal images and videos depicting prepubescent children, including toddlers, engaged in various sexual and sadistic acts. Specifically, an Australian constable who infiltrated the group in August 2006 testified about how group members employed a complex system of pseudonyms, screening tests for new members and sophisticated encryption methods to avoid detection. He also testified that the group traded more than 400,000 images and 1,000 videos of child sexual abuse before it was dismantled by law enforcement.
Ruble Keys was sentenced today to 204 months in prison. Keys pleaded guilty on May 6, 2008, to four counts related to his criminal activities as a member of the child exploitation enterprise. The charges alleged in these counts included engaging in a child exploitation enterprise; conspiracy to advertise, transport, ship, receive and possess child pornography; advertising child pornography; and receiving child pornography. Keys testified for the government at the January 2009 trial of co-defendants.
John Mosman was sentenced today to 164 months in prison. Mosman pleaded guilty on Dec. 18, 2008, to four counts relating to his criminal activities as a member of the child exploitation enterprise. The charges alleged in these counts included engaging in a child exploitation enterprise; conspiracy to advertise, transport, ship, receive and possess child pornography; advertising child pornography; and receiving child pornography. Mosman testified for the government at the January 2009 trial of co-defendants.
Raymond Roy was sentenced today to 360 months in prison. Roy pleaded guilty on Dec. 29, 2008, to five counts relating to his criminal activities as a member of the child exploitation enterprise. The charges alleged in these counts included engaging in a child exploitation enterprise; conspiracy to advertise, transport, ship, receive and possess child pornography; advertising child pornography; transporting child pornography; and receiving child pornography.
Eric Wayerski was sentenced today to 365 months in prison. Wayerski pleaded guilty on Aug. 13, 2008, to six counts relating to his criminal activities as a member of the child exploitation enterprise. The charges alleged in these counts included engaging in a child exploitation enterprise; conspiracy to advertise, transport, ship, receive and possess child pornography; advertising child pornography; transporting child pornography; receiving child pornography; and obstruction of justice.
Warren Weber was sentenced today to 180 months in prison. Weber pleaded guilty on April 17, 2008, to five counts relating to his criminal activities as a member of the child exploitation enterprise. The charges alleged in these counts included engaging in a child exploitation enterprise; conspiracy to advertise, transport, ship, receive and possess child pornography; advertising child pornography; transporting child pornography; and receiving child pornography. Weber testified for the government at the January 2009 trial of co-defendants.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse, launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The case is being prosecuted by Assistant U.S. Attorney David Goldberg of the Northern District of Florida and Trial Attorney LisaMarie Freitas of CEOS. The case is being investigated by the Innocent Images Unit of the FBI and the Queensland, Australia, Police Service, with the assistance of the Bundeskriminalamt (BKA) Child Pornography Unit in Germany and the Child Exploitation and Online Protection Centre in the United Kingdom.
Arizona Man Pleads Guilty to Receipt of Child PornographyRead the Press Release
WASHINGTON – Charles Brown, 54, of Mesa, Ariz., pleaded guilty today to one count of receiving child pornography, Acting Assistant Attorney General of the Criminal Division Rita M. Glavin and U.S. Attorney for the District of Arizona Diane J. Humetewa announced.
During the plea hearing before U.S. District Judge Paul G. Rosenblatt, Brown admitted to receiving child pornography. Specifically, Brown admitted to responding to an advertisement on the Internet offering child pornography for sale, and to ordering and submitting payment for a video advertised as containing child pornography involving a nine-year old. The advertisement had been placed by U.S. Postal Inspectors acting in an undercover capacity. Postal Inspectors arrested Brown on April 12, 2008, shortly after he received the video.
Brown’s sentencing has been scheduled for June 1, 2009. At sentencing, Brown will face a sentence of 60 months in prison; a fine of up to $250,000, a term of supervised release of any amount up to life, and will be required to register as a sex offender in accordance with state and federal law. As part of the plea agreement, Brown also agrees to undergo sex offender treatment and counseling as directed by the probation department.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov
The case was prosecuted by Trial Attorney James Silver of CEOS and Assistant U.S. Attorney Sharon K. Sexton of the U.S. Attorney’s Office for the District of Arizona. The U.S. Postal Inspection Service conducted the investigation.
Ali Al-Marri Transferred to U.S. Marshals Service CustodyRead the Press Release
WASHINGTON – Ali Saleh Kahlah al-Marri, 43, has been released from detention by the Secretary of Defense and is now in the custody of the U.S. Marshals Service. He is scheduled to make his initial court appearance today, the Justice Department announced.
Al-Marri was served with an arrest warrant this morning at the Naval Consolidated Brig in Charleston, South Carolina, and taken into custody by the U.S. Marshals Service. He is scheduled to make his initial appearance at 10 a.m. today before U.S. Magistrate Judge Robert S. Carr in federal court in Charleston.
On Feb. 26, 2009, a federal grand jury in the Central District of Illinois returned a two-count indictment charging al-Marri with providing material support to al-Qaeda and conspiring with others to provide material support to al-Qaeda. The public is reminded that the charges contained in an indictment are mere allegations and each defendant is presumed innocent unless and until convicted in a court of law.
The United States will seek to keep al-Marri detained pending his transfer to Illinois and his trial. After his initial court appearance today, al-Marri will remain in the custody of the U.S. Marshals Service pending his next court appearance.
9 March 2009
Illinois Man Convicted for Production, Receipt and Possession of Child Pornography, as Well as Bank FraudRead the Press Release
WASHINGTON - Carl Courtright III, of Granite City, Ill., was convicted today on child pornography and bank fraud charges in the Southern District of Illinois following a five-day jury trial, Acting Assistant Attorney General of the Criminal Division Rita M. Glavin and U.S. Attorney for the Southern District of Illinois Courtney Cox announced.
The federal jury convicted Courtright of one count of production of child pornography, two counts of possession of child pornography, one count of receipt of child pornography, as well as one count of bank fraud.
Evidence presented at trial revealed that the investigation of Courtright began when Illinois Attorney General Lisa Madigan required social networking site MySpace.com to provide information regarding all registered sex offenders in her state who were maintaining profiles on the site. Courtright was identified as someone who had a MySpace profile, and further investigation prompted investigators to seek a search warrant for his residence.
Evidence at trial showed that when the warrant was executed, law enforcement agents discovered evidence that Courtright had produced child pornography using a local victim, downloaded and possessed child pornography on two computers, and engaged in bank fraud. The bank fraud scheme involved Courtright’s production of counterfeit checks, which were "donations" to an online ministry he maintains. Courtright deposited the counterfeit checks into an account at Regions Bank.
Courtright faces a possible mandatory life sentence. Sentencing is set for June 12, 2009.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child
Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The case was prosecuted by Assistant U.S. Attorney Nicole E. Gorovsky of the Southern District of Illinois and Trial Attorney James Silver of CEOS. The case was investigated by the Granite City, Ill., Police Department, the State of Illinois Attorney General’s Office, the U.S. Postal Inspection Service, the Illinois Internet Crimes Against Children Task Force, the Madison County, Ill., Sheriff’s Department, the Alton, Ill., Police Department, the Bethalto, Ill., Police Department, the FBI Metro East Cyber Crime Task Force, and CEOS’s High Tech Investigative Unit.
Former Lucas County, Ohio, Sheriffs Office Corrections Officer Sentenced for Civil Rights ViolationsRead the Press Release
WASHINGTON - A former corrections officer with the Lucas County, Ohio, Sheriff’s Office was sentenced today to four years in prison for violating the civil rights of inmates in his custody at the Lucas County jail, as well as private citizens on the streets of the greater Toledo area, announced Acting Assistant Attorney General Loretta King for the Civil Rights Division; U.S. Attorney William J. Edwards for the Northern District of Ohio; and C. Frank Figliuzzi, Special Agent in Charge of the FBI’s Cleveland Division.
Today in federal district court in Toledo, Ohio, Judge Jack Zouhary also sentenced the former corrections officer, Seth Bunke, to three years of supervised release following the prison term.
Bunke was convicted by a federal jury on Oct. 16, 2008, of the felony federal civil rights violations and two misdemeanor counts of deprivation of rights under color of law.
"The defendant, who was sworn to serve and protect the people of Lucas County, chose to break the law instead of enforcing it," said Acting Assistant Attorney General Loretta King. "The Department of Justice will vigorously prosecute law enforcement officers who violate individuals’ civil rights."
According to the evidence presented at trial, on June 11, 2007, Bunke, while on official duty at the jail, repeatedly kicked an inmate in the head and face, without any justification for doing so, in the presence of other corrections officers. As a result of this assault, the inmate sustained serious injuries requiring hospitalization.
In addition, trial evidence showed that Bunke unreasonably seized a vehicle driven by two local residents on March 13, 2007, and assaulted a pretrial detainee at the Lucas County jail on or about May 6, 2007.
The case was prosecuted by Special Litigation Counsel Kristy L. Parker and Trial Attorney Eric Gibson of the Criminal Section of the Civil Rights Division and by the U.S. Attorney’s Office for the Northern District of Ohio.
Former Department of Energy Employee Pleads Guilty to Falsifying Performance Evaluation for Monetary AwardRead the Press Release
WASHINGTON - A former U.S. Department of Energy (DOE) employee who falsified his performance evaluation to justify an annual performance award to which he was not entitled pleaded guilty today to one count of making false statements, announced Acting Assistant Attorney General Rita M. Glavin of the Criminal Division.
According to court documents, Amandeus Watkins, 32, was employed by DOE from November 2006 to August 2008 as the resource manager in the Office of Public Affairs. In this position, Watkins was responsible for overseeing the process through which many public affairs employees received annual performance awards.
Watkins admitted that in March 2008 he authored and submitted to DOE a performance evaluation for himself that falsely indicated he had earned the highest possible performance rating from his former supervisor in order to justify an annual performance award he had improperly arranged to receive in December 2007. According to court documents, no DOE employee, including his former supervisor, approved an annual performance award for Watkins.
The charge to which Watkins pleaded guilty carries a maximum penalty of five years in prison and a maximum fine of $250,000. Sentencing is scheduled for July 16, 2009.
This case is being prosecuted by Trial Attorney Timothy J. Kelly of the Criminal Division’s Public Integrity Section, which is headed by William M. Welch II. The case was investigated by the Office of Inspector General for the Department of Energy.
Information
Factual Basis
Chief Engineer Pleads Guilty to Concealing Vessel PollutionRead the Press Release
WASHINGTON – Carmelo Oria, a Spanish citizen, who was the Chief Engineer on the Cyprus-flagged M/T Nautilus, pleaded guilty today to using falsified records that concealed improper discharges of oil-contaminated bilge water from the M/T Nautilus, the Justice Department announced.
The government’s investigation began in March 2008, when inspectors from the U.S. Coast Guard conducted an examination of the M/T Nautilus, following the ship’s arrival in St. Croix, U.S. Virgin Islands, and subsequently in the Port of Boston. The M/T Nautilus is a 26,794 gross ton chemical tanker owned by Cyprus-based Iceport Shipping Company Ltd., and operated by Spanish-based Consultores de Navegacion S.A. The inspections uncovered evidence that crewmembers aboard the ship had improperly handled and disposed of the ship’s oil-contaminated bilge water and falsified entries in the ship’s official oil record book to conceal these activities.
Engine room operations on board large oceangoing vessels such as the M/T Nautilus generate large amounts of waste oil and oil-contaminated bilge waste. International and U.S. law prohibit the discharge of waste containing more than 15 parts per million of oil and without treatment by an oily water separator—a required pollution prevention device. Law also requires all overboard discharges be recorded in an oil record book, a required log which is regularly inspected by the Coast Guard.
Oria served as the Chief Engineer aboard the M/T Nautilus between January and March 2008 and was responsible for all engine room operations. During that time, Oria ordered engine room crew members to discharge oil-contaminated bilge fluids from the ship’s bilges directly into the ocean. When the M/T Nautilus entered the Port of Boston on March 22, 2008, the ship’s log, which Oria was responsible for maintaining, failed to disclose the overboard discharge of oil-contaminated bilge water.
“Carmelo Oria ordered the ship’s crewmembers to bypass required environmental controls and pump oil-contaminated water from the ship’s bilge directly into the ocean. He then falsified the ship’s records in an attempt to conceal his actions,” said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “As long as individuals and companies continue to bypass this nation’s environmental laws, the Justice Department will continue to bring cases and seek justice for those involved.”
“Our hope is that this case will send a strong message to those in the maritime community who might try to circumvent our nation’s anti-pollution laws. It is necessary to ensure that the companies realize that violating our environmental laws will be taken seriously, and will ultimately cost them more than legally disposing of the waste,” said Michael J. Sullivan, U.S. Attorney for the District of Massachusetts.
“The Coast Guard remains committed to working with the maritime industry and federal, state and local law enforcement partners to protect United States environmental resources from those who choose to intentionally or negligently pollute our waters”, said Rear Admiral Dale G. Gabel, Commander of the First Coast Guard District in Boston, Mass. “When violations of federal laws are uncovered in the maritime realm, the Coast Guard stands ready and able to investigate these matters thoroughly. We will continue to work with our partners to ensure all violators are prosecuted to the fullest extent of the law.”
Douglas P. Woodlock, U.S. District Judge for the District of Massachusetts, scheduled sentencing for April 13, 2009. Oria faces up to 6 years imprisonment, to be followed by three years of supervised release, and a $250,000 fine.
The case was investigated by the U.S. Coast Guard, Coast Guard Investigative Service. It was prosecuted by Assistant U.S. Attorney Linda M. Ricci of Sullivan’s Economic Crimes Unit, Special Assistant U.S. Attorney Christopher Jones of the U.S. Coast Guard First District Legal Office, and Trial Attorney Todd Mikolop of the Justice Department’s Environmental Crimes Section.
6 March 2009
United States Joins Suit Against Community Health Systems Inc. and Three of Its Hospitals in New MexicoRead the Press Release
WASHINGTON – The United States has intervened in a whistleblower suit filed in the District of New Mexicoagainst Community Health Systems Inc. (CHS) and three of its hospitals in New Mexico: Eastern New Mexico Medical Center in Roswell, Mimbres Memorial Hospital in Deming, and Alta Vista Regional Hospital in Las Vegas. The suit alleges that CHS and its three hospitals violated the False Claims Act (FCA) by knowingly causing to be presented to the United States false claims for federal matching Medicaid funds, the Justice Department announced today.
Title XIX of the Social Security Act (the Medicaid Act) authorizes federal matching funds to the states for Medicaid programs to provide medical assistance to persons with limited income and resources. In order to ensure that state or local funds are the basis for the federal matching money, the Medicaid Act prohibits federal funding in instances where the state or county has received donations from health care providers that are related to the amount of Medicaid reimbursement paid to the provider.
The suit was filed under the qui tam or whistleblower provisions of the FCA by Robert Baker, a former revenue manager in CHS’ corporate office. Under those FCA provisions, a private party, known as a relator, can file an action on behalf of the United States and receive a portion of the recovery. Under the FCA, the United States may recover three times the amount of its losses plus civil penalties.
The relator’s complaint alleges that beginning in the summer of 2000, CHS and its three New Mexico hospitals improperly obtained federal funds through the New Mexico Sole Community Provider Fund (SCPF) and Sole Community Hospital Supplemental Payments (SCHSP) Medicaid programs. In particular, the relator alleges that CHS and its hospitals made donations to New Mexico counties which they knew would be used by the counties and the state to claim and obtain triple that amount in federal funding that was then paid to the hospitals under the SCPF and SCHSP programs. The relator alleges that CHS’ donation arrangement violated the Medicaid Act’s prohibition of provider donations that are related to the amount of Medicaid reimbursement paid to the provider.
While the qui tam action contains additional allegations, the United States is intervening only in allegations that CHS and its three New Mexico hospitals caused the submission of false claims to the United States.
The investigation was conducted by the Civil Division of the U.S. Department of Justice and the Office of Inspector General of the Department of Health and Human Services.
Two Plead Guilty to Conspiracy to File False Claims for Tax RefundsRead the Press Release
WASHINGTON - Odell Folks, a resident of Brooklyn, N.Y., and Tanya Smith, a resident of Waterbury, Conn., pleaded guilty to conspiracy to file false claims for tax refunds, the Justice Department and Internal Revenue Service (IRS) announced today. Folks also pleaded guilty to mail fraud and making a false tax return.
Folks and Tanya Smith, along with co-defendants Keith Terry and Sharon Smith, were indicted in November 2008 for a scheme to file false claims for refund with the IRS using names of clients of the New York City Human Resources Administration (HRA) and the Center for Employment Opportunities (CEO). Terry, a resident of Dallas, Ga., pleaded guilty to the false claims conspiracy and a false return charge on Jan. 29, 2009. Sharon Smith, a resident of Bronx, N.Y., is currently scheduled to begin trial on the charges on March 30, 2009.
According to the indictment and information in the plea agreements, between May 2003 and February 2005, Folks and Sharon Smith obtained names and information of HRA and CEO clients and used that information to seek refunds by filing false tax returns with the IRS. Based on the false documents, the IRS issued income tax refunds in the form of U.S. Treasury checks and mailed the refunds to false addresses. Folks and his co-conspirators obtained and cashed the refund checks. Tanya Smith and Keith Terry used their bank accounts to cash some of theTreasury checks.
According to the indictment and information in the plea agreements, Folks and Sharon Smith were employed as job counselors at CEO. HRA offers a wide range of social service programs to individuals receiving public assistance. CEO provides comprehensive employment services for persons with criminal records, including temporary jobs for individuals recently released from prison.
Judge Carol Bagley Amon of the Eastern District of New York scheduled sentencing for June 5, 2009. Folks faces a maximum sentence of 33 years in prison and a maximum fine of $750,000. Tanya Smith faces a maximum sentence of 10 years in prison and a maximum fine of $250,000. Terry is scheduled to be sentenced on April 30, 2009. He faces a maximum sentence of 13 years in prison and a maximum fine of $500,000.
John A. DiCicco, Acting Assistant Attorney General of the Justice Department’s Tax Division, commended the agents from the IRS and the U.S. Postal Inspection Service who investigated the case, as well as Tax Division trial attorney Mark F. Daly and Assistant U.S. Attorney Shreve Ariail of the Eastern District of New York, who prosecuted the case.
Two Indicted for Conspiring to Steal Trade Secrets from Goodyear Tire and Rubber CompanyRead the Press Release
WASHINGTON – An indictment was unsealed today charging Clark Alan Roberts, 46, and Sean Edward Howley, 38, both engineers with Wyko Tire Technology Inc., located in Greenback, Tenn., with conspiring to steal trade secrets from the Goodyear Tire and Rubber Company and scheming to defraud Goodyear of confidential and proprietary information, announced Acting Assistant Attorney General of the Criminal Division Rita M. Glavin and U.S. Attorney for the Eastern District of Tennessee James R. Dedrick.
Roberts and Howley were arrested this morning by federal authorities and were arraigned before U.S. Magistrate Judge Clifford Shirley.
According to the indictment, returned on March 3, 2009, Wyko secured a contract in early 2007 with the Haohau South China Guilin Rubber Company Limited (HHSC), a Chinese tire manufacturing company located in Guilin, Peoples Republic of China, to supply tire manufacturing equipment for use in producing large "off the road" (OTR) tires.
The indictment alleges that in late May 2007, Roberts and Howley traveled to a Goodyear tire manufacturing facility located in Topeka, Kan. After allegedly making material misrepresentations to Goodyear employees concerning the purpose of their visit, the defendants used a cell phone to surreptitiously photograph proprietary OTR tire manufacturing equipment. According to the indictment, the defendants later emailed the unauthorized photographs, which contained valuable trade secret information, to employees at a Wyko subsidiary located in Dudley, England, who then used the photographs to complete a similar piece of tire manufacturing machinery for the HHSC contract.
The indictment charges one count of conspiracy to commit theft of trade secrets, seven counts of theft of trade secrets, three counts of wire fraud and one count of conspiracy to commit wire fraud. If convicted of all charges, the defendants each face a maximum of 150 years in prison and $2.75 million in fines.
An indictment is merely a formal charge by the grand jury. Each defendant is presumed innocent unless and until proven guilty in a court of law.
The case is being prosecuted by Trial Attorney Thomas S. Dougherty of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney D. Gregory Weddle of the U.S. Attorney’s Office for the Eastern District of Tennessee. The case is being investigated by the FBI’s Knoxville field office.
Guilty Plea in Case of Cosco Busan Ship PilotRead the Press Release
WASHINGTON— John Joseph Cota, a California ship pilot, pleaded guilty today to negligently causing the discharge of approximately 53,000 gallons of oil into San Francisco Bay in violation of the Oil Pollution Act of 1990, a law enacted in the wake of the Exxon Valdez disaster. Cota, who piloted the M/V Cosco Busan when it hit the San Francisco Bay Bridge on Nov. 7, 2007, also pleaded guilty today to violation of the Migratory Bird Treaty Act for the death of protected migratory birds.
If the plea terms are accepted by U.S. District Court Judge Susan Illston, Cota will be sentenced to serve between two and ten months in prison and be fined between $3,000 to $30,000. The exact sentence will be determined by the court with the government reserving the right to argue for the highest sentence within this range. The plea also requires Cota to serve the maximum one year of supervised release during which he will not serve as a ship pilot or ship Captain (Master). Sentencing has been scheduled for June 19, 2009.
“Today’s guilty plea is a reminder that the Cosco Busan crash was not just an accident, but a criminal act,” said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “This is not a case involving a mere mistake. The lesson here is that environmental stewards, who abandon ship, act negligently and cause major environmental damage will be vigorously prosecuted.”
“John Cota was an experienced ship pilot that was handsomely compensated for his special knowledge of ships and expertise in local waters. His failure to act prudently under the circumstances caused a major environmental disaster that could have been far worse,” said Joseph Russoniello, U.S. Attorney for the Northern District of California. “This case should sound an alert to those in the maritime industry that safety rules and procedures are meant to be followed, safety equipment is expected to be used, and that those who act otherwise and despoil our natural wonders will be prosecuted to the full extent of the law.”
The plea agreement contains factual admissions by Cota including: “I acknowledge that my negligence was a proximate cause of the discharge of approximately 53,000 gallons of heavy fuel oil into San Francisco Bay.” During the voyage in less than a half mile of visibility, Cota gave the helm commands that crashed the Cosco Busan into the fendering system at the base of the Delta tower of the San Francisco Bay Bridge. In the plea agreement, Cota admitted that he:
- Failed to adequately discuss the intended route through San Francisco Bay with the Master or crew as is required;
- Failed to use the ship’s radar in the final approach to San Francisco Bay Bridge;
- Failed to recognize two red triangles on the ship’s electronic chart system that actually are the buoys marking the Delta bridge tower;
- Failed to verify the meaning of the red triangles by using the ship’s paper chart or radar.
- Failed to inform the crew of his method of navigation that he relied on using a particular radar setting; and
- Failed to advise the crew of a radar beacon that marked the center of the Delta-Echo span.
The allision caused a gash measuring approximately 150 feet long by 12 feet high on the port side of the ship, puncturing two of the ship’s fuel tanks and damaging the fendering system on the Delta tower of the bridge, and resulting in a significant environmental clean-up. At least 2,000 migratory birds died, including Brown Pelicans, Marbled Murrelets and Western Grebes. The Brown Pelican is a federally endangered species and the Marbled Murrelet is a federally threatened species and an endangered species under California law.
At the hearing today, Judge Illston set trial for the remaining defendant in the case, the ship’s manager, Fleet Management Ltd. (Hong Kong), for Sept. 14, 2009. Fleet is also charged with acting negligently and being a proximate cause of the pollution and killing protected migratory birds. In addition to the environmental crime charges, Fleet is charged with obstructing justice and making false statements by falsifying ship records after the incident. An indictment is merely an accusation. All defendants are presumed innocent until proven guilty at trial beyond a reasonable doubt.
As part of the plea agreement with Cota, the government agreed to dismiss pending false statement charges relating to allegations that Cota failed to disclose his medications on required Coast Guard forms in 2006 and 2007 necessary to maintain his license, and which the court ruled would be tried separately from the case involving the Cosco Busan incident. Cota admits in the plea papers filed today that his 2006 physical exam form failed to disclose some of the medications he was prescribed including Provigil (a medication prescribed to treat sleep apnea), Lorazepam (an anti-anxiety medication that had been prescribed as a sleeping aid), Vicodin (a pain medication), Tylenol 4 (a pain medication), Darvon 65 (a pain medication), Zoloft (an anti-depressant prescribed for an off-brand purpose) and Ambien (a sleeping aid). Regarding the form he signed in 2007, Cota admits that three medications, Vicodin, Zoloft and Tylenol 4 were not disclosed to the Coast Guard. According to the plea papers, while Cota reported taking various other drugs “occasionally” on the 2007 form, he now admits that he “refilled many of these prescriptions regularly.”
The investigation is being conducted by the Coast Guard Investigative Service, the EPA Criminal Investigation Division, the Federal Bureau of Investigation, the U.S. Fish and Wildlife Service and the California Department of Fish and Game, Office of Spill Prevention and Response.
The case is being prosecuted by Assistant U.S. Attorneys Jonathan Schmidt, and Stacey Geis, Special Assistant U.S. Attorney Christopher Tribolet of the U.S. Attorney’s Office for the Northern District of California and Richard A. Udell, Senior Trial Attorney with the Justice Department’s Environmental Crimes Section.
Under the Crime Victims’ Rights Act, crime victims are afforded certain statutory rights including the opportunity to attend all public hearings and provide input to the prosecution. Those adversely impacted by the oil spill are encouraged to visit http://www.usdoj.gov/usao/can/community/Notifications/index.html to learn more about the case and the Crime Victims’ Rights Act.
Former Staff Member in U.S. House of Representatives Indicted on Corruption ChargesRead the Press Release
WASHINGTON – A grand jury in the District of Columbia returned a three-count indictment today charging a former staff member in the U.S. House of Representatives with corruption offenses, Acting Assistant Attorney General Rita M. Glavin of the Criminal Division announced. Fraser C. Verrusio, 39, was charged by the grand jury with conspiring to accept an illegal gratuity, accepting an illegal gratuity, and making a false statement in failing to report his receipt of gifts from a lobbyist and the lobbyist’s client on his 2003 financial disclosure form.
According to the indictment, during the relevant times, Verrusio worked as the policy director for the U.S. House of Representatives Committee on Transportation and Infrastructure. The indictment names Todd Boulanger and James Hirni, who were lobbyists working for an equipment rental company interested in inserting three amendments into a Federal Highway Bill, as Verrusio’s co-conspirators. The indictment also names Trevor Blackann, who worked as a legislative assistant to a U.S. senator, as a co-conspirator. According to the indictment, the committee for which Verrusio worked had responsibility for the Federal Highway Bill in the House of Representatives. Similarly, the indictment states that the senator for whom Blackann worked served on a committee with responsibility for the Federal Highway Bill in the Senate.
According to the indictment, in October 2003, Verrusio and Blackann accepted an all-expenses-paid trip to Game One of the 2003 Baseball World Series from Hirni, the equipment rental company that was his client, and a representative of that company. The indictment alleges that Verrusio accepted the trip for and because of his official assistance provided and to be provided to the equipment rental company’s efforts to secure favorable amendments to the Federal Highway Bill.
According to the indictment, the all-expenses-paid trip accepted by Verrusio and Blackann included round-trip commercial airline travel to and from New York City; use of a chauffeured sport utility vehicle for transportation while in New York City; a ticket for each official to Game One of the World Series; a souvenir baseball jersey for each official; as well as lodging, meals, drinks and entertainment at a strip club. The indictment alleges that, while on the trip, Verrusio, Blackann, Hirni and the equipment rental company representative discussed the Federal Highway Bill and the equipment rental company.
The indictment also alleges that federal law required Verrusio to report his receipt of gifts valued at more than $285 per year from a single source on a 2003 annual financial disclosure form. The indictment alleges that Verrusio made a false statement on that form when he certified that the form was, "true, complete and correct," when in truth and in fact Verrusio knew and believed the form to be incomplete and incorrect in that it did not identify Hirni and the equipment rental company as the source of a reportable gift, did not describe the World Series trip or any of its reportable parts, and did not report the value of the trip or any of its reportable parts.
Blackann, Boulanger and Hirni have all pleaded guilty for their roles. The case is part of the ongoing investigation into the activities of former lobbyist Jack Abramoff and his associates. Eighteen individuals, including lobbyists and public officials, have pleaded guilty or are awaiting trial as a result of the investigation, including Abramoff, who was sentenced in September 2008 to 48 months in prison.
This case is being prosecuted by trial attorneys M. Kendall Day and Peter C. Sprung of the Public Integrity Section, headed by Section Chief William M. Welch II. The investigation is being conducted by the FBI.
An indictment is merely an allegation. Defendants are presumed innocent unless and until proven guilty in a court of law.
Indictment
Attorney General Holder Announces Recovery Act Allocations for Byrne Justice Assistance Grant ProgramRead the Press Release
WASHINGTON – U.S. Attorney General Eric Holder joined President Obama in Columbus, Ohio today at the Columbus Police Graduation Exercises to announce $2 billion in Recovery Act 2009 funding allocations for state and local law enforcement and criminal justice assistance available through the Edward Byrne Justice Assistance Grant (JAG) Program. In January, 25 Columbus police recruits learned that they would be let go rather than sworn-in; but because of Recovery Act JAG funds these police officers will keep their jobs protecting their community.
"This funding is key to helping our states and local governments fight crime and keep our streets safe," said Attorney General Holder. "The Department of Justice is moving ahead of schedule to allocate these resources so we can retain police officers, enhance law enforcement capabilities, and ensure that we have the tools and equipment necessary to build safer communities."
JAG Program funds can be used for a variety of efforts such as hiring law enforcement officers; supporting drug and gang task forces; funding crime prevention and domestic violence programs; and supporting courts, corrections, treatment, and justice information sharing initiatives. The breakdown of JAG allocations for states, territories, and units of local government can be viewed here: http://www.ojp.usdoj.gov/BJA/recoveryJAG/recoveryallocations.html.
The procedure for allocating JAG grants is based on a formula of population and violent crime statistics, in combination with a minimum allocation to ensure that each state and territory receives an appropriate share of funding. Sixty percent of the allocation is awarded directly to a state and 40 percent is set aside for units of local government. Funding will be used by states and more than 5,000 local communities to enhance their ability to protect communities and combat crime.
The Recovery Act includes more than $4 billion overall to assist state, local and tribal law enforcement and for other criminal justice activities that help to prevent crime and improve the criminal justice system in the United States while supporting the creation of jobs and much needed resources for states and local communities.
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60th Felony Conviction Obtained in Software Piracy Crackdown Operation FastlinkRead the Press Release
WASHINGTON – The 60th felony conviction from Operation Fastlink, a major Department of Justice initiative to combat online piracy worldwide, was announced today by Acting Assistant Attorney General of the Criminal Division Rita M. Glavin and Acting U.S. Attorney Nora R. Dannehy of the District of Connecticut.
Bryan Thomas Black, 30, of Waterloo, Ill., pleaded guilty today to one count of conspiracy to commit criminal infringement of a copyright for his involvement in a multinational software piracy organization that was targeted by investigators as part of "Operation Fastlink," an internationally coordinated 18-month investigation. Black will be sentenced by the Honorable Ellen Bree Burns on May 26, 2009, at which time he faces up to five years of in prison, a fine of $250,000 and three years of supervised release.
In pleading guilty today, Black admitted that, for nearly four years, he was a participant in the "warez scene," an underground online community made up of individuals and organized groups who engage in the large scale reproduction, modification and distribution of copyrighted software through the Internet. In the warez scene, Black served as the person who would obtain new video game releases and circumvent the digital copyright protections so that the software could then be reproduced and distributed on the Internet. Black also admitted that during the course of the conspiracy, he downloaded thousands of pirated copies of copyrighted works from various Web sites, known as warez sites, knowing that his and his co-conspirators’ actions were unlawful.
Operation Fastlink has resulted in more than 120 search warrants executed in 12 countries; the confiscation of hundreds of computers and illegal online distribution hubs; and the removal of more than $50 million worth of illegally copied software, games, movies and music from illicit distribution channels. Operation Fastlink is the culmination of multiple FBI undercover investigations targeting individuals involved in the illegal reproduction and distribution of movies, games, business software and music.
Operation Fastlink was conducted by the FBI, including the New Haven Field Office in coordination with the U.S. Attorney’s Office for the District of Connecticut and the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS). This case was prosecuted by Assistant U.S. Attorney Edward Chang and Senior Counsel Clement McGovern of CCIPS.
5 March 2009
U.S. Asks Courts in California & South Carolina to Shut Down Promoters of Allegedly Fraudulent $39.2 Million Tax Refund ScamRead the Press Release
WASHINGTON — The United States has sued tax return preparers in Placerville, Calif., and Columbia, S.C., seeking to bar them from preparing federal tax returns for others, the Justice Department announced today. According to the government complaints in the two cases, Teresa Marty of Pollock Pines, Calif., and Winston Able of Blythewood, S.C., prepare federal income tax returns for their customers that claim fraudulent tax refunds. The government alleges that Marty prepared one tax return claiming a $2.7 million fraudulent refund for one customer.
The complaints allege that Able and Marty both employ a tax fraud scheme that uses fabricated IRS Forms 1099-OID to report fictitious tax withholding on their customers’ returns and then claim refunds of huge amounts. The complaints against Marty and Able allege that the scheme is part of a growing trend among tax protesters to file frivolous tax returns and forms in an attempt to escape their federal tax obligations and steal from the U.S. Treasury.
The complaints allege that while the IRS detects and stops most fraudulent refund claims, Marty’s fraudulent tax return preparation has resulted in the IRS’s issuance of at least $6.9 million in erroneous payments to her customers. The government alleges that the total amount of fraudulent refunds requested on the returns Marty prepared or filed in 2008 was approximately $26.2 million and the total amount of fraudulent refunds requested on the returns Able prepared or filed was over $13 million.
Customers who participate in this tax fraud scheme may be subject to sizeable penalties for filing returns with excessive refund claims —including a penalty equal to 20% of the amount improperly claimed. The penalty applies even if, as usually happens, the IRS detects the false claim and blocks a tax refund. Thus a taxpayer improperly claiming a $2 million refund could be liable for a $400,000 penalty as well as other penalties and possible criminal prosecution.
"The actions announced today are another example of the government’s nationwide efforts to shut down tax fraud schemes and unscrupulous tax return preparers," said John A. DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division. "Taxpayers foolish enough to consider participating in this illegal scheme should consider that, in addition to risking criminal prosecution, they also risk incurring civil penalties that could cause them to lose their homes and their savings."
"Taxpayers should steer clear of any situation involving fabricating tax forms or reporting fictitious tax withholding," said IRS Commissioner Doug Shulman. "These schemes carry a high price for promoters and for taxpayers. We aggressively pursue unscrupulous tax return preparers involved in such scams. Taxpayers should remember they are ultimately responsible for what’s on their tax returns. If a promoter’s sales pitch sounds too good to be true, be sure to check it out first."
In the last decade, the Justice Department has obtained injunctions against more than 375 tax return preparers and tax-fraud promoters. Information about these cases is available on the Justice Department Web site.
Two UK Citizens Charged by United States with Bribing Nigerian Government Officials to Obtain Lucrative Contracts as Part of KBR Joint Venture SchemeRead the Press Release
WASHINGTON – Two citizens of the United Kingdom have been charged in an indictment unsealed today in the United States for their alleged participation in a decade-long scheme to bribe Nigerian government officials to obtain engineering, procurement and construction (EPC) contracts, Acting Assistant Attorney General Rita M. Glavin of the Criminal Division announced. The EPC contracts to build liquefied natural gas (LNG) facilities on Bonny Island, Nigeria, were valued at more than $6 billion.
Jeffrey Tesler, 60, of London, England, and Wojciech Chodan, 71, of Maidenhead, England, were indicted on Feb. 17, 2009, in U.S. District Court for the Southern District of Texas. The defendants are each charged with one count of conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and ten counts of violating the FCPA. The indictment also seeks forfeiture of more than $130 million from the defendants. At the request of the United States, Tesler was arrested by the London Metropolitan Police today. There is an outstanding arrest warrant in the United States for Chodan. The Justice Department is seeking the defendants’ extradition from the United Kingdom to the United States to stand trial.
According to the indictment, Tesler was hired in 1995 as an agent of a four-company joint venture that was awarded four EPC contracts by Nigeria LNG Ltd., (NLNG) between 1995 and 2004 to build LNG facilities on Bonny Island. The government-owned Nigerian National Petroleum Corporation (NNPC) was the largest shareholder of NLNG, owning 49 percent of the company. Chodan was a former salesperson and consultant of a United Kingdom subsidiary of Kellogg, Brown & Root Inc. (KBR), one of the four joint venture companies. At so-called "cultural meetings," Chodan and other co-conspirators allegedly discussed the use of Tesler and other agents to pay bribes to Nigerian government officials to secure the officials’ support for awarding the EPC contracts to the joint venture.
According to the indictment, the joint venture hired Tesler to bribe high-level Nigerian government officials, including top-level executive branch officials, and another agent to bribe lower level Nigerian government officials, including employees of NLNG. At crucial junctures before the award of the EPC contracts, KBR’s former CEO, Albert "Jack" Stanley, and others allegedly met with three successive former holders of a top-level office in the executive branch of the Nigerian government to ask the office holder to designate a representative with whom the joint venture should negotiate the bribes. Stanley and others allegedly negotiated bribe amounts with the office holders’ representatives and agreed to hire Tesler and the other agent to pay the bribes. The joint venture entered into a series of consulting contracts with a Gibraltar corporation allegedly controlled by Tesler to which the joint venture paid approximately $132 million for Tesler to use to bribe Nigerian government officials. On behalf of the joint venture and the four joint venture companies, Tesler allegedly wire transferred bribe payments to or for the benefit of various Nigerian government officials, including officials of the executive branch, NNPC, NLNG, and for the benefit of a political party in Nigeria.
If convicted on all charges, each defendant faces a maximum prison sentence of 55 years.
An indictment is merely a charge and defendants are presumed innocent until proven guilty.
In a related criminal case, KBR’s successor company, Kellogg Brown & Root LLC, pleaded guilty in February 2009 to charges related to the FCPA for its participation in the scheme to bribe Nigerian government officials. Kellogg Brown & Root LLC was ordered to pay a $402 million fine and to retain an independent compliance monitor for a three-year period to review the design and implementation of its compliance program as well as make reports to the company and the Department of Justice.
Stanley pleaded guilty in September 2008 to conspiring to violate the FCPA for his participation in the bribery scheme. Stanley’s sentencing is currently scheduled for Aug. 27, 2009.
The case is being prosecuted by Senior Trial Attorneys William J. Stuckwisch and Patrick F. Stokes of the Criminal Division’s Fraud Section, with investigative assistance from the FBI and IRS-Criminal Investigation in Houston. The Criminal Division’s Office of International Affairs provided substantial assistance. Significant assistance was provided by the SEC’s Division of Enforcement and by the authorities in France, Italy, Switzerland and the United Kingdom, including in particular the Serious Fraud Office’s Anti-Corruption Unit, the London Metropolitan Police and the City of London Police.
Indictment
Justice Department Sues Henry County, Ill., for Sexual Harassment of Former EmployeeRead the Press Release
WASHINGTON - The Department of Justice today filed a lawsuit in U.S. District Court for the Central District of Illinois against Henry County, Ill., alleging that former employee Michelle Baze was sexually harassed by her supervisor, in violation of Title VII of the Civil Rights Act of 1964. Title VII prohibits discrimination in employment on the basis of sex, race, color, national origin or religion.
The complaint alleges that Baze’s former supervisor in the Henry County Animal Control Department subjected her to sexual harassment, including unwanted physical contact of a sexual nature and inappropriate sexual comments, during the course of her employment as a secretary. The complaint alleges that Henry County had been aware that the same supervisor had sexually harassed Baze’s predecessor, but failed to take action to prevent him from harassing Baze.
"Title VII ensures that women can participate in the workplace free of harassment based on sex," said Loretta King, Acting Assistant Attorney General for the Justice Department’s Civil Rights Division. "The Department of Justice will actively pursue cases against employers who fail to take adequate steps to prevent and correct sexual harassment."
The Department of Justice is committed to the vigorous enforcement of 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.
Justice Department Sues Harrison County, Ind., Sheriff for Sexual Harassment and RetaliationRead the Press Release
WASHINGTON - The Department of Justice today filed a lawsuit against Harrison County Sheriff George Michael Deatrick, in his official capacity, alleging that he discriminated against current employee Deana Decker and former employee Melissa Graham, in the form of sexual harassment that resulted in a hostile work environment, and retaliation, in violation of Title VII of the Civil Rights Act of 1964. The Harrison County Board of Commissioners and the Harrison County Council, which fund the Sheriff’s Department, also are named as defendants in the lawsuit filed in U.S. District Court in the Southern District of Indiana.
Title VII prohibits discrimination in employment on the basis of sex, race, color, national origin or religion. It also prohibits retaliation against an employee who opposes an unlawful employment practice, or because the employee has made a charge or participated in an investigation, proceeding or hearing under the Civil Rights Act.
"It is important for employers to understand that Title VII protects women from sexual harassment in the workplace," said Acting Assistant Attorney General Loretta King for the Civil Rights Division. "The Department of Justice will vigorously pursue cases when employers engage in, or fail or refuse to take appropriate action to stop sexual harassment in the workplace."
The complaint alleges that Sheriff Deatrick subjected Decker and Graham to sexual harassment by, among other things, touching them in a sexual and offensive manner and making sexually-charged comments to them. After Decker and Graham filed discrimination charges against Deatrick with the Equal Employment Opportunity Commission, the complaint alleges that Deatrick retaliated against them by brandishing a gun and staring at them in order to intimidate and frighten them.
The Civil Rights Division is committed to the vigorous enforcement of Title VII. More information about Title VII and other federal employment laws is available on the Civil Rights Division’s Web site at: http://www.usdoj.gov/crt/emp/index.html.
Former U.S. Tax Court Official Sentenced for Engaging in a Conspiracy to Commit BriberyRead the Press Release
WASHINGTON – A former official of the U.S. Tax Court was sentenced today in connection with a bribery conspiracy involving contracts at the U.S. Tax Court in the District of Columbia, Acting Assistant Attorney General Rita M. Glavin of the Criminal Division announced.
Fred Fernando Timbol Jr., 43, of Mount Airy, Md., was sentenced by Judge Ricardo M. Urbina of the U.S. District Court for the District of Columbia to 18 months in prison and three years of supervised release. Timbol pleaded guilty on Aug. 14, 2008, to one count of conspiracy. As part of the plea agreement and by order of the court, Timbol also agreed to pay restitution in the amount of $24,142.99.
According to court documents, Timbol was a facilities services officer in the Facilities Management Section of the U.S. Tax Court. In that position, Timbol was responsible for assisting in the award of contracts to contractors who provided maintenance, construction and other related services to the U.S. Tax Court. Between July 2005 and April 2006, Timbol admitted he solicited and personally accepted at least $12,471 from a government contractor in exchange for rigging the award of at least six inflated contracts at the U.S. Tax Court.
The case was prosecuted by Trial Attorneys Daniel A. Petalas, Richard B. Evans and Peter M. Koski of the Public Integrity Section, headed by Section Chief William M. Welch II. The case was investigated jointly by the General Services Administration Office of the Inspector General and the FBI.
Fairfield, Calif., Couple Indicted on Federal Civil Rights Charge for Alleged Bias-Motivated AssaultRead the Press Release
WASHINGTON – A Fairfield, Calif., couple was indicted today by a federal grand jury in Sacramento, Calif., on federal civil rights charges related to an alleged bias-motivated assault on an Indian-American couple, announced Acting Assistant Attorney General Loretta King of the Civil Rights Division and Acting U.S. Attorney Lawrence G. Brown for the Eastern District of California.
The two-count indictment alleges that on the evening of July 14, 2007, Joseph and Georgia Silva committed a bias-motivated assault on another couple at a public beach in South Lake Tahoe, Calif. The Silvas allegedly first verbally confronted the Indian-American couple using derogatory racial and ethnic slurs. The Silvas then allegedly assaulted the couple, including striking one of the victims with a shoe and tackling and striking the other repeatedly on the head. One victim suffered significant facial injuries including fractured facial bones.
If convicted of both counts of the indictment, Joseph and Georgia Silva each face a maximum prison sentence of 20 years and a fine of up to $500,000. An indictment is merely an accusation, and the defendants are presumed innocent unless proven guilty.
The FBI’s Sacramento Division is investigating this matter. The case is being jointly prosecuted by Assistant U.S. Attorney Benjamin Wagner of the U.S. Attorney’s Office for the Eastern District of California and Trial Attorney Douglas Kern of the Justice Department’s Civil Rights Division.
The Civil Rights Division is committed to the vigorous enforcement of federal criminal civil rights statutes, including laws that prohibit race-motivated acts of violence that interfere with federally protected activities.
4 March 2009
N.J. Industrial Pipes Supply Company and Its Co-Owner Plead Guilty to Fraud at Two N.J. Superfund SitesRead the Press Release
WASHINGTON — A Middlesex, N.J., industrial pipes, valves and fittings supply company and its co-owner pleaded guilty today to participating in a fraud conspiracy at two U.S. Environmental Protection Agency (EPA)-designated Superfund sites in New Jersey, the Department of Justice announced today. The sites are Federal Creosote, located in Manville, N.J., and Diamond Alkali, located in Newark, N.J.
National Industrial Supply LLC (NIS) and its co-owner, Victor Boski, pleaded guilty in the U.S. District Court of New Jersey today. Each pleaded guilty to participating in a conspiracy to defraud the EPA at the Federal Creosote site and to defraud Tierra Solutions Inc. at the Diamond Alkali site from approximately December 2000 to approximately September 2004. Tierra Solutions is a general contractor based in The Woodlands, Texas. According to the plea agreement, NIS and Boski have agreed to cooperate with the Department’s ongoing investigation. Sentencing for NIS and Boski will be determined by the court.
"Companies and individuals who shortchange taxpayers by subverting the competitive bidding process will be held accountable," said Scott D. Hammond, Acting Assistant Attorney General in charge of the Department’s Antitrust Division.
As part of the conspiracy, Boski provided approximately $55,000 in kickbacks to Norman Stoerr, a former contracts administrator of the prime contractor at both Superfund sites, and Stoerr’s former superior in exchange for the award of sub-contracts to NIS. According to the charges, Boski, NIS, Stoerr and Stoerr’s former superior fraudulently inflated the prices of the sub-contracts to include the cost of the kickbacks.
The cleanup at the Federal Creosote site is partly funded by the EPA. An interagency agreement between the EPA and the U.S. Army Corps of Engineers designated that the EPA hire prime contractors to oversee the remedial action at the Federal Creosote site, which included the purchase of industrial pipes, valves and fittings. At Diamond Alkali, Tierra Solutions was required to fund the remedial action and maintenance of the Superfund site, according to the EPA and the New Jersey Department of Environmental Protection. Tierra Solutions hired the prime contractor for the remedial action and maintenance of Diamond Alkali.
On July 23, 2008, Stoerr pleaded guilty to bid-rigging, fraud and tax charges related to both Superfund sites. Simultaneous with Stoerr’s plea, JMJ Environmental Inc., a Laurel Springs, N.J., wastewater treatment supply company, and its owner, John Drimak Jr., pleaded guilty to bid-rigging, fraud and tax charges related to both sites. Sentencing for Stoerr, JMJ Environmental and Drimak is scheduled for May 18, 2009. Bennett Environmental Inc. (BEI) also pleaded guilty to participating in a conspiracy to defraud the EPA at the Federal Creosote site and was sentenced on Dec. 15, 2008, to pay a $1 million criminal fine. Zul Tejpar, a former BEI employee, pleaded guilty to participating in a conspiracy to provide kickbacks and defraud the EPA at the Federal Creosote site on Dec. 15, 2008. Sentencing is scheduled for Sept. 28, 2009. On Feb. 26, 2009, Christopher Tranchina, an employee of a Sewell, N.J. company that provided temporary electrical utilities, pleaded guilty to participating in a conspiracy to provide kickbacks and defraud the EPA at Federal Creosote.
NIS and Boski are charged with conspiracy to commit fraud, a violation of which carries a maximum fine of $500,000 for NIS and, for Boski, a maximum penalty of five years in prison and a $250,000 fine. The maximum fines for each defendant may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
Today’s 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 ongoing investigation is being conducted by the Antitrust Division’s New York Field Office, the EPA Office of Inspector General and the Internal Revenue Service Criminal Investigation. Anyone with information concerning bid rigging, kickbacks, tax offenses or fraud relating to subcontracts awarded at the Federal Creosote and/or the Diamond Alkali sites should contact the Antitrust Division’s New York Field Office at 212-264-9308.
Justice Department Sues Large Multi-Family Housing Developer Alleging Disability-Based Housing DiscriminationRead the Press Release
WASHINGTON– The Justice Department filed a lawsuit today against JPI Construction L.P. (JPI) and six JPI-affiliated companies in U.S. District Court in Dallas for failing to provide accessible features required by the Fair Housing Act and the Americans with Disabilities Act at multi-family housing developments in Texas and other states.
Since 1991, when the Fair Housing Act first required most new multi-family housing to contain accessible features, JPI and its affiliates have built more than 200 apartment, condominium and other housing complexes in 26 states and the District of Columbia.
"Persons with physical disabilities should have the same housing choices as other persons," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "We will continue to pursue vigorously those who still have not gotten the message that failing to design and construct multi-family housing with basic features of accessibility violates the law."
The Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability. According to the complaint, the defendants failed to design and construct accessible dwelling units and public and common use areas at Jefferson Center Apartments in Austin, Texas; Jefferson at Mission Gate Apartments in Plano, Texas; and additional multi-family housing complexes in other states. According to the complaint, certain complexes designed and constructed by the defendants have inaccessible steps and curbs leading to units, steeply sloped routes leading to units, and no accessible routes to site amenities, including inaccessible trash facilities, barbeque grills and cookout tables. In addition, certain housing units have narrow doors and hallways; kitchens that lack accessible clear floor space at the sinks, ranges and refrigerators; bathrooms that lack accessible clear floor space at the toilets and tubs; and thermostats that are mounted too high to be accessible to a person using a wheelchair.
The lawsuit seeks a court order requiring the defendants to modify the complexes to bring them into compliance with federal laws and prohibiting future discrimination by the defendants. The lawsuit also seeks monetary damages to compensate victims and a civil penalty to be paid to the government.
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. Additional information about the Fair Housing Act is also available at www.HUD.gov. Individuals who believe that they may have been victims of housing discrimination can call the Housing Discrimination Tip Line at 1-800-896-7743, e-mail 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. The allegations must still be proven in federal court.
Justice Department Settles Lawsuit Against Stimson Lumber Company to Enforce the Employment Rights of Oregon ReservistRead the Press Release
WASHINGTON - The Department of Justice announced today that it has entered into a consent decree with Stimson Lumber Company (Stimson) that, if approved by the court, will resolve the Department’s complaint, also filed today, that Oregon-based Stimson failed to reemploy Oregon reservist David Eckhardt in violation 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. military be timely reemployed by their civilian employers in the same position, or a comparable position, to the position that they would have held had they not left to serve in the military.
The Department’s complaint, filed in U.S. District Court in Portland, Ore., alleges that Stimson violated USERRA by failing or refusing to promptly reemploy David Eckhardt upon his return from military service in the Naval Reserves. In March 2007, Eckhardt attended a required military training program. After a short recovery period from an injury sustained during his military training obligation, Eckhardt contacted Stimson in April 2007 to seek reemployment as a boiler operator. The complaint alleges that Stimson failed or refused to reemploy Eckhardt, notifying him that the company had hired another individual to replace him. Under the terms of the consent decree, Stimson is required to provide remedial relief to Eckhardt in the form of an undisclosed monetary payment. Stimson is also prohibited from retaliating against persons who exercise their rights under USERRA.
"No person should lose his civilian job for choosing to serve in the military," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "The Department demonstrates again with this settlement that it is committed to vigorously enforcing federal laws that protect the employment rights of men and women who are serving in the military. We are pleased that Stimson has chosen to resolve this lawsuit and abide by the requirements of USERRA."
The Civil Rights Division has given a high priority to the enforcement of service members’ rights under USERRA. Additional information about USERRA can be found on the Justice Department Web sites: http://www.servicemembers.gov and www.usdoj.gov/crt/emp .
Justice Department Settles Lawsuit Against Ecolab Inc. to Enforce Employment Rights of Michigan U.S. Army VeteranRead the Press Release
WASHINGTON - The Department of Justice announced today that it has entered into a consent decree with Ecolab Inc. (Ecolab) that will resolve the Department’s complaint, which was filed today, that Ecolab failed to reemploy Michigan veteran Stephen Alasin in violation of the Uniformed Services Employment and Reemployment Rights Act of 1994, as amended (USERRA). The consent decree was approved by the court today as well.
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. military be timely reemployed by their civilian employers in the same position, or a comparable position, to the position that they would have held had they not left to serve in the military.
The Department’s complaint, filed in U.S. District Court in Detroit, alleges that Ecolab violated USERRA by failing or refusing to promptly reemploy Alasin upon his return from military service. Alasin enlisted in the U.S. Army in 2003 and served for almost three years, including a tour of duty in Iraq. Alasin received several medals for his military service. Upon receiving an honorable discharge in February 2006, Alasin contacted Ecolab to seek reemployment as a senior service specialist but, the complaint alleges, Ecolab failed or refused to reemploy Alasin. Under the terms of the consent decree Ecolab is required to pay Alasin $118,000 and prohibits Ecolab from retaliating against any persons who exercise their rights under USERRA.
"The Department is committed to vigorously enforcing federal laws that protect the employment rights of our service members, and cases like this, on behalf of a service member who was not reemployed following military service, further reinforce that commitment," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "The Department commends Ecolab for working cooperatively to resolve this matter and for its prompt corrective action to ensure prospective compliance with its obligations under USERRA."
"Along with the rights and liberties all Americans enjoy, our laws also impose some duties and responsibilities, including to honor the sacrifices of American soldiers returning home by allowing them to return to their jobs," said Acting U.S. Attorney Terrence Berg for the Eastern District of Michigan.
Ecolab has advised the Justice Department that the company considered this an isolated and regrettable incident, and that Ecolab already has made changes to its application process to ensure that similar incidents will not occur in the future.
The Department filed its suit against Ecolab after receiving Alasin’s complaint from the Veterans’ Employment and Training Service of the Department of Labor, upon completion of its investigation and settlement efforts.
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.
Colombian Paramilitary Leader Extradited to the United States to Face U.S. Drug ChargesRead the Press Release
WASHINGTON – Miguel Angel Mejia-Munera, a/k/a "El Mellizo," was extradited today from Colombia to the United States to face narcotics trafficking charges, announced Acting Assistant Attorney General Rita M. Glavin of the Criminal Division and Acting Administrator Michele M. Leonhart of the U.S. Drug Enforcement Administration (DEA).
According to the indictment, Miguel Angel Mejia-Munera, together with his twin brother Victor, led a major Colombian narcotics trafficking organization known as "the Twins" or "Los Mellizos" Organization. Victor Mejia-Munera was killed in April 2008 in a gun battle with the Colombian military. Miguel Angel Mejia-Munera was also allegedly a leader of the Autodefensas Unidas de Colombia (AUC), a Colombian right-wing paramilitary and drug-trafficking organization, designated by the U.S. State Department as a Foreign Terrorist Organization. Miguel Angel Mejia-Munera, the alleged leader of the Bloque Arauca of the AUC, is an Organized Crime Drug Enforcement Task Force (OCDETF)-designated Consolidated Priority Organizational Target (CPOT).
According to the indictment, returned in the District of Columbia on Jan. 29, 2004, Miguel Angel Mejia-Munera and his organization were responsible for exporting multi-thousand kilogram quantities of cocaine from Colombia to Central America, Mexico and the United States from January 1994 to January 2004.
Miguel Angel Mejia-Munera is charged in the indictment with conspiracy to import five kilograms or more of cocaine into the United States and conspiracy to manufacture and distribute five kilograms or more of cocaine, with the intent to import the cocaine into the United States. He is also charged with conspiracy to possess with intent to distribute five kilograms or more of cocaine on board a vessel subject to the jurisdiction of the United States, and with possessing and attempting to possess five kilograms or more of cocaine on board a vessel subject to the jurisdiction of the United States. Mejia-Munera also faced charges in Colombia for his alleged criminal acts.
"Through today’s extradition, Miguel Angel Mejia-Munera can now be held accountable in a U.S. court for the very serious crimes he is charged with committing," said Acting Assistant Attorney General Rita M. Glavin. "His arrival in the United States sends a message that neither the United States nor Colombia will tolerate this kind of criminal activity. The Department will continue to work in close cooperation with our Colombian law enforcement partners in combating the drug trafficking that has claimed victims in both our nations."
"The extradition of this drug kingpin closes the book on another major Colombia-based drug trafficking organization that not only was responsible for exporting massive quantities of cocaine destined for the United States, but also funded terrorist activities," said DEA Acting Administrator Michele M. Leonhart. "Miguel Angel Mejia-Munera’s claim to have demobilized under Colombia’s Justice and Peace Process is without legal merit since he refused prison confinement as is required by the Colombian Justice and Peace Law. His capture by the valiant efforts of the Colombian National Police and his extradition today underscore the resolve of our Colombian counterparts to continue working closely with us to dismantle drug and terrorist organizations."
An indictment is a formal charging document notifying the defendant of his charges. All persons charged by an indictment are presumed innocent until proven guilty.
If convicted of the charges against him, Miguel Angel Mejia-Munera faces a minimum sentence of 10 years in prison.
The case is being prosecuted by attorneys from the Criminal Division’s Narcotic and Dangerous Drug Section. Significant assistant was provided by the Criminal Division’s Office of International Affairs. The investigation in this case was led by the DEA.
3 March 2009
Kansas Cardiologist to Pay U.S. $1.3 Million to Settle False Claims Act AllegationsRead the Press Release
WASHINGTON – Joseph P. Galichia, M.D. and Galichia Medical Group P.A., a Kansas cardiologist and his practice group, have agreed to pay the United States $1.3 million to settle claims that the physician and his group violated the False Claims Act between 2001 and 2006, by submitting false claims to Medicare, the Justice Department announced today. The government contends that claims were submitted for services not provided, and in other instances, claims were submitted without proper documentation.
In May 2000, Galichia and Galichia Medical Group agreed to pay more than $1.5 million to settle a previous False Claims Act matter. In that case, the government contended that between 1993 and 1998, Galichia billed Medicare for a higher level of services than provided (up-coding), billed twice for the same services, and billed for services not provided.
"The Department of Justice is committed to ensuring that Medicare funds are paid out appropriately for services actually provided to beneficiaries," said Michael F. Hertz, Acting Assistant Attorney General for the Department’s Civil Division.
As part of the $1.3 million settlement, Galichia and Galichia Medical Group have entered into an Integrity Agreement with the U.S. Department of Health and Human Services, Office of Inspector General. The Integrity Agreement contains measures to ensure compliance with Medicare regulations and policies in the future.
"Exposing Medicare fraud is a top government priority," said Lewis Morris, Chief Counsel to the Inspector General of the Department of Health & Human Services. "We will aggressively pursue both individuals and companies seeking to enrich themselves by cheating U.S. taxpayers and the nation’s health care system."
The settlement here 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 District of Kansas; and the Department of Health and Human Services’ Office of Inspector General and Office of Counsel to the Inspector General.
Marietta Parker, Acting U.S. Attorney for the District of Kansas, commended the following investigators for their work on the case: Dan Coney of the Department of Health and Human Services’ Office of Inspector General, Troy Bird of the U.S. Postal Service’s Office of Inspector General and David Nitz of the U.S. Postal Inspection Service.
2 March 2009
United States Intervenes in Case Against EMC Corporation Alleging False Claims on Sales of Hardware, Software and Technology ServicesRead the Press Release
WASHINGTON -- The United States has intervened and filed a complaint in a qui tam suit accusing EMC Corp. of failing to disclose its commercial pricing practices during negotiation of its General Services Administration (GSA) contracts and of providing improper payments and other things of value to Systems Integrators and other Alliance Partners on contracts with government agencies, the Justice Department announced today.
The suit was originally filed in U.S. District Court in Little Rock, Ark., by Norman Rille, and his co-plaintiff, Neal Roberts, under the qui tam or whistleblower provisions of the False Claims Act. Under the qui tam statute, a private party, known as a "relator," can file an action on behalf of the United States and receive a portion of the recovery. Under the False Claims Act, the United States may recover three times the amount of its losses plus civil penalties.
Mr. Rille and Mr. Roberts alleged that EMC submitted false claims to the United States for information technology (IT) hardware and services on numerous government contracts from the late 1990’s to the present. The core of the relators’ allegations, in which the United States has joined by filing its own complaint, is that EMC made payments of money and other things of value (alliance benefits) to a number of systems integration consultants and other alliance partners with whom it had alliance relationships. The government’s complaint asserts that these alliance relationships and the resulting alliance benefits paid by EMC amount to kickbacks and undisclosed conflict of interest relationships.
The government also alleges that EMC made false statements to GSA about its commercial pricing practices in order to obtain a higher price on its contracts thereby overcharging federal agencies purchasing EMC products and services.
Acting Assistant Attorney General Michael F. Hertz announced the Department’s intervention in the suit and stated that the government joined the suit "as a part of the Department of Justice’s continuing efforts to ensure the integrity of the procurement process."
The investigation of the allegations in the qui tam complaint was conducted by the U.S. Attorney’s office in Little Rock, Ark., the Department’s Civil Division, the General Services Administration Office of the Inspector General, the Defense Criminal Investigative Service, the Office of Inspector General of the Department of Energy, the Defense Contract Audit Agency and the Postal Service Office of the Inspector General.
United States Files Suit Against Missouri-Based Pharmaceutical<br /> to Block Manufacturing and Shipping of Unapproved DrugsRead the Press Release
WASHINGTON – The United States has filed a lawsuit to block KV Pharmaceutical Company, its subsidiaries, ETHEX Corp. and Ther-Rx Corp., and its principal officers from making and distributing adulterated and unapproved drugs, the Justice Department announced today. At the same time, KV agreed to the injunction in a consent decree.
The FDA conducted inspections of KV facilities between December 2008 and February 2009 and found that the St. Louis-based company had committed significant violations of the Food and Drug Administration’s (FDA) Current Good Manufacturing Practices (CGMP) regulatory requirements and continued to manufacture unapproved drugs. As a result of FDA’s inspections, KV recalled products manufactured and distributed from its facilities. Those recalled products will be destroyed.
Under the terms of the agreement reached with the government, the defendants cannot resume manufacturing and distributing drugs until an independent expert, retained by KV, conducts a comprehensive inspection of the company’s facilities and certifies that they are in compliance with the FDCA and CGMP, and FDA gives written notification that they can resume operations. Thereafter, the consent decree requires defendants to retain an independent expert to conduct audit inspections of the company’s drug manufacturing operations to ensure they remain in compliance. The inspections must occur once every six months for a period of no less than two years and annually thereafter for an additional three years.
The agreement states that should the defendants fail to comply with the consent decree, FDCA or GCMP in the future, it empowers FDA to order the defendants to cease operations, recall drug products and/or take other correction actions. The consent decree also imposes liquidated damages on KV if it fails to comply with an of its provisions.
Department of Justice Releases Nine Office of Legal Counsel Memoranda and OpinionsRead the Press Release
WASHINGTON -- The Department of Justice today released two previously undisclosed Office of Legal Counsel (OLC) memoranda and seven previously undisclosed opinions.
"Americans deserve a government that operates with transparency and openness," said Attorney General Eric Holder. "It is my goal to make OLC opinions available when possible while still protecting national security information and ensuring robust internal executive branch debate and decision-making."
The two memoranda memorialized that certain legal propositions in ten OLC opinions issued between 2001 and 2003 no longer reflected the views of OLC and "should not be treated as authoritative for any purpose." They further explained that some of the underlying opinions had been withdrawn or superseded and that "caution should be exercised" by the executive branch "before relying in other respects" on the other opinions that had not been superseded or withdrawn.
In light of the legitimate and substantial public interest in many of the questions raised in those opinions and in the evolution of OLC’s views on those questions, the Department has released the six of those underlying opinions from 2001-2003 that are not classified and that had not previously been disclosed.
In November 2008, the Department filed a motion in a pending civil action to submit two of those underlying OLC opinions, along with one other, to the court under seal. The Department has determined that there is no longer any reason the three opinions should remain under seal and is therefore withdrawing its motion.
The opinions and memoranda are available at http://www.usdoj.gov/opa/documents/olc-memos.htm.
27 February 2009
Justice Department Files Lawsuit Against Wagner Industrial Electric Inc., to Enforce the Employment Rights of Indiana Army National GuardsmanRead the Press Release
WASHINGTON - The Department of Justice announced today that it has filed a lawsuit on behalf of Kevin Stenger, an Indiana National Guard member, against Wagner Industrial Electric Inc. (Wagner), 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.
The complaint, filed in U.S. District Court in Dayton, Ohio, alleges that Wagner violated USERRA by failing or refusing to promptly reemploy Stenger to his previous position as a foreman when he returned to work after his two weeks of annual training with the Indiana Army National Guard at Fort Leavenworth, Kan. Upon the completion of his two-week military training, Stenger contacted Wagner to seek reemployment in his foreman position. Instead, Wagner reemployed Stenger as a journeyman, a position with a lower salary, fewer responsibilities and fewer opportunities for overtime.
"No person should lose his civilian job for choosing to serve in the military," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "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 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.
International Criminal Figure Pleads Guilty to $138 Million Fuel Tax Scheme After Nearly 13 Years as a FugitiveRead the Press Release
WASHINGTON – After nearly 13 years as a fugitive, a former New Jersey resident has been returned to the United States, and pleaded guilty today to conspiring to committing one of the nation’s largest known motor fuel excise tax schemes, Acting Assistant Attorney General Rita M. Glavin of the Criminal Division announced.
Aaron Misulovin a/k/a Albert Friedman, a/k/a Valery Vibornov, pleaded guilty before U.S. District Judge Joseph E. Irenas in Camden, N.J., to one count of conspiracy, three counts of wire fraud, three counts of money laundering and three counts of tax evasion. According to the terms of the plea agreement accepted today by Judge Irenas, Misulovin will be sentenced to five years in prison, and could face a fine of up to $2.5 million and restitution. Sentencing is scheduled for June 19, 2009.
On Aug. 3, 1995, an indictment was returned by a federal grand jury in New Jersey, charging Misulovin and 24 other individuals, 15 of whom were émigrés from Eastern Europe, with conspiring to defraud the United States and the state of New Jersey of approximately $138 million in motor fuel excise taxes, and to commit the substantive offenses of wire fraud, money laundering and tax evasion. Misulovin was born in Riga, Latvia, and was naturalized as a U.S. citizen.
According to the indictment, Misulovin and co-defendants Igor Erlikh and Demetrios Karamanos, operated Kings Motor Oils (Kings), a wholesale fuel distributorship with offices in Edison, N.J. From 1989 through 1994, Kings purchased hundreds of millions of gallons of tax-free home heating oil, but through an elaborate scheme sold it as tax-paid diesel fuel to PetroPlus, a fuel wholesaler located in Deptford, N.J., which was owned and operated by co-defendant Daniel Enright. PetroPlus then sold the fuel to unknowing customers as diesel fuel for highway use, and charged and collected the applicable federal and state taxes. Under U.S. and New Jersey law, the co-conspirators incurred the tax liability for the sale of the fuel. However, instead of paying the IRS and state revenue authorities as required, the amount collected for the taxes were distributed among Enright, Misulovin, Erlikh, Karamanos and other conspirators in the scheme.
According to court documents, Kings and PetroPlus insulated themselves by inserting a series of shell companies, nominee companies and other sham entities (known collectively as "middle companies") between them in the distribution chain to give the appearance that these companies actually bought and sold the fuel. In reality, these companies never took title or possession of the fuel. According to court documents, the sole purpose of these middle companies was the generation of false and fraudulent invoices and other paperwork to disguise the true transactions between Kings and PetroPlus. One of the middle companies in each transaction would be positioned as the "burn" company – the entity that appeared on paper to bear the tax liability and that would disappear in the event of an investigation. However, the scheme was designed so that on the face of the paperwork, it always appeared that Kings and PetroPlus were relieved of any tax liability. In the early-1990s, this scheme was commonly known as a "daisy chain" scheme, and often involved organized crime groups. The "daisy chain" made it difficult for the IRS and state revenue authorities to identify those responsible to pay the federal and state taxes, and to trace the movement of the illicit proceeds. The illicit proceeds were then laundered through various bank accounts throughout the United States and overseas.
Court documents show that the sophistication and scale of this illegal operation required the participation of a number of Eastern European émigrés responsible for the creation of many of the middle companies. According to court documents, the conspirators used false identification to incorporate companies, open bank accounts, and establish storefront offices used to facilitate the scheme.
On June 19, 1998, following a nine-and-a-half-month jury trial before Judge Irenas in U.S. District Court for the District of New Jersey, Enright and Karamanos were convicted for their role in the conspiracy and related charges. Also convicted at trial were co-defendants Richard Pedroni and Mary Ingram, both wholesale motor fuels distributors in New Jersey. Two additional defendants were acquitted. Seventeen co-defendants pleaded guilty prior to trial. Enright was sentenced to 16 years in prison and ordered to pay restitution of $1 million.
At the trial of Misulovin’s co-defendants in 1997 and 1998, testimony revealed that that Misulovin and Erlikh recruited many of their friends and associates to set up the middle companies. One government witness, who had been charged as a co-conspirator and pleaded guilty, testified that he considered Misulovin his, "boss in crime." In addition, the witness revealed that Misulovin and others instructed this witness and members of his crew to form many of the middle companies using false identification. The false identification documents and corporate records of these middle companies were securely stored in a "safe house" in Brooklyn, N.Y., which Misulovin visited. Witness testimony further showed that when government agents grew suspicious about a particular middle company, Misulovin ordered that all relevant documents be destroyed. Evidence was also presented that Misulovin and Erlikh traveled to Europe during the course of the scheme to open bank accounts to be used in laundering the illegal proceeds. The evidence admitted at trial proved that, throughout the course of the scheme, Misulovin and his co-conspirators caused $596,255,927 to be wired through the middle companies. The scheme resulted in the United States being defrauded of $132,376,800. In addition, the state of New Jersey was defrauded of $11,892,297.
Misulovin and Erlikh evaded arrest on the charges by fleeing the United States in 1995. They were both considered fugitives by U.S. law enforcement, and became the subjects of an international search through notices posted by Interpol. In 1999, Erlikh was returned to the United States by Ukrainian authorities. Erlikh pleaded guilty, and was sentenced to nine years in prison and ordered to pay $1 million in restitution.
In April 2004, Israeli police arrested Misulovin, in connection with their investigation of a major international money laundering operation involving an underground bank in Israel. At the time of Misulovin’s arrest, the Israeli police froze three accounts tied to Misulovin, and seized forged and fraudulent travel documents used by Misulovin to conceal his identity. The Israeli police also seized an illegal Glock-17 firearm and ammunition from Misulovin.
U.S. and Israeli law enforcement authorities cooperated extensively throughout the duration of the Israeli investigation and prosecution of Misulovin. During this investigation, it was revealed that a portion of the funds Misulovin had laundered through the underground bank in Israel had been originally generated by his "daisy-chain" scheme in the United States. Ultimately, in July 2007, Misulovin pleaded guilty before the Tel Aviv-Jaffa Magistrate's Court to the Israeli charges involving the use of false and forged documents, illegal possession of a firearm and money laundering. Misulovin was sentenced by the Israeli court to serve two years in prison, which he began to serve in Israel in March 2008.
Misulovin entered into a plea agreement with the United States in January 2008. As part of the agreement, Misulovin agreed to waive the pending extradition, and volunteered to participate in the International Prisoner Transfer Program. The program was formally established in 1977 when Congress passed enabling legislation and the United States entered into its first transfer treaty with Mexico. In 1985, the United States also acceded to the multilateral transfer convention, the Council of Europe Convention on the Transfer of Sentenced Persons (the COE Convention). Israel is also a signatory to the COE Convention. This allowed the United States and Israel to return Misulovin, who was sentenced and imprisoned in Israel, to the United States to serve the time remaining on his Israeli sentence. Misulovin’s case is the first time that a U.S. citizen was transferred from Israel under the COE Convention.
The case was investigated by the FBI’s Newark Division; the Internal Revenue Service-Criminal Investigation Division; the U.S. Department of Transportation’s Office of Inspector General; and the New Jersey Division of Taxation.
The prosecution of the case has been led by Deputy Chief Thomas P. Ott of the Criminal Division’s Organized Crime and Racketeering Section. The prosecution has received assistance from other federal and foreign authorities, including: the Tax Division’s Northern Criminal Enforcement Section; the U.S. Attorney’s Office for the District of New Jersey; the Criminal Division’s Office of Enforcement Operations, International Prisoner Transfer Unit; the Criminal Division’s Office of International Affairs; the Bureau of Prisons; the Israel Ministry of Justice; and the Israel Police, Unit for Serious and International Crime.
Ali Al-Marri Indicted for Providing Material Support to Al-QaedaRead the Press Release
WASHINGTON – A federal grand jury in the Central District of Illinois has returned a two-count indictment charging Ali Saleh Kahlah al-Marri, 43, with providing material support to al-Qaeda and conspiring with others to provide material support to al-Qaeda, Attorney General Eric Holder announced today.
The indictment was returned yesterday and unsealed this morning. If convicted, al-Marri, a dual national of Saudi Arabia and Qatar, faces a maximum penalty of 15 years imprisonment for each count of the indictment.
“This indictment shows our resolve to protect the American people and prosecute alleged terrorists to the full extent of the law,” said Attorney General Holder. “In this administration, we will hold accountable anyone who attempts to do harm to Americans, and we will do so in a manner consistent with our values.”
On Jan. 22, 2009, the President ordered the Attorney General to lead an interagency review of al-Marri’s case. Specifically, the President instructed the Attorney General, the Secretaries of State, Defense, and Homeland Security, as well as the Director of National Intelligence to conduct a review of the factual and legal basis for al-Marri’s continued detention, and to identify and thoroughly evaluate alternative dispositions for al-Marri.
After the indictment against al-Marri was returned, the President directed the Secretary of Defense to transfer, upon the request of the Attorney General, al-Marri from the custody of the Defense Department at the Naval Consolidated Brig in Charleston, S.C., to the custody of the Justice Department for purposes of criminal prosecution. The President’s memorandum supersedes a June 23, 2003 Presidential directive that ordered al-Marri detained as an enemy combatant by the Defense Department. The transfer will be accomplished once the U.S. Supreme Court rules on a motion that the Acting Solicitor General files later today.
In conjunction with the indictment announced today, the Justice Department’s Office of the Solicitor General will be moving to dismiss al-Marri’s pending litigation before the U.S. Supreme Court.
“We look forward to prosecuting this critically important case and thank the many investigators, analysts and prosecutors who worked tirelessly to make it possible,” said Matthew Olsen, Acting Assistant Attorney General for National Security and Executive Director of the Guantanamo Detainee Review Task Force.
“These charges remind us of the importance of vigilant law enforcement across the country working individually and together to protect Americans,” said FBI Director Robert S. Mueller, III. “It was important seven years ago, and even more important today.”
“The indictment alleges that Ali al-Marri provided material support to al-Qaeda, which has committed horrific terrorist acts against our nation,” said U.S. Attorney Rodger A. Heaton. “As a result, he will now face the U.S. criminal justice system, where his guilt or innocence will be determined by a jury in open court.”
Al-Marri entered the United States on Sept. 10, 2001, purportedly to pursue a second bachelor’s degree at Bradley University in Peoria, Ill. After having been detained in the Central District of Illinois, al-Marri was transferred to the Southern District of New York as a material witness in the investigation of the Sept. 11, 2001 attacks.
Al-Marri was charged with credit card fraud, false statements and identity fraud in the Southern District of New York. After al-Marri withdrew his waiver of venue, the court dismissed the charges and the government brought its case in the Central District of Illinois. On May 22, 2003, after being returned to the Central District of Illinois, al-Marri was indicted by a grand jury in that district. The May 2003 indictment alleged the same offenses that had been alleged previously in the Southern District of New York.
On June 23, 2003, al-Marri was designated by President Bush as an enemy combatant and transported from the Central District of Illinois to the Naval Consolidated Brig in Charleston, where he has been detained since. The criminal charges against al-Marri were dismissed with prejudice on the government's motion on June 23, 2003, prior to his transfer to South Carolina.
The al-Marri investigation was conducted by the FBI Joint Terrorism Task Force in Springfield, Ill. The case is being prosecuted by Trial Attorneys Joanna Baltes and John Gibbs of the Counterterrorism Section of the Justice Department’s National Security Division, and Assistant U.S. Attorney David E. Risley of the U.S. Attorney’s Office for the Central District of Illinois.
The public is reminded that the charges contained in an indictment are mere allegations and each defendant is presumed innocent unless and until convicted in a court of law.
26 February 2009
Stanford Financial Group Chief Investment Officer Charged with ObstructionRead the Press Release
WASHINGTON – Laura Pendergest-Holt, the chief investment officer of Houston-based Stanford Financial Group (SFG), was arrested today by agents of the FBI’s Houston Field Office on a criminal complaint charging her with obstruction of a proceeding before an agency of the United States, announced Acting Assistant Attorney General of the Criminal Division Rita M. Glavin and Special Agent in Charge of the Houston Division of the FBI, Andrew R. Bland, III.
Pendergest-Holt will make her initial appearance on Friday, Feb. 27, 2009, before U.S. Magistrate Mary Milloy at the federal courthouse in Houston.
According to the complaint, Pendergest-Holt met on Feb. 10, 2009, with representatives of the U.S. Securities and Exchange Commission (SEC) at the SEC’s Fort Worth, Texas, regional office based on an SEC subpoena. According to the complaint, the SEC summoned Pendergest-Holt to testify in its investigation into allegations that SFG and related companies, including the Stanford International Bank (SIB), had defrauded investors and account holders of an estimated $8 billion in deposits.
The complaint alleges Pendergest-Holt made several affirmative misrepresentations to the SEC in order to obstruct its investigation.
Specifically, the complaint alleges that Pendergest-Holt met with several SFG corporate officers in Miami during the week of Feb. 2, 2009, to prepare for her upcoming testimony before SEC staff scheduled a week later. Pendergast-Holt is alleged to have discussed with those corporate officers the SIB’s "Tier III" Portfolio, using a computer-generated pie chart she created. The complaint alleges that the pie chart reflected, among other things, a $1.6 billion loan to a shareholder from the Tier III Portfolio.
The complaint alleges that the following week, on Feb. 10, Pendergest-Holt, accompanied by an attorney, made several misrepresentations under oath to SEC investigators during her testimony, including her alleged failure to reveal that she had participated in the Miami preparation session with SFG corporate officers. Pendergest-Holt also allegedly misrepresented her own preparatory work for the testimony, saying she had met with no one other than the attorney as she worked to ready herself for the session with the SEC.
The complaint alleges further that Pendergest-Holt failed to reveal to the SEC investigators during the testimony session that she was a member of the SIB’s investment committee, or the extent of her knowledge of the bank’s Tier III Portfolio. The complaint also alleges that at no point did Pendergest-Holt reveal that the $1.6 billion loan had been discussed with corporate officers in Miami. When asked by investigators if she served on the SIB limited investment committee, Pendergest-Holt is alleged to have answered "no."
Pendergest-Holt was interviewed again by SEC investigators on Feb. 17, 2009, in Memphis, Tenn., and, according to the complaint, she continued to obstruct the SEC’s investigation by saying she had no knowledge of the Tier III Portfolio.
The complaint is merely an accusation based on a finding of probable cause by a magistrate judge, and the defendant has not been indicted by a grand jury. The defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
The case is being investigated by the FBI’s Houston Field Office, Internal Revenue Service-Criminal Investigations and the U.S. Postal Inspection Service. The case is being prosecuted by Trial Attorney Matthew Klecka with assistance from Allan Medina, Law Clerk, Forfeiture Support Associates, assigned to the Fraud Section.
Complaint
Ohio Man Sentenced to 20 Years for Terrorism Conspiracy to Bomb Targets in Europe and the United StatesRead the Press Release
WASHINGTON – Christopher Paul, a/k/a Abdul Malek, a/k/a Paul Kenyatta Laws, a 44-year-old U.S. citizen born in Columbus, Ohio, was sentenced to 20 years in prison today for conspiring with others to use a weapon of mass destruction, namely explosive devices, against targets in Europe and the United States.
The sentence, which was handed down by U.S. District Judge Gregory L. Frost in the Southern District of Ohio, was announced by Matthew G. Olsen, Acting Assistant Attorney General for National Security; Gregory G. Lockhart, U.S. Attorney for the Southern District of Ohio; Executive Assistant Director Arthur M. Cummings, II, of the FBI’s National Security Branch; and Keith L. Bennett, Special Agent in Charge of the FBI’s Cincinnati Division.
On June 3, 2008, Paul pleaded guilty to count two of a three-count indictment charging him with conspiracy to provide material support and resources to terrorists; conspiracy to use a weapon of mass destruction (explosives); and providing material support and resources to terrorists. At his guilty plea, Paul agreed to a sentence of 20 years in prison. The government agreed to dismiss counts one and three of the indictment.
"Today’s sentence brings an end to the long, militant career of Christopher Paul, an Ohio native who joined al Qaeda in the early 1990s, fought in Afghanistan and Bosnia and conspired with others to target Americans both at home and abroad," said Acting Assistant Attorney General Matthew Olsen. "His lengthy prison term demonstrates our continuing resolve to protect the American public against terrorism."
"The Paul case represents the culmination of extraordinary efforts by the FBI Joint Terrorism Task Force as a whole and, in particular, the JTTF Paul case agents: FBI Special Agent Latisha Hartsough, Westerville Police Detective Mike Shaheen, and Franklin County Sheriff’s Deputy Jerry Goetz. Without the JTTF’s efforts and those of our international law enforcement counterparts, this case would not have been possible," said U.S. Attorney Gregory G. Lockhart.
"Thanks to the work of the agents and officers at our Columbus Joint Terrorism Task Force, American-born Christopher Paul’s actions in support of al Qaeda were disrupted and exposed. Through our partnerships around the country, we will continue to investigate and bring to justice those like him who threaten the safety and welfare of American citizens," said Executive Assistant Director Arthur M. Cummings, II, of the FBI’s National Security Branch.
According to a statement of facts read by the case agent during the change of plea hearing for Paul in June 2008 and acknowledged to be true by the defendant:
In the early 1990s, Paul traveled to Pakistan and Afghanistan to join the mujahedeen. At an al Qaeda training camp in Afghanistan, he received initial training in, among other things, the use of assault rifles, rocket-propelled grenades, and small unit tactics. After successfully completing this training, he joined al Qaeda and stayed at the Beit ur Salam guesthouse, which was exclusively for al Qaeda members. Having distinguished himself to al Qaeda, Paul was then selected for and obtained advanced training in explosives, climbing, and military history. Paul then fought in Afghanistan alongside other mujahedeen.
After fighting in Afghanistan, Paul returned to Ohio, where he began instructing individuals in martial arts in Columbus. He also began recruiting local individuals with extremist intentions in order to establish a jihadist group in Ohio. Over time and through his association with al Qaeda, Paul became dedicated to committing jihad and furthering the objectives of al Qaeda and other radical Islamic fundamentalists.
From 1993 through 1995, Paul, using various passports and names, traveled to the Balkans in Europe and fought in conflict zones such as Bosnia, establishing further contact with radical Islamic fundamentalists, and creating a master list of al Qaeda leaders and other Islamic radicals worldwide. This list and bomb-making information was seized during the execution of a search warrant at the defendant’s home.
Paul returned to Columbus after fighting in the Balkans, and, in 1997, received a fax from two al Qaeda co-conspirators in Europe asking, on behalf of "the brothers," for Paul to find them a "true group and place to make jihad." While in Columbus, Paul conducted training operations in Burr Oak State Park in Ohio with several members of his local group, replicating terrorist training he had received in Afghanistan and Bosnia.
Preparing to travel again overseas, Paul obtained a new passport after claiming his old passport – in one of his other aliases – had been damaged by water. Beginning in March 31, 1999, and continuing through Jan. 31, 2000, Paul made 44 calls to an Islamic fundamentalist co-conspirator in Europe, who was arrested in 2003 and later convicted of a terrorist conspiracy.
On April 16, 1999, Paul traveled to meet with members of an Islamic terror cell in Germany, who knew him as an expert in bomb-making/detonation devices. In Germany, Paul provided explosives training to the cell knowing that it was planning to use this training to construct bombs, car bombs, and similar devices to be used against Americans while they vacationed at foreign tourist resorts. The German terrorist cell also planned to use bombs against Americans in the United States, and against U.S. facilities abroad, such as U.S. embassies, diplomatic premises and military bases in Europe.
Upon his return to Ohio from Germany, Paul had a member of his group in Columbus purchase a printer / scanner in May 1999. The printer/scanner was then sent to one of the German terror cell members in order to help the cell manufacture fraudulent documents to facilitate worldwide travel. The cell member did not claim the package in Germany and it was sent back to Paul. During this time, Paul also bought other equipment to be used by extremists, including night vision equipment and a laser range finder. Additional similar items were found during the execution of search warrants by the Columbus FBI Joint Terrorism Task Force. Furthermore, in November 1999, bank records show that Paul wire transferred $1,760 to one of the principal members of the German cell.
The Paul investigation was conducted by the Columbus FBI Joint Terrorism Task Force, a multi-agency operation led by the FBI that includes agents and officers from 10 federal, state and local law enforcement agencies.
The case was prosecuted by the U.S. Attorney’s Office for the Southern District of Ohio and the Justice Department’s National Security Division.
N.J. Electrical Company Employee Pleads Guilty to Defrauding the Environmental Protection Agency at Superfund SiteRead the Press Release
WASHINGTON — An employee of a Sewell, N.J., company that provided temporary electrical utilities pleaded guilty today to participating in a fraud conspiracy at an Environmental Protection Agency (EPA)-designated Superfund site in New Jersey, the Department of Justice announced today.
Christopher Tranchina pleaded guilty to a charge filed today in the U.S. District Court of New Jersey. Tranchina was charged with conspiracy to defraud the EPA at the Federal Creosote site, located in Manville, N.J. The clean up at the site is partly funded by the EPA.
Under an interagency agreement between the EPA and the U.S. Army Corps of Engineers, prime contractors oversaw the removal, treatment and disposal of contaminated soil, as well as other operations at the Federal Creosote site.
According to the charge, from approximately the Spring of 2001 until approximately June of 2005, Tranchina and other co-conspirators thwarted the competitive bidding process and defrauded the EPA by inflating Federal Creosote invoices and paying kickbacks to an employee of a prime contractor at Federal Creosote. In exchange for the kickbacks, Tranchina’s employer received sub-contracts at the site. The kickbacks totaled approximately $138,000. As a part of the conspiracy, Tranchina received approximately $23,000 of the kickbacks, in the form of a hot tub, an HVAC system, cash and checks.
"The Department of Justice will investigate and prosecute those who steal from the public by subverting the competitive bidding process, particularly where taxpayer dollars are involved," said Scott D. Hammond, Acting Assistant Attorney General in charge of the Department’s Antitrust Division.
On Dec. 15, 2008, as part of the same investigation, Bennett Environmental Inc. (BEI) also pleaded guilty to participating in a conspiracy to defraud the EPA, and was sentenced to pay a criminal fine in the amount of $1 million and restitution in the amount of $1.66 million. On that same day, Zul Tejpar, a former BEI employee, pleaded guilty to his participation in the conspiracy. In addition, on July 23, 2008, JMJ Environmental Inc., a Laurel Springs, N.J., wastewater treatment supply company, its owner John Drimak Jr., and Norman Stoerr, a former contracts administrator at the Federal Creosote site, pleaded guilty to related bid rigging charges at Federal Creosote. Drimak and Stoerr also pleaded guilty to fraud charges related to both the Federal Creosote site and another New Jersey Superfund site, Diamond Alkali in Newark, N.J. Drimak and Stoerr pleaded guilty to tax related charges as well. Tejpar, Drimak and Stoerr are currently awaiting sentencing.
The fraud conspiracy that Tranchina pleaded guilty to 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.
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 ongoing investigation is being conducted by the Antitrust Division’s New York Field Office, the EPA Office of Inspector General and the Internal Revenue Service Criminal Investigation. Anyone with information concerning bid rigging, kickbacks, tax offenses or fraud relating to contracts awarded at Federal Creosote should contact the New York Field Office of the Antitrust Division at 212-264-9308.
Miami Man Found Guilty in $13.5 Million International Money Laundering SchemeRead the Press Release
WASHINGTON – Rodrigo Molina, 33, a Brazilian national who resided in Miami, was found guilty by a federal jury on 11 of 16 charged counts related to a $13.5 million money laundering conspiracy, 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.
Molina was found guilty on Feb. 25, 2009, following a seven-day jury trial in U.S. District Court for the Southern District of Florida. The indictment also charged Marcos Neto Macchione, 32, a Brazilian national residing in Avenura, Fla. Macchione pleaded guilty in June 2008 to the conspiracy to launder $13.5 million in fraud proceeds. The indictment followed the arrests of Molina and Macchione in Florida as well as 18 individuals in Brazil, including the alleged leader of this criminal organization, Doron Mukamal, as well as his partners, associates and employees. Molina and Macchione were responsible for laundering the funds illegally obtained through the telemarketing scheme.
According to evidence presented at trial, the leaders of the Brazilian telemarketing scheme (the Brazilian defendants) offered to purchase nearly worthless stock from foreign investors by offering them much more than the stocks were worth. The Brazilian defendants used well-designed Web sites to mislead their victims into believing that they were legitimate securities brokers. In order to carry out their scheme, the Brazilian defendants stole the identities of real U.S. broker dealers and created others that were fictitious. In many instances, the Brazilian defendants even created false governmental entities that touted the legitimacy of the fictitious brokers. Additionally, Voice Over Internet Protocol (VoIP) telephone providers were used so that the fictitious brokers had U.S. phone numbers even though they were located in Brazil and other countries.
Trial evidence showed that shortly before the purported stock transactions were to take place, the Brazilian defendants would require the victims to pay various advance fees that purportedly were needed to pay for taxes, escrow payments or other services not actually required in legitimate transactions. Once these "fees" were wired into bank accounts, mostly located in Miami, the Brazilian defendants simply abandoned the transactions and the victims lost their money. Molina and Macchione laundered the money through bank accounts in the United States.
Molina faces a maximum sentence of 20 years in prison on five counts of money laundering, 10 years on an additional five counts of money laundering, and twenty years on the conspiracy charge, in addition to possible fines and terms of supervised release.
In February 2009, Macchione was sentenced to 70 months in prison, two years of supervised release, and ordered to forfeit bank accounts containing approximately $1.8 million in criminal proceeds.
The case was prosecuted by Deputy Chief Steve Linick and Trial Attorney Matthew A. Klecka of the Criminal Division’s Fraud Section. The case was investigated by the FBI, U.S. Postal Inspection Service, New Jersey Bureau of Securities, New Jersey Division of Criminal Justice and the U.S. Securities and Exchange Commission.
Justice Department Settles Lawsuit Against the City of Dayton, Ohio, Alleging Discrimination Against African Americans in the Hiring of Police Officers and FirefightersRead the Press Release
WASHINGTON - The Department of Justice announced today that it has entered into a consent decree with the city of Dayton that, if approved by the court, will resolve the Department’s complaint that Dayton has been engaged in a pattern or practice of discrimination against African-Americans in its hiring of entry-level police officers and firefighters, in violation of Title VII of the Civil Rights Act of 1964 (Title VII).
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 (e.g. written examinations and qualification standards), which result in disparate impact, unless the employer can prove that such practices are job related and consistent with business necessity.
The United States’ complaint, filed in the U.S. District Court for the Southern District of Ohio in September 2008, alleges that Dayton’s use of an internally created written examination for screening entry-level police officer applicants, and its use of heightened minimum qualifications for entry-level firefighter applicants, i.e. requiring that applicants have EMT-Basic and Firefighter I and II certifications at the time they apply, resulted in disparate impact on African-Americans. The complaint also alleges that neither practice has been demonstrated by the city of Dayton to be job related and consistent with business necessity, in accordance with the requirements of Title VII. According to the complaint, although the civilian labor force of Dayton is approximately 37 percent African-American, only approximately nine percent of the city’s sworn police officers and less than 3 percent of its sworn firefighters are African–American. In fact, according to the complaint, the percentage of African-Americans in the city’s fire department actually decreased from 7 percent in 1984 to less than 3 percent in 2008.
The consent decree requires that the city of Dayton no longer use the selection practices challenged in the complaint for screening and hiring police officers and firefighters, and requires that the city develop new selection procedures for hiring police officers and firefighters that comply with Title VII. Additionally, the consent decree requires that the city of Dayton pay $450,000 into a settlement fund that will be used to make awards of back pay to African-Americans who were harmed by the selection practices challenged by the United States and who are determined to be eligible for relief. Four African-Americans who passed the city’s written police officer examination, but whose hiring was delayed due to the city’s rank-order use of the written examination scores, will each be offered $18,900 from the settlement fund, retroactive seniority for all purposes except for time-in-grade required for promotion, and the opportunity to receive retroactive pension credit. Additional African-Americans determined to be eligible for relief under the consent decree may receive a priority offer of employment from the city, a monetary award of back pay from the settlement fund, retroactive seniority for all purposes except for time-in-grade required for promotion and/or retroactive pension credit. The consent decree requires the city of Dayton to hire up to five eligible African-American claimants as police officers and up to nine eligible African-American claimants as firefighters. Under the decree, Dayton maintains the opportunity to screen the claimants eligible for consideration for priority hire to ensure that they meet the lawful qualifications for the positions required of all other police officers and firefighters.
"This settlement agreement sends a clear message that hiring practices that have discriminatory impact on account of race will not be tolerated," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "The Department commends the city of Dayton for working cooperatively to resolve this case without protracted litigation, to put in place new selection practices for police officers and firefighters that comply with Title VII and to provide relief to those African-Americans who have been harmed by the city’s hiring practices challenged by the Department."
According to the complaint, approximately 68 percent of white candidates, but only approximately 29 percent of African-American candidates, passed the city of Dayton’s most recent written police officer examination; and the scores of passing African-American candidates on that exam were lower than those of their white counterparts. In addition, of the 60 police officers the city appointed from the eligibility list that resulted from is most recent police officer examination, only four, or less than seven percent, were African-American.
The complaint also alleges that, since 2004, when the city began requiring that firefighter applicants have Emergency Medical Technician-Basic and Firefighter I and Firefighter II certifications to be considered for hire, the percentage of African-American applicants dropped significantly. While African Americans comprised 20 percent of all firefighter applicants in 2000, and approximately 25 percent of all firefighter applicants in 2002, African-Americans comprised only about 6 percent of all firefighter applicants to take the city’s most recent written firefighter examination, which was administered in 2005.
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
Iraqi-Born Dutch Citizen Pleads Guilty to Terrorism Conspiracy Against Americans in IraqRead the Press Release
WASHINGTON – An Iraqi-born Dutch citizen today pleaded guilty to conspiring with others to murder Americans overseas, including by planting roadside bombs targeting U.S. soldiers in Fallujah, Iraq, and by demonstrating on video how these explosives would be detonated to destroy American vehicles and their occupants.
The guilty plea by Wesam al-Delaema, a/k/a Wesam Khalaf Chayed Delaeme, age 36, was announced today by Matthew G. Olsen, Acting Assistant Attorney General for National Security; Jeffrey A. Taylor, U.S. Attorney for the District of Columbia; and Joseph Persichini Jr., Assistant Director in Charge of the Federal Bureau of Investigation (FBI) Washington Field Office.
At a hearing today before U.S. District Court Judge Paul Friedman, al-Delaema entered a plea of guilty to count one of a six-count indictment returned in U.S. District Court for the District of Columbia in September 2005. Specifically, al-Delaema pleaded guilty to conspiracy to murder U.S. nationals outside the United States.
Separately, al-Delaema has also agreed to plead guilty next week in Superior Court for the District of Columbia to one count of aggravated assault for a December 2007 incident at the D.C. jail in which he kicked a prison guard to the point of unconsciousness while the guard was prone on the ground. The guard sustained significant injuries, including a subdural hemorrhage. Al-Delaema was indicted for this offense in Superior Court for the District of Columbia in November 2008.
The Justice Department and al-Delaema have agreed upon a sentence of 25 years imprisonment for the offense of conspiracy to murder U.S. nationals overseas and a concurrent sentence of 18 months imprisonment for the offense of aggravated assault. Sentencing has been set for April 15, 2009. According to an agreement between the United States and the Netherlands, al-Delaema will serve out his sentence in the Netherlands.
According to the plea agreement and factual proffers filed in court, between October 2003 and May 2, 2005, al-Delaema entered into an agreement with several co-conspirators to murder U.S. nationals in Iraq. As part of the conspiracy, al-Delaema travelled to Fallujah in October 2003. There, al-Delaema and his co-conspirators -- calling themselves the "Mujahideen from Fallujah" -- declared their intentions to kill Americans in Iraq using improvised explosive devices (IEDs).
As part of the conspiracy, al-Delaema and his co-conspirators discussed and demonstrated, on video, the way in which the IEDs they had buried in a road near Fallujah would be detonated and would destroy American vehicles driving on the road and kill the American occupants of those vehicles.
In one statement on video, al-Delaema stated, "We will show you, in a short while, the site where we hide the mines and how the operation is conducted. The operation will be carried out, if Allah wills, today, and if they come. This is not the first operation we carry out. We have executed several operations and most of them were successful. The American Army wouldn’t admit to casualties. Their casualties have gone beyond our imagination. In Fallujah alone, they lost hundreds."
Later in the same video, al-Delaema and a co-conspirator demonstrated the components of an IED buried in the road.
According to the factual proffer that he agreed to, al-Delaema not only created "how-to" and recruitment videos, but also filmed the effects of roadside attacks in Iraq. Furthermore, after his return to the Netherlands, al-Delaema continued to attempt to obtain propaganda videos for those seeking to kill Americans in Iraq, frequently attempting to obtain raw footage of attacks on Americans in Iraq.
Finally, in May 2005, al-Delaema possessed video images of himself and his co-conspirators documenting their intentions to kill Americans in Iraq and their acts in furtherance of their conspiracy, including hiding the roadside bombs near Fallujah. He also possessed that day additional edited videos of attacks on Americans.
Al-Delaema was arrested by Dutch law enforcement authorities on May 2, 2005, and he initially faced similar charges in that country. Following his arrest, Dutch law enforcement and prosecution authorities worked cooperatively with the FBI in its investigation of al-Delaema’s terrorist activities.
In September 2005, the United States filed a formal request with the Netherlands seeking al-Delaema’s extradition. The extradition request was subsequently granted by a Dutch court and then by the Dutch Ministry of Justice. In December 2006, the extradition request was sustained on appeal in the Netherlands. In January 2007, al-Delaema was flown to the United States, arrested and taken into custody by the FBI.
"Today’s guilty plea is the culmination of the first prosecution in the United States charging terrorist activities in Iraq. Al-Delaema now faces justice for his efforts to orchestrate roadside bomb attacks against our men and women serving in Iraq. We are honored to play a role in prosecuting those involved in such attacks," said Matthew G. Olsen, Acting Assistant Attorney General for National Security.
"Today's plea demonstrates our continued vigilant efforts to track down and bring to justice terrorists who plot attacks on our citizens, particularly our brave military men and women serving in Iraq," stated U.S. Attorney Jeffrey A. Taylor. "We hope this sends a message to others plotting to harm our citizens that we will use every tool at our disposal to defend Americans, both at home and abroad."
"Investigations of terrorists traveling to and from Iraq and Afghanistan to conduct anti-coalition attacks can only be accomplished through the close cooperation between the FBI and our foreign law enforcement partners," said FBI Assistant Director in Charge Joseph Persichini Jr. "The FBI had the extreme good fortune to work with the Dutch KLPD in this terrorism investigation and we look forward to continued cooperation with The Netherlands and other members of the International Law Enforcement community in fighting the global war on terror."
The investigation into this matter was conducted by the FBI’s Washington Field Office, with assistance from the Dutch National Police Agency and the National Office of the Public Prosecutor in the Netherlands. The Office of International Affairs in the Criminal Division of the U.S. Department of Justice coordinated the extradition efforts on behalf of the United States.
The prosecutors handling the case are Assistant U.S. Attorneys Gregg Maisel and Rachel Lieber of the U.S. Attorney’s Office for the District of Columbia, and Trial Attorney David Miller of the Counterterrorism Section of the Justice Department’s National Security Division.
Former Cartel Leader Extradited from MexicoRead the Press Release
WASHINGTON - Miguel Caro Quintero, the alleged former leader of the now-defunct Sonora Cartel, was extradited by the government of Mexico to the United States on Feb. 25, 2009, the Justice Department announced today.
Miguel Caro Quintero arrived in the United States yesterday and has been transferred to the District of Colorado to face charges including racketeering and narcotics trafficking. Miguel Caro Quintero made his initial appearance this afternoon in U.S. District Court for the District of Colorado. Charges are also pending against Miguel Caro Quintero in the District of Arizona. Prior to his extradition, Miguel Caro Quintero was serving a prison sentence in Mexico for drug-related crimes.
The Sonora Cartel, a former drug trafficking organization based in Mexico, was responsible for exporting to the United States and distributing multi-ton quantities of marijuana during the 1980s and 1990s. Caro Quintero and his older brother, Rafael Caro Quintero, were identified as significant foreign narcotics traffickers under The Kingpin Act in June 2000, subjecting them and their associates to economic sanctions. Rafael Caro Quintero was accused of being the mastermind behind the kidnapping and murder of DEA Special Agent Enrique Camarena in 1985 and was prosecuted by the government of Mexico.
"The extradition of former kingpin Miguel Caro Quintero who reigned with impunity for too long is a victory for citizens of both the United States and Mexico," said DEA Acting Administrator Michele M. Leonhart. "After serving time in a Mexican prison, Caro Quintero will now answer for his crimes with the one consequence kingpins fear most: extradition to the United States. DEA will continue to work with our courageous Mexican counterparts in our relentless pursuit to bring the highest level drug traffickers to justice."
The District of Colorado case is being prosecuted by attorneys from the U.S. Attorney’s Office in the District of Colorado. The charges in the District of Arizona are being prosecuted by attorneys from the Criminal Division’s Narcotic and Dangerous Drug Section. The Criminal Division’s Office of International Affairs provided significant assistance in the extradition of Miguel Caro Quintero.
An indictment is merely an allegation and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
Department of Justice FY 2010 Budget RequestRead the Press Release
WASHINGTON – The President released the Administration’s FY 2010 top-line budget proposal today which includes $26.5 billion for the Department of Justice (DOJ), a 3.5 percent increase more than the FY 2009 budget. The Department’s budget includes enhanced funding for: national security and intelligence; combating financial fraud; hiring additional police officers; civil rights enforcement; securing our nation’s borders; and for federal detention and incarceration programs.
"The President has promised that, from the day he took office, America will have a Justice Department that is truly dedicated to justice," said Attorney General Holder. "This budget supports this vital task by investing in our critical law enforcement mission, including protecting Americans from terrorism, fighting financial and mortgage fraud, getting more cops on the beat, reinvigorating civil rights enforcement, and providing essential resources for our prisons."
Funding Highlights:
Counters the Threat of Terrorism and Strengthens National Security – Provides $8 billion for the FBI, including $425 million in enhancements, and $88 million for the National Security Division to address the Attorney General’s highest priority – protecting Americans from terrorist acts. Funding supports the detection and disruption of terrorists, counterintelligence, cyber security, and other threats against our national security.
Combats Financial Fraud – Provides resources for additional FBI agents to investigate mortgage fraud and corporate crime and for additional federal prosecutors, civil litigators and bankruptcy attorneys to protect investors, the integrity of the market, and the federal government’s investment of resources in the nation’s financial recovery.
Begins to Put 50,000 More Cops on the Beat – Expands the Community Oriented Policing Services (COPS) program by providing funds to begin hiring 50,000 additional police officers. Supports the hiring of police nationwide in order to help states and communities prevent the growth of crime.
Enhances Federal Civil Rights Enforcement – Includes $145 million for the Civil Rights Division to strengthen civil rights enforcement against racial, ethnic, sexual preference, religious and gender discrimination.
Strengthens Immigration Enforcement and Border Security – Includes resources for a comprehensive approach to enforcement along our borders that combines law enforcement and prosecutorial component efforts to investigate arrest, detain, and prosecute illegal immigrants and other criminals. The initiative also enhances the Department’s ability to track fugitives from justice and combat gunrunners and illegal drug traffickers.
Supports Federal Detention and Incarceration Programs – Provides $6 billion for the Bureau of Prisons and $1.4 billion for the Office of the Detention Trustee to ensure that sentenced criminals and detainees are housed in facilities that are safe, humane, cost-efficient, and secure.
Expands Prisoner Reentry Programs – Includes $109 million for prisoner reentry programs, including an additional $75 million for the Office of Justice Programs to expand grant programs authorized by the Second Chance Act that provide counseling, job training, drug treatment, and other transitional assistance to former prisoners.
Enhances Financial Accountability in the Department of Justice – Provides funds for continuing the phased implementation of the Unified Financial Management System. This initiative will unify and standardize the Department’s financial, accounting and procurement systems and processes to improve the efficiency and integrity of these functions.
Due to the Presidential transition, the President is releasing the FY 2010 budget request in two parts. The first submission, today, provides the top-line request for each agency, including the Department of Justice. The second submission, in April, will consist of detailed budget proposals and traditional congressional justification materials. The details of the Department of Justice FY 2010 budget request will be finalized in the coming weeks, and the Administration’s proposals will be released in April.
Today’s top-line budget proposal builds upon the recent funding the Department received as a result of the American Recovery and Reinvestment Act of 2009 (H.R.1). The Department received $4 billion in 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.