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18 February 2009
UBS Enters into Deferred Prosecution AgreementRead the Press Release
WASHINGTON – UBS AG, Switzerland’s largest bank, has entered into a deferred prosecution agreement on charges of conspiring to defraud the United States by impeding the Internal Revenue Service (IRS), the Justice Department announced today.
As part of the deferred prosecution agreement and in an unprecedented move, UBS, based on an order by the Swiss Financial Markets Supervisory Authority (FINMA), has agreed to immediately provide the United States government with the identities of, and account information for, certain United States customers of UBS’s cross-border business. Under the deferred prosecution agreement, UBS has also agreed to expeditiously exit the business of providing banking services to United States clients with undeclared accounts. As part of the deferred prosecution agreement, UBS has further agreed to pay $780 million in fines, penalties, interest and restitution. Earlier today, the agreement was accepted in Ft. Lauderdale, Fla. by U.S. District Judge James I. Cohn.
A criminal information was unsealed today that charges UBS with conspiring to defraud the United States by impeding the IRS. According to court documents, in 2000, after it purchased the brokerage firm Paine Webber, UBS voluntarily entered into an agreement with the IRS that required UBS to report to the IRS income and other identifying information for its United States clients who held United States securities in a UBS account. Court documents allege that the agreement also required UBS to withhold income taxes from United States clients who directed investment activities in foreign securities from the United States. The information further asserts that, in order to evade those new reporting requirements, employees and managers within the cross-border business, with the knowledge of certain UBS executives, helped United States taxpayers open new UBS accounts in the names of nominees and/or sham entities. According to court documents, the assets of the individual’s accounts were then transferred to the newly created accounts, as to which the U.S. taxpayer would not be identified as a beneficiary.
The information asserts that this device was used by UBS to justify evading its reporting obligations and helped United States taxpayers to continue to conceal their identities and assets from the IRS.
The information also alleges that Swiss bankers routinely traveled to the United States to market Swiss bank secrecy to United States clients interested in attempting to evade United States income taxes. Court documents assert that, in 2004 alone, Swiss bankers allegedly traveled to the United States approximately 3,800 times to discuss their clients’ Swiss bank accounts. The information further alleges that UBS managers and employees used encrypted laptops and other counter-surveillance techniques to help prevent the detection of their marketing efforts and the identities and offshore assets of their U.S. clients. According to the information, clients of the cross-border business in turn filed false tax returns which omitted the income earned on their Swiss bank accounts and failed to disclose the existence of those accounts to the IRS.
In light of the bank’s willingness to acknowledge responsibility for its actions and omissions, its cooperation and remedial actions to date, and its promised continuing cooperation and remedial actions, the government will recommend dismissal of the charge, provided the bank fully carries out its obligations under the agreement.
In November 2008, UBS executive Raoul Weil was indicted by a federal grand jury in Fort Lauderdale and charged with conspiring to defraud the United States for his alleged role in overseeing the United States cross-border business. The district court recently declared him to be a fugitive.
In June 2008, former UBS private banker Bradley Birkenfeld pleaded guilty to a charge of conspiring to defraud the United States for similar conduct. Birkenfeld is scheduled to be sentenced on May 1, 2009. Also, in June 2008, the U.S. District Court in Miami authorized the Internal Revenue Service to serve upon UBS a so-called "John Doe" summons seeking records that would identify United States taxpayers with accounts at UBS in Switzerland who have elected to conceal the existence of their accounts from the IRS.
"Today’s agreement is but one milestone in an ongoing law enforcement effort to reassure hard-working and law-abiding taxpayers who pay their fair share of taxes that those who don’t will pay a heavy price," said John A. DiCicco, Acting Assistant Attorney General of the Justice Department’s Tax Division. "The veil of secrecy has been pulled aside and we will continue to aggressively pursue those who shirk their federal tax obligations or assist others in doing so."
"UBS executives knew that UBS’s cross-border business violated the law," said R. Alexander Acosta, U.S. Attorney for the Southern District of Florida. "They refused to stop this activity, however, and in fact instructed their bankers to grow the business. The reason was money -- the business was too profitable to give up. This was not a mere compliance oversight, but rather a knowing crime motivated by greed and disrespect of the law."
Acting Assistant Attorney General DiCicco and U.S. Attorney Acosta commended Tax Division attorneys Kevin Downing and Michael Ben’Ary, and Assistant U.S. Attorney Jeffrey Neiman, along with special agents from the Internal Revenue Service who provided invaluable assistance in investigating this case.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at http://www.usdoj.gov/tax/.
U.S. Court Issues Permanent Injunction Order Against Maine Tax Return PreparerRead the Press Release
WASHINGTON – A federal court in Maine permanently barred Donna L. Hamilton from preparing federal tax returns for others, the Justice Department announced today. The court also ordered the Maine resident to provide her customer lists to the government and to mail copies of the court order to her customers. Hamilton consented to the civil injunction order.
According to the government complaint, Hamilton operated a tax return preparation service under the name East Coast Accounting from her mother’s residence in Topsham, Maine. Hamilton allegedly purchased the business from her mother, Carol East Palesky, who had previously operated a business that provided tax return preparation and other accounting services under the name East Accounting Associates. On Dec. 12, 2007, U.S. District Judge D. Brock Hornby issued an order of permanent injunction against Palesky prohibiting her from preparing federal tax returns and advising anyone about the preparation of a federal income tax return.
The complaint states that Hamilton prepared approximately 82 returns during the 2006 and 2007 filing seasons. The government complaint also alleges that Hamilton prepared federal tax returns during the 2005 filing season but did not sign any of the returns. The complaint further alleges that the IRS estimates a potential $123,000 loss to the U.S. Treasury.
According to the complaint, Hamilton fabricated and/or inflated deductions relating to employees’ business expenses, capital losses and education credits. One example in the complaint asserts that Hamilton reported a $1,000 education credit on her customers’ tax return even though the customers had never provided her with any information that would suggest that they were enrolled in college or had incurred any educational expenses during the tax.
Acting Assistant Attorney General John A. DiCicco thanked Tax Division trial attorney Lisa Bellamy for her handling of the government’s case. The Justice Department has obtained injunctions against more than 375 tax return preparers and tax-fraud promoters over the past decade. Information about the Justice Department’s Tax Division and its efforts to stop fraudulent return preparers is available on the Justice Department Web site.
Statement from Matthew A. Miller, Director of the Office of Public Affairs, Regarding Issuance of the National Research Councils Report on Forensic ScienceRead the Press Release
"We appreciate the diligent work of the National Research Council’s committee on forensic science in preparing this report. The Department of Justice’s principal focus in dealing with forensic evidence is on applying it dispassionately to law enforcement challenges, and we regularly use forensics to not only convict the guilty, but also to exonerate the innocent.
"We look forward to working with the law enforcement community and members of Congress to evaluate this report and consider how best to address its findings and recommendations."
North Carolina Man Pleads Guilty<br /> to Possessing Child PornographyRead the Press Release
WASHINGTON – Timothy Christenbury, of Charlotte, N.C., pleaded guilty today to possessing child pornography, Acting Assistant Attorney General of the Criminal Division Rita M. Glavin and U.S. Attorney for the Western District of North Carolina Gretchen C.F. Shappert announced.
Christenbury, 46, pleaded guilty before U.S. Magistrate Judge Carl Horn III to one count of possession of child pornography. He was indicted on those charges on Dec. 16, 2008. According to the indictment, Christenbury possessed computer files containing child pornography from on or about Sept. 2 to Sept. 4, 2007.
Christenbury was identified through "Operation Joint Hammer" – the U.S. component of an ongoing global enforcement operation targeting transnational rings of child pornographers. The operation already has led to the arrest of more than 60 people in the United States involved in the trade of child pornography.
Operation Joint Hammer was initiated through evidence developed by European law enforcement and shared with U.S. counterparts by Europol and Interpol. The European portion of this global enforcement effort, "Operation Koala," was launched after the discovery of a handful of people in Europe who were molesting children and producing photographs of that abuse for commercial gain. Further investigation unveiled a number of online child pornography rings – some of which hosted dangerous offenders who not only traded child pornography, but who themselves sexually abused children. Law enforcement has determined that the customers of the Web site were located in nearly 30 countries around the world, including the United States.
Christenbury faces a maximum of 10 years in prison, forfeiture of all seized property, and up to a $250,000 fine. Christenbury also will face the imposition of supervised release following his release from prison for a term of at least five years to life.
The case is being prosecuted by Assistant U.S. Attorneys Cortney Escaravage and Kimlani Ford of the Western District of North Carolina and Trial Attorney Alecia Riewerts Wolak of the Criminal Division’s Child Exploitation and Obscenity Section. The investigation is being handled by Immigration and Customs Enforcement.
Justice Department Obtains $120,000 Settlement in Discrimination Lawsuit Against Chicago Area RealtorsRead the Press Release
WASHINGTON —RE/MAX East-West, a real estate firm in Elmhurst, Ill., and one of its former real estate agents, John DeJohn, have agreed to pay $120,000 to settle allegations that they illegally steered prospective homebuyers toward and away from certain neighborhoods based on race and national origin, the Justice Department announced today. The consent decree was signed on Feb. 17, 2009, by U.S. District Judge Ruben Castillo.
The lawsuit originated from a complaint filed by the National Fair Housing Alliance (NFHA) with the U.S. Department of Housing and Urban Development (HUD). Testing conducted by NFHA of RE/MAX East-West in 2004 and 2005 revealed that DeJohn had steered an Hispanic tester toward homes in predominantly African-American or Hispanic neighborhoods, but had encouraged a similarly situated white tester to look at listings in predominantly white neighborhoods. Both testers had contacted DeJohn about the same advertised listing. According to the complaint, DeJohn also told the white tester that, "I don’t care if you are a bigot. If we go to an area and you don’t like it, just let me know. I can’t be a bigot but you can be one," or words to that effect. After an investigation, HUD found reasonable cause to believe that unlawful discrimination had occurred and referred the matter to the Justice Department, which filed a lawsuit in the Northern District of Illinois on July 18, 2008.
"Unlawful steering by real estate agents frustrates the rights of people to make fully informed housing choices and perpetuates segregated housing patterns," said Acting Assistant Attorney General Loretta King of the Civil Rights Division. "We appreciate the efforts of NFHA and of investigators at HUD who have helped shine a light on this problem. We will continue to vigorously pursue such discrimination."
"Real estate firms and their agents who steer buyers to different neighborhoods based on race or nationality have violated the Fair Housing Act, and we will enforce the law to ensure that people may purchase homes where they choose and are free from unlawful discrimination," said Patrick Fitzgerald, United States Attorney for the Northern District of Illinois.
"The elimination of racial steering was a principal goal of the Fair Housing Act, when it was signed into law in 1968," said Bryan Greene, HUD's General Deputy Assistant Secretary for Fair Housing and Equal Opportunity. "Today, steering still rears its head. Where it does, HUD will wield the law against it, and in partnership with the Department of Justice, obtain meaningful relief for its victims."
The lawsuit named as defendants S&W Elmhurst LLC, an Elmhurst company that does business under the name RE/MAX East West, and DeJohn. The settlement requires the defendants to pay $120,000 to the NFHA. The settlement also requires RE/MAX East-West to hire a qualified organization to provide fair housing training to its agents and to maintain records and submit periodic reports to the Justice Department. DeJohn is no longer working as a realtor and his Illinois real estate license expires in April 2009. However, the settlement requires DeJohn to comply with similar training and reporting requirements if he decides to become a real estate agent again in Illinois or any other state.
Fighting illegal housing discrimination is a top priority of the Justice Department. The Federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability. More information about the Civil Rights Division and the laws it enforces is available at http://www.usdoj.gov/crt. Persons who believe they have experienced or witnessed unlawful housing discrimination may call the Housing Discrimination Tip Line at 1-800-896-7743, e-mail the Justice Department at [email protected], or contact HUD at 1-800-669-9777. More information about the Fair Housing Act can also be found at www.usdoj.gov/fairhousing or www.HUD.gov.
17 February 2009
U.S. Court Permanently Shuts Down Two Pennsylvania Tax PreparersRead the Press Release
WASHINGTON – A federal judge in Pennsylvania has permanently barred Chalamar Muhammad and her husband, Curtis Muhammad, from preparing tax returns for others, the Justice Department announced today. Judge Harvey Bartle III of the U.S. District Court for the Eastern District of Pennsylvania entered the order of permanent injunction after the Coatesville, Pa., couple failed to defend against the government’s allegations. The case against the third defendant, Chalamar’s mother, Doranna Muhammad, remains pending.
According to the government complaint in the case, the three family members operated CDC Tax Preparation and Financial Services. The firm allegedly prepared federal income tax returns for customers claiming fabricated deductions and credits. Examples of bogus tax deductions mentioned in the government’s court papers include false claims of contributions of thousands of dollars to churches and charities, and false claims of education credits. According to the complaint, the Internal Revenue Service (IRS) has identified more than $2.2 million in unreported tax liability on returns prepared by the defendants that it has audited, and estimates that the total cost to the U.S. Treasury from the defendants’ misconduct may exceed $7 million.
The government complaint alleges that the firm prepared more than 2,600 tax returns for customers since 2003. Chalamar Muhammad allegedly tried to obstruct IRS audits of her customers’ returns by submitting documents that she fabricated to purportedly substantiate bogus deductions and credits. The complaint alleges that the Muhammads changed the business’s name and its IRS electronic filing number frequently in order to stay a step ahead of the law. As part of the court’s order, Chalamar and Curtis Muhammad are permanently barred from using the IRS’s E-File program to file tax returns for others.
Acting Assistant Attorney General John A. DiCicco thanked Tax Division trial attorney Ellen Weis for her handling of the government’s case, and Revenue Agent Julie Hersh of the Internal Revenue Service’s Small Business Self-Employed Division for her extensive investigative work. Over the past decade, the Justice Department’s Tax Division has obtained injunctions against more than 375 tax return preparers and tax-fraud promoters.
Information about the Justice Department’s Tax Division and its efforts to stop tax-fraud promoters and fraudulent tax preparers is available on the Justice Department’s Web site.
Injunction
Texas Man Sentenced to 41 Months in Prison for Selling Counterfeit <br /> Software Worth $1 Million on Web SitesRead the Press Release
WASHINGTON - Timothy Kyle Dunaway, 24, of Wichita Falls, Texas, was sentenced today to 41 months in prison by U.S. District Court Judge Reed O’Connor in Wichita Falls for selling counterfeit computer software through the Internet in violation of criminal copyright infringement laws, Acting Assistant Attorney General Rita M. Glavin of the Criminal Division and Acting U.S. Attorney James T. Jacks for the Northern District of Texas announced. The software sold by Dunaway had a combined retail value of more than $1 million.
Dunaway was also sentenced to two years of supervised release and ordered to pay $810,257 in restitution. Judge O’Connor also ordered Dunaway to forfeit a Ferrari 348 TB and a Rolex watch purchased with illegal proceeds of the scheme. Dunaway pleaded guilty in Wichita Falls on Oct. 30, 2008, to one count of criminal copyright infringement for selling pirated business software through the Internet.
According to court documents, from July 2004 through May 2008, Dunaway operated approximately 40 Web sites that sold a large volume of downloadable counterfeit software without authorization from the copyright owners. Dunaway admitted he operated computer servers in Vienna, Austria and Malaysia. Agents of U.S. Immigration and Customs Enforcement (ICE), working in cooperation with foreign law enforcement, seized Dunaway’s international computer servers. According to court documents, Dunaway promoted his illicit scheme by purchasing advertising for his Web sites from major Internet search engines. Throughout the entire course of the scheme, the defendant processed more than $800,000 dollars through credit card merchant accounts under his control.
The case is part of the Department of Justice’s ongoing initiative to combat the sale of pirated software and counterfeit goods through commercial Web sites and online auction sites such as eBay. To date, the Department has obtained 33 convictions involving online auction and commercial distribution of counterfeit software. The Department’s initiative to combat online auction piracy is just one of several steps being undertaken to address the losses caused by intellectual property theft and hold responsible those engaged in criminal copyright infringement.
The case is being prosecuted by Trial Attorney Marc Miller of the Criminal Division’s Computer Crime and Intellectual Property Section as well as Assistant U.S. Attorneys Alex C. Lewis and Diane Kozub for the Northern District of Texas. The case was investigated by the multi-agency Intellectual Property Rights Coordination Center, the ICE Cyber Crimes Center and the Dallas office of ICE.
Justice Department Receives $4 Billion in Grant Funding as a Result of the American Recovery and Reinvestment Act of 2009Read the Press Release
WASHINGTON — Today President Obama signed the American Recovery and Reinvestment Act of 2009 (H.R.1), which includes $4 billion in Department of Justice grant funding to enhance state, local, and tribal law enforcement efforts, including the hiring of new police officers, to combat violence against women, and to fight internet crimes against children, the Department of Justice announced.
“This funding is vital to keeping our communities strong,” said Attorney General Eric Holder. “As governors, mayors, and local law enforcement professionals struggle with the current economic crisis, we can’t afford to decrease our commitment to fighting crime and keeping our communities safe. These grants will help ensure states and localities can make the concerted efforts necessary to protect our most vulnerable communities and populations.”
Specific Department of Justice investments in the Act include:
- $1 billion to fund local police officers through Community Oriented Policing Services (COPS) program. These grants will fund an estimated 5,500 local police officers through the COPS Hiring Recovery Program.
- $2 billion in the Edward Byrne Justice Assistance Grant (JAG) program through the Office of Justice Programs (OJP) to fund grants for state and local programs that combat crime. The Byrne JAG program is distributed by formula – 60 percent to the states and 40 percent to the local law enforcement efforts.
- Resources from the Office on Violence Against Women for programs that help our most vulnerable populations -- $225 million in Violence Against Women Act Grants. Also provides $100 million through OJP for grants to assist victims of crime, $225 million for tribal law enforcement assistance, and $50 million for the Internet Crimes Against Children Task Forces.
- Provides an additional $390 million from OJP for local law enforcement assistance, including $225 million in competitive Byrne grants, $125 million targeted for rural areas, and $40 million for the Southern border (including $10 million for ATF’s Project Gunrunner).
The Act also includes funds for the administration of the Department’s Recovery Act grants and associated oversight and accountability.
Information regarding COPS can be found at http://www.cops.usdoj.gov. Press inquiries may be directed to Corey Ray, 202-616-1728.
Information about the Office of Justice Programs can be found at http://www.ojp.usdoj.gov. Press inquiries may be directed to OJP’s Office of Communications at 202-307-0703.
Information about the Office on Violence Against Women can be found at http://www.ovw.usdoj.gov. Press inquiries may be directed to Joan LaRocca at 202-307-6026.
Atlantic City Tax Return Preparer Sentenced to Jail for FraudRead the Press Release
WASHINGTON – Eduardo Cortez, a resident of Mays Landing, N.J., was sentenced to 36 months incarceration and three years of supervised release by U.S. District Judge Noel L. Hillman in Camden, N.J., the Justice Department and Internal Revenue Service (IRS) announced today. According to his plea agreement, Cortez and his employees knowingly prepared false and fraudulent tax returns for customers that included false and inflated deductions, credits and adjustments. Cortez, who is also known as Eduardo Cortes, Edward Cortez, Eduardo Perez, and Eduardo Cottes, was also ordered to pay restitution of $442,734.
In August 2008, Cortez pleaded guilty to tax evasion and conspiracy to defraud the IRS. According to his plea agreement, Cortez defrauded the IRS by preparing false tax returns for customers of his business, Peoples Multiple Services, located in Atlantic City. Peoples also operated under the names People Tax Services, Perez Income Tax Services, People Multiple Services Inc., Peoples Multi Level Services and Cormel Inc.
According to his plea agreement, Cortez entered into an agreement with the IRS in 2000 stating that he owed over $114,000 in taxes, exclusive of interest and penalties, for calendar years 1993 through 1995. The plea agreement states that Cortez evaded these assessed taxes by taking various steps to conceal his assets and income from the IRS. His conduct, according to the plea agreement, included submitting false documents to the IRS which misrepresented his ability to pay his taxes and understated his net worth.
The plea agreement states that Cortez also used nominees to hide his income from the IRS. It further states that he had his business income paid to nominees and deposited into bank and brokerage accounts opened in the names of those nominees. Cortez also admitted in his plea agreement that he caused his personal expenses to be paid for by the nominees and caused tax returns to be filed in the names of nominees which falsely reported Cortez’s business income and assets.
Rosalind Kengkart, a co-defendant of Cortez who pleaded guilty to conspiracy to impede the IRS in July 2008, is scheduled to be sentenced by Judge Hillman on Feb. 18, 2009. According to her plea agreement, Kengkart, a resident of Atlantic City, prepared false tax returns for customers at Peoples that included false and inflated deductions, credits, and adjustments.
John A. DiCicco, Acting Assistant Attorney General of the Justice Department’s Tax Division, commended the IRS special agents who investigated the case, as well as Tax Division trial attorneys Shawn T. Noud and Mark F. Daly 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/.
13 February 2009
U.S. Asks Federal Court to Shut Down Iowa Tax PreparersRead the Press Release
WASHINGTON — The United States has sued a Clive, Iowa, couple to bar them from preparing federal tax returns for others, the Justice Department announced today. According to the government complaint, Jill Schwartz-Musin, her husband Howard Musin, and their business, SSC Services, prepare fraudulent federal income tax returns for small business owners.
The complaint alleges that the couple prepares income tax returns for customers throughout the nation, many of whom operate home-based businesses. According to the complaint, Schwartz-Musin promoted her tax business at an annual conference for Shaklee Corporation distributors.
The complaint also alleges the couple claim fabricated business expenses on customers’ returns —sometimes for tens of thousands of dollars —in order to reduce their taxes. The suit alleges the couple improperly claimed business expense deductions on customers’ returns for costs of such personal items as clothing, hair care, nail care, use of tanning salons, a hot tub, furniture in a vacation home, gifts to family members and vacation trips to Sweden and Cancun, Mexico. In what the complaint calls an egregious example of misconduct, the couple allegedly claimed business deductions on one customer’s return for wedding expenses that included payments for flowers, photography and makeup.
The government alleges that Schwartz-Musin and Musin have prepared over 5,500 income tax returns between 2003 and 2006. The complaint estimates that the fraudulent deductions on returns the defendants prepared have cost the United States over $21 million between 2003 and 2007.
Over the past decade, the Justice Department has obtained injunctions against more than 370 tax preparers and tax-fraud promoters. Information about these cases is available on the Justice Department website.
Three Miami Physicians and Three Medical Workers Charged with $10 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – Six Miami-Dade County residents have been indicted in connection with an alleged $10 million Medicare fraud scheme operated out of Midway Medical, a Miami clinic that purported to specialize in treating HIV/AIDS patients, 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.
Carmen Lourdes del Cueto, M.D., 65, Roberto Rodriguez, M.D., 54, Carlos Garrido, M.D., 69, Gonzalo Nodarse, 38, Alexis Carrazana, 41, and Alexis Dagnesses, 44, were all indicted by a grand jury in Miami on Feb. 12, 2009, for conspiracy to commit health care fraud. Del Cueto, Rodriguez, Garrido and Nodarse were also charged with conspiracy to launder health care fraud proceeds, as well as three counts each of substantive money laundering. The indictment seeks the forfeiture of assets from all named defendants.
According to the indictment, the three physicians, del Cueto, Rodriguez and Garrido, were part-owners of Midway Medical. Midway Medical purported to be an infusion clinic that specialized in providing infusions and injections to HIV-positive patients. The indictment alleges that the physicians ordered medically unnecessary infusions and injections, and falsified medical records to make it appear that the HIV services were necessary. The indictment also alleges that many of the infusions or injections were never actually provided.
The indictment also alleges that medical assistants Nodarse and Carrazana assisted the physicians in falsifying the medical records to make it appear that the services were needed. As part of the scheme, Dagnesses is alleged to have manipulated HIV-positive blood samples in order to obtain laboratory reports indicating that the patients had illnesses that they in fact did not have.
Del Cueto, Rodriguez, Garrido and Nodarse are further charged with distributing the proceeds of the fraud through a series of financial transactions involving more that $10,000 in tainted funds.
The indictment alleges that the physicians at Midway Medical billed more than $10 million to the Medicare program for services that were medically unnecessary and not actually provided between September 2002 and June 2005. During that time frame, Medicare paid more than $4.8 million on those fraudulent claims submitted by Midway Medical. If convicted on all charges, Del Cueto, Rodriguez, Garrido and Nodarse each face maximum prison sentences of 50 years. Carrazana and Dagnesses face 10 year maximum terms in prison.
An indictment is merely a charge and defendants are presumed innocent until proven guilty.
The case is being prosecuted by Trial Attorney John K. Neal and Deputy Chief Kirk Ogrosky of the Criminal Division’s Fraud Section. The case was investigated by the FBI and the Department of Health and Human Services, Office of Inspector General. The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and U.S. Attorney Acosta of the Southern District of Florida. Since strike force operations began in March 2007, 107 cases including 196 defendants have been indicted. Collectively, these defendants are alleged to have fraudulently billed the Medicare program for more than $600 million.
Justice Department Seeks to Shut Down Sacramento Tax Preparation FirmRead the Press Release
WASHINGTON – The United States has sued a Sacramento, Calif., tax preparer, Chris Elmer, his firm – Associated Tax Planners Inc. (ATP) – and several members of his family associated with ATP, seeking to bar them all permanently from the tax-preparation business, the Justice Department announced today. The civil injunction suit was filed in Sacramento with the U.S. District Court for the Eastern District of California.
The complaint alleges that ATP prepares thousands of federal income tax returns for individuals and businesses each year, and repeatedly claims false or inflated business deductions. Many of the deductions are allegedly claimed as purported business expenses of sham partnerships. The complaint alleges that in many instances the defendants claimed purported partnership business losses on customers’ individual tax returns regardless of whether the customers actually had a partnership or other business enterprise.
The complaint further alleges that the defendants and their customers often do not file a corresponding partnership return when the customers report partnership losses on their individual returns. The defendants also allegedly fabricate phony Internal Revenue Service (IRS) tax identification numbers for the partnerships to conceal their sham nature.
The defendants allegedly told customers and other tax preparers that the IRS is unlikely to detect the defendants’ deductions because the IRS is unlikely to audit a small partnership. Chris Elmer allegedly told one customer that this made a small partnership an ideal vehicle in which to "tuck" personal expenses as business-expense deductions.
"The public should beware of tax preparers who claim to know how to hide deductions from the Internal Revenue Service," said John DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division. "Taxpayers should carefully review their returns before they are filed with the IRS."
Over the past decade, the Justice Department has obtained injunctions against more than 370 tax preparers and tax-fraud promoters. Information about these cases is available on http://www.usdoj.gov/tax/.
German National Arrested for Smuggling Coral from the PhilippinesRead the Press Release
WASHINGTON—Gunther Wenzek, a German national, was arraigned today in U.S. District Court in Alexandria, Va., on a nine count indictment charging him with three felony counts of smuggling protected coral into the United States port of Portland, Ore., three felony counts of violating the Lacey Act and three misdemeanor charges of violating the Endangered Species Act, the Justice Department announced. Wenzek appeared today before U.S. Magistrate Judge T. Rawles Jones, Jr. of the Eastern District of Virginia.
A grand jury in Portland, Ore. indicted Wenzek in July 2008. The indictment had been sealed pending Wenzek’s scheduled appearance at the Global Pet Expo in Orlando, Fla., this week. Law enforcement officials arrested Wenzek Wednesday night as he entered the United States at Dulles airport outside of Washington, D.C., en route to the pet exposition.
According to the indictment, Wenzek owns a company named CoraPet, based in Essen, Germany, and has sold various coral products to retailers in the United States. An investigation was launched in 2007 after Wenzek tried to ship a container loaded with fragments of endangered coral from reefs off the Philippine coast to Portland. After this initial shipment, agents subsequently seized two full containers of endangered coral shipped by Wenzek to a customer in Portland. These two shipments made up a total of over 40 tons of coral.
The corals seized have been identified as corals from the scientific order Scleractinia, genera Porites, Acropora, and Pocillopora, common to Philippine reefs. Due to the threat of extinction, stony corals, such as those seized in this case are protected by international law. Philippine law specifically forbids exports of all coral. Moreover, the Convention on International Trade in Endangered Species (CITES) bars importation of the coral Wenzek tried to import to customers in the United States, absent a permit.
“Protection of coral reefs continues to play an important role in the Department of Justice’s environmental enforcement efforts both domestically and internationally, said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “Preventing the further decline of coral reefs is of paramount importance in preserving our marine environment and fisheries.”
Andrew Bruckner, a biologist from the National Oceanic Atmospheric Administration, Office of Law Enforcement said, “The removal of dead coral and live rock is of major concern for coral reefs, including those reefs protecting coastal communities from storms. These corals are the fundamental building blocks of the coral reef ecosystem. Unsustainable collection of coral frequently results in the loss of important nursery areas, feeding grounds, refuge for fish and invertebrates, and increased erosion of reef systems.”Karin J. Immergut, U.S. Attorney for the District of Oregon, said, “We will not allow criminals to profit from the illegal devastation of the world’s coral reefs. We will scour the globe for those responsible for this devastation and bring them to justice.”
“We appreciate the support from fellow law enforcement on this very important investigation,” said Paul Chang, Special Agent in Charge of Law Enforcement for the U.S. Fish and Wildlife Service's Pacific Region, based in Portland. “Stopping the type of criminal activity alleged in this case ranks among our highest priorities because of the very significant impact it has on the dwindling coral reefs of the world.”
The Lacey Act prohibits import, export, transportation, sale, receipt, acquisition or purchase of fish, wildlife, or plants that are taken, possessed, transported or sold in violation of any federal, state, tribal or foreign law.
An indictment is merely an accusation, and a defendant is presumed innocent unless and until proven guilty in a court of law.The case was investigated by the U.S. Fish and Wildlife Service, U.S. Immigration and Customs Enforcement, and the National Marine Fisheries Service. The case is being prosecuted by Assistant U.S. Attorney, Dwight Holton from the District of Oregon and Senior Trial Attorney J. Ronald Sutcliffe of the Justice Department’s Environmental Crimes Section, with assistance from the Eastern District of Virginia.
Co-Founder of Casino-Cheating Criminal Enterprise Pleads Guilty to Racketeering Conspiracy Targeting Casinos in the United States and CanadaRead the Press Release
WASHINGTON – Tai Khiem Tran, 47, pleaded guilty today in San Diego to conspiring to participate in a racketeering enterprise, the "Tran Organization," in a scheme to cheat casinos across the United States and Canada, Acting Assistant Attorney General Rita M. Glavin of the Criminal Division and U.S. Attorney Karen P. Hewitt for the Southern District of California announced today. Tran admitted that he and his co-conspirators unlawfully obtained up to $1 million during card cheats.
A three-count indictment was returned May 22, 2007, and unsealed in the Southern District of California on May 24, 2007, charging Tran and 13 others each with one count of conspiracy to participate in the affairs of a racketeering enterprise; one count of conspiracy to commit several offenses against the United States, including conspiracy to steal money and other property from Indian tribal casinos; and one count of conspiracy to commit money laundering. The indictment also charged five separate individuals each with one count of conspiracy to commit several offenses against the United States, including conspiracy to steal money and other property from Indian tribal casinos; and one count of conspiracy to commit money laundering.
In his plea agreement, Tran admitted that in or about August 2002, he, with co-conspirators Phuong Quoc Truong, Van Thu Tran, and others, created a criminal enterprise defined in the indictment as the "Tran Organization" based in San Diego and elsewhere for the purpose of participating in gambling cheats at casinos across the United States.
In his plea agreement, Tran admitted that on numerous occasions between approximately August 2002 and June 2005, he participated in gambling cheats together with other alleged members of the Tran Organization at casinos in California and Canada. Tran admitted to targeting at least seven casinos in the racketeering conspiracy, including:
- Agua Caliente Casino, in Palm Springs, Calif.;
- Barona Valley Ranch Resort and Casino, in Lakeside, Calif.;
- Cache Creek Casino Resort, in Brooks, Calif.;
- Casino Rama, in Orillia, Ontario, Canada;
- Pechanga Resort and Casino, in Temecula, Calif.;
- Spa Resort Casino, in Palm Springs, Calif.; and
- Sycuan Casino, in El Cajon, Calif.
According to the indictment, the defendants and others executed a "false shuffle" cheating scheme at casinos in the United States and Canada during blackjack and mini-baccarat games. The indictment alleges that members of the criminal organization bribed casino card dealers and supervisors to perform false shuffles during card games, thereby creating "slugs" or groups, of un-shuffled cards. The indictment also alleges that after tracking the order of cards dealt in a card game, a member of the organization would signal to the card dealer to perform a "false shuffle," and members of the group would then bet on the known order of cards when the slug appeared on the table. By doing so, members of the conspiracy repeatedly won thousands of dollars during card games, including winning up to $868,000 on one occasion.
The indictment also alleges that the members of the organization used sophisticated mechanisms for tracking the order of cards during games, including hidden transmitter devices and specially created software that would predict the order in which cards would reappear during mini-baccarat and blackjack games.
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.
Tran’s sentencing is scheduled for July 13, 2009, in San Diego before U.S. District Judge John A. Houston. At sentencing, Tran faces a maximum sentence of 20 years in prison on the racketeering conspiracy charge. Tran agreed to a personal money judgment in the amount of $823,612, which will be entered by way of a preliminary order of forfeiture. He also acknowledged that the restitution that he may be ordered to pay by the court at sentencing is not limited by the forfeiture amount. Tran agreed to the forfeiture of his interests in various assets, including a house in the San Diego area, a 2006 Mercedes Benz, and various pieces of jewelry. Tran was also charged in Orillia, Ontario, Canada, for his admitted cheating activities at Casino Rama.
A second indictment has alleged that 11 additional defendants conspired to commit offenses on behalf of the Tran Organization. A one-count indictment, unsealed in the Southern District of California on Sept. 11, 2008, charged Bryan Arce; Don Man Duong; Hogan Ho; Thang Viet Huynh; Outtama Keovongsa; Leap Kong, a/k/a Lanida Kong; Qua Le; Khunsela Prom, a/k/a Danny Prom; James Root; Darrell Saicocie; and Dan Thich each with one count of conspiracy to commit several offenses against the United States, including conspiracy to steal money and other property from Indian tribal casinos, and conspiracy to travel in interstate and foreign commerce in aid of racketeering.
To date, 26 defendants, including Tran, have pleaded guilty to charges relating to the casino-cheating conspiracy: Phuong Quoc Truong; Anh Phuong Tran; Phat Ngoc Tran; Martin Lee Aronson; Liem Thanh Lam; George Michael Lee; Tien Duc Vu; Son Hong Johnson; Barry Wellford; Willy Tran; Tuan Mong Le; Duc Cong Nguyen; Han Truong Nguyen; Roderick Vang Thor; Sisouvanh Mounlasy; Navin Nith; Renee Cuc Quang; Ui Suk Weller; Phally Ly; Khunsela Prom; Hop Nguyen; Hogan Ho; Darrell Saicocie; Bryan Arce; and Qua Le. These defendants admitted to targeting, with the aid of coconspirators, a combined total of approximately 24 casinos during the course of the conspiracy.
The case is being investigated by the FBI’s San Diego Field Office; the Internal Revenue Service-Criminal Investigation; the San Diego Sheriff’s Department; and the California Department of Justice’s Bureau of Gambling Control. The investigation has received assistance from federal, state, tribal and foreign authorities, including: the Ontario Provincial Police; the National Indian Gaming Commission; the U.S. Attorney’s Office for the Western District of Washington; FBI Resident Agencies in Gulfport, Miss., Tacoma, Wash., and Toledo, Ohio; the Indiana State Police; the Rumsey Rancheria Tribal Gaming Agency; the Sycuan Gaming Commission; the Barona Gaming Commission; the Mississippi Gaming Commission; and the Washington State Gambling Commission.
The prosecution of the case is led by the Criminal Division’s Organized Crime and Racketeering Section (OCRS). Department of Justice Trial Attorneys Joseph K. Wheatley, Robert S. Tully and Gavin A. Corn are prosecuting the indictment in San Diego.
AT&T Technical Services Corp. to Pay U.S. more than $8.2 Million to Settle False Claims Involving the E-Rate ProgramRead the Press Release
WASHINGTON – AT&T Technical Services Corp. (AT&T-TSCO) has agreed to pay $8,266,414.33 as part of a civil settlement relating to allegations that the company violated the False Claims Act in connection with the Federal Communication Commission's E-Rate program, the Justice Department announced today.
The E-Rate program, created by Congress in the Telecommunications Act of 1996, provides funding for needy schools and libraries to connect to and utilize the Internet. Under the E-Rate program, which is funded by monies collected from telephone users, schools apply for funds to pay for hardware and monthly connectivity service fees. The FCC oversees the E-Rate program.
The United States contended that AT&T-TSCO engaged in non-competitive bidding practices for E-rate contracts. Additionally, the government alleged that AT&T-TSCO claimed and received E-rate funds for goods and services that were ineligible for the program’s discounts, overbilled the E-Rate program for services provided and facilitated a payment or profit to the applicant from E-Rate funds.
The agreed-to resolution announced today resulted from an ongoing federal investigation of fraud and anti-competitive conduct in the E-Rate program in Indiana. The investigation is being conducted jointly by the Justice Department’s Civil Division, the U.S. Attorney's Office for the Southern District of Indiana and the FCC Office of the Inspector General.
APL Ltd. to Pay U.S. $26.3 Million to Resolve Fraud Allegations for Inflated Shipping Costs to Military in Iraq and AfghanistanRead the Press Release
WASHINGTON– APL Limited has agreed to pay the government $26.3 million to resolve allegations that it submitted false claims to the United States in connection with contracts to transport cargo in shipping containers to support U.S. troops in Iraq and Afghanistan, the Justice Department announced today. The government alleges that APL, a wholly-owned American subsidiary of Singapore-based Neptune Orient Lines Limited, knowingly overcharged and double-billed the Department of Defense to transport thousands of containers from ports to inland delivery destinations in Iraq and Afghanistan.
The government alleges that APL inflated its invoices in several ways. For example, APL billed in excess of the rate it paid to plug refrigerated containers holding perishable cargo into a source of electricity at a port in Karachi, Pakistan; billed in excess of the contractual rate to maintain the operation of refrigerated containers at a port in Karachi and at U.S. military bases in Afghanistan; and billed for various non-reimbursable services performed by APL’s subcontractor at a Kuwaiti port.
"Today’s settlement demonstrates our commitment to ensure that contractors doing business with the military in Iraq and Afghanistan perform their contracts ethically, and that taxpayer funds are not misused," said Acting Assistant Attorney General Michael F. Hertz of the Justice Department’s Civil Division.
The settlement resolves allegations against APL that were filed in San Francisco, Calif., by Jerry H. Brown II, an employee of the company. The lawsuit was filed under the qui tam or whistleblower provisions of the federal False Claims Act, which permit private individuals called "relators" to bring lawsuits on behalf of the United States and receive a portion of the proceeds of a settlement or judgment awarded against a defendant. The relator in this action will receive $5.2 million as his statutory share of the proceeds of this settlement.
"The prosecution of this lawsuit and this settlement demonstrate the importance of the Federal Civil False Claims Act in, on the one hand, rewarding "whistle blowers" who have valuable credible information about fraud waste and abuse and the courage to bring that information to the attention of the Department of Justice and, on the other, allowing the government to conduct a thorough investigation of the allegations, usually without first having to disclose that an investigation is underway, thereby achieving the maximum recovery possible in an efficient and cost-effective way," said Joseph P. Russoniello, U.S. Attorney for the Northern District of California.
The settlement with APL was the result of a coordinated effort among the Commercial Litigation Branch of the Justice Department’s Civil Division; the U.S. Attorney’s Office for the Northern District of California, Affirmative Civil Enforcement Unit; the Defense Criminal Investigative Service of the Department of Defense; the Army’s Criminal Investigation Command; and the Defense Contract Audit Agency of the Department of Defense.
"The Defense Criminal Investigative Service (DCIS) is thoroughly committed to pursuing any and all allegations of fraud that drain precious resources from America's war fighters, said Sharon Woods, Director, DCIS. "This particular fraud was directly related to the supply lines supporting our brave soldiers, sailors, airmen, marines and U.S. civilians in Iraq and Afghanistan. The settlement with APL was only made possible by the hard work of the prosecutors from the Department of Justice and agents from the DCIS/Army Criminal Investigation Command with support from auditors of the Defense Contract Audit Agency."
"The fighting men and women of America who serve in our Armed Forces today are putting their lives on the line for this country. Allegations that someone would attempt to illegally profit from this situation will be aggressively investigated," said Brigadier General Rodney Johnson, the commanding general of the U.S. Army Criminal Investigation Command. "We will do everything in our investigative power to ensure our Special Agents are aggressively pursuing allegations of this nature and helping to hold those responsible accountable."
Assistant U.S. Attorney Steven J. Saltiel handled the matter on behalf of the U.S. Attorney’s Office, with the assistance of Legal Assistant Kathy Terry, together with Civil Division attorney Andrew A. Steinberg.
12 February 2009
Four Individuals Indicted for Racially-Motivated Assault in Nampa, IdahoRead the Press Release
WASHINGTON – Four individuals have been arrested and charged with carrying out a racially-motivated beating and conspiring to interfere with the civil rights of an African-American man in Nampa, Idaho.
The indictment, returned on Feb. 11, 2009, by a federal grand jury in the District of Idaho, was announced by Acting Assistant Attorney General Loretta King of the Civil Rights Division; U.S. Attorney Thomas E. Moss for the District of Idaho; Timothy J. Fuhrman, Special Agent in Charge of the FBI’s Salt Lake City Field Office; and Chief Bill Augsburger of the Nampa Police Department.
The indictment alleges that on July 4, 2008, Michael J. Bullard, Jennifer J. Hartpence, a/k/a Jennifer J. Erickson, Richard C. Armstrong and James D. Whitewater, encountered an African-American man inside a Wal-Mart Supercenter store. As the defendants left the store, they discussed beating this African-American man and made preparations for the attack. When the African-American man left the store, the defendants allegedly threatened him, called him racial slurs and Bullard asked him what country he thought he was in. The African-American man tried to run away, but Bullard, Armstrong and Whitewater allegedly chased him across the store’s parking lot, where they tackled him and repeatedly hit and kicked him.
"Hate crimes tear at the very fabric of our great nation and we must remain vigilant in our efforts to combat them," said Acting Assistant Attorney General Loretta King.
"We are well past the time in Idaho when a person’s race, color, religion or ethnicity can be the basis for an assault," said U.S. Attorney Thomas E. Moss. "Everyone has a legal right to frequent a business that serves as a public accommodation without being injured or intimidated based on race. This office will vigorously pursue prosecution of individuals who perpetrate hate crimes."
"One cannot help but note the irony that the terrible acts described in the indictment occurred on the 4th of July last year," said Timothy J. Fuhrman, Special Agent in Charge of the FBI’s Salt Lake City Field Office. "The initial aggressive investigative efforts by the Nampa Police Department in this matter were instrumental in leading to the indictment of these four individuals. In this day and age law enforcement cannot tolerate such activity, and the FBI is committed to investigating these incidents aggressively and without fail."
"This case is important in so much as the vigorous investigation by Nampa Detectives, cooperation by the citizens of Nampa and of the hard work on the part of the Federal Bureau of Investigation shows that hate bias crimes are taken very seriously and will not be tolerated," said Nampa Police Department Chief Bill Augsburger.
If convicted, Bullard, Hartpence, Armstrong and Whitewater face a maximum prison sentence of 20 years. The details contained in the indictment are only allegations; the defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The case is being investigated by the FBI and the Nampa Police Department. It is being prosecuted by Assistant U.S. Attorney Wendy Olson of the U.S. Attorney’s Office for the District of Idaho and Trial Attorney Erin Aslan of the Justice Department’s Civil Rights Division.
Five Defendants Convicted of International Sex Trafficking for Forcing Central American Girls and Women into ProstitutionRead the Press Release
WASHINGTON – Five defendants, all members or associates of an extended family, face potential life sentences after being found guilty of sex trafficking for participating in a scheme that lured young Central American women and girls into the Los Angeles area and forced them into prostitution, announced Acting Assistant Attorney General Loretta King for Civil Rights Division and U.S. Attorney Thomas O’Brien for the Central District of California.
The defendants, four Guatemalan nationals and one Mexican citizen, were convicted on Feb. 11, 2009, of conspiracy; sex trafficking by force, fraud or coercion; and importation of aliens for purposes of prostitution. The jury in the case was unable to reach unanimous verdicts on additional charges.
During a six-week trial, the government presented evidence that the defendants targeted young, uneducated, impoverished and undocumented women and girls from Central America. The defendants conspired to lure and smuggle their victims into the United States for prostitution by enticing them with false promises of legitimate jobs. But after arranging for the victims to be smuggled across the U.S.-Mexico border, the defendants used a combination of threats, including deception, rape, physical violence and witchcraft, to compel the victims to perform acts of prostitution.
The defendants intimidated and controlled their victims, the evidence showed, by threatening that if the victims tried to escape, the defendants or their associates would find them, beat them and kill their loved ones in Guatemala. Some defendants also used witch doctors to threaten the girls that a curse would be placed on them and their families if they tried to escape. Two defendants further restrained the victims by locking them in at night and blockading windows and doors to prevent their escape. The defendants’ scheme of coercion and control also included, according to the evidence presented at trial, beatings and threats; manipulation of debts; verbal abuse; psychological manipulation; strict controls over the victims’ work schedules; and ominous comments about consequences that befell the families of other victims who attempted to escape.
Defendants collected the profits generated by the compelled prostitution, and maintained control of the prostitution proceeds, earning tens of thousands of dollars for their profit while the victims received almost nothing.
The defendants found guilty are Gladys Vasquez Valenzuela, aka Gladys, 38; Mirna Jeanneth Vasquez Valenzuela, aka Miriam, 27; Gabriel Mendez, 34; Maria de los Angeles Vicente aka Angela, 29; and Maribel Rodriguez Vasquez, 29. All of the defendants face statutory maximum penalties of life in prison. All of the defendants except Rodriguez Vasquez face a mandatory minimum sentence of 15 years in prison.
U.S. District Judge Margaret M. Morrow, who presided over the trial, will sentence the defendants later this year.
Additional defendants Flor Morales Sanchez, Pablo Bonifacio, Luis Vicente Vasquez and Albertina Vasquez Valenzeula previously pleaded guilty to various offenses in connection with the defendants’ scheme.
"It is heart-wrenching to see young girls and women being victimized and exploited in this horrific way. The Civil Rights Division will work in conjunction with U.S. Attorneys Offices nationwide to stamp out this vicious and intolerable crime and seek significant prison sentences for anyone engaging in these despicable acts," said Loretta King, Acting Assistant Attorney General for Civil Rights. "This verdict is a message to all international and domestic sex traffickers that they cannot escape justice for committing egregious human rights violations."
"The defendants in this case trafficked in human beings, using these victims’ desire for a better life to lure them into a situation where they were deprived of their basic human rights," said U.S. Attorney Thomas P. O’Brien. "No one should be victimized in this way."
Human trafficking prosecutions are a top priority of the Justice Department. In Fiscal Year 2008, the Civil Rights Division and U.S. Attorneys’ Offices filed a record number of criminal civil rights cases, including record numbers of both sex trafficking and labor trafficking cases.
The case was prosecuted by Assistant U.S. Attorneys Cheryl O’Connor Murphy, Curtis A. Kin, Anthony J. Lewis, Sara J. Heidel and Special Litigation Counsel Andrew J. Kline from the Civil Rights Division. The case was investigated by Special Agents Tricia Whitehill and Valerie Venegas of the FBI, Miguel Palomino of U.S. Immigration and Customs Enforcement and Jesus Quezada from the U.S. Department of Labor.
District of Columbia Seafood Company, Owner and Employee Plead Guilty to Federal Trafficking ChargesRead the Press Release
WASHINGTON—A fish wholesaler, its owner and an employee have all pleaded guilty in U.S. District Court for the District of Columbia for the illegal purchase and sale of striped bass from the Chesapeake Bay and Potomac River from 2003 through 2007, the Justice Department announced today.
Cannon Seafood Inc., its owner and president Robert Moore Sr. of Falls Church, Va., and Robert Moore Jr. of Ashburn, Va., each pleaded guilty to one felony violation of the Lacey Act. The Act prohibits individuals or corporations from creating false records for fish, and from transporting, selling, or buying fish harvested illegally.
Under the terms of the plea agreement, Cannon Seafood has agreed to pay a fine of $80,000 and pay $28,000 in restitution to the congressionally established National Fish and Wildlife Foundation (NFWF). Moore Sr. has agreed to pay a $40,000 fine and pay $15,000 in restitution to the NFWF and Moore Jr. has agreed to pay a $30,000 fine and pay $10,000 in restitution to the same foundation. The court set a sentencing date of May 8, 2009, at 9:30 A.M.
According to the plea agreement, from April 2003 until June 30, 2007, Moore Sr., Cannon’s majority owner and president and Moore Jr. bought striped bass from Thomas Hallock, a commercial fisherman from Maryland, and Jerry Decatur Sr. and Jerry Decatur Jr., two Virginia fisherman. The Moores knew that striped bass was regulated with various closed seasons and size limits and that Virginia and Maryland required all commercially harvested striped bass to have plastic tags affixed when they were caught.
According to the plea agreement, during this time period, Hallock harvested more striped bass than allowed under his Maryland limit, and did not report the striped bass that he was selling to Cannon. He also caught striped bass during the spawning season when commercial harvest was prohibited, and sold this fish to Cannon. In turn, Moore, Jr. and other Cannon employees, on behalf of Cannon, generated and provided Hallock false receipts for the Maryland-caught striped bass that had been transported from Maryland into the District of Columbia.
Moore Sr. knew that Moore, Jr. and other Cannon employees were generating and providing these false Cannon sales receipts. These receipts falsely reflected that Cannon had purchased another species of fish from Hallock, and also altered the weight and price of the fish in order to conceal the striped bass purchase. During this time period, Cannon generated 168 false receipts for over 62,000 pounds of Maryland striped bass, and paid Hallock over $139,000 for this fish.
Further, Moore Sr. and other Cannon employees, on behalf of Cannon, arranged for and purchased striped bass from the Decaturs that had been transported from Virginia into the District of Columbia, and which did not have plastic tags affixed to the fish as required by Virginia law. Moore Jr., regularly saw striped bass that had been purchased from the Decaturs without affixed tags and, knew that Cannon was buying these striped bass illegally. The majority of untagged fish that Cannon bought from the Decaturs was caught and bought during the spring striped bass spawning seasons when fishing was prohibited because of its importance to the long term propagation of the species. During this time period, Cannon purchased over 30,000 pounds of untagged striped bass from the Decaturs, and paid over $87,000 for the fish.
“Fishing limits in the Chesapeake Bay and Potomac River are designed to protect the healthy sustainable population of striped bass and ensure a viable fishery up and down the eastern seaboard. Seafood wholesalers, like Cannon Seafood, who knowingly help fishermen conceal their illegal activities, and who purchase and resell illegally harvested rockfish are undercutting honest fishermen and risking the continuation of the species,” said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division.
“This concerted federal and state investigation sheds light on a pattern of abuse that completely undermines the states’ ability to manage and set quotas for striped bass,” said Acting Special Agent in Charge Sal Amato of the U.S. Fish and Wildlife Service’s Northeast Region. “Violations of fishing laws rob future generations of this important Chesapeake Bay resource.”
“The Maryland Department of Natural Resources applauds and was happy to support these enforcement actions to preserve and protect our striped bass resource,” said DNR Secretary John R. Griffin. “Through the enforcement efforts of the Maryland Natural Resources Police and through innovative partnerships with the U.S. Fish and Wildlife Service and our sister states, we are working to ensure that our waterways are used in a lawful manner which provides for enjoyment of these public trust resources for current and future generations.”
“This is a great example of a cooperative law enforcement initiative to protect our natural resources,” said Commissioner Steven G. Bowman of the Virginia Marine Resources Commission, which includes the Virginia Marine Police. “Trafficking in illegal rockfish is not a harmless offense, and the Virginia Marine Police take this quite seriously.”
In related cases, five commercial fishermen have been charged with Lacey Act violations for allegedly transporting and selling striped bass, knowing that they had falsely recorded the numbers and weight on their permit-allocation cards and failed to accurately record the times when the fish were actually harvested. Two additional St. Mary’s County commercial fishermen, Joseph Peter Nelson and Joseph Peter Nelson Jr., have been indicted in the District of Maryland for conspiracy to violate the Lacey Act, and six substantive felony Lacey Act counts. The indictment also seeks forfeiture of vessels and vehicles allegedly used by the Nelsons in carrying out the offenses.
Today’s guilty pleas are the result of the investigation by an interstate task force formed by the U.S. Fish and Wildlife Service, the Maryland Natural Resources Police and the Virginia Marine Police, Special Investigative Unit in 2003. The task force conducted undercover purchases and sales of striped bass in 2003, engaged in covert observation of commercial fishing operations in the Chesapeake Bay and Potomac River area, and conducted detailed analysis of area striped bass catch reporting and commercial business sales records from 2003 through 2007. The investigation is continuing, and charges against others are possible.
These cases are being prosecuted by Senior Trial Attorney Wayne Hettenbach of the Justice Department’s Environmental Crimes Section, and Assistant U.S. Attorney Stacy Belf of the U.S. Attorney’s Office for the District of Maryland with assistance from the U.S. Attorneys’ Office for the District of Columbia.
11 February 2009
Two Sentenced to Prison for Environmental CrimesRead the Press Release
WASHINGTON— A federal judge has sentenced two operators of asbestos abatement companies to prison for environmental crimes related to the illegal removal and disposal of asbestos in upstate New York, the Justice Department announced.
John Wood of Plattsburgh, N.Y., and Curtis Collins, of Willsboro, N.Y., were sentenced on Feb. 6, 2009, to four years and two years in prison, respectively, by U.S. District Judge David N. Hurd for the Northern District of New York.
Wood was further sentenced to pay restitution $854,166.06 to victims and was placed on supervised release for three years following the completion of his prison term. Collins was ordered to pay $114, 902.89 in restitution to victims and ordered to serve three years of supervised release.
Both defendants pleaded guilty to conspiring to violate the Clean Air Act and the mail fraud statute. Wood further pleaded guilty to contempt of court based on numerous new asbestos crimes that he committed while awaiting trial on the original charges.
In 2005, after being released from prison for unrelated felonies, John Wood began operating an asbestos abatement company known as J & W Construction, Inc. Wood thereafter directed his employees to perform “rip and run” asbestos removals that, rather than removing all asbestos, dispersed and left substantial quantities behind, significantly contaminating numerous businesses and homes. Some of the asbestos was buried on a farm in Willsboro that required the expenditure of funds from EPA’s Superfund to clean up the contamination.To deceive clients into believing that all of the asbestos had been removed and that their businesses and homes were safe to reoccupy, Wood utilized the services of Mark Desnoyers, a licensed air monitor from Plattsburgh. Desnoyers falsified air samples so that laboratory results appeared to prove that all asbestos had been removed from homes and businesses when in fact they remained seriously contaminated. Wood testified against Desnoyers at trial last September.
Curtis Collins worked for Wood and also ran his own asbestos abatement business. Collins pleaded guilty and cooperated with the United States by testifying against Desnoyers at trial.
Desnoyers was convicted of all counts of an indictment charging him with a Clean Air Act and mail fraud conspiracy and related substantive violations. Desnoyers is scheduled to be sentenced on March 13, 2009 at 11 a.m. before Judge Hurd in Utica, N.Y.
Asbestos has been determined to cause lung cancer, asbestosis and mesothelioma, an invariably fatal disease. The Environmental Protection Agency has determined that there is no safe level of exposure to asbestos.
The investigation of this matter was conducted by Special Agents of the U.S. Environmental Protection Agency, with assistance from Inspectors with the New York State Department of Labor (Asbestos Control Bureau). The matter was jointly prosecuted by the Justice Department’s Environmental Crimes Section and the U.S. Attorney’s Office for the Northern District of New York.
Kellogg Brown & Root LLC Pleads Guilty to Foreign Bribery<br /> Charges and Agrees to Pay $402 Million Criminal FineRead the Press Release
WASHINGTON – Kellogg Brown & Root LLC (KBR), a global engineering, construction and services company based in Houston, pleaded guilty today to charges related to the Foreign Corrupt Practices Act (FCPA) for its 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.
KBR entered guilty pleas to a five-count criminal information in federal court in Houston before U.S. District Judge Keith P. Ellison. As part of the plea agreement, KBR agreed to pay a $402 million criminal fine.
According to court documents, KBR was part 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.
KBR pleaded guilty to conspiring with its joint-venture partners and others to violate the FCPA by authorizing, promising and paying bribes to a range of Nigerian government officials, including officials of the executive branch of the Nigerian government, NNPC officials, and NLNG officials, to obtain the EPC contracts. KBR also pleaded guilty to four counts of violating the FCPA related to the joint venture’s payment of tens of millions of dollars in "consulting fees" to two agents for use in bribing Nigerian government officials.
KBR admitted that, at crucial junctures before the award of the EPC contracts, KBR’s former CEO, Albert "Jack" Stanley, and others 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 bribes to Nigerian government officials. Stanley and others negotiated bribe amounts with the office holders’ representatives and agreed to hire the two agents to pay the bribes. According to court documents, the joint venture paid approximately $132 million to the first agent, a consulting company incorporated in Gibraltar, and more than $50 million to the second agent, a global trading company headquartered in Tokyo, Japan, during the course of the bribery scheme. KBR admitted that it had intended for these agents’ fees to be used, in part, for bribes to Nigerian government officials.
Under the terms of the plea agreement, KBR agreed to retain an independent compliance monitor for a three-year period to review the design and implementation of KBR’s compliance program and to make reports to KBR and the Department of Justice. KBR also agreed to cooperate with the Department in its ongoing investigations.
In a related criminal case, 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 May 6, 2009.
Today, KBR’s parent company, KBR Inc., and its former parent company, Halliburton Company, also reached a settlement of a related civil complaint filed by the U.S. Securities and Exchange Commission (SEC). The SEC's complaint charged KBR Inc. with violating the FCPA’s anti-bribery provisions, and charged KBR and Halliburton with engaging in books and records and internal controls violations related to the bribery. KBR Inc. and Halliburton jointly agreed to pay $177 million in disgorgement of profits relating to those violations.
"Today's guilty plea by KBR ends one chapter in the Department’s long-running investigation of corruption in the award of $6 billion in construction contracts in Nigeria. This bribery scheme involved both senior foreign government officials and KBR corporate executives who took actions to insulate themselves from the reach of U.S. law enforcement," said Acting Assistant Attorney General Rita M. Glavin of the Criminal Division. "The successful prosecution of KBR, and its agreement to pay a more than $400 million fine, demonstrates that no one is above the law, and that the Department is determined to seek penalties that are commensurate with, and will deter, this kind of serious criminal misconduct."
"This case, which represents the second largest fine ever in an FCPA prosecution, demonstrates the FBI’s continued commitment to aggressively investigate violations of this law," said Andrew R. Bland III, Special Agent in Charge of the FBI’s Houston Field Office. "We will continue to investigate these matters by working in partnership with other law enforcement agencies, both foreign and domestic, to ensure that corporate executives who have been found guilty of bribing foreign officials in return for lucrative business contracts, are punished to the full extent of the law."
"FCPA violations have been and will continue to be dealt with severely by the SEC and other law enforcement agencies," said SEC Chairman Mary Schapiro. "Any company that seeks to put greed ahead of the law by making illegal payments to win business should beware that we are working vigorously across borders to detect and punish such illicit conduct."
The criminal 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 in gathering evidence abroad and facilitating international cooperation. Significant assistance was provided by the SEC’s Division of Enforcement and by the authorities in France, Italy, Switzerland and the United Kingdom.
Justice Department Seeks to Shut Down Texas Tax PreparersRead the Press Release
WASHINGTON – The United States has sued a Dallas tax preparer, Tina Preston, her tax-preparation firm – Preston Tax Services, Inc. – and several other individuals associated with the firm, seeking to bar them all permanently from the tax-preparation business, the Justice Department announced today. The civil injunction suit was filed in Dallas with the U.S. District Court for the Northern District of Texas.
According to the government complaint, Preston Tax Services prepares federal income tax returns for thousands of individual customers. The complaint alleges that Tina Preston taught employees how to list phony businesses on customers’ returns in order to report false business losses to offset the customers’ wage income and reduce or eliminate customers’ reported income. In other instances, the complaint alleges that the defendants used phony businesses to increase customers’ income in order to claim improper earned income tax credits, a benefit that is available under some circumstances to working people in certain income ranges. According to the complaint, the tax loss from the defendants’ misconduct could be as much as $60 million.
The complaint alleges that Preston held what she called "commission parties" to reward employees and customers at the end of each tax-filing season. Some parties allegedly featured performances by male and female strippers and drawings for valuable prizes, including a car, $1,000 in cash and a trip to Jamaica.
"Tax-preparer fraud is a serious problem," said John A. DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division. "The IRS and Justice Department are committed to putting fraudulent preparers out of business. Taxpayers should choose their preparer carefully and review their returns before signing to ensure that it is correct."
Since 2001 the Justice Department has obtained injunctions against more than 370 tax preparers and tax-fraud promoters. Information about these cases is available on the Justice Department website.
Justice Department Reaches Settlement with SmallTownPapers Inc., Regarding Employment Rights of Air Force ReservistRead the Press Release
WASHINGTON — The Justice Department announced today that it has reached a settlement that, if approved by the court, will resolve a lawsuit the Department filed on behalf of Air Force Reservist Frank Bonnin against SmallTownPapers Inc., (SmallTownPapers).
The complaint, filed in August 2008 in U.S. District Court in Seattle, alleged that SmallTownPapers violated the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) when it terminated Bonnin from his position as director of publisher relations due to his military obligation as an Air Force Reservist to attend active duty training. USERRA prohibits employment discrimination against individuals because of their service obligations in the uniformed services. Under the terms of the consent decree, SmallTownPapers will pay Bonnin $52,500 in back pay.
"This settlement represents the Department’s continued commitment to protecting the employment rights of those who serve our country," said Loretta King, Acting Assistant Attorney General for Civil Rights.
The Justice Department’s lawsuit was filed after receiving Bonnin’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 of the Department of Justice assumed responsibility in 2004 for the enforcement of USERRA with respect to state and local governments and private employers. Since 2004, the Division has filed 31 USERRA suits on behalf of service members.
Additional information about USERRA can be found on the Department of Justice Web site at http://www.servicemembers.gov, and on the Department of Labor Web site at http://www.dol.gov/vets/programs/userra/main.htm.
Hyannis, Mass., Man Pleads Guilty to Receiving and Possessing Child PornographyRead the Press Release
WASHINGTON – Harris Taubman, of Hyannis, Mass., pleaded guilty today in U.S. District Court in Boston to receiving and possessing child pornography, Acting Assistant Attorney General Rita M. Glavin of the Criminal Division and U.S. Attorney Michael J. Sullivan for the District of Massachusetts announced.
Taubman, 48, pleaded before U.S. District Judge William G. Young to three counts of receipt of child pornography and one count of possession of child pornography. He was indicted on those charges on Feb. 6, 2008.
According to his plea agreement, Taubman was first identified by Barnstable, Mass., police as a result of a 911 call referencing a dispute during which Taubman allegedly pointed a loaded shotgun at a neighbor. According to court documents, when police arrived at Taubman’s residence, they found unlawful ammunition cartridges. A further search pursuant to a search warrant revealed numerous printed images of child pornography. The execution of additional search warrants resulted in the seizure of almost 2,000 computer disks containing child pornography, as well as more than 20 computer hard drives. In total, Taubman possessed tens of thousands of images and videos depicting prepubescent children engaged in sexually explicit conduct.
The court deferred formal acceptance of Taubman’s plea until a pre-sentence report has been conducted by the United States Probation Office. Sentencing is set for March 26. Pursuant to the plea agreement, once the court accepts the plea, Taubman may be sentenced to seven years in prison, forfeit all seized property, and serve a 10-year term of supervised release once his prison term ends.
The case is being prosecuted by Trial Attorney Elizabeth M. Yusi of the Child Exploitation and Obscenity Section of the Department of Justice’s Criminal Division and Assistant U.S. Attorney Dana Gershengorn of the District of Massachusett’s Major Crimes Unit. The case is being investigated by the Federal Bureau of Investigation and the Barnstable Police Department.
10 February 2009
Wyoming & Kansas Refiners Agree to Settle Clean Air Act ViolationsRead the Press Release
WASHINGTON—Two petroleum refiners have agreed in separate settlements to spend a total of more than $141 million in new air pollution controls at three refineries in Kansas and Wyoming, Justice Department and U.S. Environmental Protection Agency (EPA) announced today. The settlements are expected to reduce harmful emissions by 7,000 tons per year.
Frontier Refining and Frontier El Dorado Refining (Frontier) have agreed to pay a civil penalty of $1.23 million and spend approximately $127 million in pollution control upgrades for alleged violations at its refineries in Cheyenne, Wyo., and El Dorado, Kan. Wyoming Refining Co. (WRC) has agreed to pay a civil penalty of $150,000 and spend approximately $14 million in similar upgrades for alleged violations at its Newcastle, Wyo., refinery.
The state of Wyoming joined the federal government in the agreement with WRC. Both the states of Wyoming and Kansas joined the federal government in the agreement with Frontier.
The three refineries are required to install advanced control technologies that, when fully implemented, will reduce annual emissions of sulfur dioxide by approximately 3,775 tons, nitrogen oxide by approximately 2,100 tons and other pollutants by approximately 1,200 tons. The refineries have a combined production capacity of approximately 168,000 barrels per day.
In addition, each refinery will upgrade leak-detection and repair practices to reduce harmful emissions from pumps and valves, implement programs to minimize the number and severity of flaring events and adopt new strategies for ensuring continued compliance with benzene waste requirements under the Clean Air Act. Flaring, the process by which byproduct-gas from the refining process is burned off, can cause respiratory problems and exacerbate asthma.
As part of the settlement, Frontier agreed to implement environmentally-beneficial projects valued at more than $1.3 million, including several projects at its refineries to reduce volatile organic compound (VOC) emissions by installing dome covers on refinery storage tanks. VOC’s are a prime ingredient in the formation of smog.
“Today’s agreements will bring three important refineries, two in Wyoming and one in Kansas, into compliance with the Clean Air Act,” said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “The settlements, done in coordination with the states of Wyoming and Kansas, require new pollution controls, reduce significant amounts of air pollutants, secure sizeable penalties, and will ultimately benefit the environment and impacted communities.”
“Today’s settlements demonstrate EPA's continuing efforts to reduce emissions of nitrogen oxide and sulfur dioxide, which are the largest sources of pollution from refineries,” said Catherine McCabe, Acting Assistant Administrator for EPA’s Office of Enforcement and Compliance Assurance. “Nitrogen oxide and sulfur dioxide can cause severe respiratory problems and contribute to childhood asthma, smog and haze, as well as other health and environmental effects.”
The settlement requires Frontier to correct deficiencies in the refinery's risk management program that were identified during a 2006 EPA inspection. These deficiencies included overdue inspections and tests of storage vessels containing toxic and flammable substances.
Under the Clean Air Act, facilities that handle large amounts of chemicals are required to develop a risk management program, which assesses the hazards associated with dangerous chemicals. The program must include an accident prevention program and an emergency response plan to deal with accidental releases.
Today’s agreements are the latest in a series of comprehensive, company-wide settlements under an EPA initiative to reduce air pollution from refineries nationwide. With today’s settlements, 99 refineries operating in 29 states, or 88 percent of the nation’s refining capacity, have agreed to federally-enforceable judicial consent decrees that will significantly reduce emissions and achieve compliance with the Clean Air Act.
The consent decrees, lodged today in the U.S. District Courts in Kansas and Wyoming, are subject to a 30-day public comment period and approval by the federal court. Copies of the consent decrees are available on the Department of Justice Web site at: http://www.usdoj.gov/enrd/Consent_Decrees.html.
Former Velda City, Mo., Reserve Police Officer Pleads Guilty to Civil Rights and Obstruction ChargesRead the Press Release
WASHINGTON - A former Velda City, Mo., auxiliary reserve police officer pleaded guilty today to violating the federal civil rights of a woman he sexually assaulted during a traffic stop and to concealing evidence of his crime from federal investigators, announced Acting Assistant Attorney General Loretta King of the Civil Rights Division and U.S. Attorney Catherine L. Hanaway for the Eastern District of Missouri.
According to facts presented in court, on or about July 9, 2006, Joe Ernest Phillips, 38, then an auxiliary reserve police officer for the Velda City Police Department sexually assaulted a woman while acting under color of law and deprived her of her civil rights. While on-duty in a marked patrol car, Phillips admitted he pulled the female motorist over and searched her purse and the interior and trunk of her car. After completing his search, Phillips instructed the victim to follow him in her car to a poorly lit and isolated parking lot where he sexually assaulted her.
Phillips also admitted that after the sexual assault, he repeatedly lied to the FBI during its inquiry, and concealed evidence in an effort to thwart the federal investigation into his crime.
"Law enforcement officers who betray the public trust by stepping outside the law to assault and abuse the rights of others will be vigorously prosecuted," said Loretta King, Acting Assistant Attorney General. "This shameful and unlawful conduct undermines the tireless efforts of the vast majority of law enforcement officers who perform their duties with honor and professionalism."
U.S. District Judge E. Richard Webber scheduled sentencing for April 30, 2009. Phillips faces a maximum penalty of life in prison and a $250,000 fine for the civil rights violation. He faces up to 20 years in prison and a $250,000 fine for destroying evidence.
The case was investigated by the FBI’s St. Louis Division and is being prosecuted by Trial Attorneys Eric L. Gibson and Avner Shapiro of the Justice Department’s Civil Rights Division and Assistant U.S. Attorney Hal Goldsmith.
Former Tulsa Businessman Sentenced to 11 Years in Prison for Receiving Child PornographyRead the Press Release
UPDATE
The conviction of the defendant in this case, Terry Dobbs, was reversed on appeal.
WASHINGTON - Terry Brian Dobbs, an Oklahoma businessman, was sentenced today to 11 years in prison for receiving images of child pornography, Acting Assistant Attorney General of the Criminal Division Rita M. Glavin and U.S. Attorney for the Northern District of Oklahoma David E. O’Meilia announced.
Dobbs, 51, was also sentenced to lifetime supervised release following his term in prison by U.S. District Judge Gregory Frizzel, and was ordered to pay an $8,000 fine. Dobbs was found guilty after a six-day jury trial in November 2008 of receiving picture and video files of child pornography, which were found on his home computer by federal investigators in July 2006. According to testimony presented at trial, the computer files of child pornography were downloaded by Dobbs between December 2005 and April 2006.
The original indictment charging Dobbs was issued by a federal grand jury in September 2007. A superseding indictment adding to the original charge was issued by the grand jury in July 2008. After the verdict in his trial, Dobbs was ordered to be detained by the U.S. Marshal’s Service without bond.
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 the 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 Barak Cohen of CEOS and Assistant U.S. Attorney Susan Morgan of the U.S. Attorney’s Office in Tulsa. CEOS’ High-Tech Investigative Unit and the Tulsa Police Department provided forensic analysis of Dobbs’ computer. The charges were the result of an investigation by the U.S. Postal Inspection Service.
Former Member of Armed Services Pleads Guilty to Participating in Bribery and Extortion ConspiracyRead the Press Release
WASHINGTON – A former member of the U.S. armed services pleaded guilty today in the U.S. District Court for the District of Arizona in Tucson for his role in a widespread bribery and extortion conspiracy, Acting Assistant Attorney General Rita M. Glavin of the Criminal Division announced today.
The charges arise from Operation Lively Green, an undercover investigation conducted by the FBI that began in December 2001. To date, 56 additional defendants have been sentenced for their roles in the conspiracy.
Rommel I. Schroer, 33, a former sergeant in the U.S. Air Force, pleaded guilty today to one count of conspiring to enrich himself by obtaining cash bribes from people he believed to be narcotics traffickers in return for his assistance, protection, and participation in the activities of what he believed to be an illegal narcotics-trafficking organization that distributed cocaine from Arizona to other locations in the southwestern United States. In reality, the narcotics traffickers were undercover FBI agents. According to court documents, in order to protect the shipments of cocaine, Mr. Schroer and his co-conspirators wore official uniforms, carried official forms of identification, and used official vehicles, when necessary, to prevent police stops, searches and seizures of the narcotics as they drove the cocaine shipments through checkpoints manned by the U.S. Border Patrol, the Arizona Department of Public Safety and Nevada law enforcement officers.
The case is part of a joint investigation being conducted by the Southern Arizona Corruption Task Force (SACTF), which is comprised of the FBI, the Drug Enforcement Administration, the U.S. Immigration and Customs Enforcement (ICE) at the Department of Homeland Security and the Tucson Police Department. The Arizona Air National Guard, Air Force Office of Special Investigations, Defense Criminal Investigative Service and the Criminal Investigation Division of the Internal Revenue Service are also participating in the investigation. The case is being prosecuted by Trial Attorneys Michael Ferrara and Peter Koski of the Criminal Division’s Public Integrity Section, headed by Chief William M. Welch II. The U.S. Attorney’s Office for the Western District of Oklahoma has also secured the guilty pleas of 14 defendants in a related investigation, Operation Tarnish Star.
Former Executive Indicted for His Role in Two Cathode Ray Tube Price-Fixing ConspiraciesRead the Press Release
WASHINGTON – A federal grand jury in San Francisco today returned a two-count indictment against the former Chairman and Chief Executive Officer of Chunghwa Picture Tubes Ltd. for his participation in global conspiracies to fix prices of two types of cathode ray tubes (CRTs) used in computer monitors and televisions, the U.S. Department of Justice announced today. This is the first charge as a result of the Antitrust Division’s ongoing investigation into the cathode ray tubes industry.
The indictment, filed today in U.S. District Court in San Francisco, charges Cheng Yuan Lin, aka C.Y. Lin, a resident of Taiwan, with conspiring with others to suppress and eliminate competition by fixing prices, reducing output and allocating market shares of color display tubes (CDTs) to be sold in the U.S. and elsewhere, beginning at least as early as Jan. 28, 1997, until at least as late as April 7, 2003. The indictment also charges C.Y. Lin with conspiring with others to suppress and eliminate competition by fixing prices for color picture tubes (CPTs) to be sold in the U.S. and elsewhere, beginning at least as early as March 12, 1997, until at least as late as April 7, 2003.
CRTs consist of evacuated glass envelopes that contain an electron gun and a phosphorescent screen. When electrons strike the screen, light is emitted, creating an image on the screen. CDTs and CPTs are each types of CRTs. CDTs are used in computer monitors and other specialized applications, while CPTs are used in color televisions. The worldwide market for CRTs, including CPTs and CDTs, in 1997, at the start of the conspiracies has been estimated as approximately $26 billion.
"This conspiracy harmed countless Americans who purchased computers and televisions using cathode ray tubes sold at fixed prices," said Scott D. Hammond, Acting Assistant Attorney General in charge of the Antitrust Division. "The Antitrust Division will continue to prosecute individuals, wherever they are located and however high their position on the corporate ladder, who engage in price fixing aimed at U.S. businesses and consumers."
According to the charges, C.Y. Lin and co-conspirators carried out the CDT conspiracy by, among other things:
- Attending meetings and engaging in conversations and communications in Taiwan, Korea, Malaysia, China and elsewhere to discuss the prices, output and market shares of CDTs;
- Agreeing during those meetings, conversations and communications to charge prices of CDTs at certain target levels or ranges;
- Agreeing during those meetings, conversations and communications to reduce output of CDTs by shutting down CDT production lines for certain periods of time;
- Agreeing during those meetings, conversations and communications to allocate target market shares for the CDT market overall and for certain CDT customers;
- Exchanging CDT sales, production, market share and pricing information for the purpose of implementing, monitoring and enforcing adherence to the agreed-upon prices, output reduction and market share allocation;
- Implementing an auditing system that permitted co-conspirators to visit each other’s production facilities to verify that CDT production lines had been shut down as agreed;
- Authorizing and approving the participation of subordinate employees in the conspiracy;
- Issuing price quotations and reducing output in accordance with the agreements reached; and
- Taking steps to conceal the conspiracy and conspiratorial contacts through various means.
C.Y. Lin is charged with carrying out the CPT conspiracy with his co-conspirators by, among other things:
- Attending meetings and engaging in conversations and communications in Taiwan, Korea, Malaysia, China, Thailand, Indonesia and elsewhere to discuss the prices of CPTs;
- Agreeing during those meetings, conversations and communications to charge prices of CPTs at certain target levels or ranges;
- Exchanging CPT pricing information for the purpose of implementing, monitoring and enforcing adherence to the agreed-upon prices;
- Authorizing and approving the participation of subordinate employees in the conspiracy;
- Issuing price quotations in accordance with the agreements reached; and
- Taking steps to conceal the conspiracy and conspiratorial contacts through various means.
On Feb. 3, 2009, Lin was indicted for his participation in a separate conspiracy to suppress and eliminate competition by fixing the prices of Thin Film Transistor-Liquid Crystal Display (TFT-LCD) panels.
Lin is charged with violating the Sherman Act, which carries a maximum penalty of three years imprisonment and a fine of $350,000 for individuals for violations occurring before June 22, 2004. The maximum fines may be increased to twice the gain derived from the crime or twice the loss suffered by the victims if either of those amounts is greater than the Sherman Act maximum fines.
This case is part of an ongoing joint investigation by the San Francisco Field Office of the Antitrust Division of the U.S. Department of Justice and the Federal Bureau of Investigation in San Francisco. Anyone with information concerning illegal conduct in the CRT industry is urged to call the San Francisco Field Office of the Antitrust Division at 415-436-6660.
Five Individuals Indicted for Devising and Participating in Stock Manipulation SchemeRead the Press Release
WASHINGTON - A 24-count indictment charging five individuals with various crimes arising from an alleged scheme to defraud investors through the manipulation of the publicly traded stocks of three companies was unsealed today in Tulsa, Okla., announced Acting Assistant Attorney General of the Criminal Division Rita M. Glavin and U.S. Attorney for the Northern District of Oklahoma David E. O’Meilia.
The indictment, returned by a federal grand jury in Tulsa on Jan. 15, 2009, alleges the scheme reaped the defendants in excess of $41 million.
G. David Gordon, 47, a Tulsa, Okla., attorney, and Richard Clark, 61, also of Tulsa, were arrested and are scheduled to make their initial appearance today in the U.S. District Court for the Northern District of Oklahoma. Louisville, Ky., attorney James Reskin, 50, was also arrested today and is scheduled to make his initial appearance in the U.S. District Court for the Western District of Kentucky. Dean Sheptycki, 41, a resident of the Bahamas, was arrested by Bahamian authorities today and currently awaits extradition to the United States. The indictment also charges Dallas-area resident Joshua Wayne Lankford, 35, in the scheme to defraud.
Two companies based in Tulsa at the time of the alleged scheme were among those whose stock was manipulated: Deep Rock Oil & Gas, Inc. and Global Beverage Solutions, Inc., formerly known as Pacific Peak Investments. The third company, National Storm Management Group, Inc., is based in Glen Ellyn, Ill.
The indictment alleges that between April 2004 and December 2006, the defendants devised and engaged in a scheme to defraud investors known as a "pump and dump," in which they manipulated three publicly traded penny stocks. A penny stock is a common stock that trades for less than $5 per share in the over the counter market, rather than on national exchanges.
According to the indictment, the defendants executed the scheme by obtaining a majority of the free-trading shares of stock of the company they intended to manipulate, using fraudulent and deceptive means to acquire the stock and/or remove the trading restrictions on the shares they obtained.
According to the indictment, the defendants hid and "parked" their shares with various nominees, such as friends, relatives, or other entities that they owned and controlled. Subsequently, they allegedly engaged in coordinated trading in order to create the appearance of an emerging market for these stocks, after which they conducted massive promotional campaigns in which unsolicited fax and e-mail "blasts" were sent to millions of recipients. According to the indictment, these blasts touted the respective stocks without accurately disclosing who was paying for the promotions, omitted that the defendants intended to sell their shares, and induced unsuspecting legitimate investors to purchase stock in the companies. The defendants and their nominees allegedly took significant profits by selling large amounts of shares after they had artificially inflated the stock price. For each of the three manipulated stocks, the defendants’ alleged sell-off caused declines of the stock price and left legitimate investors holding stock of significantly reduced value.
The indictment charges all five defendants with one count of conspiracy to commit securities fraud, wire fraud, and money laundering, nine counts of wire fraud, five counts of securities fraud, and six counts of money laundering in connection with the manipulation of three penny stocks. Gordon is also charged with one count of making a false statement in a matter within the jurisdiction of the Securities and Exchange Commission (SEC) regarding the scheme to defraud. Additionally, the indictment charges Gordon with one count of wire fraud in connection with a fourth penny stock, that of International Power Group Ltd., based in New Jersey, and one count of obstruction of justice of an investigation into the alleged wire fraud violation.
According to the indictment, the defendants profited more than $41 million from the overall scheme. The indictment seeks the criminal forfeiture of $41.4 million from all five defendants in connection with the three penny stocks. Additionally, the indictment seeks criminal forfeiture of $2.74 million from Gordon in connection with the wire fraud involving the fourth penny stock.
A grand jury indictment is one method of charging defendants with alleged violations of federal law, and all defendants are presumed innocent unless and until the charges are proved beyond a reasonable doubt in a court of law.
The conspiracy and false statement charges each carry a maximum sentence of five years in prison and a $250,000 fine. Each charge of wire fraud as well as the obstruction of justice count carries a maximum sentence of 20 years in prison and a $250,000 fine. The maximum sentence for each securities fraud count is 20 years in prison and a $5,000,000 fine and the maximum sentence for each money laundering count is 10 years in prison and a $250,000 fine.
In a related action, the SEC today filed a civil enforcement action against Gordon, Lankford and Sheptycki.
On July 22, 2008, Mark Byron Lindberg, 40, of the Dallas area, pleaded guilty to a conspiracy alleging the same wire and securities fraud scheme and agreed to a $6,229,354 forfeiture judgment for his participation in the scheme that bilked investors across the nation out of millions of dollars. Lindberg admitted that he and other unnamed co-conspirators, two of them from Tulsa, attempted to illegally manipulate the stock price of various companies through a number of means including: acquiring a substantial amount of free-trading shares of stock in the companies that were concealed in various brokerage accounts; creating and distributing to the public false and misleading promotional materials; and engaging in coordinated trading of stock in order to manipulate the price of the stocks being traded, including selling their stock while at the same time encouraging the public to buy.
The case is being prosecuted by Trial Attorney Andrew Warren of the Criminal Division’s Fraud Section, Assistant U.S. Attorney Catherine Depew for the Northern District of Oklahoma, and Special Assistant U.S. Attorney Kevin Muhlendorf, who is detailed to the U.S. Attorney’s Office from the SEC. The case is being investigated by the FBI, the IRS-Criminal Investigation Division and the U.S. Postal Inspection Service.
California Man Sentenced to 18 Months in Community Correctional Facility in Connection with Scheme to Defraud First International Bank and Export-Import BankRead the Press Release
WASHINGTON – Carlos Serrano, 64, of Glendale, Calif., was sentenced to 18 months in a community correctional facility in connection with a $1.3 million scheme to defraud the First International Bank of Connecticut (FIB) and the Export-Import Bank of the United States (Ex-Im Bank), Acting Assistant Attorney General Rita M. Glavin of the Criminal Division and U.S. Attorney Thomas P. O’Brien of the Central District of California announced today.
Serrano was sentenced on Feb. 9, 2009, in U.S. District Court for the Central District of California by Judge Christina A. Snyder. In addition to his prison sentence, Serrano was placed on five years of probation and ordered to pay restitution of $924,569 to the Ex-Im Bank.
Following a four-day trial, Serrano was convicted on Sept. 18, 2008, of conspiring to commit bank fraud and committing bank fraud in connection with a fraudulent $1.3 million loan transaction involving FIB and the Ex-Im Bank. At trial, the jury heard testimony that in approximately November 2000, Serrano met with alleged co-conspirators and agreed to act as an exporter in a loan transaction between a company in the Philippines and FIB, in which the Ex-Im Bank acted as guarantor. According to trial testimony, Serrano’s sole job in the transaction was to obtain a $200,000 down payment from the Philippine company, purchase $1.3 million in U.S. goods on behalf of the Philippine company, ship the purchased goods to the Philippine company and certify to FIB and the Ex-Im Bank that he had purchased and shipped those goods. The jury heard testimony that Serrano contacted U.S. suppliers using a fake name for the purpose of obtaining price quotes, but that he never actually purchased any goods. Jurors also heard testimony that Serrano certified in documents sent to and relied upon by FIB and the Ex-Im Bank that he had purchased $1.3 million in U.S. goods and shipped those goods to the Philippines.
In reliance on Serrano’s false statements, FIB sent Serrano $1.1 million in loan proceeds. Testimony revealed that after receiving the loan proceeds, Serrano paid himself approximately $28,000, sent approximately $949,000 to an alleged co-conspirator and sent approximately $160,000 to a company in Singapore. As a result of the fraud, the Ex-Im Bank lost $924,569.
This case is part of a broader investigation into an $80 million scheme to defraud the Ex-Im Bank between November 1999 and December 2005. To date, eight individuals – Serrano, Daniel Curran, Christina Song, Edward Chua, David Villongco, Robert Delgado, Jaime Galvez and Edward Javier – have been convicted for their involvement in the fraud scheme. Curran was sentenced on April 23, 2008, to 41 months in prison; Song was sentenced on Oct. 2, 2008, to 37 months in prison; Chua was sentenced on May 14, 2008, to 37 months in prison; Villongco was sentenced on Feb. 29, 2008, to 33 months in prison; Delgado was sentenced on Oct. 5, 2007, to two years in prison; Galvez was sentenced on Jan. 7, 2008, to one year in prison; and Javier was sentenced on July 18, 2008, to six months in prison.
In addition, four other individuals – Marilyn Ong, Ildefonso Ong, Nelson Ti and Joseph Tirona – have been indicted by a federal grand jury in the District of Columbia for their alleged involvement in the scheme. An indictment is merely an accusation, and the defendants are presumed innocent unless proven guilty.
The case was prosecuted by Assistant Chief Hank Bond Walther of the Criminal Division’s Fraud Section and Jason P. Gonzalez of the U.S. Attorney’s Office for the Central District of California. The case was investigated by the U.S. Postal Inspection Service and the FBI.
Arizona Man Sentenced to Five Years for Distribution of Child PornographyRead the Press Release
WASHINGTON – Theodore Allan, 54, of Glendale, Ariz., was sentenced today to five years in prison for distribution of 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.
Allan was indicted on charges of distribution, receipt and possession of child pornography on March 6, 2007. The charges followed a July 14, 2006, U.S. Immigration and Customs Enforcement (ICE) search of Allan’s home. According to court documents, ICE agents discovered approximately nine videos and 267 images depicting the sexual abuse of children.
Allan pleaded guilty on Aug. 4, 2008, to one count of distribution. As part of the plea agreement, Allan admitted to distributing child pornography via e-mail.
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 the 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 Senior Litigation Counsel Vincent Q. Kirby of the District of Arizona. ICE conducted the investigation.
6 February 2009
Las Vegas Minister and Conspirator Sentenced in Tax Evasion SchemeRead the Press Release
WASHINGTON - Michael Haynes, a practicing minister, and David Jett, both of Las Vegas, were sentenced to 37 months in prison and five years probation, respectively, by Chief U.S. District Judge Robert L. Hunt in Las Vegas, the Justice Department and Internal Revenue Service (IRS) announced today. Haynes and Jett were also ordered to pay restitution of $834,000 and $150,000, respectively, to the U.S. Treasury.
In September 2008, a jury convicted Haynes for conspiring to evade taxes through a scheme involving the fraudulent sale of One Voice Technologies Inc. stock. Jett pleaded guilty to conspiracy in March 2008.
According to the indictment and evidence presented at trial, Haynes and Jett orchestrated the fraudulent sale of $7 million in One Voice stock. Haynes and Jett used at least ten stock certificates to generate the $7 million in gross proceeds; all of these stock certificates were in different nominee names. As part of the scheme, new stock certificates in the name of One Voice were issued to at least five nominees, two of whom testified at trial. With the assistance of the transfer agent for One Voice, Haynes had the nominees sign documents that stated they had lost their original stock certificates and assigned their rights to the stock.
According to court documents and evidence presented at trial, Haynes directed the $7 million in stock proceeds to be deposited in a nominee bank account at the Bank of Nova Scotia. At Haynes’ instruction, the proceeds were transferred via checks and wire transfers to U.S. bank accounts in his and Jett’s control. Jett and Haynes then used funds obtained from the sale of One Voice stock for their personal benefit. Haynes failed to report the proceeds of the stock sale on his personal income taxes.
Acting Attorney General John A. DiCicco commended the IRS special agents who investigated the case, as well as Tax Division trial attorneys Lori H. Hendrickson and Timothy J. Stockwell who prosecuted the case.
5 February 2009
U.S. Court Rejects Two Prominent L.A. Real Estate Investors Attempt to Use Tax Avoidance SchemeRead the Press Release
WASHINGTON - A federal court in Los Angeles invalidated an abusive tax shelter scheme engaged in by prominent real estate investors James Thomas and Edward Fox, the Justice Department announced today. U.S. District Judge John F. Walter also imposed the maximum penalty - forty percent - allowed by the tax code against them.
Thomas, a former Internal Revenue Service (IRS) attorney, and Fox owned real estate, including interests in the Library Tower, the Gas Company Tower and the Wells Fargo Center, all located in Los Angeles. In 2001 they sought out an abusive tax shelter that has become known as "Son of BOSS." In the Son of BOSS scheme used by Thomas and Fox, they purchased an exotic form of a financial option that they claim would have protected them against a catastrophic decline in real estate values, which they feared in the immediate aftermath of the terrorist attacks of September 11.
Thomas and Fox paid the accounting firm of Arthur Andersen and insurance giant AIG more than $2 million in fees to obtain financial options, but Judge Walter agreed with the government that the true value of the options was less than $1,000. Notwithstanding the low value of the options, Thomas and Fox claimed that the scheme created more than $145 million of tax "basis." That tax basis, if valid, could have been used to shield from the income tax more than $145 million of future profits had Thomas and Fox sold their real estate at a gain.
Judge Walter determined that the tax avoidance scheme had no real economic substance and was simply designed to fabricate tax basis in certain partnerships. The court rejected Thomas’s attempt to claim an increase in tax basis of $100 million despite paying only $1.5 million for the transaction at issue. Similarly, the court rejected Fox’s attempt to claim a $45 million increase in tax basis despite paying only $675,000. According to the court, Thomas and Fox, and their tax advisor, Martin Griffiths, "obviously recognized" the tax benefits to this fabricated basis. The court also rejected Thomas and Fox’s contention that the abusive tax shelter accomplished a reasonable business purpose.
Most of the more than 2000 taxpayers who used the "Son of BOSS" scheme settled their cases with the IRS, paying the full tax and part of the penalties owed, and the IRS announced in 2005 that it had collected nearly $4 billion as a result of those settlements. The government warned taxpayers who did not settle that it would pursue those cases in court and seek the maximum penalty allowed.
"The court’s decision today is yet another victory for the American taxpayer," said John A. DiCicco, Acting Assistant Attorney General of the Justice Department’s Tax Division. "Too many individuals in the last decade have turned to abusive tax shelters to keep from paying their fair share of taxes. This decision serves as yet another reminder that these abusive schemes are not valid."
Acting Assistant Attorney General DiCicco and Thomas P. O’Brien, U.S. Attorney for the Central District of California, thanked Assistant U.S. Attorney Andrew Pribe, Tax Division trial attorney Rick Watson and IRS Chief Counsel attorney Jonathan Sloat who represented the government.
Two Individuals Arrested on Federal Sex Trafficking ChargesRead the Press Release
WASHINGTON – Two men have been arrested and charged in an indictment unsealed today with crimes related to sex trafficking, Acting Assistant Attorney General Loretta King of the Civil Rights Division and U.S. Attorney for the Eastern District of Arkansas Jane W. Duke announced.
Tommy Handy, aka "Tom Tom" and his nephew, Everett Cooney, aka "Bear," were indicted by a federal grand jury in Little Rock, Ark., for conspiracy to commit sex trafficking and sex trafficking for their roles in using force, fraud and coercion to cause juvenile girls and adult women to engage in commercial sex acts. Handy and Cooney allegedly benefitted financially from the conspiracy, which took place from January 2002 to May 2008. Handy was also charged with possession of a firearm in furtherance of a crime of violence.
If convicted, Handy and Cooney both face a maximum sentence of life in prison and fines of more than $1 million.
An indictment is only an allegation, and the defendants are presumed innocent unless and until proven guilty.
The prosecution of human trafficking offenses is a top priority of the Justice Department. In Fiscal Year 2008, the Department filed a record number of both labor trafficking and sex trafficking cases.
The case will be prosecuted by Assistant U.S. Attorney Joe J. Volpe and Civil Rights Division Trial Attorney Jim Felte. The charges are the result of an investigation conducted by the FBI.
Patriot Coal to Pay $6.5 Million to Settle Clean Water Act ViolationsRead the Press Release
WASHINGTON - Patriot Coal Corporation, one of the largest coal mining companies in the United States, has agreed to pay a $6.5 million civil penalty to settle violations of the Clean Water Act, the Justice Department and U.S. Environmental Protection Agency (EPA), and the state of West Virginia announced today.
The settlement includes the third largest penalty ever paid in a federal Clean Water Act case for discharge permit violations. In addition, Patriot has agreed to extensive measures designed to ensure Clean Water Act compliance at its mines in West Virginia. The consent decree includes innovative and heightened operating standards which should serve as a model for the coal mining industry in Central Appalachia.
“This settlement represents a very important step in making sure that the coal mining industry is in compliance with the Clean Water Act,” said John C. Cruden, Acting Assistant Attorney General in charge of the Justice Department's Environment and Natural Resources Division. “It will benefit the citizens of West Virginia and helps make sure that the Mountain State's streams and rivers are not damaged.”
“This settlement continues to set the bar high for the coal industry and Clean Water Act enforcement in general. Today's settlement reiterates EPA's commitment to maintaining clean and healthy waterways,” said William T. Wisniewski, acting Regional Administrator for EPA’s mid-Atlantic region.
In a joint complaint filed concurrently with the consent decree, the United States and the State of West Virginia alleged that Patriot violated its Clean Water Act permits more than 1,400 times -- representing over 22,000 days of violations between January 2003 and December 2007 at its mining complexes in West Virginia. During this time, Patriot and its subsidiaries allegedly discharged excess amounts of metals, sediment, and other pollutants into dozens of rivers and streams in West Virginia. Excess discharges of these pollutants can significantly harm water quality and aquatic life in West Virginia's streams.
As part of the settlement, Patriot has agreed to implement extensive measures to prevent future violations and to perform environmental projects, at a total estimated cost of $6 million. Specifically, Patriot will develop and implement a company-wide compliance-focused environmental management system including creating a database to track information relevant to compliance efforts; conduct regular internal and third-party environmental compliance audits; implement a system of tiered response actions for any possible future violations; and conduct annual training for all employees and contractors with environmental responsibilities. The company will also perform five stream restoration projects in local watersheds and perform assessments of mining impacts on aquatic life.
With corporate headquarters in St. Louis, Patriot owns and operates 16 mining complexes in West Virginia and Kentucky.
The consent decree, lodged in the U.S. District Court for the Southern District of West Virginia, is subject to a 30-day public comment period and approval by the federal court. A copy of the consent decree is available on the Department of Justice Web site at: http://www.usdoj.gov/enrd/Consent_Decrees.html.
Minnesota Man Arrested in Connection with Ponzi SchemeRead the Press Release
WASHINGTON – A Minnesota man was arrested today on charges related to an alleged Ponzi scheme involving commodity pools, Acting Assistant Attorney General Rita M. Glavin for the Criminal Division and U.S. Attorney Frank J. Magill for the District of Minnesota announced.
Charles "Chuck" E. Hays, of Rosemount, Minn., was charged in a criminal complaint filed in the District of Minnesota with one count of wire fraud and one count of mail fraud. According to the complaint, Hays allegedly induced investors to provide funds to Crossfire Trading, LLC (Crossfire), a company for which the listed operating address was the same as Hays’ residence.
According to the complaint, Hays allegedly told investors their money had been invested in a "pooled" commodities trading account, using misrepresentations such as false statements from a commodities brokerage firm, when in reality no such investments were ever made. The complaint alleges that Crossfire had no commodities trading account and the documents shown and sent to victim investors were fabrications. The complaint also alleges that Hays used the money wired to his bank accounts by investors for his personal expenses, including the purchase of an approximately $3 million yacht, as well as for payments to other investors.
Hays is scheduled to appear today before a magistrate judge for the U.S. District Court for the District of Minnesota.
Additionally, the government has seized the yacht Hays purchased with investor funds as well as bank accounts, which contain approximately $1 million in funds allegedly obtained through the fraudulent scheme.
In a related action, the U.S. Commodity Futures Trading Commission today filed a civil enforcement action against Hays and Crossfire.
A complaint is merely an allegation and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
The case is being prosecuted by Assistant Chief Robertson Park and Trial Attorney Laura Perkins of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Ann Anaya for the District of Minnesota. Significant assistance is also being provided by Assistant U.S. Attorney Jim Alexander for the District of Minnesota. The case is being investigated by the U.S. Postal Inspection Service.
Member of Human Trafficking Ring Pleads Guilty to Sex Trafficking ChargesRead the Press Release
WASHINGTON - Raul Cortes-Meza, 21, aka "Oscar", a Mexican national, pleaded guilty today in U.S. District Court in Atlanta to sex trafficking of a minor from Mexico, Acting Assistant Attorney General Loretta King of the Civil Rights Division and U.S. Attorney David E. Nahmias for the Northern District of Georgia announced.
According to the information presented in court, Cortes-Meza harbored a 17-year-old girl in the United States after she was pursued romantically by Cortes-Meza’s alleged co-conspirator in Mexico, then smuggled into the United States and brought to the Norcross, Ga., area. After the victim’s arrival in Norcross, Cortes-Meza, knowing that the victim was under 18 years of age, drove her to numerous apartments in the Atlanta metropolitan area to have sex with paying clients. Cortes-Meza instructed the victim to enter the apartments and provide fifteen minutes of sexual services to each man who was present, and subsequently collected money from the men with whom the victim engaged in commercial sex.
"Human trafficking occurs in hidden corners across the country," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "Few crimes are more reprehensible than profiting from the sexual exploitation of a minor. The Department is committed to enforcing laws that put human traffickers behind bars."
"Human trafficking violates basic human rights and will not be tolerated," said U.S. Attorney David E. Nahmias. "Using girls under the age of 18 to engage in commercial sex acts is a serious violation of federal law. The victimization of the young woman in this case was unfortunately made easier by her illegal status, unfamiliarity with U.S. laws, and fear of law enforcement instilled in her by the trafficker. Federal laws protect all victims of such heinous crimes, whether or not they are U.S. citizens. No victim should fear coming forward to report illegal activity."
The sex trafficking of a minor charge to which Cortes-Meza pleaded guilty carries a mandatory minimum sentence of 10 years in federal prison A sentencing date has not yet been scheduled by the court.
The prosecution of human trafficking offenses is a top priority of the Justice Department. In fiscal year 2008, the Section filed the largest number of federal criminal civil rights cases ever in a single year in the history of the Civil Rights Division., including a recod number of both sex trafficking and labor trafficking cases.
The case is being investigated by special agents of U.S. Immigration and Customs Enforcement. The case is being prosecuted by Civil Rights Division Trial Attorney Karima Maloney and Assistant U.S. Attorneys Corey Steinberg and Susan Coppedge for the Northern District of Georgia.
Government Contractor Sentenced to 30 Months in Prison on Bribery ChargesRead the Press Release
WASHINGTON – A government contractor and former employee of the U.S. Department of the Treasury was sentenced in Washington today in connection with a bribery scheme 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.
Daniel Money, 44, of Shady Side, Md., was sentenced by U.S. District Judge Ricardo M. Urbina of the U.S. District Court for the District of Columbia, to 30 months in prison, three years supervised release and a $7,500 fine. Money pleaded guilty on Sept. 5, 2008, to one count of bribery. As part of the plea agreement and by order of the court, Money also will forfeit $95,000, which constitutes the profit that Money made on the contract that he performed as part of the bribery scheme. As part of the plea agreement, Money also agreed to pay restitution of $2,250 to the U.S. Department of the Treasury related to his theft of diesel fuel from the Treasury.
According to court documents, Money was a Maryland-based contractor who provided maintenance, repair, electrical, construction and other related services for government agencies, including the General Services Administration (GSA) and the U.S. Tax Court. Through his company, Daniel Construction, Money obtained and performed government contract work and was also employed as a planner for the U.S. Department of the Treasury. Between March 2007 and May 2008, Money admitted he agreed to provide a government official with a total of $55,000 in bribe payments in exchange for the award of two contracts to Daniel Construction, including a contract in the amount of $188,000 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 GSA Office of the Inspector General, the U.S. Treasury Office of the Inspector General and the FBI.
Former Memphis Police Officer Found Guilty on 44 Counts<br /> of Civil Rights, Narcotics, Robbery and Firearms ChargesRead the Press Release
WASHINGTON – A federal jury in Memphis, Tenn., today found Arthur Sease IV, a former Memphis Police Department officer, guilty on forty-four counts of civil rights, narcotics, robbery and firearms offenses, Acting Assistant Attorney General Loretta King of the Civil Rights Division and U.S. Attorney Lawrence J. Laurenzi for the Western District of Tennessee announced.
The evidence at trial showed that from November 2003 through April 2006, Sease conspired with other Memphis police officers to use their authority as law enforcement officers, including their service weapons, to rob suspected drug dealers of cash, cocaine and marijuana. Sease and his co-conspirators would then resell the stolen drugs for their own profit. The government introduced proof of 16 separate robberies, as well as one attempted robbery. In each robbery, Sease or another uniformed Memphis police officer, would pull over a car containing suspected drug dealers and steal whatever drugs and cash that they found.
According to evidence presented at trial, Sease conspired with other Memphis drug dealers to arrange drug deals so that he could rob the other dealers when they arrived. On one occasion, evidence showed that Sease had a co-conspirator resell cocaine that Sease had stolen from one drug dealer to another drug dealer. Sease then pulled the buyer’s car over, stole the cocaine again and resold it. Sease and his co-conspirators kidnapped several drug dealers in an effort to get them to set up additional drug deals for Sease to rob.
Sease was a Memphis police officer from 2001 through 2005. He was discharged in 2005 for misconduct relating to one of the robberies. After he was fired, one of Sease’s co-conspirators, Andrew Hunt, became a Memphis reserve police officer and the two continued to rob drug dealers while pretending to be police officers, according to evidence presented at trial.
Five other individuals have already pleaded guilty in this case. Hunt pleaded guilty in September 2006 to a federal civil rights conspiracy, robbery affecting interstate commerce and drug distribution, and was sentenced in December 2006 to 19 years in prison. Former Memphis police officers Antoine Owens, Harold McCall and Alexander Johnson pleaded guilty to civil rights conspiracy charges and are currently awaiting sentencing. Laterrica Woods, a civilian who helped Sease and Hunt with one of their robberies, also pleaded guilty to a civil rights conspiracy and is scheduled to be sentenced in March 2009.
"It is a shame that as crime in our community is ever present that we have to spend our limited resources on investigating and prosecuting those people who have taken an oath to serve and protect our community," said Lawrence J. Laurenzi, U.S. Attorney for the Western District of Tennessee. "Effective law enforcement begins with honest law enforcement. We will continue to vigorously and tirelessly investigate and prosecute those law enforcement officials who break the law. Our community demands honest law enforcement."
"The city of Memphis put its trust in Arthur Sease to protect and serve, and Arthur Sease abused that trust," said Acting Assistant Attorney General Loretta King for the Civil Rights Division. "A badge is not a license to do what you want; it carries an obligation to do what is right."
"It is never easy to investigate one of your own; however, civil rights and public corruption investigations remain a top priority," said Perrye K. Turner, Assistant Special Agent in Charge of the FBI’s Memphis Field Office. "Citizens have the right to expect honest services from its law enforcement officers, at the local, state and federal levels. The FBI will continue to work in cooperation with its partners to identify, investigate and prosecute those who would violate the public’s trust for personal gain."
"This represents a very small percentage of the fine men and women in blue. Those officers who choose to violate the law and the trust of our citizens will face harsh punishment. The Memphis Police Department will continue to work with the federal and local government agencies to send the message that criminal activities involving Memphis police officers will not be tolerated," said Police Director Larry Godwin. "The shield of law enforcement shall not be tarnished," added Godwin.
Sease faces a minimum punishment of 275 years in prison. A sentencing date has been set for May 14, 2009.
This case was investigated by Special Agents Tracey Harris, Maria Irizarri and Jaime Corman from the FBI’s Memphis Division and Sergeants Matt Whittington and Billy Greenwood of the Memphis Police Department Security Squad. Officers Tony Parks and Thurmond Richardson contributed to the initial investigation. Assistant U.S. Attorney Steve Parker from the U.S. Attorney’s Office for the Western District of Tennessee and Trial Attorney Jonathan Skrmetti from the Civil Rights Division’s Criminal Section prosecuted the case.
The Civil Rights Division is committed to the vigorous enforcement of every federal criminal civil rights statute, such as those laws that prohibit unreasonable search and seizure, deprivation of property without due process of law, or other acts of misconduct by law enforcement and other government officials. In FY2008, the Criminal Section filed the largest-ever number of federal criminal civil rights cases in a single year in the section’s history, and the second-highest ever number of official misconduct prosecutions.
Former Employee at U.S. Embassy in Haiti Pleads Guilty to Theft of More Than $800,000Read the Press Release
WASHINGTON – A former employee at the U.S. Embassy in Haiti pleaded guilty today to one count of theft for stealing more than $800,000 from the U.S. Department of State, Acting Assistant Attorney General Rita M. Glavin of the Criminal Division announced.
According to court documents, Jean G. Saint-Joy, 25, a/k/a Gary Saint-Joy, a/k/a Garry Saint-Joy, a citizen of Haiti, was employed as a cashier by the U.S. Embassy in Port-au-Prince, Haiti, from approximately 1995 until July 2008.
Beginning in approximately 2003 and continuing until early 2008, Saint-Joy admitted he engaged in a scheme to embezzle funds from the State Department. As part of this scheme, Saint- Joy admitted he submitted and caused to be submitted false and fraudulent documents to the State Department claiming that he required reimbursement for the payment of legitimate embassy expenses. According to court documents, Saint-Joy illegally obtained approximately $428,639 from the State Department as a result of the scheme. Saint-Joy also admitted he provided and caused to be provided false and fraudulent requests for cash advances from the embassy’s cash advance accounts with two banks in Port-au-Prince. According to court documents, Saint-Joy illegally obtained approximately $50,000 from one account and approximately $371,627 from the other account. The total amount of Saint-Joy’s theft was approximately $849,000.
The charge to which Saint-Joy pleaded guilty carries a maximum penalty of 10 years in prison and a maximum fine of $250,000. Sentencing was scheduled for May 26, 2009.
The case is being prosecuted by Trial Attorneys Ethan H. Levisohn and Marc Levin 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 U.S. Department of State.
4 February 2009
United States Files Clean Air Lawsuit Against Westar EnergyRead the Press Release
WASHINGTON — The United States has filed a complaint against Westar Energy alleging that the company violated the Clean Air Act by making major modifications to the Jeffrey Energy Center, a coal-fired power plant in St. Marys, Kan., without also installing and operating modern pollution control equipment, the Justice Department and U.S. Environmental Protection Agency (EPA) announced today.
The complaint alleges that for more than a decade, the Jeffrey Energy Center has operated without the best available emissions-control technology required by the New Source Review provisions of the Clean Air Act to control emissions of sulfur dioxide, nitrogen oxide and particulate matter, contributing to formation of fine particulate matter, smog and acid rain.
The lawsuit, filed by the Justice Department on behalf of the EPA, asks the court to order Westar Energy to install and operate appropriate air pollution control technology in order to substantially reduce sulfur dioxide, nitrogen oxide and particulate matter emissions from the Jeffrey Energy Center. The United States also seeks civil penalties up to the maximum amount authorized by law, as well as actions by the energy provider to mitigate the adverse effects alleged to have been caused by the violations.
Coal-fired power plants collectively produce more pollution than any other industry in the United States. They account for nearly 70 percent of sulfur dioxide emissions each year and 20 percent of nitrogen oxides emissions. Emissions from coal-fired power plants have detrimental health effects on asthma sufferers, the elderly and children. Additionally, these emissions have been linked to forest degradation, waterway damage, reservoir contamination and deterioration of stone and copper in buildings.
To combat these adverse effects, the EPA and the Justice Department are pursuing a national initiative, targeting electric utilities whose coal-fired power plants violate the law. The suit was filed in the U.S. District Court in Kansas City, Kan.
Former Mississippi County Deputy Sheriffs Plead Guilty to Civil Rights ViolationsRead the Press Release
WASHINGTON – Former Tippah County, Miss., Deputy Sheriff Jeffrey Rogers, 35, pleaded guilty today to a one-count information charging him and former Deputy Sheriff William Rogers with violating the civil rights of an arrestee, the Justice Department announced. William Rogers, 56, who is Jeffrey Rogers’ father, pleaded guilty on Jan. 20, 2009, to the same charge of violating the civil rights of an arrestee.
In pleading guilty, the defendants admitted that in June 2007 they used their Tasers to attack an arrestee without justification. The arrestee suffered multiple burns and contusions from the Taser attack. After the attack, the defendants stripped the arrestee of his clothing and chained him overnight to the wall of an isolation cell. After bragging about the incident to fellow employees, Jeffrey Rogers misled federal agents who were investigating the incident. In an effort to cover up his crimes, William Rogers also filed a misleading police report about the incident. The Tippah County Sheriff’s Department fired Jeffrey Rogers after the incident.
"The vast majority of America’s law enforcement officers do their jobs bravely and with appropriate restraint," said Acting Assistant Attorney General for the Civil Rights Division Loretta King. "Those who use excessive force not only hurt their immediate victims but also the reputations of their peers, and will be prosecuted vigorously."
Sentencing dates have not yet been scheduled by the court for either Jeffrey or William Rogers.
The case was investigated by the FBI and is being prosecuted by Trial Attorneys Kathleen J. Monaghan and Michael J. Frank from the Justice Department’s Civil Rights Division and by Assistant U.S. Attorney Robert W. Coleman II from the U.S. Attorney’s Office for the Northern District of Mississippi.
The Civil Rights Division is committed to the vigorous enforcement of federal criminal civil rights statutes, such as those prohibiting the willful use of excessive force or other acts of misconduct by law enforcement officials.
Federal Court Bars Connecticut Woman from Preparing Tax Returns for OthersRead the Press Release
WASHINGTON – A federal district court in Connecticut has permanently barred Elda Sinani, a resident of that state, from preparing federal tax returns for others, the Justice Department announced today. Sinani consented to the civil injunction order.
According to the government complaint, Sinani operated two businesses – Eagle Notary Public & Tax Service in Waterbury, Conn., from November 2001 through April 2004 and later Universe Travel & Legal Services in Hartford, Conn. The complaint alleges that she provided tax return preparation services through both of these businesses. The complaint further alleges that Sinani inflated deductions for her customers to which they otherwise were not entitled. An example identified in the complaint asserts that she frequently improperly reported her customers’ transfer of monies to family members as charitable contributions.
The complaint states that Sinani prepared more than 1,500 returns for the tax years 2003 through 2006. According to the complaint, the IRS has determined that the U.S. Treasury has incurred more than $300,000 in losses from tax returns prepared by Sinani and may have incurred losses exceeding $2.9 million.
Acting Assistant Attorney General John A. DiCicco thanked Tax Division trial attorney Lisa Bellamy for her handling of the government’s case. The Justice Department has obtained injunctions against more than 370 tax return preparers and tax-fraud promoters since 2001. Information about the Justice Department’s Tax Division and its efforts to stop fraudulent return preparers is available on the Justice Department website.
3 February 2009
Three Foreign Executives Indicted for Their Roles in LCD Price-Fixing ConspiracyRead the Press Release
WASHINGTON - A federal grand jury in San Francisco returned an indictment against two former executives from Chunghwa Picture Tubes Ltd. (Chunghwa) and one former executive from LG Display Co. Ltd. (LG) for their participation in a global conspiracy to fix prices of Thin Film Transistor-Liquid Crystal Display (TFT-LCD) panels, the U.S. Department of Justice announced today.
The indictment, filed today in U.S. District Court in San Francisco, charges that Cheng Yuan Lin, aka C.Y. Lin, Wen Jun Cheng, aka Tony Cheng, and Duk Mo Koo conspired with unnamed co-conspirators to suppress and eliminate competition by fixing the prices of TFT-LCD panels. The three executives participated in the conspiracy at various times during the charged conspiracy period, which began on or about Sept. 14, 2001, and continued to on or about Dec. 1, 2006.
- Lin participated in the conspiracy from Sept. 14, 2001 to Apr. 7, 2003 as Chunghwa’s Chairman and Chief Executive Officer. Lin is a resident of Taiwan, Republic of China.
- Cheng participated in the conspiracy from Oct. 5, 2001 to Sept. 24, 2004. For most of this period, Cheng was Chunghwa’s Assistant Vice President of Sales and Marketing. Cheng is a resident of Taiwan, Republic of China.
- Koo participated in the conspiracy from Dec. 11, 2001 to Dec. 1, 2005 as Executive Vice President and Chief Sales Officer for LG. Koo is a citizen and resident of the Republic of Korea.
"The Antitrust Division will vigorously pursue individuals who engage in antitrust crimes targeting U.S. businesses and consumers no matter where those individuals live or commit the crime," said Scott D. Hammond, Acting Assistant Attorney General in charge of the Antitrust Division. "Today’s charges should make clear that there are no safe havens for international cartels that violate the U.S. antitrust laws."
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.
Including today’s charge, three 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 the ongoing investigation.
These three foreign-based executives were charged with participating with co-conspirators in a conspiracy that was accomplished by the following means:
- Attending meetings and engaging in conversations and communications in Taiwan, Korea and the United States to discuss the prices of TFT-LCD panels;
- Agreeing during those meetings, conversations and communications to charge prices of TFT-LCD panels at certain levels;
- Attending regular group meetings, commonly referred to as "crystal meetings," in hotel rooms in Taiwan and agreeing during those meetings to charge prices for standard-sized TFT-LCD panels at certain target levels;
- Exchanging TFT-LCD shipping, production, supply, demand and pricing information, for the purpose of implementing, monitoring and enforcing adherence to the agreed-upon prices;
- Authorizing, ordering and consenting to the participation of subordinate employees in the conspiracy;
- Issuing price quotations in accordance with the agreements reached;
- Accepting payment for the supply of TFT-LCD panels sold at collusive, noncompetitive prices to customers in the United States and elsewhere; and
- Taking steps to conceal the conspiracy and conspiratorial contacts through various means.
Lin, Cheng and Koo are each charged with participating in the conspiracy to suppress competition in violation of the Sherman Act. The maximum penalty for the conviction of a Sherman Act violation occurring before June 22, 2004, is three years imprisonment and a fine of $350,000 for individuals. The maximum penalty for a violation occurring after June 22, 2004, is 10 years imprisonment and a fine of $1 million for individuals. The maximum fines may be increased, however, to twice the gain derived from the crime or twice the loss suffered by the victims if either or those amounts is greater than the Sherman Act maximum fines. Of the three executives charged today, only Lin’s violation occurred before June 22, 2004.
On Jan. 15, 2009, former Chunghwa CEO Chieng-Hon "Frank" Lin and two Chunghwa executives, Chih-Chun "C.C." Liu and Hsueh-Lung "Brian" Lee, were charged with participating in the same conspiracy and agreed to plead guilty. Under their plea agreements, which must be approved by the court, Chieng-Hon Lin agreed to serve nine months in prison and pay a $50,000 criminal fine; Chih-Chun Liu agreed to serve seven months in prison and pay a $30,000 criminal fine; and Hsueh-Lung Lee agreed to serve six months in prison and pay a $20,000 criminal fine. Also on Jan. 15, 2009, LG executive Chang Suk "C.S." Chung agreed to plead guilty for his role in the conspiracy. Under his plea agreement, which must be approved by the court, Chung agreed to serve a seven-month prison sentence and pay a $25,000 criminal fine.
In total, three companies have been charged with price fixing in the TFT-LCD investigation. On Dec. 15, 2008, LG pleaded guilty to participating in this conspiracy and was sentenced to pay a $400 million criminal fine – the second largest fine in Antitrust Division history. On Jan. 14, 2009, Chunghwa pleaded guilty to participating in the same conspiracy and was sentenced to pay a $65 million criminal fine. On Dec. 16, 2008, Sharp Corp. pleaded guilty to three separate conspiracies to fix the prices of TFT-LCD panels sold to Dell Inc., Apple Computer Inc., and Motorola Inc., and was sentenced to pay a $120 million criminal fine.
Today’s charge is the result of a joint investigation by the San Francisco Field Office of the Antitrust Division of the U.S. Department of Justice 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.
Justice Department Settles Religious Discrimination Lawsuit Against Washington Metropolitan Area Transit AuthorityRead the Press Release
WASHINGTON — The Department of Justice announced today that it has entered into a settlement agreement with the Washington Metropolitan Area Transit Authority (WMATA) that, if approved by the court, will resolve the complaint of pattern or practice religious discrimination filed by the United States against WMATA under Title VII of the Civil Rights Act of 1964.
The United States filed a complaint in U.S. District Court for the District of Columbia in September 2008, alleging that WMATA violated Title VII by failing to reasonably accommodate and provide equal employment opportunities to employees and prospective employees whose religious practices require an accommodation from WMATA’s uniform policy for bus operators and similarly situated employees. The United States also alleged that WMATA discriminated against Gloria Jones who applied and met all of the minimum qualifications for bus operator position, but could not comply for religious reasons with the portion of WMATA’s uniform policy that required bus operators to wear pants. At the start of the orientation process, Ms. Jones requested an accommodation that would allow her to wear a skirt instead of pants, consistent with her religious practice, along with the rest of the bus operator uniform. WMATA summarily denied her request for a religious accommodation and terminated the hiring process.
Under the terms of the settlement agreement, WMATA is required to implement and distribute a religious accommodation policy consistent with Title VII’s requirement to reasonably accommodate the religious practices of all employees and prospective employees. WMATA also is required to provide mandatory training on religious discrimination and accommodation for its supervisory employees. Additionally, WMATA will pay $47,324 to Jones and $2,500 to each of the two other individuals who requested but were denied an accommodation from WMATA’s uniform policy, according to terms of the agreement.
"This settlement agreement sends a clear message that the Department of Justice will not tolerate religious discrimination by employers," said Loretta King, Acting Assistant Attorney General for the Civil Rights Division. "I am pleased that WMATA has agreed to end its discriminatory practice and put into place mechanisms to protect the religious practices of its current and future employees."
Title VII prohibits discrimination in employment on the basis of gender, race, color, national origin or religion, and 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 Act. More information about Title VII and other federal employment laws is available on the Department of Justice Web site at http://www.usdoj.gov/crt/emp/index.html
Former Finance Director of California Valve Company Pleads Guilty to Bribing Foreign Government OfficialsRead the Press Release
WASHINGTON – The former finance director of an Orange County, Calif.-based valve company pleaded guilty today in connection with his role in a conspiracy to pay approximately $628,000 in bribes to numerous foreign government officials, Acting Assistant Attorney General Rita M. Glavin of the Criminal Division, U.S. Attorney Thomas P. O’Brien of the Central District of California, and Joseph Persichini Jr., Assistant Director in Charge of the FBI’s Washington Field Office, announced.
Richard Morlok, 55, a resident of Rancho Santa Margarita, Calif., pleaded guilty before U.S. District Judge James V. Selna in Santa Ana, Calif., to a one-count information charging him with conspiring to make corrupt payments to foreign government officials for the purpose of securing business for the Orange County-based valve company from state-owned enterprises in several countries, including China, Korea, Romania and Saudi Arabia, in violation of the Foreign Corrupt Practices Act (FCPA).
According to court documents, the valve company designed and manufactured service control valves for use in the nuclear, oil and gas, and power generation industries worldwide. Morlok was the finance director at the valve company from 2002 through 2007. In this position, Morlok oversaw the finance department and had responsibility for approving certain commission payments and signing off on wire transfers to the recipients of those commission payments.
In connection with his guilty plea, Morlok admitted that from 2003 through 2006, he caused employees and agents of the valve company to make corrupt payments totaling approximately $628,000 to foreign officials employed at state-owned enterprises in order to assist in obtaining and retaining business for the valve company. Morlok also admitted that the valve company earned approximately $3.5 million in profits from the contracts it obtained as a result of these corrupt payments. According to the court documents, the corrupt payments were made to foreign officials at state-owned entities including, but not limited to, China National Offshore Oil Company, PetroChina, Jiangsu Nuclear Power Corporation (China), KHNP (Korea), Rovinari Power (Romania) and Safco (Saudi Arabia).
Morlok also admitted to providing false and misleading information to auditors during a 2004 internal audit of the valve company’s commission payments, and to providing false and misleading information to external auditors during a 2004 external audit.
As part of his plea agreement, Morlok has agreed to cooperate with the Department in its ongoing investigation. At sentencing, scheduled for July 20, 2009, Morlok faces a maximum of five years in prison.
In a related case, Mario Covino pleaded guilty on Jan. 8, 2009, to conspiring to make corrupt payments totaling approximately $1 million to numerous foreign government officials for the purpose of securing business for the same Orange County valve company from state-owned enterprises in several countries, including Brazil, China, India, Korea, Malaysia and the United Arab Emirates. Covino, an Italian citizen and resident of Irvine, Calif., was responsible for overseeing new construction projects for the valve company and for the replacement of existing valves made by other companies and installed at customer plants in more than 30 countries. Covino’s sentencing is scheduled for July 20, 2009.
The case was prosecuted by Assistant Chief Hank Bond Walther and Trial Attorney Andrew Gentin of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Douglas McCormick of the U.S. Attorney’s Office for the Central District of California. The case was investigated by the FBI’s Washington Field Office.
Federal Court Bars Maine Resident from Preparing Tax Returns for OthersRead the Press Release
WASHINGTON – A federal court in Maine has permanently barred Robert A. Grover from preparing federal tax returns for others, the Justice Department announced today. The court also ordered the Maine resident to provide his customer lists to the government and to mail copies of the complaint and court order to his customers. Grover consented to the civil injunction order.
According to the government complaint, Grover operated a tax return preparation service under the name Grover Tax Preparation LLC in Kennebec County, Maine. The complaint noted that Grover had a history of violating state tax laws in that he was indicted on 41 counts of income tax evasion in violation of a Maine statute. On Dec. 17, 2008, Grover entered pleas of nollo contendre (no contest) to these charges and is scheduled to be sentenced in the state matter in March 2009.
The government’s complaint alleges that Grover prepared more than 2,600 federal tax returns during a four-year period. According to the complaint, Grover fabricated and/or inflated deductions and understated gross receipts on his customers’ Schedule C forms. In addition, the complaint alleges that Grover failed to report capital gains from the sale of assets on some of his customers’ Schedule D forms. Grover also allegedly fabricated and/or inflated deductions related to his customers’ rental properties on Schedule E forms. In the complaint, the government estimates that the U.S. Treasury has incurred from $1 million up to $29.5 million in losses from tax returns prepared by Grover.
Acting Assistant Attorney General John A. DiCicco thanked Tax Division trial attorney Lisa Bellamy for her handling of the government’s case. The Justice Department has obtained injunctions against more than 365 tax return preparers and tax-fraud promoters since 2001.
Information about the Justice Department’s Tax Division and its efforts to stop fraudulent return preparers is available on the Justice Department Web site.
Coal-Fired Power Plant to Spend More Than $135 Million to Settle Clean Air ViolationsRead the Press Release
WASHINGTON—Kentucky Utilities (KU), a coal-fired electric utility, has agreed to pay a $1.4 million civil penalty and spend approximately $135 million on pollution controls to resolve violations of the Clean Air Act, the Justice Department and the U.S. Environmental Protection Agency announced today.
KU has agreed to install new pollution control equipment on its largest generating unit that will reduce combined emissions of sulfur dioxide and nitrogen oxides by more than 31,000 tons per year, which is 90 percent below the 2007 emission levels. KU will also install controls to reduce particulate matter emissions by approximately 1,000 tons per year.
The company will spend approximately $3 million on projects to benefit the environment and mitigate the adverse effects of the alleged violations including:
- Contribute $1.8 million to a pilot project on the effectiveness of storing compressed carbon dioxide gas, a by-product of coal combustion, in deep injection wells;
- Spend $1 million to retrofit school buses with filters or other controls to reduce emissions of particulate matter; and
- Pay $200,000 to the National Park Service to help restore Mammoth Cave National Park, located in Kentucky.
KU has agreed to surrender the excess nitrogen oxide and sulfur dioxide allowances it will have after installing the pollution controls. Coal-fired power plants are allowed to emit sulfur dioxide and nitrogen oxides as allowances, which are granted under federal or state acid rain permits. Once surrendered, these allowances cannot be used again, thus removing the emissions from the environment permanently.
“This settlement will result in the substantial reduction of harmful emissions, and will benefit air quality in Kentucky and downwind areas,” said John C. Cruden, Acting Assistant Attorney General for the Justice Department's Environment and Natural Resources Division. “The Justice Department will spare no effort in its pursuit of emission reductions from power plants across the country to achieve the benefits envisioned by the Clean Air Act.”
“Today’s settlement sets the most stringent limit for nitrogen oxide emissions ever imposed in a federal settlement with a coal-fired power plant,” said Catherine McCabe, Acting Assistant Administrator for EPA’s Office of Enforcement and Compliance Assurance. “EPA is committed to ensuring our nation's coal-fired power plants comply with the Clean Air Act. Pollutants from these facilities can cause severe respiratory problems, contribute to childhood asthma, and contribute to smog and haze.”
In a complaint filed in March of 2007, the government alleged that KU modified the largest coal-fired electrical generating unit at the E. W. Brown Generating Station in Mercer County, Ky., without installing required pollution control equipment or complying with applicable emission limits, in violation of the Clean Air Act. The unit has been operating since 1971, and the modifications made in 1997 allowed the unit to increase the amount of coal it burned and increase the amount and rate of emissions for sulfur dioxide, nitrogen oxide and particulate matter. The government discovered the violations through an information request issued to KU.
The settlement is part of the EPA’s enforcement initiative to control harmful emissions from coal-fired power plants under the Clean Air Act’s New Source Review requirements. The total combined sulfur dioxide and nitrogen oxide emission reductions secured from these settlements will exceed more than 1.8 million tons each year once all the required pollution controls have been installed and implemented.Coal-fired plants release sulfur dioxides and nitrogen oxides, which are a primary cause of acid rain that harms trees and lakes and impairs visibility. These pollutants cause severe respiratory problems, contribute to childhood asthma, and contribute to smog and haze. Air pollution from power plants can drift significant distances downwind and degrade air quality in nearby areas.
Kentucky Utilities, based in Lexington, Ky., generates and distributes electricity to more than 500,000 customers in Kentucky and Virginia. It owns and operates five coal-fired electrical generating stations in Kentucky. The settlement applies to the largest boiler unit at the E.W. Brown Generating Station located on Lake Herrington in Mercer County, Ky.
The settlement was lodged in the U.S. District Court for the Eastern District of Kentucky in Lexington and is subject to a 30-day public comment period and final court approval. A copy of the consent decree is available on the Department of Justice Web site at http://www.usdoj.gov/enrd/Consent_Decrees.html.
2 February 2009
U.S. Recovers $19 Million from AMEC Construction Management<br /> to Settle Litigation Regarding Fraud, False Claims, Kickbacks<br /> & Re-Procurement Costs on Federal Construction ContractsRead the Press Release
WASHINGTON – The United States has recovered more than $19 million from AMEC Construction Management Inc. (ACMI) to resolve allegations of fraud, false claims and kickbacks on four General Services Administration (GSA) construction contracts, as well as litigation over claims by the GSA for excess re-procurement costs incurred by GSA after it terminated ACMI’s contract to build the Thomas F. Eagleton United States Courthouse in St. Louis, Missouri, the Department of Justice announced today. ACMI was formerly known as Morse Diesel International Inc.
In counterclaims filed in the U.S. Court of Federal Claims, the United States sought damages and penalties under the False Claims Act, the Anti-Kickback Act and common law theories for false bond reimbursement claims submitted by ACMI to the GSA and bond premium kickbacks paid by the company’s bond broker to ACMI’s United Kingdom parent company, AMEC plc, on four federal contracts: two for the construction of the Eagleton Courthouse; a third for the construction of the U.S. courthouse and federal building in Sacramento, Calif.; and a fourth for renovations to the U.S. customs house in San Francisco. The government also sought a declaration from the court that ACMI’s claims against the government were forfeited on account of its fraud, as provided by the Forfeiture of Fraudulent Claims Act.
In July 2005 and January 2007, the U.S. Court of Federal Claims granted summary judgment against ACMI and held the company liable to the United States for its violations of the Anti-Kickback Act and the False Claims Act. The court also held that ACMI had forfeited its right to pursue its own claims against the government. In October 2007, the federal claims court awarded the government damages and penalties totaling nearly $7.3 million. The government obtained a writ of garnishment for the damages and penalties owed it in the U.S. District Court for the District of New Jersey, and ACMI has agreed to have a total of more than $8 million paid to the government as part of the settlement.
The settlement also will resolve litigation in the Court of Federal Claims regarding the excess re-procurement costs incurred by the GSA when it undertook the completion of the Eagleton Courthouse after terminating ACMI for default in 1999. ACMI has agreed to settle those claims for a total of more than $11 million, including amounts that the GSA retained as set-offs from other matters involving ACMI.
"Federal contractors who commit fraud against the government will be pursued aggressively and will be held accountable for their violations of law," said Michael F. Hertz, Acting Assistant Attorney General of the Department of Justice's Civil Division. "This settlement is an example of the Department’s determination to ensure that federal funds are protected from fraud and abuse."
The case was filed after an audit and investigation by the GSA’s Office of the Inspector General revealed the bond fraud. The kickbacks were uncovered during the litigation. ACMI also entered guilty pleas to felony fraud in the U.S. District Court for the Eastern District of Missouri in December 2000 and in the U.S. District Court for the Eastern District of California in March 2002 for the bond frauds involved in today’s civil settlement.