Eastern District of Michigan

A former lieutenant and crew chief from the now-disbanded Narcotics Unit of the Detroit Police Department were sentenced today following their convictions for conspiring to rob drug dealers and to steal drugs and money obtained in police searches, announced U.S. Attorney Barbara L. McQuade.

Joining McQuade in the announcement were Special Agent in Charge David P. Gelios of the Federal Bureau of Investigation’s Detroit Division, Chief James E. Craig of the Detroit Police Department, Manny Muriel, Special Agent in Charge of the Detroit office of the Internal Revenue Service – Criminal Investigation and Special Agent in Charge Timothy Plancon, Drug Enforcement Administration, Detroit Field Division.

Lt. David Hansberry, 35, was sentenced to 12 ½ years in prison and Officer Bryan Watson, 47, was sentence to 9 years in prison. Both Defendants were also ordered to serve two year terms of supervised release upon completion of their prison sentences. Watson was also ordered to pay a $2,000 fine. The two were convicted on charges of conspiracy to interfere with commerce by extortion and robbery following a five-week trial conducted before U.S. District Judge Stephen J. Murphy.

According to the evidence presented at trial, the defendants arranged drug transactions with civilians, including confidential sources, so that they could rob and extort them. The defendants allegedly carried out traffic stops and fake arrests, and then stole drugs, money and personal property from their victims. Hansberry and Watson used their status as law enforcement officers to assist in their scheme, by driving police vehicles, activating lights on their police vehicles, wearing police-issued attire, displaying official badges and carrying firearms. Hansberry and Watson also identified themselves as police officers to coerce their victims into complying with their demands and to encourage their victims to flee, leaving behind illegal drugs, money and personal property.

In addition, the evidence showed that Hansberry, who was a sergeant at the time, and Watson failed to log into evidence money and drugs seized during searches of homes. Instead, they split the proceeds and arranged for the sale of the drugs, sharing the proceeds generated by the sales. In one instance in July 2010, Hansberry and Watson participated in a drug seizure that netted more than $3 million, the largest cash seizure by the Detroit Police Department at that time. Only $2.2 million, however, was placed in the evidence room.

“Police officers who abuse their positions of trust must be held accountable so that they do not tarnish the badges of all of the thousands of police officers who serve with honor," McQuade said.

 

"While an unfortunate reminder that sometimes those in public service squander the trust placed in them by the public, today's sentences should not taint the outstanding work conducted every day by the Detroit Police Department to combat crime in city of Detroit,” said David P. Gelios, Special Agent in Charge, FBI Detroit Division. "The conclusion of this case highlights the continued importance of the work of the FBI-led Public Corruption Task Force, in coordination with our law enforcement partners, to aggressively investigate allegations of public officials who abuse their positions for personal gain."

 

The case was investigated by the FBI Detroit Area Public Corruption Task Force, in collaboration with the Detroit Police Department’s Office of Internal Affairs and the Drug Enforcement Administration. The case was prosecuted by Assistant U.S. Attorneys Sheldon Light and J. Michael Buckley.

 

 

Two men were convicted yesterday for their roles in three armed robberies of Dollar General stores in Detroit, U.S. Attorney Barbara L. McQuade announced today.

 

McQuade was joined in the announcement by Special Agent in Charge David P. Gelios, Federal Bureau of Investigation, Detroit Division, and Chief James Craig, Detroit Police Department whose departments led the collaborative investigation into this armed robbery crew as part of the Detroit One initiative.

 

Convicted by federal jury verdict after a week-long trial were:

 

Dwayne Dupree, 30, of Detroit, of three counts of robbery and three counts of using a firearm in furtherance of a crime of violence; and

 

Shawn Pearson, 23, of Detroit, of three counts of robbery and three counts of using a firearm in furtherance of a crime of violence.

 

Facts at trial showed that the men’s crime spree started on December 17, 2014, when four armed robbers stormed into the Dollar General store at 13441 E. Seven Mile Road in Detroit. The robbers, with their identities concealed with hoodies, masks and gloves, took over the counter area of the store, holding store employees at gunpoint before making off with some of the store’s money. One of the four men was Pearson. He was assisted by Dupree, who acted as a lookout.

 

Less than three weeks later, on January 5, 2015, two armed masked men robbed the same Dollar General store, this time firing shots at the store manager as they made their getaway. Once again, Pearson was one of the armed robbers, while this time Dupree acted as both a lookout and getaway driver.

 

Then, on March 19, 2015, Pearson and Dupree acted as the armed robbers of the Dollar General store at 16004 Fenkell. On this occasion, the evidence showed that Dupree fired a shot into the air to scare the store employees to move faster in turning over the store’s money.

 

FBI Violent Crime Task Force, working in close collaboration with members of the Detroit Police Department, followed the evidence, including ballistic, phone, and social media information, to identify Dupree and Pearson and to solve these robberies.

 

"The Detroit One partnership focuses on criminals like this armed robbery crew, who endanger public safety and create a climate of fear." McQuade said. "By identifying and prosecuting the individuals and groups driving violence in Detroit, we hope to make the city a safe place to live and work."

 

“The defendants in this string of violent robberies were brazen in both terrorizing employees and placing the public in danger", said David P. Gelios, Special Agent in Charge, FBI Detroit Division. "Yesterday’s verdict demonstrates the value of the continuing investigative partnership between the FBI and the Detroit Police Department in our collaborative efforts to reduce violent crime in metropolitan Detroit and to keep our communities safe.”

 

The case was prosecuted by Assistant United States Attorneys Christopher Graveline and Michael Heesters.

The owner of a Novi restaurant and his wife pleaded guilty today to conspiracy and harboring undocumented workers for commercial advantage and private financial gain, announced United States Attorney Barbara L. McQuade.

 

McQuade was joined in the announcement by Acting Special Agent in Charge Steve Francis, U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) and Chief David Molloy, Novi Police Department.

 

Roger Tam, 56, and his wife, Ada Lei, 49, of Novi, entered their guilty pleas before U.S. District Judge Marianne O. Battani in Detroit.

 

"Today the principal defendants were convicted for using illegal labor to operate restaurants in metro Detroit," said Steve Francis, acting special agent in charge of HSI Detroit. "These guilty pleas should stand as a warning to employers who knowingly hire and employ illegal aliens that they will be held accountable for their actions.”

 

“These defendants are accepting responsibility for harboring undocumented workers and conspiracy, but we disagree about the appropriate sentencing guidelines that apply,” McQuade said. “At the sentencing hearing, the United States will seek a sentencing enhancement for creating a substantial risk of death or serious bodily injury to reflect the seriousness of the offense.”

 

According to court records, HSI special agents and officers with the Novi Police Department executed federal and state search warrants at a Novi residence owned by the Tams where five Mexican nationals died as a result of a fire that occurred on January 31, 2016. Department of Homeland Security databases revealed that all five men were illegally present in the United States.

 

Evidence obtained during the course of the investigation showed that the five Mexican nationals were hired by the defendants to work at their restaurant, Kim’s Garden, in Novi. As a benefit of their employment, the Mexican nationals resided at the couple’s Novi home and were transported to and from the restaurant for work. Tam admitted that the deceased individuals were employees at Kim’s Garden, that they were paid in cash, and that they were allowed to reside in the basement of Tam’s home.

 

The Tams each face up to 10 years in prison and a $250,000 fine. Sentencing has been set for June 13, 2017.

 

This case was investigated by the Novi Police Department and HSI with assistance from ICE’s Enforcement and Removal Operations (ERO), U.S. Customs and Border Protection’s Border Patrol and the Oakland County Sherriff’s Office

A Detroit man was sentenced today for conspiring to steal identities and unemployment benefits, United States Attorney Barbara L. McQuade announced today.

 

McQuade was joined in the announcement by James Vanderberg, Special Agent in Charge, Chicago Region, U.S. Department of Labor, Office of Inspector General, and Wanda Stokes, director, of the Michigan Talent Investment Agency which administers the Unemployment Insurance program

 

Joel Randall Driscoll, 27, was sentenced to 57 months for conspiracy to commit mail fraud and aggravated identity theft. The aggravated identity theft charge carries a mandatory two-year sentence, which is imposed consecutively to the sentence for other crimes.

 

According to the indictment, Driscoll, along with co-conspirators Lashea Catrice Scott, Grady Whitaker, Jr., Devonte Cook, Deonta Holley and Terence Gould, devised and executed a scheme to defraud and obtain public money from the State of Michigan Unemployment Insurance program from January 2012 to December 2015. Michigan unemployment benefits, which are funded by employers and the U.S. Department of Labor, are paid to individuals who are unemployed. As part of the conspiracy, the defendants stole the identities of unsuspecting individuals and applied for benefits in their names. The benefits were issued on debits cards, which the defendants used at automated teller machines across Detroit to access the unemployment insurance benefits for personal use. The conspiracy involved the stolen identities of hundreds of individuals and resulted in losses to the government of more than $400,000.

 

“These criminals not only stole funds from the state, but they also stole money from the pockets of the unemployed workers for whom the benefits were intended by committing identify fraud.” McQuade said.

 

“Joel Driscoll victimized individuals by stealing their identities, and defrauded the Michigan Unemployment Insurance program of more than $400,000 intended for American workers in need of relief from the financial effects of unemployment. We will continue to work with our law enforcement partners to safeguard the Unemployment Insurance Program,” stated James Vanderberg, Special Agent in Charge, Chicago Region, U.S. Department of Labor, Office of Inspector General.

 

Co-conspirator Grady Whitaker, Jr. was sentenced to 68 months in custody on December 12, 2016 for his role in the conspiracy and the aggravated identity theft. The remaining defendants have all entered pleas to various charges and are awaiting sentencing.

 

The case was investigated by U.S. Department of Labor – Office of Inspector General in conjunction with the State of Michigan – Unemployment Insurance Agency and prosecuted by Assistant United States Attorneys Erin J. Hendrix and Brandy R. McMillion.

Four Detroit men have been sentenced to federal prison for roles they played in a credit card fraud ring, announced U.S. Attorney Barbara L. McQuade.

On January 25, 2017, U.S. District Judge Mark A. Goldsmith sentenced Terry Lewis, age 41, to 60 months in prison. Judge Goldsmith had previously sentenced Lewis’s co-defendants, Eric Dismukes, age 40, to 75 months in prison, Pastor Julius Baker, age 33, to 42 months in prison and Darrius Guyton, age 29, to 39 months in prison. All four defendants were also ordered to serve three-year terms of supervised release upon completion of their prison sentences.

The evidence in the case showed that Dismukes and Lewis illicitly acquired personal identifying information of third parties and then used that information to fraudulently obtain credit cards. Dismukes and Lewis used the fraudulently-obtained credit cards to conduct illicit financial transactions in the Metropolitan Detroit area, including fraudulent retail store purchases and ATM cash withdrawals. Dismukes and Lewis also provided fraudulently-obtained credit cards to other members of the fraud ring, including Baker and Guyton, so that those individuals could also conduct illicit financial transactions. Baker conducted a number of illicit financial transactions using a credit card terminal that was registered to the Rock Community Christian Church, where Baker had served as a pastor. Baker admitted to moving the proceeds of those fraudulent transactions to personal accounts that he controlled. In total, members of the credit card fraud ring caused more than half a million dollars in loss.

Judge Goldsmith has ordered the defendants to pay the following amounts in restitution:

• Dismukes: $150,000

• Pastor Baker: $150,000

• Lewis: $40,000

• Guyton: $15,000

The case was investigated by the United States Postal Inspection Service and prosecuted by Assistant United States Attorney Andrew Yahkind.

Detroit One collaboration of local, state and federal law enforcement has led to the guilty pleas of five Latin Counts street gang members for racketeering conspiracy involving murder and drug trafficking, U.S. Attorney Barbara L. McQuade announced today.

 

The pleas were unsealed today and occurred during the past week in federal court in Ann Arbor. All five defendants pleaded guilty to racketeering conspiracy, and each faces 30 years in prison. The five gang members are:

 

- Devin Dantzler, 21, of Ecorse;

 

- Victor Vasquez, 26, of Detroit;

 

- Jonathan Estrada, 27, of Lincoln Park;

 

- Jesus Rodriguez, 25, of Lincoln Park; and

 

- Angel Rodriguez, 21, of Lincoln Park.

 

According to the racketeering indictment, the Latin Counts gang operates in southwest Detroit and the downriver communities of Lincoln Park and Ecorse. The indictment alleges that 11 defendants committed assaults, murder, trafficking in drugs and stolen firearms, robbery and breaking and entering homes and businesses. The indictment alleges that the gang uses violence to stake out its “turf” and to intimidate both rival gang members and the citizens of southwest Detroit.

 

As part of their guilty pleas, Dantzler and Victor Vasquez took responsibility for causing the death of Mustafa Al-Yasiry at the Big Apple Market in southwest Detroit on April 18, 2014. According to the indictment, several Latin Counts assaulted Al-Yasiry, and Dantzler shot and killed him. Three other gang members have already pleaded guilty for their roles in this murder. Similarly, as part of their pleas, Estrada and the two Rodriguez brothers took responsibility for participating in the killing of Terrence McClearen and the shooting of another victim on August 18, 2013.

 

Under the Detroit One Initiative, and through the lead efforts of the Detroit Police Department and the FBI Violent Crime Task Force, which consists of representatives of Homeland Security Investigations, Detroit Police Department, Lincoln Park Police Department, Michigan Department of Corrections, and Michigan State Police, investigators were able to merge separate probes of various members of this organization and its activities into one encompassing investigation.

 

“By working together, the Detroit One partners are systematically dismantling the street gangs that cause violent crime in our neighborhoods,” McQuade said. “We want to take back our streets from violent gangs so that Detroit residents can enjoy the safe quality of life that we all deserve.”

 

“The success of the Detroit One initiative is evident in the continued disruption, arrest and prosecution of these violent gang members in our communities” said Chief James Craig. “The collaboration of law enforcement agencies certainly plays a key role in returning the neighborhoods back to the people.”

 

“These guilty pleas demonstrate law enforcement's resolve to stopping the escalating violence linked to gang activity”, stated HSI Acting Special Agent in Charge Steve Francis. "Removing criminal gang members from the streets will ensure that they are no longer in a position to wreak havoc in our neighborhoods and threaten the public's safety."

 

"Once again, the Detroit One Initiative and its ongoing dynamic law enforcement collaborations have proven highly effective in combating some of the most violent and heinous criminals in our community”, said David P. Gelios, Special Agent in Charge, FBI Detroit Division. "Success, in these cases, is a direct result of ongoing joint investigative efforts like this led by the FBI’s multi-agency Violent Gang Task Force, which is comprised of federal, state and local law enforcement agencies. It is through these joint ventures and the Detroit One Initiative we are routinely and effectively force multiplying by leveraging resources to help keep our neighborhoods and communities safe from the threats gang violence poses to our citizens”.

 

Detroit One is a collaborative effort between law enforcement and the community to reduce homicide and other violent crime in Detroit. By working together, local, state, and federal law enforcement agencies strive to maximize their ability to identify and arrest individuals and groups initiating violence in Detroit. Since its launch in 2013, homicides are down 20% and non-fatal shootings are down 25% in the City of Detroit. A comparison between the four-year period since Detroit One began with the prior four-year period shows 174 fewer homicides in the city.

 

These pleas are the latest in a string of charges from the U.S. Attorney’s Office and Wayne County Prosecutor’s Office during the last four years involving violent street gangs in the city of Detroit, including:

 

• 19 members/associates of the Seven Mile Blood street gang for federal racketeering conspiracy and other violent acts in furtherance of racketeering;

 

• Nine members of the Bounty Hunter Bloods street gang for federal racketeering conspiracy and other violent acts in furtherance of racketeering;

 

• 14 members of the Phantom Outlaw Motorcycle Club/Vice Lords street gang for federal racketeering conspiracy and other violent acts in furtherance of racketeering;

 

• Four Vice Lord members in state court for armed robbery and a Vice Lord leader charged under the federal street gang statute for his role in that armed robbery;

 

• Nine Vice Lords members for racketeering charges stemming from the shooting of four individuals at their family residence on Detroit’s northwest side;

 

• Three members of the Band Crew street gang charged under the state of Michigan gang felony statute for violent acts in furtherance of their gang activities and eight members of the Band Crew for federal racketeering conspiracy and other violent acts in furtherance of racketeering;

 

• 10 members of the RTM street gang for federal racketeering conspiracy and other violent acts in furtherance of racketeering;

   

• 11 members of the 6 Mile Chedda Grove street gang for federal racketeering conspiracy and other violent acts in furtherance of racketeering;

   

• 14 members of the Rollin’ 60s Crips street gang for federal racketeering conspiracy and other violent acts in furtherance of racketeering;

   

• Four members of the Band Gang street gang charged under the state of Michigan gang felony statute for violent acts in furtherance of their gang activities and three members of the Band Gang for federal access device fraud/ aggravated identity theft and one member of the same gang charged in federal court with being a felon in possession of a firearm;

   

• 24 individuals on drug conspiracy charges for their use of sixteen different houses in the east side Ravendale neighborhood of Detroit, many of them abandoned homes, for distributing heroin, cocaine, and crack cocaine between 2013 – 2015; and

   

• 14 individuals on federal charges of criminal enterprise, drug distribution or weapons offenses for drug distribution in the west side Warrendale neighborhood of Detroit.

 

A Detroit man was sentenced to four years in prison yesterday for witness tampering for disclosing personal identification information of shooting victims and their family members to a leader of a street gang. The case was the result of work by the Detroit One partnership of local, state and federal law enforcement.

 

The announcement was made by Acting Assistant Attorney General David Bitkower of the Justice Department’s Criminal Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Special Agent in Charge Robin Shoemaker of the Bureau of Alcohol, Tobacco, Firearms and Explosives, Special Agent in Charge David P. Gelios of the Federal Bureau of Investigation, and Chief James Craig of the Detroit Police Department.

 

Jamerio Clark, 28, of Detroit, pleaded guilty on September 27, 2016, to tampering with a witness, victim or informant before U.S. District Judge David M. Lawson in Detroit. He is the eighth person to be sentenced in this case, part of the Detroit One partnership of local, state and federal law enforcement.

 

According to admissions made by the Vice Lord gang members who have pleaded guilty in this case, the Vice Lords is a national gang engaged in a variety of crimes, and Vice Lords’ leaders are located in both Chicago and Detroit. As admitted in the plea agreements, members of the Vice Lords, including Antonio Clark, were searching for two brothers who had attempted to leave the gang as part of a plan to “violate” the brothers for their perceived infractions against the gang. to admissions, on May 7, 2015, they and others met at a Vice Lord member’s house to discuss their plan and collect firearms, including an AK-47 assault rifle, and then traveled in multiple cars to the intended victims’ house. After a brief confrontation with the brothers’ family members, Antonio Clark opened fire with an AK-47, firing at the family more than two dozen times and hitting the brothers, their mother and 15-year-old sister. All of the victims survived the shooting.

 

Jamerio Clark admitted that from May 8, 2015, through at least January 2016, he was employed at a medical facility where he had access to a private database that contained personally identifiable health information for anyone who had been treated at a Detroit Medical Center facility. At his brother’s request and while employed at the medical facility, Jamerio Clark accessed this database on at least 15 occasions to search for three Vice Lords shooting victims. According to the plea agreement, Jamerio Clark then provided to Antonio Clark information, including dates of birth, phone numbers, addresses and information pertaining to relatives of these individuals. Jamerio Clark admitted that he knew his brother wanted this information to locate these individuals and prevent them from cooperating in the investigation and prosecution of the shooting.

 

Seven gang members have already been sentenced in this case and received the following terms of imprisonment:

 

Antonio Clark, 27, of Detroit – 20 years

Aramis Wilson, 26, of Detroit – 12 years, 6 months

Tyrone Price, 27, of Detroit – 11 years, 8 months

Dion Robinson, 38, of Detroit – 10 years, 1 month

Jonathan Kinchen, 24, of Detroit – 10 years

Kojuan Lee, 20, of Detroit – 8 years, 1 month

Kirshean Nelson, 20, of Detroit – 3 years

 

“The Detroit One partners are working to dismantle violent street gangs that commit gun violence because of the harm it causes to our residents and our neighborhoods,” McQuade said. “Our community will not tolerate gun violence as a method to resolve disputes.”

 

The arrests and convictions in this case are, in part, the result of the Detroit One Initiative, a collaborative effort between law enforcement and the community to reduce homicide and other violent crime in Detroit. Through the lead efforts of the Comprehensive Violence Reduction Partnership Task Force, which consists of representatives of the ATF, Detroit Police Department, Michigan State Police, Michigan Department of Corrections and the FBI, law enforcement authorities linked various acts of violence in Detroit to the Vice Lords street gang, and identified the leaders and key members of the gang.

 

Another defendant, Burney Everett, 27, of Detroit, is scheduled to be sentenced on February 8, 2017. The sentencing date for the final defendant, Kenneth Smith, has yet been set.

 

This case is being investigated by the ATF, FBI, and Detroit Police Department. The case is being prosecuted by Assistant United States Attorneys Christopher Graveline and Mark Bilkovic of the United States Attorney’s Office for the Eastern District of Michigan, and Trial Attorney Joseph Wheatley of the Criminal Division’s Organized Crime and Gang Section.

 

Costco Pharmacies Filled Prescriptions that Were Improper or Incomplete

 

DETROIT - Costco Wholesale will pay $11.75 million to settle allegations that its pharmacies violated the Controlled Substances Act when they improperly filled prescriptions for controlled substances. The settlement resolves allegations that Costco pharmacies filled prescriptions that were incomplete, lacked valid Drug Enforcement Administration (DEA) numbers or were for substances beyond various doctors’ scope of practice. Additionally, the settlement resolves allegations that Costco failed to keep and maintain accurate records for controlled substances at its pharmacies and centralized fill locations.

 

The settlement was announced today by U.S. Attorneys Annette L. Hayes of the Western District of Washington, Michael C. Ormsby of the Eastern District of Washington, Eileen M. Decker of the Central District of California, Barbara L. McQuade of the Eastern District of Michigan and Phillip A. Talbert of the Eastern District of California.

 

“In light of the prescription pill and opioid overdose epidemic we are seeing across the country, compliance with regulations governing pharmacies is more important than ever,” said U.S. Attorney McQuade. “We applaud Costco for working with DEA and taking steps to tighten up its compliance to ensure that prescription pills do not end up on the street market.”

 

“Pharmacies across this country are on the leading edge of the battle against our prescription drug abuse crisis,” said U.S. Attorney Hayes. “A company such as Costco that distributes a significant volume of controlled substances has a responsibility to ensure it complies with regulations that help prevent opioids and other dangerous drugs from being misused or otherwise added to the illegal marketplace. I commend the DEA investigators for uncovering the violations at issue in this case, and working with Costco to ensure that systems are put in place to prevent controlled substances from ending up in the wrong hands.”

 

“Last year, over 50,000 Americans died as a result of drug overdoses, many of which were related to the misuse of prescription drugs. This settlement demonstrates the accountability and responsibility that go along with handling controlled prescription drugs,” said DEA Assistant Administrator Louis Milione. “DEA works every day to reinforce good corporate practices through outreach and education efforts and, when appropriate, with administrative and criminal action.”

 

Under the settlement reached Jan. 18, 2017, Costco acknowledges that between Jan. 1, 2012 and Dec. 31, 2015, certain Costco Pharmacies dispensed controlled substances inconsistent with their compliance obligations under the Controlled Substances Act (CSA) and its implementing regulations. The violations include: filling prescriptions from practitioners who did not have a valid DEA number; incorrectly recording the practitioner’s DEA number; filling prescriptions outside the scope of a practitioner’s DEA registration; filling prescriptions that did not contain all the required information; failing to maintain accurate dispensing records; and failing to maintain records for their central fill locations in Sacramento, California, and Everett, Washington.

 

“These are not just administrative or paperwork violations – Costco’s failure to have proper controls in place in its pharmacies played a role in prescription drugs reaching the black market,” said U.S. Attorney Decker. “Costco pharmacies in Southern California filled numerous prescriptions for drugs that should not have been sold to consumers because of its flawed system for validating DEA registration numbers.”

 

“Opioid misuse has reached epidemic levels in the United States. This important matter is yet another example of the tenacious dedication of Drug Enforcement Administration investigators in uncovering and addressing corporate regulatory noncompliance,” said U.S. Attorney Ormsby. “The DEA must be commended for its superb efforts in combating the opioid problem at so many different levels, including regulatory compliance.”

 

“Pharmacies are the gatekeepers responsible for ensuring the lawful use of powerful drugs that have a legitimate medical purpose but are easily abused. The CSA provides the statutory oversight to ensure that pharmacies keep meticulous records,” said U.S. Attorney Talbert. “The successful resolution of this matter demonstrates the Department of Justice’s commitment to enforcing the CSA.”

 

To address issues uncovered in this investigation, Costco made improvements in its pharmacies. The company purchased a new pharmacy management system at a total budgeted five year cost of approximately $127 million. Additionally, Costco implemented a three tier audit program of its pharmacy locations: Tier 1 done by pharmacy managers and regional pharmacy supervisors; Tier 2 completed by an Internal Audit group consisting of three auditors and an audit supervisor; and Tier 3 an External Audit of 40 annual audits.

 

Under the terms of the settlement, over the next three years, DEA is allowed to conduct unannounced and unrestricted inspections of all DEA registered Costco Pharmacy locations without Administrative Inspection Warrants. The DEA monitors pharmacy prescribing practices to ensure compliance with federal law. Pharmacies found in violation face escalating penalties up to the revocation of their DEA Registration number – the authorization that allows them to write prescriptions for controlled substances.

 

This case was investigated by DEA Diversion Groups in Seattle, Los Angeles, Sacramento and Detroit. While this settlement is national in scope, the settlement was negotiated by the United States Attorney’s Offices in the Western and Eastern Districts of Washington, Central and Eastern Districts of California and Eastern District of Michigan.

An associate of the Vice Lords street gang was sentenced to 48 months in prison today for witness tampering by obtaining and disclosing the private health information of Vice Lords shooting victims and victims’ family members to a member of the gang.

Acting Assistant Attorney General David Bitkower of the Justice Department’s Criminal Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Special Agent in Charge Robin Shoemaker of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Detroit Field Division, Special Agent in Charge David P. Gelios of the FBI’s Detroit Division and Chief James Craig of the Detroit Police Department made the announcement.

Jamerio Clark, aka Merio, 28, of Detroit, was sentenced by U.S. District Judge David M. Lawson of the Eastern District of Michigan.

According to admissions made by codefendants who have pleaded guilty in this case, the Vice Lords is a national gang engaged in a variety of crimes, and Vice Lords’ leaders are located in both Chicago and Detroit. The gang is broken down into various “sets,” “decks,” or “branches,” including the Detroit-based Traveling Vice Lords (TVL). The Vice Lords have often targeted members who sought to leave the gang for physical beatings or murder.

Jamerio Clark admitted that from May 8, 2015, through at least January 2016, he was employed at a medical facility where he had access to a private database that contained individually identifiable health information for anyone who had been treated at a Detroit Medical Center facility. At the request of his brother and fellow gang member, Antonio Clark, and while employed at the medical facility, Jamerio Clark accessed this database on at least 15 occasions to search for three TVL shooting victims, he admitted. Jamerio Clark then provided information, including dates of birth, phone numbers, addresses, and information pertaining to relatives of these victims to Antonio Clark. Jamerio Clark admitted that he knew his brother wanted this information to locate these relatives and prevent them from cooperating in the investigation and prosecution of the TVL shooting.

Nine members and leaders of the TVL have pleaded guilty to charges related to the shooting, eight of whom have been sentenced: Antonio Clark, 27, of Detroit, was sentenced to 240 months in prison; Aramis Wilson, 26, of Detroit, was sentenced to 150 months in prison; Dion Robinson, 38, of Detroit, was sentenced to 121 months in prison; Jonathan Kinchen, 24, of Detroit, was sentenced to 120 months in prison; Tyrone Price, 27, of Detroit, was sentenced to 140 months in prison; Kojuan Lee, 20, of Detroit, was sentenced to 97 months in prison; and Kirshean Nelson, 20, of Detroit, was sentenced to 36 months in prison. Burney Everett, aka Tank, 27, of Detroit, pleaded guilty on Oct. 25, 2016, and is scheduled to be sentenced on Feb. 8, 2017. Kenneth Smith, 35, of Detroit, pleaded guilty on Jan. 28, 2016, and awaits sentencing, which has not yet been set.

The charges and convictions related to the TVL shooting are just one component of the federal government’s prosecution of the Vice Lords street gang, which has led to the arrests and convictions of dozens of Vice Lords leaders and members over the last few years. In two trials during March and May 2015, juries convicted eight leaders and members of the Phantom Outlaw Motorcycle Club, many of whom were also leaders and members of the Vice Lords, for various crimes, including a mass-murder plot against a rival organization and the shooting of a member of another rival organization. Among those convicted was Antonio Johnson, aka MT and Mister Tony, the National President of the Phantoms and the Three-Star General over all of the Vice Lords in Michigan. On Sept. 8, 2015, Johnson was sentenced to 35 years in prison for racketeering conspiracy, murder conspiracy in aid of racketeering, assault with a dangerous weapon in aid of racketeering, aiding and abetting the use and carry of firearms during and in relation to a crime of violence and felon in possession of a firearm.

The arrests and convictions in this case are, in part, the result of the Detroit One Initiative, a collaborative effort between law enforcement and the community to reduce homicide and other violent crime in Detroit. Through the lead efforts of the Comprehensive Violence Reduction Partnership Task Force, which consists of representatives of the ATF, Detroit Police Department, Michigan State Police, Michigan Department of Corrections and FBI, law enforcement authorities linked various acts of violence in Detroit to the Vice Lords street gang, and identified the leaders and key members of the gang, who now have been held accountable.

The charges and allegations contained in the indictment are merely accusations. The defendants are presumed innocent until and unless proven guilty.

The ATF, FBI and Detroit Police Department are investigating the case. Trial Attorney Joseph Wheatley of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorneys Christopher Graveline and Mark Bilkovic of the Eastern District of Michigan are prosecuting the case.

Three Takata Executives Charged with Wire Fraud and Conspiracy

 

Tokyo-based Takata Corporation, one of the world’s largest suppliers of automotive safety-related equipment, agreed to plead guilty to wire fraud and pay a total of $1 billion in criminal penalties stemming from the company’s fraudulent conduct in relation to sales of defective airbag inflators. An indictment was also unsealed charging three Takata executives with wire fraud and conspiracy in relation to the same conduct.

 

U.S. Attorney Barbara McQuade of the Eastern District of Michigan, Chief Andrew Weissmann of the Fraud Section of the Justice Department’s Criminal Division, Special Agent in Charge David P. Gelios of the FBI’s Detroit Field Office and Inspector General Calvin L. Scovel III of the U.S. Department of Transportation Office of Inspector General made the announcement.

 

“Automotive suppliers who sell products that are supposed to protect consumers from injury or death must put safety ahead of profits,” said U.S. Attorney McQuade. “If they choose instead to engage in fraud, we will hold accountable the individuals and business entities who are responsible.”

 

“For more than a decade, Takata repeatedly and systematically falsified critical test data related to the safety of its products, putting profits and production schedules ahead of safety,” said Fraud Section Chief Weissmann. “This announcement is the latest in the automotive industry enforcement actions the Fraud Section has taken to protect U.S. consumers against fraud.”

 

“Today’s criminal charges of the Takata Corporation and three of its employees should be a reminder to other corporations and their employees that if they commit fraud, the FBI and its law enforcement partners will ensure they are held accountable for their actions,” said Special Agent in Charge Gelios. “Whether it is the manipulation of test results which impact customer safety, defective product development or any other type of fraud, we will continue to aggressively investigate corporate fraud allegations to protect consumers in the United States and elsewhere.”

 

“I offer my deepest sympathies to the families and friends of those who died and to those who were injured as a result of the Takata Corporation’s failure to fulfill its obligation to ensure the safety of its airbag systems,” said Inspector General Scovel. “Because safety is and will remain the highest priority for my office, we will continue to work tirelessly with our law enforcement and prosecutorial partners in pursuing those who commit criminal violations of transportation-related laws and regulations. Along with similar settlements with General Motors in September 2015 and Toyota in March 2014, today’s agreement makes clear to all auto manufacturers and parts suppliers their duty in keeping the public safe.”

 

According to the company’s admissions, in the late 1990s, Takata began developing airbag inflators that relied upon ammonium nitrate as their primary propellant. From at least in or around 2000, Takata knew that certain ammonium nitrate-based inflators were not performing to the specifications required by the auto manufacturers. Takata also knew that certain inflators had sustained failures, including ruptures, during testing. Nevertheless, Takata induced its customers to purchase these airbag systems by submitting false and fraudulent reports and other information that concealed the true condition of the inflators. This fraudulent data made the performance of the company’s airbag inflators appear better than it actually was, including by omitting that, in some instances, inflators ruptured during testing. Takata employees – including a number of key executives – routinely discussed the falsification of test reports being provided to Takata’s customers in email and in verbal communications. Even after the inflators began to experience repeated problems in the field – including ruptures causing injuries and deaths – Takata executives continued to withhold the true and accurate inflator test information and data from their customers.

 

In addition, Takata took no disciplinary actions against those involved in the falsification of test data until 2015, despite the fact that senior executives had been made aware of the fraudulent conduct years earlier.

 

Takata has agreed to plead guilty to a one-count criminal information filed today in the Eastern District of Michigan and assigned to U.S. District Judge George Caram Steeh, charging the company with one count of wire fraud. Under the terms of the agreement, Takata will pay a total criminal penalty of $1 billion, including $975 million in restitution and a $25 million fine. Two restitution funds will be established: a $125 million fund for individuals who have been physically injured by Takata’s airbags and who have not already reached a settlement with the company, and a $850 million fund for airbag recall and replacement costs incurred by auto manufacturers who were victims of Takata’s fraud scheme. A court-appointed special master will oversee administration of the restitution funds. Takata has also agreed to implement rigorous internal controls, retain a compliance monitor for a term of three years and cooperate fully with the department’s ongoing investigation, including its investigation of individuals.

 

The three Takata executives – Shinichi Tanaka, 59; Hideo Nakajima, 65; and Tsuneo Chikaraishi, 61, all Japanese citizens – were each charged in an indictment filed on Dec. 7, 2016, in the Eastern District of Michigan with one count of conspiracy to commit wire fraud and five counts of wire fraud for their alleged conduct in connection with the above-described fraud scheme.

 

The department reached this resolution based on a number of factors, including Takata’s extensive cooperation with the government’s investigation. However, the company did not receive more significant mitigation credit, either in the penalty or the form of resolution, because of the nature of the conduct to which the company is pleading guilty, including the approximate 15-year duration of the fraud, the pervasiveness of the scheme into the executive level of management and the potential risk the fraud posed to drivers and passengers.

 

An indictment is merely an allegation and all defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

 

The FBI and the U.S. Department of Transportation’s Office of Inspector General investigated the case. Assistant Chief Robert Zink and Trial Attorneys Brian K. Kidd, Christopher D. Jackson and Andrew R. Tyler of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys John K. Neal, Erin S. Shaw and Andrew J. Yahkind of the Eastern District of Michigan are prosecuting the case. The Criminal Division’s Office of International Affairs also provided assistance.

Three Takata Executives Charged with Wire Fraud and Conspiracy

Tokyo-based Takata Corporation, one of the world’s largest suppliers of automotive safety-related equipment, agreed to plead guilty to wire fraud and pay a total of $1 billion in criminal penalties stemming from the company’s fraudulent conduct in relation to sales of defective airbag inflators. An indictment was also unsealed charging three Takata executives with wire fraud and conspiracy in relation to the same conduct.

U.S. Attorney Barbara McQuade of the Eastern District of Michigan, Chief Andrew Weissmann of the Fraud Section of the Justice Department’s Criminal Division, Special Agent in Charge David P. Gelios of the FBI’s Detroit Field Office and Inspector General Calvin L. Scovel III of the U.S. Department of Transportation Office of Inspector General made the announcement.

“Automotive suppliers who sell products that are supposed to protect consumers from injury or death must put safety ahead of profits,” said U.S. Attorney McQuade. “If they choose instead to engage in fraud, we will hold accountable the individuals and business entities who are responsible.”

“For more than a decade, Takata repeatedly and systematically falsified critical test data related to the safety of its products, putting profits and production schedules ahead of safety,” said Fraud Section Chief Weissmann. “This announcement is the latest in the automotive industry enforcement actions the Fraud Section has taken to protect U.S. consumers against fraud.”

“Today’s criminal charges of the Takata Corporation and three of its employees should be a reminder to other corporations and their employees that if they commit fraud, the FBI and its law enforcement partners will ensure they are held accountable for their actions,” said Special Agent in Charge Gelios. “Whether it is the manipulation of test results which impact customer safety, defective product development or any other type of fraud, we will continue to aggressively investigate corporate fraud allegations to protect consumers in the United States and elsewhere.”

“I offer my deepest sympathies to the families and friends of those who died and to those who were injured as a result of the Takata Corporation’s failure to fulfill its obligation to ensure the safety of its airbag systems,” said Inspector General Scovel. “Because safety is and will remain the highest priority for my office, we will continue to work tirelessly with our law enforcement and prosecutorial partners in pursuing those who commit criminal violations of transportation-related laws and regulations. Along with similar settlements with General Motors in September 2015 and Toyota in March 2014, today’s agreement makes clear to all auto manufacturers and parts suppliers their duty in keeping the public safe.”

According to the company’s admissions, in the late 1990s, Takata began developing airbag inflators that relied upon ammonium nitrate as their primary propellant. From at least in or around 2000, Takata knew that certain ammonium nitrate-based inflators were not performing to the specifications required by the auto manufacturers. Takata also knew that certain inflators had sustained failures, including ruptures, during testing. Nevertheless, Takata induced its customers to purchase these airbag systems by submitting false and fraudulent reports and other information that concealed the true condition of the inflators. This fraudulent data made the performance of the company’s airbag inflators appear better than it actually was, including by omitting that, in some instances, inflators ruptured during testing. Takata employees – including a number of key executives – routinely discussed the falsification of test reports being provided to Takata’s customers in email and in verbal communications. Even after the inflators began to experience repeated problems in the field – including ruptures causing injuries and deaths – Takata executives continued to withhold the true and accurate inflator test information and data from their customers.

1. addition, Takata took no disciplinary actions against those involved in the falsification of test data until 2015, despite the fact that senior executives had been made aware of the fraudulent conduct years earlier.

Takata has agreed to plead guilty to a one-count criminal information filed today in the Eastern District of Michigan and assigned to U.S. District Judge George Caram Steeh, charging the company with one count of wire fraud. Under the terms of the agreement, Takata will pay a total criminal penalty of $1 billion, including $975 million in restitution and a $25 million fine. Two restitution funds will be established: a $125 million fund for individuals who have been physically injured by Takata’s airbags and who have not already reached a settlement with the company, and a $850 million fund for airbag recall and replacement costs incurred by auto manufacturers who were victims of Takata’s fraud scheme. A court-appointed special master will oversee administration of the restitution funds. Takata has also agreed to implement rigorous internal controls, retain a compliance monitor for a term of three years and cooperate fully with the department’s ongoing investigation, including its investigation of individuals.

The three Takata executives – Shinichi Tanaka, 59; Hideo Nakajima, 65; and Tsuneo Chikaraishi, 61, all Japanese citizens – were each charged in an indictment filed on Dec. 7, 2016, in the Eastern District of Michigan with one count of conspiracy to commit wire fraud and five counts of wire fraud for their alleged conduct in connection with the above-described fraud scheme.

The department reached this resolution based on a number of factors, including Takata’s extensive cooperation with the government’s investigation. However, the company did not receive more significant mitigation credit, either in the penalty or the form of resolution, because of the nature of the conduct to which the company is pleading guilty, including the approximate 15-year duration of the fraud, the pervasiveness of the scheme into the executive level of management and the potential risk the fraud posed to drivers and passengers.

An indictment is merely an allegation and all defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

The FBI and the U.S. Department of Transportation’s Office of Inspector General investigated the case. Assistant Chief Robert Zink and Trial Attorneys Brian K. Kidd, Christopher D. Jackson and Andrew R. Tyler of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys John K. Neal, Erin S. Shaw and Andrew J. Yahkind of the Eastern District of Michigan are prosecuting the case. The Criminal Division’s Office of International Affairs also provided assistance.

 

Court Documents:

Takata Information

Takata Plea Agreement

Tanaka et al Indictment

 

A Detroit man pleaded guilty based on threatening Facebook posts he made during a livestream of a slain Detroit Police Officer’s funeral, announced United States Attorney Barbara L. McQuade.

 

Joining McQuade in the announcement was Special Agent in Charge David P. Gelios, Federal Bureau of Investigation, Detroit Division, and Chief James Craig, Detroit Police Department.

 

Judge Sean F. Cox accepted the guilty plea of DeShawn Maurice Lanton, 22, of Detroit. Lanton’s plea agreement calls for a sentence of 15-21 months.

 

On September 23, 2016, a funeral was held for Detroit Police Sergeant Kenneth Steil, who was murdered in the line of duty. Several media outlets covered the funeral, including Channel 7 Action News in Detroit, which provided a livestream of the funeral via Facebook Live. While watching the funeral on Facebook Live, Lanton, using the Facebook moniker “Kane Pnotes,” wrote threatening messages on the Facebook Live thread accompanying the livestream. Specifically, as the Facebook Live feed showed hundreds of law enforcement personnel enter the church to pay respects to Sargent Steil, Lanton posted the following:

 

“maybe I should drop a bomb on tha building to get rid of the rest of y’all”

 

Several other Facebook users observed Lanton’s comments, viewed them as a threat to the funeral, and contacted law enforcement.

 

“We are committed to prosecuting any threat that rises to the level of a ‘true threat’ under the law,” McQuade said. “While criticism of government and law enforcement is generally protected by the First Amendment, specific threats to harm police officers cross the legal line.”

An elected Trustee of New Haven, Michigan was charged today in a criminal complaint with demanding and taking a bribe in exchange for his official acts in connection with a municipal contract, United States Attorney Barbara McQuade announced. In addition, a former Trustee of New Haven was charged in a criminal information with accepting multiple bribes.

McQuade was joined in the announcement by FBI Special Agent in Charge David P. Gelios and Manny J. Muriel, Special Agent in Charge, Internal Revenue Service-Criminal Investigation, Detroit Field Office.

Christopher Craigmiles, 43, of Lenox Township, is charged in a complaint with engaging in corrupt activity, including demanding and accepting money in exchange for official acts as a Trustee of New Haven. Craigmiles is a current, elected Trustee of the Village of New Haven. Brett Harris, 57, of New Haven, is charged in an information with accepting multiple bribes in exchange for a promise to support a future municipal contract for the village. Harris was an elected Trustee of New Haven until losing re-election in November 2016. The charges against Craigmiles and Harris are part of an ongoing and long-running investigation into systemic corruption in multiple municipalities in southeast Michigan, primarily Macomb County. The investigation has employed telephone wiretaps, consensual audio and video recordings by cooperative individuals, undercover operations, physical surveillance, telephone tracking warrants, and subpoenas of financial records and other documents.

The criminal information against Harris charges that Harris conspired with Craigmiles and former Clinton Township Trustee Dean Reynolds to engage in bribery in the summer of 2016. Reynolds unwittingly introduced Harris to an undercover FBI agent who was posing as a consultant to a company that has contracts with various municipalities in southeast Michigan—referred to in the information as “Company A.” Reynolds told the undercover agent that Harris was a public official who would be willing to take bribes in exchange for his vote on a future contract with Company A. Previously, Reynolds had accepted $17,000 in cash bribes from the undercover agent and between $50,000 and $70,000 in bribes from an executive of Company A, and Reynolds is currently charged in a pending federal indictment. After being introduced to the undercover agent by Reynolds, Harris accepted multiple bribes amounting to $11,000 in cash from the undercover agent in exchange for his vote as a Trustee on a future contract between New Haven and Company A. In August 2016, Harris then introduced the undercover agent to Craigmiles. Harris identified Craigmiles as being another New Haven Trustee who would accept bribes. The criminal complaint charges Craigmiles with accepting a $5,000 cash bribe from the undercover FBI agent in August 2016. Craigmiles agreed to support a future contract for Company A in exchange for the money.

“Our elected officials must make decisions based on what is best for the people and our communities, not based on whether they are given cash,” said U.S. Attorney McQuade. “Elected officials who violate the public trust by accepting bribes must be arrested and prosecuted.”

"Today's announcement of public corruption charges, in the Village of New Haven, demonstrates the FBI's unyielding commitment to aggressively investigate public servants, past or present, who accept bribes in exchange for official actions, said David P. Gelios, Special Agent in Charge, Detroit Division of the FBI. "Illegal conduct as described today erodes the trust and confidence community members place in their elected officials and threatens the integrity of our system of governance."

This investigation is being conducted by the FBI Detroit Area Corruption Task Force, a multiagency task force led by the FBI Detroit Division and comprised of the Internal Revenue Service – Criminal Investigation Division, Michigan State Police, Michigan Attorney General’s Office, and several other local and federal law enforcement agencies. It is being prosecuted by Assistant United States Attorneys R. Michael Bullotta and David A. Gardey.

Upon conviction for a violation of Title 18, United States Code, Section 666, federal program bribery, Craigmiles faces a maximum of ten years in prison and a fine of up to $250,000. Upon conviction for a violation of Title 18, United States Code, Section 371, conspiracy to commit federal program bribery, Harris faces a maximum of five years in prison and a fine of up to $250,000.

Court appearances for Craigmiles and Harris will take place sometime next week.

A complaint and an information are only charges and are not evidence of guilt. Trial cannot be held on felony charges in a complaint. When the investigation is completed a determination will be made whether to seek a felony indictment.

The FBI requests that anyone having information regarding public officials accepting bribes is encouraged to contact the Detroit Division of the FBI at 313-965-2222.

VW to Pay $2.8 Billion Criminal Fine in Guilty Plea and $1.5 Billion Settlement of Civil Environmental, Customs, and Financial Violations; Monitor to Be Appointed to Oversee the Parent Company

 

Volkswagen AG (VW) has agreed to plead guilty to three criminal felony counts, and pay a $2.8 billion criminal penalty, as a result of the company’s long-running scheme to sell approximately 590,000 diesel vehicles in the U.S. by using a defeat device to cheat on emissions tests mandated by the Environmental Protection Agency (EPA) and the California Air Resources Board (CARB), and lying and obstructing justice to further the scheme, the Justice Department announced today.

 

In separate civil resolutions of environmental, customs, and financial claims, VW has agreed to pay $1.5 billion. This includes EPA’s claim for civil penalties against Volkswagen in connection with Volkswagen’s importation and sale of these cars, as well as U.S. Customs and Border Protection (CBP) claims for customs fraud. In addition, the EPA agreement requires injunctive relief to prevent future violations. The agreements also resolve alleged violations of the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA).

 

“Volkswagen’s blatant cheating on U.S. emissions standards not only harmed our clean air, but it also created a competitive disadvantage for other automakers who play by the rules,” United States Attorney Barbara McQuade said. “Today’s announcement of a corporate felony guilty plea and indictments against Volkswagen executives demonstrates that corrupt corporations and individual employees will be held accountable.”

 

“Volkswagen and its executives are accused of involvement in a massive fraud scheme to intentionally sell diesel cars that violated U.S. emissions rules. Today’s charges signify our government’s commitment to protect the American automotive consumer,” said David P. Gelios, Special Agent in Charge, Detroit Division of the FBI. “Any company or its representatives that seeks to undermine American industry regulatory standards to gain an unfair advantage in the marketplace will be subjected to a comprehensive criminal investigation as evidenced in this case".

 

The Criminal Case:

 

VW is charged with and has agreed to plead guilty to participating in a conspiracy to defraud the United States and VW’s U.S. customers, and to violate the Clean Air Act, by lying and misleading the EPA and U.S. customers about whether certain VW, Audi, and Porsche branded diesel vehicles complied with U.S. emissions standards, using cheating software to circumvent the U.S. testing process, and concealing material facts about its cheating from U.S. regulators. VW is also charged with obstruction of justice for destroying documents related to the scheme, and with a separate crime of importing these cars into the U.S. by means of false statements about the vehicles’ compliance with emissions limits. Under the terms of the plea agreement, which must be accepted by the court, VW will plead guilty to all these crimes, will be on probation for three years, will be under an independent corporate compliance monitor who will oversee the company for at least three years, and agrees to fully cooperate in the Justice Department’s ongoing investigation and prosecution of individuals responsible for these crimes.

 

In addition, a federal grand jury in the Eastern District of Michigan returned an indictment today charging six VW AG executives and employees for their roles in the nearly ten-year conspiracy. Heinz-Jakob Neusser, 56, Jens Hadler, 50, Richard Dorenkamp, 68, Bernd Gottweis, 69, Oliver Schmidt, 48, and Jürgen Peter, 59, all of Germany, are charged with one count of conspiracy to defraud the United States, defraud VW’s U.S. customers, and violate the Clean Air Act, by making false representations to regulators and the public about the ability of VW’s supposedly “clean diesel” vehicles to comply with U.S. emissions requirements. The indictment also charges Dorenkamp, Neusser, Schmidt and Peter with Clean Air Act violations and charges Neusser, Gottweis, Schmidt and Peter with wire fraud counts. This case has been assigned to United States District Judge Sean F. Cox.

 

Schmidt was arrested on Jan. 7, 2017, in Miami during a visit to the United States, and appeared in federal court there on Monday. The other defendants are believed to presently reside in Germany.

 

Today’s announcement was made by Attorney General Loretta E. Lynch, EPA Administrator Gina McCarthy and Assistant Administrator Cynthia Giles, Deputy Attorney General Sally Q. Yates, FBI Deputy Director Andrew McCabe, Acting Deputy Secretary Russell C. Deyo for the Department of Homeland Security, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Assistant Attorney General John C. Cruden of the Justice Department’s Environment and Natural Resources Division, and Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.

 

According to the indictment, the individuals occupied the following positions within the company:

 

1. Heinz-Jakob Neusser. From July 2013 until September 2015, Neusser worked for VW AG as head of Development for VW Brand and was also on the management board for VW Brand. From October 2011 until July 2013, Neusser served as the head of Engine Development for VW.

2. Jens Hadler. From May 2007 until March 2011, Hadler worked for VW AG as head of Engine Development for VW.

3. Richard Dorenkamp. From 2003 until December 2013, Dorenkamp worked for VW AG as the head of VW’s Engine Development After-Treatment Department in Wolfsburg, Germany. From 2006 until 2013, Dorenkamp led a team of engineers that developed the first diesel engine that was designed to meet the new, tougher emissions standards in the United States.

4. Bernd Gottweis. From 2007 until October 2014, Gottweis worked for VW AG as a supervisor with responsibility for Quality Management and Product Safety.

5. Oliver Schmidt. From 2012 through February 2015, Schmidt was the General Manager in charge of the Environment and Engineering Office, located in Auburn Hills, Michigan. From Feb 2015 through Sept. 2015 Schmidt returned to VW headquarters to work directly for Neusser, including on emissions issues.

6. Jürgen Peter. Peter worked in the VW AG Quality Management and Product Safety Group from 1990 until the present. From March 2015 until July 2015, Peter was one of the VW AG liaisons between the regulatory agencies and VW AG.

    

   According to the charging documents and statement of facts filed with the court, in 2006, Volkswagen engineers began to design a new diesel engine to meet stricter U.S. emissions standards that would take effect by model year 2007. This new engine would be the cornerstone of a new project to sell diesel vehicles in the United States that would be marketed to buyers as “clean diesel,” a project that was an important strategic goal for Volkswagen’s management. When the co-conspirators realized that they could not design a diesel engine that would both meet the stricter NOx emissions standards and attract sufficient customer demand in the U.S. market, they decided they would use a software function to cheat standard U.S. emissions tests.

    

   Volkswagen engineers working under Dorenkamp and Hadler designed and implemented a software to recognize whether a vehicle was undergoing standard U.S. emissions testing on a dynamometer or it was being driven on the road under normal driving conditions. The software accomplished this by recognizing the standard published drive cycles. Based on these inputs, if the vehicle’s software detected that it was being tested, the vehicle performed in one mode, which satisfied U.S. NOx emissions standards. If the software detected that the vehicle was not being tested, it operated in a different mode, in which the vehicle’s emissions control systems were reduced substantially, causing the vehicle to emit NOx up to 40 times higher than U.S. standards.

    

   Disagreements over the direction of the project were articulated at a meeting over which Hadler presided, and which Dorenkamp attended. Hadler authorized Dorenkamp to proceed with the project knowing that only the use of the defeat device software would enable VW diesel vehicles to pass U.S. emissions tests. Starting with the first model year 2009 of VW’s new “clean diesel” engine through model year 2016, Dorenkamp, Neusser, Hadler, and their co-conspirators installed, or caused to be installed, the defeat device software into the vehicles imported and sold in the United States. In order to sell their “clean diesel” vehicles in the United States, the co-conspirators lied to the EPA about the existence of their test-cheating software, hiding it from the EPA, CARB, Volkswagen customers, and the U.S. public. Dorenkamp, Neusser, Hadler, Gottweis, Schmidt, Peter, and their co-conspirators then marketed, and caused to be marketed, VW diesel vehicles to the U.S. public as “clean diesel” and environmentally-friendly.

    

   Around 2012, hardware failures developed in certain of the diesel vehicles. VW engineers believed the increased stress on the exhaust system from being driven in the “dyno mode” could be the cause of the hardware failures. In July 2012, VW engineers met with Neusser and Gottweis to explain what they believed to be the cause of the hardware failures, and explained the defeat device. Gottweis and Neusser each encouraged further concealment of the software. In 2014, the co-conspirators perfected their cheating software by starting the vehicle in “street mode,” and, when the defeat device realized the vehicle was being tested, switching to the “dyno mode.” To increase the ability of the vehicle’s software to recognize that it was being tested on the dynamometer, the VW engineers activated a “steering wheel angle recognition feature.” With these alterations, it was believed the stress on the exhaust system would be reduced because the engine would not be operating for as long in “dyno mode”. The new function was installed in existing vehicles through software updates. The defendants and other co-conspirators falsely represented, and caused to be represented, to U.S. regulators, U.S. customers, and others that the software update was intended to improve durability and emissions issues in the vehicles when, in fact, they knew it was used to more quickly deactivate emission control systems when the vehicle was not undergoing emissions tests.

    

   After years of VW selling their “clean diesel” vehicles in the United States that had the cheating software, in March 2014, West Virginia University’s Center for Alternative Fuels, Engines and Emissions published the results of a study commissioned by the International Council on Clean Transportation (ICCT). The ICCT study identified substantial discrepancies in the NOx emissions from certain VW vehicles when tested on the road compared to when these vehicles were undergoing EPA and CARB standard drive cycle tests on a dynamometer. Rather than tell the truth, VW AG employees, including Neusser, Gottweis, Schmidt, and Peter pursued a strategy to disclose as little as possible – to continue to hide the existence of the software from U.S. regulators, U.S. customers, and the U.S. public.

    

   Following the ICCT study, CARB, in coordination with the EPA, attempted to work with VW to determine the cause for the higher NOx emissions in VW diesel vehicles when being driven on the road as opposed to on the dynamometer undergoing standard emissions test cycles. To do this, CARB, in coordination with the EPA, repeatedly asked VW questions that became increasingly more specific and detailed, and tested the vehicles themselves. In implementing their strategy of disclosing as little as possible, Neusser, Gottweis, Schmidt, Peter, and their co-conspirators provided EPA and CARB with testing results, data, presentations, and statements in an attempt to make it appear that there were innocent mechanical and technological problems to blame, while secretly knowing that the primary reason for the discrepancy was their cheating software that was installed in every VW diesel vehicle sold in the United States. The co-conspirators continued this back-and-forth with the EPA and CARB for over eighteen months, obstructing the regulators’ attempts to uncover the truth.

    

   The charges in the indictment are merely accusations and each defendant is presumed innocent unless and until proven guilty.

    

   The case was investigated by the FBI and EPA-CID. The prosecution and corporate investigation are being handled by Securities and Financial Fraud Unit Chief Benjamin D. Singer and Trial Attorneys David Fuhr, Alison Anderson, Christopher Fenton, and Gary Winters of the Justice Department’s Criminal Division Fraud Section; Trial Attorney Jennifer Blackwell of the Environment and Natural Resources Division Environmental Crimes Section, Criminal Division Chief Mark Chutkow and White Collar Crime Unit Chief John K. Neal and Assistant U.S. Attorney Timothy J. Wyse of the U.S. Attorney’s Office for the Eastern District of Michigan. The Justice Department’s Office of International Affairs also assisted in the case. The Justice Department also extends its thanks to the Office of the Public Prosecutor in Braunschweig, Germany.

    

   The Civil Resolutions:

    

   The first civil settlement resolves EPA’s remaining claims against six Volkswagen-related entities (including Volkswagen AG, Audi AG and Porsche AG) currently pending in the multidistrict litigation before U.S. District Judge Charles R. Breyer in the Northern District of California. EPA’s complaint alleges that Volkswagen violated the Clean Air Act by selling approximately 590,000 cars that the United States alleges are equipped with defeat devices and, during normal operation and use, emit pollution significantly in excess of EPA-compliant levels. VW has agreed to pay $1.45 billion to resolve EPA’s civil penalty claims, as well as the civil penalty claim of CBP described below. The consent decree resolving the Clean Air Act claims also resolves EPA’s remaining claim in the complaint for injunctive relief to prevent future violations by requiring VW to undertake a number of corporate governance reforms and perform in-use testing of its vehicles using a portable emissions measurement system of the same type used to catch VW’s cheating in the first place. Today’s settlement is in addition the historic $14.7 billion settlement that addressed the 2.0 liter cars on the road and associated environmental harm announced in June 2016, and $1 billion settlement that addressed the 3.0 liter cars on the road and associated environmental harm announced in December 2016, which together included nearly $3 billion for environmental mitigation projects.

    

   A second civil settlement resolves civil fraud claims asserted by U.S. Customs and Border Protection (CBP) against VW entities. VW entities violated criminal and civil customs laws by knowingly submitting to CBP material false statements and omitting material information, over multiple years, with the intent of deceiving or misleading CBP concerning the admissibility of vehicles into the United States. CBP enforces U.S. customs laws as well as numerous laws on behalf of other governmental agencies related to health, safety, and border security. At the time of importation, Volkswagen falsely represented to CBP that each of the nearly 590,000 imported vehicles complied with all applicable environmental laws, knowing those representations to be untrue. CBP’s relationship with the importing community is one based on trust, and this resolution demonstrates that CBP will not tolerate abrogation of importer responsibilities and schemes to defraud the revenue of the United States. The $1.45 billion paid under the EPA settlement also resolves CBP’s claims.

    

   In a third settlement, VW has agreed to pay $50 million in civil penalties for alleged violations of FIRREA. The Justice Department alleged that a VW entity supported the sales and leasing of certain VW vehicles, including the defeat-device vehicles, by offering competitive financing terms by purchasing from dealers certain automobile retail installment contracts (i.e. loans) and leases entered into by customers that purchased or leased certain VW vehicles, as well as dealer floorplan loans. These financing arrangements were primarily collateralized by the vehicles underlying the loan and lease transactions. The department alleged that certain of these loans, leases, and floorplan financings were pooled together to create asset-backed securities and that federally insured financial institutions purchased certain notes in these securities. Today’s FIRREA resolution is part of the department’s ongoing efforts to deter wrongdoers from using the financial markets to facilitate their fraud and to ensure the stability of the nation’s financial system.

    

   Except where based on admissions by VW, the claims resolved by the civil agreements are allegations only.

    

The civil settlements were handled by the Environmental Enforcement Section of the Environmental and Natural Resources Division, with assistance from the EPA; the Commercial Litigation Branch of the Civil Division; and CBP.

The Justice Department filed a lawsuit yesterday to challenge the at-large method of electing the city council of Eastpointe, Michigan. The complaint alleges that the election system in Eastpointe violates Section 2 of the Voting Rights Act by denying black citizens in the city the equal opportunity to elect representatives of their choice.

The lawsuit, filed in the U.S. District Court for the Eastern District of Michigan, follows an extensive review of the city’s electoral practices, history and current conditions, guided by extensive precedent applying Section 2 of the Voting Rights Act. Among other important factors highlighted in the case law, the lawsuit alleges that Eastpointe has racially polarized voting patterns, with white voters consistently opposing and defeating the preferred candidates of Eastpointe’s sizable black community. Although black residents comprise roughly one-third of the electorate and consistently support black candidates for local office, no black individual has ever served on the Eastpointe City Council. With Eastpointe’s current system, voting patterns combined with other local factors dilute the black community’s voice and lead to a discriminatory result.

The complaint also alleges that changing the method of voting – for example, by electing each councilmember from a district – could create an equitable opportunity for black voters to elect a candidate of their choice to the Eastpointe City Council. The lawsuit seeks a federal court order implementing a new method of electing the Eastpointe City Council.

“Federal law seeks to protect diverse communities from discriminatory systems that weaken the power of the franchise,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “The Justice Department hopes to work cooperatively with Eastpointe to ensure that all communities enjoy equitable opportunity in our elections.”

“Section 2 of the Voting Rights Act prohibits practices such as Eastpointe’s at-large City Council system where they improperly dilute the ability of citizens to elect the candidates of their choice,” said U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan. “We filed this lawsuit to ensure that all voters in Eastpointe have a fair opportunity to participate in their local government.”

The Justice Department continues to have positive discussions with the city of Eastpointe and remains hopeful that a settlement will be reached. As Eastpointe’s next regularly scheduled city council election is set for November 2017, the department’s filing was necessary to preserve the ability of a court to hear this case in a timely manner.

Complaints about discriminatory voting practices may be reported to the Civil Rights Division’s Voting Section at 1-800-253-3931. More information about the Voting Rights Act and other federal voting laws is available on the Justice Department’s website at www.justice.gov/crt/voting.

 

The Justice Department filed a lawsuit late yesterday to challenge the at-large method of electing the city council of Eastpointe, Michigan.  The complaint alleges that the election system in Eastpointe violates Section 2 of the Voting Rights Act by denying black citizens in the city the equal opportunity to elect representatives of their choice.

The lawsuit, filed in the U.S. District Court for the Eastern District of Michigan, follows an extensive review of the city’s electoral practices, history and current conditions, guided by extensive precedent applying Section 2 of the Voting Rights Act.  Among other important factors highlighted in the case law, the lawsuit alleges that Eastpointe has racially polarized voting patterns, with white voters consistently opposing and defeating the preferred candidates of Eastpointe’s sizable black community.  Although black residents comprise roughly one-third of the electorate and consistently support black candidates for local office, no black individual has ever served on the Eastpointe City Council.  With Eastpointe’s current system, voting patterns combined with other local factors dilute the black community’s voice and lead to a discriminatory result.

The complaint also alleges that changing the method of voting – for example, by electing each councilmember from a district – could create an equitable opportunity for black voters to elect a candidate of their choice to the Eastpointe City Council.  The lawsuit seeks a federal court order implementing a new method of electing the Eastpointe City Council.

“Federal law seeks to protect diverse communities from discriminatory systems that weaken the power of the franchise,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division.  “The Justice Department hopes to work cooperatively with Eastpointe to ensure that all communities enjoy equitable opportunity in our elections.”

“Section 2 of the Voting Rights Act prohibits practices such as Eastpointe’s at-large City Council system where they improperly dilute the ability of citizens to elect the candidates of their choice,” said U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan.  “We filed this lawsuit to ensure that all voters in Eastpointe have a fair opportunity to participate in their local government.”  

The Justice Department continues to have positive discussions with the city of Eastpointe and remains hopeful that a settlement will be reached.  As Eastpointe’s next regularly scheduled city council election is set for November 2017, the department’s filing was necessary to preserve the ability of a court to hear this case in a timely manner.

Complaints about discriminatory voting practices may be reported to the Civil Rights Division’s Voting Section at 1-800-253-3931.  More information about the Voting Rights Act and other federal voting laws is available on the Justice Department’s website at www.justice.gov/crt/voting.  

Eastpointe Complaint

A Detroit-area neurosurgeon was sentenced today to 235 months in prison for his role in $2.8 million health care fraud scheme in which he caused serious bodily harm to patients by performing unnecessary invasive spinal surgeries.

 

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Special Agent in Charge David P. Gelios of the FBI’s Detroit Division, Assistant Director in Charge Deirdre Fike of the FBI’s Los Angeles Division, Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Service Office of Inspector General (HHS-OIG) Chicago Region, Special Agent in Charge Glenn R. Ferry of the HHS-OIG Los Angeles Region and Special Agent in Charge Steve Francis of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI) Detroit Field Office made the announcement.

 

Aria O. Sabit M.D., 43, of Birmingham, Michigan, pleaded guilty to four counts of health care fraud, one count of conspiracy to commit health care fraud and one count of unlawful distribution of a controlled substance, resulting in losses to Medicare, Medicaid and various private insurance companies.

 

Sabit was a licensed neurosurgeon who owned and operated the Michigan Brain and Spine Physicians Group, which had various locations in the Eastern District of Michigan. In connection with his guilty plea, Sabit admitted that he derived significant profits by convincing patients to undergo spinal fusion surgeries with “instrumentation” (medical devices designed to stabilize and strengthen the spine) that he never performed and billed public and private healthcare benefit programs for those fraudulent services. Sabit further admitted that, in some instances, he operated on patients and dictated in his operative reports – which he knew would later be used to support fraudulent insurance claims – that he had performed spinal fusion with instrumentation, when he had not. Specifically, Sabit fraudulently billed public and private health care programs for instrumentation when, in fact, he used cortical bone dowels made of tissue. Sabit failed to render services in relation to lumbar and thoracic fusion surgeries, including in certain instances, billing for implants that were not provided.

 

Before moving to moving to Michigan, Sabit was a resident of Ventura, California, and a licensed neurosurgeon in California. Sabit admitted that, in approximately February 2010, while he was on the staff of a California hospital, he became involved with Apex Medical Technologies LLC (Apex), which was owned by another neurosurgeon and three non-physicians. In exchange for the opportunity to invest in Apex and share in its profits, Sabit agreed to convince his hospital to buy spinal implant devices from Apex and to use a substantial number Apex spinal implant devices in his surgical procedures. Sabit further admitted that he and Apex’s co-owners concealed Sabit’s involvement in Apex from the hospitals and surgical centers.

 

In connection with his guilty plea, Sabit admitted that the financial incentives provided to him by Apex and his co-conspirators caused him to use more spinal implant devices than were medically necessary to treat his patients in order to generate more sales revenue for Apex, which resulted in serious bodily injury to his patients. Sabit also admitted that, on a few occasions, the money he made from using Apex spinal implant devices motivated him either to refer patients for unnecessary spine surgeries or for more complex procedures that they did not need.

 

The FBI, HHS-OIG and ICE investigated the Michigan case. The FBI and HHS-OIG investigated the California case, which was subsequently transferred to the Eastern District of Michigan. The California case was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office of the Eastern District of Michigan. Trial Attorney Catherine K. Dick, formerly of the Criminal Division’s Fraud Section, is prosecuting the California case. Assistant U.S. Attorneys Regina R. McCullough and Philip A. Ross of the Eastern District of Michigan are prosecuting the Michigan case.

 

Sabit also is a defendant in two civil False Claims Act cases brought by the Justice Department in the Central District of California. These cases remain pending.

 

The Criminal Division’s Fraud Section leads the Medicare Fraud Strike Force. Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged over 3,000 defendants who collectively have billed the Medicare program for over $10 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

 

To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.

A Detroit-area neurosurgeon was sentenced yesterday to 235 months in prison for his role in $2.8 million health care fraud scheme in which he caused serious bodily harm to patients by performing unnecessary invasive spinal surgeries.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Acting Special Agent in Charge David P. Gelios of the FBI’s Detroit Division, Assistant Director in Charge Deirdre Fike of the FBI’s Los Angeles Division, Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Service Office of Inspector General (HHS-OIG) Chicago Region, Special Agent in Charge Glenn R. Ferry of the HHS-OIG Los Angeles Region and Special Agent in Charge Steve Francis of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI) Detroit Field Office made the announcement.

Aria O. Sabit M.D., 43, of Birmingham, Michigan, pleaded guilty to four counts of health care fraud, one count of conspiracy to commit health care fraud and one count of unlawful distribution of a controlled substance, resulting in losses to Medicare, Medicaid and various private insurance companies.

Sabit was a licensed neurosurgeon who owned and operated the Michigan Brain and Spine Physicians Group, which had various locations in the Eastern District of Michigan. In connection with his guilty plea, Sabit admitted that he derived significant profits by convincing patients to undergo spinal fusion surgeries with “instrumentation” (medical devices designed to stabilize and strengthen the spine) that he never performed and billed public and private healthcare benefit programs for those fraudulent services. Sabit further admitted that, in some instances, he operated on patients and dictated in his operative reports – which he knew would later be used to support fraudulent insurance claims – that he had performed spinal fusion with instrumentation, when he had not. Specifically, Sabit fraudulently billed public and private health care programs for instrumentation when, in fact, he used cortical bone dowels made of tissue. Sabit failed to render services in relation to lumbar and thoracic fusion surgeries, including in certain instances, billing for implants that were not provided.

Before moving to moving to Michigan, Sabit was a resident of Ventura, California, and a licensed neurosurgeon in California. Sabit admitted that, in approximately February 2010, while he was on the staff of a California hospital, he became involved with Apex Medical Technologies LLC (Apex), which was owned by another neurosurgeon and three non-physicians. In exchange for the opportunity to invest in Apex and share in its profits, Sabit agreed to convince his hospital to buy spinal implant devices from Apex and to use a substantial number Apex spinal implant devices in his surgical procedures. Sabit further admitted that he and Apex’s co-owners concealed Sabit’s involvement in Apex from the hospitals and surgical centers.

In connection with his guilty plea, Sabit admitted that the financial incentives provided to him by Apex and his co-conspirators caused him to use more spinal implant devices than were medically necessary to treat his patients in order to generate more sales revenue for Apex, which resulted in serious bodily injury to his patients. Sabit also admitted that, on a few occasions, the money he made from using Apex spinal implant devices motivated him either to refer patients for unnecessary spine surgeries or for more complex procedures that they did not need.

The FBI, HHS-OIG and ICE investigated the Michigan case. The FBI and HHS-OIG investigated the California case, which was subsequently transferred to the Eastern District of Michigan. The California case was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office of the Eastern District of Michigan. Trial Attorney Catherine K. Dick, formerly of the Criminal Division’s Fraud Section, is prosecuting the California case. Assistant U.S. Attorneys Regina R. McCullough and Philip A. Ross of the Eastern District of Michigan are prosecuting the Michigan case.

Sabit also is a defendant in two civil False Claims Act cases brought by the Justice Department in the Central District of California. These cases remain pending.

The Criminal Division’s Fraud Section leads the Medicare Fraud Strike Force. Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged over 3,000 defendants who collectively have billed the Medicare program for over $10 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.

United Shore Financial Services LLC (USFS) has agreed to pay the United States $48 million to resolve allegations that it violated the False Claims Act by knowingly originating and underwriting mortgage loans insured by the U.S. Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA) that did not meet applicable requirements, the Justice Department announced today.  USFS is headquartered in Troy, Michigan.

“The settlement announced today holds United Shore accountable for its endorsement of ineligible loans for FHA mortgage insurance,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “Over the past several years, the Civil Division, in collaboration with numerous U.S. Attorneys’ Offices, HUD and its Office of Inspector General, has diligently worked to hold FHA-approved lenders accountable for actions that deprived homeowners of their homes, wasted taxpayer funds, and contributed to the financial crisis.  The settlement announced today is yet another success in this continuing effort.” 

“The federal government insures loans on the condition that lenders comply with certain rules to safeguard federal funds,” said U.S. Attorney Barbara L. McQuade for the Eastern District of Michigan.  “When lenders breach their duty of due diligence and make risky loans that go bad, taxpayers pay the bill.  By holding accountable lenders who fail to comply with underwriting requirements, we hope to send a message to all lenders that they must comply with government standards for federally insured loans.”

“USFS acknowledged that it failed to comply with FHA underwriting and quality control (QC) requirements, resulting in improperly originated mortgages,” said U.S. Attorney John W. Vaudreuil for the Western District of Wisconsin.  “While USFS deserves credit for acknowledging and resolving its conduct, that conduct not only resulted in substantial losses of public funds, but also put Wisconsin homeowners at risk of losing their homes or ruining their credit.  This large settlement should send a clear message that such conduct will not be tolerated.” 

During the time period covered by the settlement, USFS participated as a direct endorsement lender (DEL) in the FHA insurance program.  A DEL has the authority to originate, underwrite and endorse mortgages for FHA insurance.  If a DEL approves a mortgage loan for FHA insurance and the loan later defaults, the holder of the loan may submit an insurance claim to HUD, FHA’s parent agency, for the losses resulting from the defaulted loan.  Under the DEL program, the FHA does not review a loan for compliance with FHA requirements before it is endorsed for FHA insurance.  DELs are therefore required to follow program rules designed to ensure that they are properly underwriting and certifying mortgages for FHA insurance, to maintain a QC program that can prevent and correct deficiencies in their underwriting practices, and to self-report any deficient loans identified by their QC program.

The settlement announced today resolves allegations that between Jan. 1, 2006, and Dec. 31, 2011, USFS failed to comply with certain FHA origination, underwriting and QC requirements.  As part of the settlement, USFS admitted to the following facts:  USFS improperly pressured underwriters to approve FHA mortgages and its compensation plan used a formula expressly tying underwriter compensation to the percentage of loans approved by the underwriter and closed by USFS.  USFS also falsely certified that direct endorsement underwriters personally reviewed appraisal reports prior to USFS approving and endorsing mortgages for FHA insurance.     

Additionally, although USFS’ internal QC reviews showed severe problems with FHA insured mortgages, USFS routinely failed to provide any meaningful information to senior management regarding its QC findings.

USFS also failed to adhere to HUD’s self-reporting requirements.  While USFS’s QC reviews identified hundreds of materially-deficient FHA insured loans during the time period at issue, USFS self-reported only three loans to HUD. 

As a result of USFS’ conduct and omissions, HUD insured hundreds of loans approved by USFS that were not eligible for FHA mortgage insurance under the Direct Endorsement program, and that HUD would not otherwise have insured.  HUD subsequently incurred substantial losses when it paid insurance claims on those loans.

Further, on Jan. 10, 2014, after the United States initiated an investigation into USFS, USFS made certain discretionary distributions to a shareholder in the company. 

***

“The settlement announced today strongly demonstrates HUD OIG’s continued efforts to identify and investigate underwriting deficiencies in the origination and underwriting of single-family residential loans insured by FHA,” said HUD Inspector General David A. Montoya.

“This settlement, once again, demonstrates HUD’s unyielding efforts to root out poor underwriting practices in its mortgage insurance programs,” said Acting HUD General Counsel Tonya Robinson.  “We want to thank the Department of Justice for partnering with us in holding lenders accountable for their actions. It is critically important that lenders comply with HUD’s underwriting standards and originate mortgages that are in accordance with FHA requirements and that borrowers can sustain.”

The settlement was the result of a joint investigation conducted by HUD, HUD’s Office of Inspector General, the Civil Division’s Commercial Litigation Branch and the U.S. Attorneys’ Offices for the Eastern District of Michigan and the Western District of Wisconsin.

WASHINGTON - United Shore Financial Services LLC (USFS) has agreed to pay the United States $48 million to resolve allegations that it violated the False Claims Act by knowingly originating and underwriting mortgage loans insured by the U.S. Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA) that did not meet applicable requirements, the Justice Department announced today.  USFS is headquartered in Troy, Michigan.

“The settlement announced today holds United Shore accountable for its endorsement of ineligible loans for FHA mortgage insurance,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “Over the past several years, the Civil Division, in collaboration with numerous U.S. Attorneys’ Offices, HUD and its Office of Inspector General, has diligently worked to hold FHA-approved lenders accountable for actions that deprived homeowners of their homes, wasted taxpayer funds, and contributed to the financial crisis.  The settlement announced today is yet another success in this continuing effort.” 

“The federal government insures loans on the condition that lenders comply with certain rules to safeguard federal funds,” said U.S. Attorney Barbara L. McQuade for the Eastern District of Michigan.  “When lenders breach their duty of due diligence and make risky loans that go bad, taxpayers pay the bill.  By holding accountable lenders who fail to comply with underwriting requirements, we hope to send a message to all lenders that they must comply with government standards for federally insured loans.”

“USFS acknowledged that it failed to comply with FHA underwriting and quality control (QC) requirements, resulting in improperly originated mortgages,” said U.S. Attorney John W. Vaudreuil for the Western District of Wisconsin.  “While USFS deserves credit for acknowledging and resolving its conduct, that conduct not only resulted in substantial losses of public funds, but also put Wisconsin homeowners at risk of losing their homes or ruining their credit.  This large settlement should send a clear message that such conduct will not be tolerated.” 

During the time period covered by the settlement, USFS participated as a direct endorsement lender (DEL) in the FHA insurance program.  A DEL has the authority to originate, underwrite and endorse mortgages for FHA insurance.  If a DEL approves a mortgage loan for FHA insurance and the loan later defaults, the holder of the loan may submit an insurance claim to HUD, FHA’s parent agency, for the losses resulting from the defaulted loan.  Under the DEL program, the FHA does not review a loan for compliance with FHA requirements before it is endorsed for FHA insurance.  DELs are therefore required to follow program rules designed to ensure that they are properly underwriting and certifying mortgages for FHA insurance, to maintain a QC program that can prevent and correct deficiencies in their underwriting practices, and to self-report any deficient loans identified by their QC program.

The settlement announced today resolves allegations that between Jan. 1, 2006, and Dec. 31, 2011, USFS failed to comply with certain FHA origination, underwriting and QC requirements.  As part of the settlement, USFS admitted to the following facts:  USFS improperly pressured underwriters to approve FHA mortgages and its compensation plan used a formula expressly tying underwriter compensation to the percentage of loans approved by the underwriter and closed by USFS.  USFS also falsely certified that direct endorsement underwriters personally reviewed appraisal reports prior to USFS approving and endorsing mortgages for FHA insurance.    

Additionally, although USFS’ internal QC reviews showed severe problems with FHA insured mortgages, USFS routinely failed to provide any meaningful information to senior management regarding its QC findings.

USFS also failed to adhere to HUD’s self-reporting requirements.  While USFS’s QC reviews identified hundreds of materially-deficient FHA insured loans during the time period at issue, USFS self-reported only three loans to HUD. 

As a result of USFS’ conduct and omissions, HUD insured hundreds of loans approved by USFS that were not eligible for FHA mortgage insurance under the Direct Endorsement program, and that HUD would not otherwise have insured.  HUD subsequently incurred substantial losses when it paid insurance claims on those loans.

Further, on Jan. 10, 2014, after the United States initiated an investigation into USFS, USFS made certain discretionary distributions to a shareholder in the company. 

* * *

“The settlement announced today strongly demonstrates HUD OIG’s continued efforts to identify and investigate underwriting deficiencies in the origination and underwriting of single-family residential loans insured by FHA,” said HUD Inspector General David A. Montoya.

“This settlement, once again, demonstrates HUD’s unyielding efforts to root out poor underwriting practices in its mortgage insurance programs,” said Acting HUD General Counsel Tonya Robinson.  “We want to thank the Department of Justice for partnering with us in holding lenders accountable for their actions. It is critically important that lenders comply with HUD’s underwriting standards and originate mortgages that are in accordance with FHA requirements and that borrowers can sustain.”

The settlement was the result of a joint investigation conducted by HUD, HUD’s Office of Inspector General, the Civil Division’s Commercial Litigation Branch and the U.S. Attorneys’ Offices for the Eastern District of Michigan and the Western District of Wisconsin.

 

Detroit, MI -  U.S. Attorney Barbara McQuade announced today that the Eastern District of Michigan collected $140,568,099.71 in criminal and civil actions in Fiscal Year 2016.  Of this amount, $134,081,710.61 was collected in criminal actions and $6,486,389.10 was collected in civil actions. 

Additionally, the Eastern District of Michigan worked with other U.S. Attorney’s Offices and components of the Department of Justice to collect an additional $137,338,109.30 in cases pursued jointly with these offices.    Of this amount, $136,489,477.62 was collected in criminal actions and $848,631.68 was collected in civil actions.               

Attorney General Loretta E. Lynch announced on December 14, 2016 that the Justice Department collected nearly $15.4 billion in civil and criminal actions in the fiscal year ending Sept. 30, 2016.  The $15,380,130,434 in collections in FY 2016 represents more than five times the appropriated $2.93 billion budget for the 94 U.S. Attorneys’ offices and the main litigating divisions of the Justice Department combined in that same period.

“Every day, the men and women of the Department of Justice work tirelessly to enforce our laws, ensuring that taxpayer dollars are used properly and that the American people are protected from exploitation and abuse,” said Attorney General Lynch.  “Today’s announcement is a testament to that work, and it makes clear that our actions deliver a significant return on public investment.  I want to thank the prosecutors and trial attorneys who made this year's collections possible, and I want to emphasize that the department remains committed to the well-being of our people and our nation.”

“The attorneys and support professionals in the U.S. Attorney’s Office for the Eastern District of Michigan recovered more than five times the amount of money spent in our annual budget of $26 million,” McQuade said. “Those funds will be returned to victims and taxpayers.”

This past year, the Eastern District of Michigan seized approximately $11.9 million in the case of U.S. v. Farid Fata. The government seized Fata's assets to create a restitution fund for the benefit of Fata's victims and their heirs.  In addition, the government seized approximately $1.6 million in assets from Norman Shy, a former vendor doing business with Detroit Public Schools (DPS).  Those funds will be paid back to DPS through the restoration process.

The U.S. Attorneys’ Offices, along with the department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the U.S. and criminal debts owed to federal crime victims.  The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss.  While restitution is paid to the victim, criminal fines and felony assessments are paid to the department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs.

The largest civil collections were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals and/or corporations for violations of federal health, safety, civil rights or environmental laws.  In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration and Department of Education.

Additionally, the U.S. Attorney’s office in the Eastern District of Michigan, working with partner agencies and divisions, collected $26,602,309.00 in asset forfeiture actions in FY 2016.  Forfeited assets deposited into the Department of Justice Assets Forfeiture Fund are used to restore funds to crime victims and for a variety of law enforcement purposes.

Steven Ingersoll of Traverse City, Michigan was sentenced yesterday in Bay City, Michigan, to 41 months in prison for federal tax convictions, announced U.S. Attorney Barbara L. McQuade.

Joining McQuade in the announcement were Manny Muriel, Special Agent in Charge of the Internal Revenue Service-Criminal Investigation and John K. Gauthier,

Acting Special Agent in Charge, Chicago Area Office U.S. Environmental Protection Agency Criminal Investigation Division.  

Ingersoll was the former owner and operator of Smart Schools Management and Smart Schools, Inc., educational management companies that ran two charter schools in Michigan—one in Traverse City and one in Bay City.  Ingersoll failed to accurately report and pay taxes on payments he received from his educational management companies.

On March 10, 2015, Ingersoll was convicted of one count of tax evasion for 2009, one count of tax evasion for 2010 and one count of conspiracy to defraud the IRS—along with his co-defendant Roy Bradley, Sr—with respect to 2011.

Roy Bradley, Sr., of Bay City was also convicted in December of 2014 of violations of the federal Clean Air Act, for directing workers to improperly remove asbestos during a school renovation project.  In March of 2015, he was sentenced to 60 months on those convictions.  He has not yet been sentenced on his tax related conviction.

United States Attorney McQuade said.  “Business owners and others who cheat on their income taxes are free-riding on the backs of the rest of us who pay our taxes.  We hope that a prison sentence will deter this kind of conduct.”

This case was investigated by agents of the IRS-CI and EPA-CID.

The Justice Department filed a lawsuit today against Sterling Heights, Michigan, alleging that the city violated the Religious Land Use and Institutionalized Persons Act of 2000 (RLUIPA) when it denied special land use approval to allow the American Islamic Community Center Inc. (AICC) to build a mosque on five adjoining parcels of land located in the city.

The complaint, filed in the U.S. District Court of the Eastern District of Michigan, alleges that Sterling Heights discriminated against the AICC on the basis of religion when it refused to approve the land use request to allow the AICC to build a mosque.  It further alleges that the denial imposed a substantial burden on the AICC’s religious exercise.  The AICC, currently located in Madison Heights, Michigan, sought to build in Sterling Heights because the location is more convenient for its members and its current space has become inadequate for its religious, educational and social needs.  The complaint alleges that its current facility is overcrowded during important religious observances and lacks space for educational activities, youth activities and special events.

“The Constitution protects the rights of religious communities to create the institutions and physical spaces they need to observe and practice their faith free from discriminatory barriers,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division.  “The Justice Department will continue to aggressively protect the rights of all communities to live, pray and worship free from religious discrimination and substantial burdens in local land use decisions.”

“The law prohibits the government from discriminating on the basis of religion or imposing a substantial burden on the exercise of religion when making land use decisions,” said U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan.  “We are alleging that Sterling Heights discriminated against the American Islamic Community Center on the basis of religion and placed a substantial burden on the community’s ability to exercise its religion by denying approval to build a mosque.  We filed this lawsuit to protect the rights of all of our citizens to freely practice their religion and have a place to gather with members of their community.”

The complaint is an allegation of unlawful conduct.  The allegations must still be proven in federal court.

The case was brought by the department’s Civil Rights Division and the U.S. Attorney’s Office of the Eastern District of Michigan.

RLUIPA, enacted in 2000, contains multiple provisions prohibiting religious discrimination and protecting against unjustified burdens on religious exercise.  Persons who believe that they been subjected to religious discrimination in land use or zoning may contact the Civil Rights Division’s Housing and Civil Enforcement Section at (800) 896-7743 or the U.S. Attorney’s Office of the Eastern District of Michigan’s Civil Rights Hotline at (313) 226-9151 or usamie.civilrights@usdoj.gov.

More information about RLUIPA, including a report on the department’s enforcement, may be found at www.justice.gov/crt/religious-land-use-and-institutionalized-persons-act.

Sterling Heights Complaint

A federal grand jury has returned a superseding indictment against Rasmieh Yousef Odeh, 69, of Chicago on charges of procuring her naturalization unlawfully by failing to disclose that she had been convicted of participating in a terrorist bombing, announced United States Attorney Barbara L. McQuade

McQuade was joined in the announcement by Steve Francis, Acting Special Agent in Charge of Immigration and Customs Enforcement, Homeland Security Investigations. 

The superseding indictment alleges that in 2004, Odeh obtained her naturalization contrary to law, in violation of 18 U.S.C. § 1425(a).  Odeh previously was indicted on the same charge, and in 2014 was convicted.  Following a remand by the Sixth Circuit Court of Appeals, the United States District Court in Detroit last week granted Odeh a new trial.  The retrial will proceed based on the new indictment.

The new indictment does not add any additional charges, but alleges additional facts to support the charges. The original indictment charged that Odeh lied in seeking her naturalization as a United States citizen by failing to disclose that she had been arrested, charged, convicted and imprisoned in Israel, beginning in 1969, as a result of bombings of a supermarket and the British Consulate.  The new indictment includes those allegations as well, but also alleges that Odeh, in seeking naturalization, also falsely answered two additional questions on her application form relating to her association with the Popular Front for the Liberation of Palestine, a designated terrorist organization.

The new indictment also alleges that Odeh was inadmissible at the time she arrived in the United States in 1995 because she “engaged in a terrorist activity” as that term is defined by law.

The maximum penalty upon conviction is 10 years imprisonment.  A trial has been scheduled for January 10, 2017, in Detroit. 

The indictment is merely a charge and is not any evidence of guilt.  At trial, it will be the government’s burden to prove guilt beyond a reasonable doubt.

The former program director of supplemental educational services provider, Priority: My Education pleaded guilty today to federal program fraud, announced U.S. Attorney Barbara L. McQuade.                         

Joining McQuade in the announcement were David P. Gelios, Special Agent in Charge of the Detroit Field Office of the Federal Bureau of Investigation.

Pleading guilty today before United States District Judge Bernard A. Friedman was Theodore Thomas Pride, III, 37 of Detroit. 

According to court records, between 2011 and 2012, Theodore Pride III, as resident agent and program director of Priority: My Education, a company that had been approved by the State of Michigan to provide supplemental educational services to eligible students in Michigan, obtained at least $684, 644 from DPS through a scheme in which he submitted fraudulent invoices for payment to DPS for tutorial services that were never rendered to DPS students.

United States Attorney Barbara L. McQuade said, "People who defraud a school system are effectively stealing educational opportunities from children."

Pride faces up to 10 years in prison and fines of up to $250,000 when he is sentenced on April 11, 2017 at 11:00 am. 

This case was investigated by agents of the FBI.  This case is being prosecuted by Assistant United States Attorney Dawn N. Ison.

The FBI Detroit Area Corruption Task Force (DACTF) is led by the FBI Detroit Field Office, and consists of Special Agents and law enforcement officers with the FBI Detroit; the Detroit Police Department; the Michigan State Police; the Michigan Attorney General’s Office; the Internal Revenue Service – Criminal Investigation Division; the U.S. Department of Housing and Urban Development–Office of Inspector General; the U.S. Environmental Protection Agency–Office of Inspector General; the U.S. Department of Transportation–Office of Inspector General; the U.S. Department of Homeland Security–Office of Inspector General; the U.S. Department of Education–Office of Inspector General; and the U.S. Department of Labor–Office of Inspector General, Office of Labor Racketeering and Fraud Investigations.

A Michigan man pleaded guilty to fraud charges for his role in a scheme to defraud Medicare out of approximately $6.3 million while he acted as an unlicensed physician at a Detroit in-home physician services company.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Special Agent in Charge David P. Gelios of the FBI’s Detroit Division and Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Chicago Regional Office made the announcement.

Renald Dasine, 54, of Ypsilanti, Michigan, pleaded guilty yesterday to one count of conspiracy to commit wire fraud before U.S. District Judge John Corbett O’Meara of the Eastern District of Michigan.  Sentencing has been scheduled for March 8, 2017. 

As part of his guilty plea, Dasine admitted that in connection with his employment at B&M Visiting Doctors PLC, he submitted fraudulent claims to Medicare as part of a fraud scheme that took place from 2005 to 2013.  Dasine saw patients and falsified related patient records, including medical documents, prescriptions for controlled substances and billing documents, all under the name of a licensed medical doctor.   

Cecil Alexander Kent, Charles McRae and Alvin Williams, all unlicensed physicians, previously pleaded guilty for their involvement in the B&M Visiting Doctors PLC scheme.

The FBI’s Detroit Division and HHS-OIG investigated this case, which was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.  Fraud Section Trial Attorneys Melissa Aoyagi and Kyle Maurer prosecuted the case.

The Fraud Section leads the Medicare Fraud Strike Force.  Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 3,000 defendants who have collectively billed the Medicare program for more than $11 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

A former Detroit Public Schools principal of was convicted at a jury trial today in an illegal bribery and kickback scheme, announced U.S. Attorney Barbara L. McQuade.

Joining McQuade in the announcement were David P. Gelios, Special Agent in Charge of the Detroit Field Office of the Federal Bureau of Investigation, and Manny Muriel, Special Agent in Charge of the Internal Revenue Service-Criminal Investigation.

Josette Buendia, 51, of Garden City, Michigan, the principal at Bennett Elementary School, was found guilty on all three charges of conspiracy to commit bribery and bribery charges, ending a five-day jury trial before U.S. District Judge George Caram Steeh.

According to the evidence presented at trial, Buendia conspired with Norman Shy, 75, owner of Allstate Sales, a vendor of school supplies.  From November 2011 through January 2015, Buendia knowingly certified and submitted fraudulent invoices to DPS, causing DPS to pay Shy for materials that the school did not receive, or that the school only received a portion of the materials.  Invoiced supplies included supplemental teaching materials and raised line paper.  In exchange, Shy paid bribes and kickbacks to Buendia in the form of gift cards and cash, using a portion of the payments he received from DPS from the fraudulent invoices. The bribes and kickback Buendia received totaled approximately $46,000. 

Buendia faces up to five years in prison when she is sentenced on April 6, 2017, at 2:30 pm.

“This principal accepted bribes in exchange for shortchanging the school district,” McQuade said.  “Regardless of what she did with the money, Detroit Public Schools and the students paid the price.” 

“Today’s verdict reinforces the message we want everyone to understand as a result of the Detroit Public School's corruption investigation:   Anyone who attempts to enrich oneself at the expense of school children will be prosecuted," said David P. Gelios, Special Agent in Charge, FBI Detroit Division.  "The FBI will continue to work with the Detroit Area Public Corruption Task Force and the U.S. Attorney’s Office to investigate and prosecute the misapplication of public funds intended to educate our kids.”

“Josette Buendia’s actions violated the trust and confidence of the parents and students of Bennett Elementary School,” said Special Agent in Charge Manny Muriel, IRS – Criminal Investigation.  “Today’s verdict should send a loud and clear message that the community expects their hard earned tax dollars to be used to educate our children and not to line the pockets of school officials.”

This case was investigated by agents of the FBI and IRS-CI. This case is being prosecuted by Assistant United States Attorneys J. Michael Buckley and Frances Carlson.

The FBI Detroit Area Corruption Task Force (DACTF) is led by the FBI Detroit Field Office, and consists of Special Agents and law enforcement officers with the FBI Detroit; the Detroit Police Department; the Michigan State Police; the Michigan Attorney General’s Office; the Internal Revenue Service – Criminal Investigation Division; the U.S. Department of Housing and Urban Development–Office of Inspector General; the U.S. Environmental Protection Agency–Office of Inspector General; the U.S. Department of Transportation–Office of Inspector General; the U.S. Department of Homeland Security–Office of Inspector General; the U.S. Department of Education–Office of Inspector General; and the U.S. Department of Labor–Office of Inspector General, Office of Labor Racketeering and Fraud Investigations.

A 24-year old Dearborn man was sentenced yesterday to more than five years in prison for making false statements to federal agents in relation to a terrorist investigation, announced U.S. Attorney Barbara L. McQuade.

Joining in the announcement was David P. Gelios, Special Agent in Charge, Federal Bureau of Investigation, Detroit Division. 

U.S. District Judge Gerald E. Rosen sentenced Mohammad Hassan Hamdan to 63 months in prison and ordered him deported from the United States to Lebanon upon completion of his sentence. 

According to court records, on March 16, 2014, Hamdan attempted to fly to Lebanon and on to Syria to fight on behalf of Hizballah in the Syrian civil war.  Before boarding an overseas flight to Lebanon, Hamdan was stopped by agents of the FBI. Hamdan admitted that he knew the United States had designated Hizballah a terrorist organization. He denied any plans to join Hizballah or to fight in Syria, instead stating that the purpose of his trip to Lebanon was to have dental work done.  He later pleaded guilty and admitted that these statements were false.

"Supporting a terrorist organization anywhere in the world contributes to violent extremism and makes us all less safe," McQuade said. 

This case was investigated by agents of the Federal Bureau of Investigation and prosecuted by Assistant United States Attorney Ronald Waterstreet.

The collaboration of local, state and federal law enforcement under the Detroit One initiative has resulted in the indictment of nine more members of the 6 Mile Chedda Grove street gang from Detroit’s east side, U.S. Attorney Barbara L. McQuade announced today.

Joining McQuade in the announcement was Special Agent in Charge David P. Gelios, Federal Bureau of Investigation, Detroit Division, and Chief James Craig, Detroit Police Department.

The initial indictment in June charged Edwin Mills and Carlo Wilson with murder in aid of racketeering for the mid-afternoon shootings that occurred at the Troester Market on December 1, 2015, that resulted in two deaths and serious injuries to children.  The superseding indictment unsealed today adds nine more defendants and charges racketeering conspiracy, additional murders in aid of racketeering and related offenses.  Two additional murders charged in the superseding indictment also occurred in broad daylight on February 7, 2015, and August 20, 2015.

According to the superseding indictment, “6 Mile Chedda Grove” is a street gang that operates primarily within an area bordered roughly by East McNichols Road to the north, Kelly Road to the east, Houston-Whittier Street to the south, and Chalmers Street to the west.  The superseding indictment alleges that 6 Mile Chedda Grove is a violent organization responsible for murders, assaults, robberies, and firearms and narcotics trafficking in the Detroit metropolitan area and in other states.  The gang allegedly uses violence to retaliate against rivals, to intimidate witnesses and to advance members’ positions within the gang. 

Under the Detroit One initiative, and through the lead efforts of the FBI’s Violent Gang Task Force and the Detroit Police Gang Intelligence Unit, law enforcement identified several members of this gang who have been charged in the superseding indictment in federal court.  The Task Force includes representatives of the Detroit Police Department, Michigan Department of Corrections and the U.S. Border Patrol. 

Four defendants were taken into custody over the last two days on this indictment:

• Mario Leico Jackson, a/k/a “Ugg,” 23, of Detroit, charged with racketeering conspiracy;

• Phillip Glen-Earl Peaks, a/k/a “Peezy,” 28, of Detroit, charged with racketeering conspiracy;

• Michael Richardson, a/k/a “Mikey Made,” 28, of Detroit, charged with racketeering conspiracy, felon in possession of a firearm, possession with intent to distribute heroin and possession of a firearm in furtherance of a drug trafficking crime;

• Devontae Aaron Russell, a/k/a “Tae,” 23, of Knoxville, Tennessee, charged with racketeering conspiracy.

 

Seven other defendants are already in federal or state custody based upon other charges, including:

• Edwin Lamont Mills, a/k/a “Ed Boy,” 26, of Detroit, charged with racketeering conspiracy, and two counts each of murder in aid of racketeering, assault with a dangerous weapon in aid of racketeering, and using and carrying a firearm during a crime of violence causing death;

• Carlo Dajuan Wilson, a/k/a “Los,” 23, of Warren, charged with racketeering conspiracy, and two counts each of murder in aid of racketeering, assault with a dangerous weapon in aid of racketeering and using and carrying a firearm during a crime of violence causing death;

• Donell Christopher Thompson, a/k/a “Dnell,” 26, of Detroit, charged with racketeering conspiracy, and one count each of murder in aid of racketeering and using and carrying a firearm during a crime of violence causing death;

• Lomnil Bookies Jackson, a/k/a “Lomo,” 23, of Detroit, charged with racketeering conspiracy, and one count each of murder in aid of racketeering, assault with a dangerous weapon in aid of racketeering and using and carrying a firearm during a crime of violence causing death;

• Patrick Jeffrey Johnson, a/k/a “Cane,” 22, of Detroit, charged with racketeering conspiracy;

• Corey Alexander Mills, 22, of Detroit, charged with racketeering conspiracy;

• Robert Wayne Baytops, a/k/a “R.B.,” 41, of Detroit, charged with racketeering conspiracy and felon in possession of firearms.

 

"The Detroit One strategy to dismantle violent gangs has two key components -- enforcement operations like this one and intervention through the Ceasefire call-in program, stated U.S. Attorney McQuade.  “The Detroit One enforcement efforts target street gangs that are responsible for violence in our neighborhoods.  We have seen encouraging results, including a 35 percent reduction in shootings in Detroit’s 9th Precinct, where this gang operates."

“We are extremely proud of the outstanding work done today by our agents and law enforcement partners, which is the result of long-term efforts to counter violent crime, illegal drugs, and organized criminal activity,” said David P. Gelios, Special Agent in Charge of the Detroit Field Office.  "The continued success and impact of the Detroit One Initiative is persuasive evidence of how interagency collaboration results in tangible public safety benefits to the citizens we serve in the Detroit metropolitan area."

"The people of Detroit deserve a safe city in which they may thrive," said Chief James E. Craig. "The Detroit One partnership is rooted in the belief that all citizens and neighborhoods deserve to be free of crime and our joint efforts to make that a reality will continue."

Detroit One is a collaborative effort between law enforcement and the community to reduce homicide and other violent crime in Detroit.  By working collaboratively, local, state, and federal law enforcement is striving to maximize its ability to identify and arrest the individuals and groups initiating the violence in Detroit.  This indictment is the latest in a string of charges from the U.S.  Attorney’s Office and Wayne County Prosecutor’s Office during the last four years involving violent street gangs in the city of Detroit, including:

• 17 members of the Seven Mile Blood street gang for federal racketeering conspiracy and other violent acts in furtherance of racketeering;

• Nine members of the Bounty Hunter Bloods street gang for federal racketeering conspiracy and other violent acts in furtherance of racketeering;

• 13 members of the Latin Counts street gang for federal racketeering conspiracy and other violent acts in furtherance of racketeering;

• 14 members of the Phantom Outlaw Motorcycle Club / Vice Lords street gang for federal racketeering conspiracy and other violent acts in furtherance of racketeering;

• Four Vice Lord members in state court for armed robbery and a Vice Lord leader charged under the federal street gang statute for his role in that armed robbery;

• Nine Vice Lords members for racketeering charges stemming from the shooting of four individuals at their family residence on Detroit’s northwest side;

• Three members of the Band Crew street gang charged under the state of Michigan gang felony statute for violent acts in furtherance of their gang activities and eight members of the Band crew for federal racketeering conspiracy and other violent acts in furtherance of racketeering; and
• 10 members of the RTM street gang for federal racketeering conspiracy and other violent acts in furtherance of racketeering;
• 24 individuals on drug conspiracy charges for their use of sixteen different houses in the east side Ravendale neighborhood of Detroit, many of them abandoned homes, for distributing heroin, cocaine, and crack cocaine between 2013 – 2015
• 14 individuals on criminal enterprise, drug distribution or weapons offense for drug distribution in the west side Warrendale neighborhood of Detroit

 

Most significantly, Detroit has seen a reduction in the overall violent crime rate every year since the Detroit One collaboration began in 2013. 

Mario Jackson and Michael Richardson will appear in federal court in Detroit this afternoon.  The other defendants will appear in federal court on later dates.

A superseding indictment is only a charge and is not evidence of guilt.  A defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.

 

Vitas Health Corporation Midwest and related entities agreed to pay $200,000 to resolve allegations that they violated the False Claims Act and the Anti-Kickback Statute by paying Dr. Farid Fata for patient referrals to its hospice care services, announced U.S. Attorney Barbara L. McQuade. In an earlier unrelated criminal matter, Fata pleaded guilty to health care fraud, conspiracy to pay and receive kickbacks and promotional money laundering, and was sentenced to a term of 45 years in prison.

The allegations in the civil False Claims Act suit were brought to the government by a whistleblower, known as a relator, under the qui tam provisions of the False Claims Act. From November 2012 to January 2014, relator Rita Dubois worked at Vitas as the Director of Market Development in Southeastern Michigan. Dubois’s complaint alleged that from mid-2012 through early 2014, Vitas contributed $15,750 to the Swan For Life Cancer Foundation, which was a cancer charity that Fata established. In return, Fata referred 23 patients to Vitas for hospice care, the complaint alleges. Dubois will receive $36,000 out of the $200,000 settlement for her role in filing the qui tam action.

“Patients deserve to receive referrals based on the quality of the services provided, not based on illegal kickback arrangements between medical providers,” McQuade said. “We are working to root out practices that enrich doctors and medical businesses at the expense and potential safety of patients.”

This case was investigated jointly by the U.S. Attorney’s Office for the Eastern District of Michigan and the Department of Health and Human Services, Office of Inspector General.

The former elected Supervisor of Chesterfield Township was indicted by a grand jury yesterday on four counts of conspiracy and demanding bribes in exchange for corruptly influencing his decisions as a supervisor in connection with the township’s business United States Attorney Barbara McQuade announced.

McQuade was joined in the announcement by FBI Special Agent in Charge David P. Gelios and Manny J. Muriel, Special Agent in Charge, Internal Revenue Service-Criminal Investigation, Detroit Field Office.

Michael Lovelock, 57, of New Baltimore, is charged with engaging in a pattern of corrupt activity, including demanding and accepting money and other things of value, in exchange for official acts as the township supervisor.  The indictment of Lovelock is part of an ongoing and long-running investigation into systemic corruption in multiple municipalities in southeast Michigan, primarily Macomb County.   

The indictment charges that over the course of six years while he served as Supervisor, Lovelock conspired with a representative of a company having business with Chesterfield Township, and that Lovelock accepted bribes on multiple occasions from that company representative and an undercover FBI agent.  Lovelock accepted bribes amounting to $30,000 in cash between 2010 and 2016.  In exchange, Lovelock voted in favor of a contract for the company, and he agreed to put past due amounts owed to the company by township residents on the township tax bills of those residents in order to assist the company in collecting money.  In addition, Lovelock sought reimbursement from Macomb County for the company’s work cleaning up following a flood in Chesterfield.   In 2016, Lovelock accepted a $1,500 cash bribe from an undercover FBI agent.  Lovelock also is charged with accepting an additional $2,500 cash bribe from the company representative after that individual began cooperating with the FBI.    

This investigation is being conducted by the FBI Detroit Area Corruption Task Force, a multiagency task force led by the FBI Detroit Division and comprised of the Internal Revenue Service – Criminal Investigation Division, Michigan State Police, Michigan Attorney General’s Office, and several other local and federal law enforcement agencies.  It is being prosecuted by Assistant United States Attorneys R. Michael Bullotta and David A. Gardey.

Upon conviction for a violation of Title 18, United States Code, Section 666, federal program bribery, Lovelock faces a maximum of ten years in prison and a fine of up to $250,000 on each of the three counts of bribery in the indictment.  Upon conviction for a violation of Title 18, United States Code, Section 371, conspiracy, Lovelock faces a maximum of five years in prison and a fine of up to $250,000 on this count of the indictment.     

An indictment is only a charge and is not evidence of guilt. 

The FBI requests that anyone having information regarding public officials accepting bribes is encouraged to contact the Detroit Division of the FBI at 313-965-2222.

The FBI recently released statistics on hate crimes committed in the US in 2015.  Hate crimes are one of the highest priorities of the Department of Justice and the FBI because of the devastating impact they have on families and communities.

A hate crime is defined as a criminal offense against a person or property motivated in whole or in part by an offender’s bias against a race, religion, disability, sexual orientation, ethnicity, gender, or gender identity.

If you, or someone you know, is the victim of a hate crime and feel unsafe, call your local police department immediately. The FBI works with its law enforcement partners to investigate hate crime allegations. Success in helping keep our community safe depends on the public’s cooperation and increases when hate crimes are promptly reported and all potential evidence is preserved to assist in the investigation.  

Oftentimes, victims of hate crimes are afraid to come forward or lack the confidence that law enforcement will actively investigate their claims.  We want to assure the residents of our district that our offices are committed to investigating and prosecuting hate crimes and encourage those who find themselves on the receiving end of a hate crime, or are a witness to a hate crime, to call either the FBI at (313) 965-2323 or the United States Attorney’s Office at (313) 226-9151.

“Hate crimes laws are designed to protect members of all groups, whether they are members of minority groups or majority groups,” McQuade said.  “We take these crimes very seriously because of the harm they cause to the victim and the fear they create in other members of the same group.”

“The FBI is committed to defending the civil rights of everyone.  To that end and in coordination with our local and state partners, we will investigate acts that involve the use of or threat of force against an individual because of his/her race, color, religion, national origin, disability, or gender ", said David P. Gelios, Special Agent in Charge, Detroit Division of the FBI. “In addition to harm to a victim or damage done to a victim’s property, hate crimes are meant to threaten and intimidate an entire community.  The FBI won’t stand by idly when hate crimes are committed.” 

A 67 year-old Detroit man was taken into custody after a criminal complaint was filed in federal court charging him with sex trafficking, announced United States Attorney Barbara L. McQuade.     

McQuade was joined in the announcement by Special Agent in Charge David P. Gelios, Federal Bureau of Investigation and Chief James Craig, Detroit Police Department.

Richard Knider Jackson was charged in the complaint.

The criminal complaint alleges that on November 17, 2016, a 911 call was placed to the Detroit Police Department regarding a home on South Electric Street in Southwest Detroit. When police arrived, they found a woman who reported that Jackson had forced her and four others—2 adults and 2 juveniles—to prostitute from the home. She said that Jackson provided all of them with drugs, and that he was violent with them. Police also found a large black steel gate and lock on the stairs to the upstairs of the residence. The other two adult victims were present in the home when police arrived, but the juveniles had escaped through a bathroom window earlier in the day. They have not been recovered, and their whereabouts are unknown.

Jackson made his initial appearance this afternoon in federal court and was temporarily detained until his bond hearing on Monday, November 21 at 1pm.

A criminal complaint contains allegations that a defendant has committed a crime.  Every defendant is presumed innocent until and unless proven guilty.

The FBI is currently looking for the two juveniles who had escaped from the house.  Anyone with information about the juveniles, or with information about Jackson’s sex trafficking operation, is asked to contact the FBI at (313) 965-2323

The elected Supervisor of Chesterfield Township was arrested by agents of the Federal Bureau of Investigation (FBI) today based on a criminal complaint charging him with demanding and taking bribes in exchange for his official acts in connection with a municipal contract, U.S. Attorney Barbara McQuade announced.

McQuade was joined in the announcement by FBI Special Agent in Charge David P. Gelios and Manny J. Muriel, Special Agent in Charge, Internal Revenue Service-Criminal Investigation, Detroit Field Office.

Michael Lovelock, 57, of New Baltimore, was charged with engaging in a pattern of corrupt activity, including demanding and accepting money in exchange for official acts as the Chesterfield Supervisor.  Lovelock’s arrest is part of an ongoing and long-running investigation into systemic corruption in multiple municipalities in southeast Michigan, primarily Macomb County.  The investigation has employed telephone wiretaps, consensual audio and video recordings by cooperative individuals, undercover operations, physical surveillance, telephone tracking warrants, and subpoenas of financial records and other documents. 

The complaint charges that since approximately 2010 and continuing through 2016, Lovelock accepted multiple bribes from the representative of a company that had a significant contract with Chesterfield Township.  In total, Lovelock accepted over $30,000 in cash from the company’s representative.  In addition, Lovelock accepted two other bribe payments totaling $4,000 in cash from an undercover agent of the FBI and an individual cooperating in the investigation, with the payments being video recorded.  In exchange for all of the cash that Lovelock demanded and accepted during the course of the bribery conspiracy, Lovelock agreed to use his official position as Chesterfield Supervisor to: (1) secure an extension of the contract with the township for the company, (2) put past due accounts of the company on the Chesterfield tax rolls so as to assist the company in getting paid by township residents, (3) obtain payment from Macomb County for the company for its work on flood damage that occurred in August 2014; and (4) provide a favorable reference for the company for other municipalities and so that Lovelock would not speak negatively about the company.

“Public officials who seek to take advantage of their official positions for their own personal gain by selling official acts should expect to be arrested and prosecuted,” said U.S. Attorney McQuade.  “The citizens of our district deserve elected representatives who make decisions based on the best interests of the community rather than their own corrupt financial interests.”

"Today’s arrest further demonstrates the continuing threat we face of elected officials, at any level of the government, prioritizing personal gain over their sworn obligation to represent their constituents’ best interests and uphold the trust afforded to them by the citizens they represent,” said David P. Gelios, Special Agent in Charge, Detroit Division of the Federal Bureau of Investigation.   "The FBI led Detroit Area Public Corruption Task Force will continue to prioritize the investigation of cases involving any federal, state, or local public officials who solicit and accept bribes in exchange for official acts.”

This investigation is being conducted by the FBI Detroit Area Corruption Task Force, a multiagency task force led by the FBI Detroit Division and comprised of the Internal Revenue Service – Criminal Investigation Division, Michigan State Police, Michigan Attorney General’s Office, and several other local and federal law enforcement agencies.  It is being prosecuted by Assistant United States Attorneys R. Michael Bullotta and David A. Gardey.

Upon conviction for a violation of Title 18, United States Code, Section 666, federal program bribery, Lovelock faces a maximum of ten years in prison and a fine of up to $250,000.   

A complaint is only a charge and is not evidence of guilt.  Trial cannot be held on felony charges in a complaint.  When the investigation is completed a determination will be made whether to seek a felony indictment.

The FBI requests that anyone having information regarding public officials accepting bribes is encouraged to contact the Detroit Division of the FBI at 313-965-2222.

The team responsible for the investigation and prosecution of Dr. Farid Fata was among 376 employees recognized by Attorney General Loretta E. Lynch today for their distinguished public service at the 64th Annual Attorney General’s Awards Ceremony.  This annual ceremony recognizes individuals for their outstanding service and dedication to carrying out the mission of the Department of Justice.

Among the employees recognized were Linda Aouate, Sarah Resnick Cohen, John K. Neal and Wayne F. Pratt, Assistant United States Attorneys, and Sandy Palazzolo, Victim-Witness Coordinator, from the U.S. Attorney’s Office for the Eastern District of Michigan; Gejaa T. Gobena, former Deputy Chief, and Catherine K. Dick, Supervisory Trial Attorney, of the Fraud Section, Criminal Division; Joan E. Hartman, Trial Attorney, Fraud Section, Commercial Litigation Branch, Civil Division; Bryan Drake, William Brian Fairweather, Kevin J. Swanson, Special Agents, and LaFell D. Peoples, Forensic Accountant, Detroit Field Office, Federal Bureau of Investigation; Abhijit Dixit and Michael Fairbanks, Special Agents, Office of Inspector General, U.S. Department of Health and Human Services; and Kevin Nalu, Special Agent, Internal Revenue Service, Criminal Investigations, U.S. Department of Treasury.

The team was presented the Attorney General’s Award for Fraud Prevention.  This award recognizes exceptional dedication and effort to prevent, investigate and prosecute fraud, white-collar crimes and official corruption.  The team received this award for its work on the case of United States v. Farid Fata. 

Fata was a licensed medical doctor who owned and operated a cancer treatment clinic, Michigan Hematology Oncology P.C. (MHO), which had locations in Rochester Hills, Clarkston, Bloomfield Hills, Lapeer, Sterling Heights, Troy and Oak Park, Michigan.  He also owned a diagnostic testing facility, United Diagnostics PLLC, located in Rochester Hills. 

Fata was sentenced to 45 years in prison for his role in a health care fraud scheme that included prescribing and administering unnecessary aggressive chemotherapy, cancer treatments, intravenous iron and other infusion therapies to 553 individual patients to increase his billings to Medicare and other insurance companies.  Fata submitted fraudulent claims totaling approximately $34 million.  The team was successful in seizing approximately $11.9 million and put together a team of specialists to assist former patients and family members of Dr. Fata in submitting claims for restitution. 

“We are grateful for the work of the agents, prosecutors and victim coordinators who investigated and prosecuted the case against Dr. Fata.” McQuade said.  “This group worked around the clock to investigate allegations promptly and thoroughly to stop Dr. Fata from harming patients and bring him to justice.”  

“Dr. Fata prioritized greed for monetary gain over his oath to provide patients lifesaving care by deceitfully diagnosing cancer.  He subsequently prescribed toxic treatments to hundreds of individuals who suffered catastrophic harm and loss which will impact them and their families for decades”, said David P. Gelios, Special Agent in Charge, Detroit Division of the Federal Bureau of Investigation.  “I am so proud of the men and women of the Detroit FBI, Health and Human Services Office of the Inspector General, Department of Justice Medicare Fraud Strike Force and the U. S. Attorney’s Office for their recognition by Attorney General Lynch for the work they did to bring an end to this chapter of outrageous medical malpractice.  While this case shocked the nation’s conscience, it is important for the public to know the FBI and our partners will remain vigilant in keeping the people of the state of Michigan safe from unethical health care providers.”

A Flint man pleaded guilty on November 8, 2016 to discharging a firearm during a carjacking, U.S. Attorney Barbara L. McQuade announced today. 

McQuade was joined in the announcement by S. Robin Shoemaker, Special Agent in Charge of the Detroit Field Division of the Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF). 

Mark E. Woodall, Jr., 21, entered the guilty plea before United States District Court Judge Linda V. Parker.

According to court documents, Woodall and two accomplices carjacked and shot another man on January 20, 2014, in Flint.  Woodall and his accomplices brandished firearms as they approached the victim, who was seated in his car parked at an apartment complex.  Woodall and his accomplices ordered the victim out of his car.  Woodall and his accomplices then ordered the victim to get back in the car and drive them.  After driving several blocks, Woodall and his accomplices ordered the victim to stop the car and get into the back seat.  The victim stopped the car and took off running.  As the victim ran away, Woodall and one of his accomplices began shooting at the victim.  The victim was shot in the shoulder but managed to escape.  Woodall and his accomplices then drove away in the victim’s car. 

“We are focusing our resources on the most violent offenders in Flint in hopes of improving the quality of life for residents,” McQuade said.  “Armed carjacking is one of the most serious violations of public safety, making people feel vulnerable in their own neighborhoods and driveways.   We will bring strong federal penalties against those  who prey on motorists in Flint.”

“We are committed to investigating those persons who seek to prey upon the citizens of Flint, using firearms as a means to intimidate others and commit violent crimes,” Special Agent in Charge Shoemaker said.

Woodall faces at least 10 years and up to life imprisonment for discharging the firearm during the carjacking.  Sentencing has been scheduled for February 21, 2017, at 11:30 a.m. before Judge Parker.

Woodall is currently serving a 3 to 10 year state sentence with the Michigan Department of Corrections for his involvement in a 2013 shooting in Flint.  Woodall’s federal sentence must run consecutively to his state sentence. 

The case was investigated by special agents of the ATF with assistance from the Flint Police Department and Michigan State Police.  The case is being prosecuted by an Assistant United States Attorney from the Flint Branch of the United States Attorney’s Office. 

The co-owner of a Detroit home health care company was sentenced today to 96 months in prison for his role in a Medicare fraud scheme that caused approximately $33 million in losses.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Special Agent in Charge David P. Gelios of the FBI’s Detroit Division and Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services-Office of Inspector General (HHS-OIG) Chicago Regional Office made the announcement.

Badar Ahmadani, 49, of Ypsilanti, Michigan, was sentenced by U.S. District Judge Judith E. Levy of the Eastern District of Michigan, who also ordered him to pay $38,150,113.64 in restitution.  On July 27, 2015, Ahmadani was convicted at trial of one count of conspiracy to commit health care fraud and one count of conspiracy to pay and receive health care kickbacks. 

According to evidence presented at trial, Ahmadani participated in a scheme in which from 2006 through 2011, he and his co-conspirators obtained patients by paying cash kickbacks to recruiters, who in turn paid cash to patients to induce them to sign up for home health care with companies owned by co-defendant Zafar Mehmood: Access Care Home Care Inc., Patient Care Home Care Inc., Hands On Healing Home Care Inc. (which Ahmadani co-owned) and All State Home Care Inc.  The evidence also showed that Mehmood and Ahmadani paid kickbacks to physicians to refer patients to the companies for home health care services that were medically unnecessary as well as not provided. 

On Oct. 28, 2016, Mehmood was sentenced to serve 360 months in prison and to pay $40,488,106.98 in restitution.  Mehmood was convicted at trial with Ahmadani of one count of conspiracy to commit health care fraud, four counts of health care fraud, one count of conspiracy to pay and receive health care kickbacks, one count of conspiracy to commit money laundering, two counts of money laundering and two counts of obstruction of justice.        

The FBI and HHS-OIG investigated the case, which was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.  Fraud Section Trial Attorneys Niall M. O’Donnell and A. Brendan Stewart prosecuted the case.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,900 defendants who have collectively billed the Medicare program for more than $10 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to www.stopmedicarefraud.gov.

A former chief financial officer of a Clarkston, Michigan, credit union, pleaded guilty today to embezzling more than $18 million from his employer, U.S. Attorney Barbara McQuade announced.

McQuade was joined in the announcement by Special Agent in Charge David P. Gelios, Federal Bureau of Investigation, Detroit Division.

Michael A. Lajoice, 37, pleaded guilty to one count of bank fraud before U.S. District Judge Gershwin A. Drain. 

According to plea documents, LaJoice was employed by the Clarkston Brandon Community Credit Union (CBCCU), which was a federally insured financial institution.  LaJoice began his employment as an Account Manager and later became CBCCU’s Chief Financial Officer in June 2015.  As such, LaJoice was responsible for the accounting functions of CBCCU, which included producing CBCCU's financial statements, making general ledger entries and ACH transfers, tracking investments and reconciling CBCCU’s corporate account statements. 

Between January 2003 and January 2016, Lajoice embezzled more than $18 million from CBCU.  Over the years, Lajoice used a variety of methods to execute and cover up his embezzlement.  In some instances, Lajoice issued cashier’s checks from various CBCCU accounts without authorization and deposited those funds into accounts at other financial institutions that he controlled.  In other instances, Lajoice used Automated Clearing House (ACH) withdrawals to conduct unauthorized transfers from CBCCU’s accounts to his own personal accounts held at other financial institutions.  To conceal the fraud, Lajoice created fictitious investments in certificates of deposit and bonds, and represented to auditors and bank examiners that the money he stole had in fact been invested in these vehicles.

Lajoice will be sentenced on March 21, 2017.  He faces a statutory maximum term of 30 years’ imprisonment.  The advisory sentencing guidelines contained in his plea agreement call for a term of imprisonment of between 121-151 months.

The case was investigated by the FBI, Oakland County Sheriff’s Department, and investigators from the Oakland County Prosecutor’s Office. Assistant United States Attorneys Abed Hammoud and John K. Neal are prosecuting the case. Assistant United States Attorney Philip Ross is handling the asset forfeiture proceeding

An elected Trustee of Clinton Township was indicted by a grand jury yesterday on eight counts of bribery in exchange for corruptly influencing his decisions on township business, U.S. Attorney Barbara McQuade announced.

McQuade was joined in the announcement by FBI Special Agent in Charge David P. Gelios and Manny J. Muriel, Special Agent in Charge, Internal Revenue Service-Criminal Investigation, Detroit Field Office.

Dean Reynolds, 49, of Clinton Township, was charged with engaging in a pattern of corrupt activity, including demanding and accepting money and other things of value, in exchange for official acts as a trustee.  The indictment of Reynolds is part of an ongoing and long-running investigation into systemic corruption in multiple municipalities in southeast Michigan, primarily Macomb County.   

The indictment charges that Reynolds accepted bribes from representatives of two companies having business with Clinton Township, and that Reynolds accepted bribes from an undercover FBI agent.  In connection with one company, Reynolds accepted bribes between 2009 and 2013 amounting to $9,000 in cash and a $7,000 check.  Between 2012 and 2015, Reynolds demanded and accepted bribes amounting to over $50,000 in cash, along with other things of value, from a second company.  In 2016, Reynolds accepted a total of $7,000 in cash bribes from an undercover FBI agent on three separate occasions.  Reynolds also accepted an additional $10,000 in cash bribes from a representative of one of the companies after that individual began cooperating with the FBI.    

This investigation is being conducted by the FBI Detroit Area Corruption Task Force, a multiagency task force led by the FBI Detroit Division and comprised of the Internal Revenue Service – Criminal Investigation Division, Michigan State Police, Michigan Attorney General’s Office, and several other local and federal law enforcement agencies.  It is being prosecuted by Assistant United States Attorneys R. Michael Bullotta and David A. Gardey.

Upon conviction for a violation of Title 18, United States Code, Section 666, federal program bribery, Reynolds faces a maximum of ten years in prison and a fine of up to $250,000 on each of the eight counts of the indictment.   

An indictment is only a charge and is not evidence of guilt. 

The FBI requests that anyone having information regarding public officials accepting bribes is encouraged to contact the Detroit Division of the FBI at 313-965-2222.

Charles T. Busse, 57, of Birmingham, Michigan, pleaded guilty today to charges of bribery, conspiracy to defraud the United States, tax evasion and failure to report cash payments of more than $10,000, announced U.S. Attorney Barbara L. McQuade. 

Joining in the announcement was Manny Muriel, Special Agent in Charge of the Detroit office of the Internal Revenue Service – Criminal Investigations, Giovanni Tiano, Special Agent in Charge of the Detroit, Michigan office of the Department of Homeland Security – Office of Inspector General and Special Agent in Charge David P. Gelios, Federal Bureau of Investigation, Detroit Division.

Charles T. Busse pleaded guilty before U.S. District Judge Avern Cohn in Detroit.

According to court records, Busse admitted to paying bribes to a Special Agent with U.S. Immigration and Customs Enforcement – Homeland Security Investigations to obtain numerous deferrals of deportation and other immigration benefits for his clients.  Attorney Busse maintains law offices in Rochester Hills and Dearborn.

Busse also admitted to conspiring to obstruct the lawful function of the U.S. Department of Homeland Security by dishonest means.  In addition, Busse pleaded guilty to criminal tax evasion and violating the federal law that requires an attorney to report any cash payments of more than $10,000.  The crimes are alleged to have occurred between 2009 and 2015.  The four charged crimes carry maximum penalties of between five and fifteen years.

A sentencing date will be set by the court.

U.S. Attorney McQuade commended the outstanding work of the Office of Inspector General of the U.S Department of Homeland Security, the Internal Revenue Service – Criminal Investigations and the Federal Bureau of Investigation in conducting a comprehensive criminal investigation into potential corruption activities involving a federal law enforcement official.

An Oak Park engineer was sentenced yesterday to 21 months in prison for illegally obtaining $400,000 in computer equipment in a wire fraud scheme, U.S. Attorney Barbara L. McQuade announced.

McQuade was joined in the announcement by David P. Gelios, Special Agent in Charge of the Detroit Field Office of the Federal Bureau of Investigation.

U.S. District Judge Robert H. Cleland imposed sentence on Lahai Charles, 36, former employee of Federal-Mogul Corporation.  Judge Cleland also imposed a two-year term of supervised release and ordered Charles to pay $414,000 in restitution to Cisco Systems, Inc. and $3,100 to Federal-Mogul.  Charles pleaded guilty to one count of wire fraud in June.

According to court records, Charles was employed in Southfield by Federal-Mogul Corporation as an IT networking engineer.  Federal-Mogul is a supplier of parts to businesses in the automotive industry and other sectors.  Charles managed network switches for a number of Federal-Mogul offices in North America and South America.  Cisco Systems, Inc., a computer technology company based in San Jose, California, provided computer equipment and support services to Federal-Mogul’s IT operations.  During a 15-month period, Charles used his position at Federal-Mogul to exploit Cisco’s programs to provide IT support services to its large corporate customers.  He obtained Cisco IT equipment through a series of false statements to Cisco and then sold the equipment to third parties through a secondary market broker.  He did this to enrich himself, spending some of the funds on several personal trips to South America.

The case was investigated by the FBI, with assistance from Cisco Systems and Federal-Mogul, and prosecuted by Assistant U.S. Attorney Stephen Hiyama.

The owner of several Detroit home health care companies was sentenced today to 360 months in prison for his role in a Medicare fraud scheme that caused approximately $33 million in losses.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Special Agent in Charge David P. Gelios of the FBI’s Detroit Division and Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services-Office of Inspector General (HHS-OIG) Chicago Regional Office made the announcement.

Zafar Mehmood, 50, of Ypsilanti, Michigan, was sentenced by U.S. District Judge Judith E. Levy of the Eastern District of Michigan, who also ordered Mehmood to pay $40,488,106.98 in restitution.  Forfeiture will be determined at a hearing on Nov. 7, 2016.  On July 27, 2015, Mehmood was convicted of one count of conspiracy to commit health care fraud, four counts of health care fraud, one count of conspiracy to pay and receive health care kickbacks, one count of conspiracy to commit money laundering, two counts of money laundering and two counts of obstruction of justice. 

According to evidence presented at trial, from 2006 through 2011, Mehmood participated in a scheme in which he obtained patients by paying cash kickbacks to recruiters, who in turn paid cash to patients to induce them to sign up for home health care with Mehmood’s companies: Access Care Home Care Inc., Patient Care Home Care Inc., Hands On Healing Home Care Inc. and All State Home Care Inc.  The evidence also showed that he paid kickbacks to physicians to refer patients to the companies for unnecessary home health care services.

In addition, trial evidence showed that Mehmood and his co-conspirators falsified records to make it appear as if the patients qualified for and received the services for which Medicare paid over $33 million during the course of the conspiracy.  Mehmood used a co-conspirator to launder the proceeds of the fraud through shell companies under Mehmood’s control, according to trial evidence.         

Trial evidence also demonstrated that while visiting an HHS-OIG facility during pretrial release to review evidence with his attorney, Mehmood stole incriminating documents that law enforcement authorities had seized during the execution of search warrants at Mehmood’s companies.  Law enforcement agents subsequently recovered the missing documents in a search of Mehmood’s jail cell.

A co-defendant, Badar Ahmadani, was also convicted at trial of one count of conspiracy to commit health care fraud and one count of conspiracy to pay and receive health care kickbacks.  Ahmadani is scheduled to be sentenced on Nov. 7, 2016.

The FBI and HHS-OIG investigated the case, which was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.  Fraud Section Trial Attorneys Niall M. O’Donnell and A. Brendan Stewart prosecuted the case.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,900 defendants who have collectively billed the Medicare program for more than $10 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to www.stopmedicarefraud.gov.

A leader of the Vice Lords street gang pleaded guilty today for his role in the May 7, 2015, shooting of four members of a family with an AK-47 in Detroit.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Special Agent in Charge Robin Shoemaker of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Detroit Field Division, Special Agent in Charge David P. Gelios of the FBI’s Detroit Division and Chief James Craig of the Detroit Police Department made the announcement. 

Burney Everett, aka Tank, 28, of Detroit, pleaded guilty before U.S. District Judge David M. Lawson of the Eastern District of Michigan to two counts of assault with a dangerous weapon in aid of racketeering and one count of use and carry of a firearm during and in relation to a crime of violence.  Sentencing has been scheduled for Feb. 8, 2017.

According to admissions made in connection with Everett’s plea, the Vice Lords is a national gang engaged in a variety of crimes and the gang’s leaders are located in both Chicago and Detroit.  The gang is broken down into various “sets,” “decks,” or “branches,” including the Detroit-based Traveling Vice Lords (TVL).  The Vice Lords have often targeted members who sought to leave the gang for physical beatings or murder. 

Everett admitted that in May 2015, he directed other members of the TVL to search for two brothers who had left or attempted to leave the gang in order to harm them.  Everett further admitted that on May 7, 2015, at his direction, members of the TVL traveled in multiple cars to the intended victims’ house.  After a brief confrontation with the brothers’ family members, Vice Lords member Antonio Clark admitted in connection with his own plea that he fired an AK-47 23 times, hitting the brothers, their mother and a 15-year-old sister.  All of the victims survived the shooting.

Eight other members and leaders of the TVL have pleaded guilty to charges related to the shooting, six of whom have been sentenced: Antonio Clark was sentenced to 240 months in prison; Aramis Wilson was sentenced to 150 months in prison; Tyrone Price was sentenced to 140 months in prison; Dion Robinson was sentenced to 120 months in prison; Jonathan Kinchen was sentenced to 120 months in prison; and Kojuan Lee was sentenced to 97 months in prison.  On Sept. 27, 2016, Jamerio Clark, a Vice Lords associate and the brother of Antonio Clark, pleaded guilty to witness tampering, admitting that he obtained private health information from a Detroit medical facility’s database, including addresses, birthdates and emergency contact information, of victims of the TVL shooting, and provided this information to his brother.

The charges and convictions related to the May 7, 2015, shooting are just one component of the federal government’s prosecution of the Vice Lords street gang, which has led to the arrests and convictions of dozens of Vice Lords leaders and members over the last few years.  In two trials during March and May 2015, juries convicted eight leaders and members of the Phantom Outlaw Motorcycle Club, many of whom were also leaders and members of the Vice Lords, for various crimes, including a mass-murder plot against a rival organization and the shooting of a member of another rival organization.  Among those convicted was Antonio Johnson, aka MT and Mister Tony, the National President of the Phantoms and the Three-Star General over all of the Vice Lords in Michigan.  On Sept. 8, 2015, Johnson was sentenced to 35 years in prison for racketeering conspiracy, murder conspiracy in aid of racketeering, assault with a dangerous weapon in aid of racketeering, aiding and abetting the use and carry of firearms during and in relation to a crime of violence and felon in possession of a firearm.

The arrests and convictions in this case are, in part, the result of the Detroit One Initiative, a collaborative effort between law enforcement and the community to reduce homicide and other violent crime in Detroit.  Through the lead efforts of the Comprehensive Violence Reduction Partnership Task Force, which consists of representatives of the ATF, Detroit Police Department, Michigan State Police, Michigan Department of Corrections and FBI, law enforcement authorities linked various acts of violence in Detroit to the Vice Lords street gang, and identified the leaders and key members of the gang, who now have been held accountable.

The charges and allegations contained in the indictment are merely accusations.  The defendants are presumed innocent until and unless proven guilty. 

The ATF, FBI and Detroit Police Department are investigating the case.  Trial Attorney Joseph Wheatley of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorneys Christopher Graveline and Mark Bilkovic of the Eastern District of Michigan are prosecuting the case.

United States Attorney Barbara L. McQuade announced today that Assistant United States Attorney (AUSA) Dawn N. Ison will lead the efforts of her Office in connection with the Justice Department’s nationwide Election Day Program for the upcoming November 8, 2016, general elections.  AUSA Ison has been appointed to serve as the District Election Officer (DEO) for the Eastern District of District, and in that capacity is responsible for overseeing the District’s handling of complaints of election fraud and voting rights abuses in consultation with Justice Department Headquarters in Washington.

United States Attorney Barbara L. McQuade said, “Every citizen must be able to vote without interference or discrimination and to have that vote counted without it being stolen because of fraud.  The Department of Justice will act promptly and aggressively to protect the integrity of the election process.”

The Department of Justice has an important role in deterring election fraud and discrimination at the polls, and combating these violations whenever and wherever they occur.  The Department’s long-standing Election Day Program furthers these goals, and also seeks to ensure public confidence in the integrity of the election process by providing local points of contact within the Department for the public to report possible election fraud and voting rights violations while the polls are open on election day.

Federal law protects against such crimes as intimidating or bribing voters, buying and selling votes, impersonating voters, altering vote tallies, stuffing ballot boxes, and marking ballots for voters against their wishes or without their input.  It also contains special protections for the rights of voters and provides that they can vote free from acts that intimidate or harass them.  For example, actions of persons designed to interrupt or intimidate voters at polling places by questioning or challenging them, or by photographing or videotaping them, under the pretext that these are actions to uncover illegal voting may violate federal voting rights law.  Further, federal law protects the right of voters to mark their own ballot or to be assisted by a person of their choice.

The franchise is the cornerstone of American democracy.  We all must ensure that those who are entitled to the franchise exercise it if they choose, and that those who seek to corrupt it are brought to justice.  In order to respond to complaints of election fraud or voting rights abuses on November 8, 2016, and to ensure that such complaints are directed to the appropriate authorities, United States Attorney Barbara L. McQuade stated that AUSA/DEO Ison will be on duty in this District while the polls are open.  She can be reached by the public at the following telephone number: (313) 226-9567.

In addition, the FBI will have special agents available in each field office and resident agency throughout the country to receive allegations of election fraud and other election abuses on election day.  The local FBI field office can be reached by the public at (313) 965-2323.

Complaints about possible violations of the federal voting rights laws can be made directly to the Civil Rights Division’s Voting Section in Washington, DC by phone at 1-800-253-3931 or (202) 307-2767, by fax at (202) 307-3961, by email to voting.section@usdoj.gov or by complaint form at http://www.justice.gov/crt/complaint/votintake/index.php.

United States Attorney Barbara L. McQuade said, “Ensuring free and fair elections depends in large part on the cooperation of the American electorate.  It is imperative that those who have specific information about discrimination or election fraud make that information available immediately to my Office, the FBI, or the Civil Rights Division.”

An elected Trustee of Macomb Township was arrested by agents of the Federal Bureau of Investigation (FBI) today based on a criminal complaint charging him with demanding and taking bribes in exchange for his vote and official assistance on a municipal contract, United States Attorney Barbara McQuade announced.

McQuade was joined in the announcement by FBI Special Agent in Charge David P. Gelios and Manny J. Muriel, Special Agent in Charge, Internal Revenue Service-Criminal Investigation, Detroit Field Office.

Clifford Freitas, 43, of Macomb Township, is charged with engaging in a pattern of corrupt activity, including demanding and accepting money in exchange for official acts as a Trustee.  Freitas’ arrest is another part of an ongoing and long-running investigation into systemic corruption in multiple municipalities in southeast Michigan, primarily Macomb County.  The investigation has employed telephone wiretaps, consensual audio and video recordings by cooperative individuals, undercover operations, physical surveillance, telephone tracking warrants, and subpoenas of financial records and other documents. 

The complaint charges that Freitas demanded and accepted money from a municipal vendor in exchange for using his official position as a Trustee to get the vendor a municipal contract and to secure favorable terms for the company.  In July 2015, Macomb Township put out a request for proposal for a municipal contract.  Soon thereafter, Freitas approached a representative of a prospective vendor, and Freitas demanded money in return for Freitas’ support as a Trustee.  Freitas agreed to accept $7,500 from the vendor in return for his assistance in getting the contract.  Through his position as a Trustee, Freitas obtained sensitive bid information on the municipal contract in order to help the vendor, telling the vendor what bid was needed to beat out competing contractors.  After the vendor was awarded the contract by Macomb Township, Freitas demanded an additional $35,000 from the company representative for his additional assistance as a public official relating to the contract.  In May 2016, Freitas accepted $2,000 in cash from an undercover agent of the FBI, with the payment being video recorded.

“Bribery in municipal contracting undermines clean and effective government and erodes public trust,” said U.S. Attorney McQuade.

“The citizens of Michigan must be able to trust that government officials will perform their duties in the best interests of the communities they serve,” said David P. Gelios, Special Agent in Charge, Detroit Division of the Federal Bureau of investigation.  “Today’s arrest is another unfortunate reminder that some public officials have lost sight of that obligation choosing instead to utilize their positions of authority to serve their own interests.  The Detroit FBI along with its partners assigned to the Detroit Area Public Corruption Task Force remain committed to investigating those who criminally violate their oaths of office.  I would encourage anyone who has information about corrupt activity in Macomb County or any other community in Michigan to contact the Detroit FBI Public Corruption tip line at 313-965-2222.”

This investigation is being conducted by the Macomb Resident Agency of the FBI and the FBI Detroit Area Corruption Task Force, a multiagency task force led by the FBI Detroit Division and comprised of the Internal Revenue Service – Criminal Investigation Division, Michigan State Police, Michigan Attorney General’s Office, and several other local and federal law enforcement agencies.  It is being prosecuted by Assistant United States Attorneys R. Michael Bullotta and David A. Gardey.

Freitas will be in federal court this afternoon at 1pm for his initial appearance.

Upon conviction for a violation of Title 18, United States Code, Section 666, federal program bribery, Freitas faces a maximum of ten years in prison and a fine of up to $250,000.   

A complaint is only a charge and is not evidence of guilt.  Trial cannot be held on felony charges in a complaint.  When the investigation is completed a determination will be made whether to seek a felony indictment.

A Special Agent with U.S. Immigration and Customs Enforcement – Homeland Security Investigations and an attorney have been charged with bribery, conspiracy to defraud the United States and obstruction of justice, announced U.S. Attorney Barbara L. McQuade.  The charging documents were unsealed today.

Joining in the announcement was Giovanni Tiano, Special Agent in Charge of the Detroit, Michigan office of the Department of Homeland Security – Office of Inspector General and Manny Muriel, Special Agent in Charge of the Detroit, Michigan office of the Internal Revenue Service – Criminal Investigations. 

Charged in an Indictment was Clifton Divers, 48, of Detroit, Michigan.  Divers was charged with misusing his position as a Special Agent with U.S. Immigration and Customs Enforcement – Homeland Security Investigations to obtain numerous deferrals of deportation and other immigration benefits for non-citizen foreign nationals in return for over $5,000 in cash payments, free legal services and other things of value. 

Special Agent Divers is also charged with conspiring to impair, obstruct and defeat the lawful function of the U.S. Department of Homeland Security by dishonest means.  In addition, Agent Divers is charged with destruction and falsification of records to obstruct an official investigation by the Office of Inspector General of the U.S. Department of Homeland Security.  The crimes are alleged to have occurred between 2009 and 2015.  The six charged crimes carry maximum penalties of between five and twenty years.

Charged in an Information was attorney Charles T. Busse, 58, of Birmingham, Michigan.  Busse was charged with paying bribes to a Special Agent with U.S. Immigration and Customs Enforcement – Homeland Security Investigations to obtain numerous deferrals of deportation and other immigration benefits for his clients.  Attorney Busse maintains law offices in Rochester Hills, Michigan and in Dearborn, Michigan. 

Busse was also charged with conspiring to impair, obstruct and defeat the lawful function of the U.S. Department of Homeland Security by dishonest means.  In addition, Busse was charged with criminal tax evasion and with violating the federal law that requires an attorney to report any cash payments of more than $10,000.  The crimes are alleged to have occurred between 2009 and 2015.  The four charged crimes carry maximum penalties of between five and fifteen years.

McQuade stated, “Anyone who abuses a federal law enforcement position for personal profit can expect to face serious penalties, including criminal prosecution.”

Special Agent in Charge Tianno stated, “Acts of corruption within the Department of Homeland Security represent a threat to our national security, and the Office of Inspector General is committed to doing everything possible to eradicate those who choose to place our country at risk.  Homeland Security Investigations (HSI) have some of the finest agents in law enforcement and this arrest today is not indicative of the selfless work the fine men and women from HSI perform every day.”

“This case should serve to reassure the public that the IRS will continue to enforce our nation’s tax laws to protect the integrity of our tax systems and we will take particular interest in cases where someone, for their own personal benefit, attempts to profit from corruption,” said Manny Muriel, Special Agent in Charge.  “For years, criminals have devised complex schemes in an attempt to conceal their illegal activities.  Tax cheats should take note that they cannot evade their tax reporting obligations without consequences.”

U.S. Attorney McQuade commended the outstanding work of the Office of Inspector General of the U.S Department of Homeland Security and the Internal Revenue Service – Criminal Investigations in conducting a comprehensive criminal investigation into potential corruption activities involving a federal law enforcement official. 

An indictment/information is only a charge and is not evidence of guilt.  Every defendant is entitled to a fair trial in which it will be the government's burden to prove guilty beyond a reasonable doubt

An elected Trustee of Clinton Township was arrested by the agents of the Federal Bureau of Investigation (FBI) today based on a criminal complaint charging him with demanding and taking bribes in exchange for his vote on municipal contracts, United States Attorney Barbara McQuade announced.

McQuade was joined in the announcement by FBI Special Agent in Charge David P. Gelios and Manny J. Muriel, Special Agent in Charge, Internal Revenue Service-Criminal Investigation, Detroit Field Office.

Dean Reynolds, 49, of Clinton Township, is charged with engaging in a pattern of corrupt activity, including demanding and accepting money and other things of value, in exchange for official acts as a Trustee.  Reynolds’ arrest is part of an ongoing and long-running investigation into systemic corruption in multiple municipalities in southeast Michigan, primarily Macomb County.  The investigation has employed telephone wiretaps, consensual audio and video recordings by cooperative individuals, undercover operations, physical surveillance, telephone tracking warrants, and subpoenas of financial records and other documents. 

The complaint charges that since approximately 2012, Reynolds accepted multiple bribes from the representative of a company that was seeking and that secured a significant contract with Clinton Township.  In total, Reynolds accepted between $50,000 to $70,000 in cash from the company’s representative.  In addition, Reynolds accepted an additional $17,000 in cash payments from an undercover agent of the FBI, with the payments being video recorded.  In exchange for the money from the company representative, Reynolds sold his vote on the Board of Trustees in favor of the company’s contract, and Reynolds provided information about the votes of other Trustees.

“Corruption undermines the very nature of representative government, said U.S. Attorney McQuade.  “Law enforcement is committed to seeking out and prosecuting corrupt public officials in all areas of the Eastern District, including suburban communities.”

“Today’s arrest should serve as a reminder to the public of the FBI's longstanding record of successful public corruption investigations in the Detroit Metropolitan area”, said, David P. Gelios, Special Agent in Charge, Federal Bureau of Investigation.  “Betrayal of the public trust for personal gain will always be an investigative priority of the FBI and our partners in Michigan”.

This investigation is being conducted by the FBI Detroit Area Corruption Task Force, a multiagency task force led by the FBI Detroit Division and comprised of the Internal Revenue Service – Criminal Investigation Division, Michigan State Police, Michigan Attorney General’s Office, and several other local and federal law enforcement agencies.  It is being prosecuted by Assistant United States Attorneys R. Michael Bullotta and David A. Gardey.

Upon conviction for a violation of Title 18, United States Code, Section 666, federal program bribery, Reynolds faces a maximum of ten years in prison and a fine of up to $250,000.   

A complaint is only a charge and is not evidence of guilt.  Trial cannot be held on felony charges in a complaint.  When the investigation is completed a determination will be made whether to seek a felony indictment.

Reynolds will be in federal court this afternoon at 1pm for his initial appearance on the criminal complaint. 

The FBI requests that anyone having information regarding public officials accepting bribes is encouraged to contact the Detroit Division of the FBI at 313-965-2222.

 

The Justice Department today announced a settlement with Pittsfield Charter Township, Michigan, resolving allegations that the township violated the Religious Land Use and Institutionalized Persons Act of 2000 (RLUIPA) in denying zoning approval to allow the Michigan Islamic Academy (MIA) to build a school on a vacant parcel of land.

The settlement, which must still be approved by the U.S. District Court for the Eastern District of Michigan, resolves an October 2015 lawsuit between the United States and the township.  A separate settlement resolving a similar lawsuit brought by MIA against the township has also been submitted to the court for approval. 

The department’s complaint alleged that in October 2011, Pittsfield Charter Township imposed a substantial burden on MIA’s exercise of religion when it refused to grant its request for rezoning to allow MIA to build a new school on a vacant parcel of land in the township.  MIA, a pre-K through grade 12 school currently located in Ann Arbor, Michigan, sought to build a new facility in Pittsfield because it had outgrown its current location. 

As part of the settlement, the township has agreed to permit MIA to construct a school on the vacant parcel of land, to treat the school and all other religious groups equally and to publicize its non-discrimination policies and practices.  The township also agreed that its leaders and various township employees will attend training on the requirements of RLUIPA.  In addition, the county will report periodically to the Justice Department.  In the separate settlement between MIA and the township, Pittsfield agreed to pay $1.7 million to resolve MIA’s claims for damages and attorney’s fees caused by the 2011 denial and the resulting delay in construction of the school.

“Federal law protects the religious beliefs, freedoms and practices of all communities, including the right to build religious institutions free from unlawful and unfair barriers,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division.  “This agreement will allow the Michigan Islamic Academy to build the facility it needs to serve its members and contribute to the community of Pittsfield.” 

“The law prohibits the government from imposing land use regulations that substantially burden religious exercise unless there is a compelling government interest and the government uses the least restrictive means of achieving that interest,” said U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan.  “We filed this lawsuit to protect the right of all Americans to practice their religion and receive the religious instruction and education of their choice.  This settlement will permit the families of the Michigan Islamic Academy to exercise the same rights as all Americans.”

The case was brought by the Civil Rights Division’s Housing and Civil Enforcement Section and the U.S. Attorney’s Office of the Eastern District of Michigan. 

RLUIPA prohibits religious discrimination in land use and zoning decisions.  People who believe they were subjected to religious discrimination in land use or zoning may contact the Housing and Civil Enforcement Section at 1-800-896-7743.  More information about RLUIPA, including a report on the department’s enforcement, may be found at www.justice.gov/crt/about/hce/rluipaexplain.php.

The Justice Department today announced a settlement with Pittsfield Charter Township, Michigan, resolving allegations that the township violated the Religious Land Use and Institutionalized Persons Act of 2000 (RLUIPA) in denying zoning approval to allow the Michigan Islamic Academy (MIA) to build a school on a vacant parcel of land.

The settlement, which must still be approved by the U.S. District Court for the Eastern District of Michigan, resolves an October 2015 lawsuit between the United States and the township.  A separate settlement resolving a similar lawsuit brought by MIA against the township has also been submitted to the court for approval. 

The department’s complaint alleged that in October 2011, Pittsfield Charter Township imposed a substantial burden on MIA’s exercise of religion when it refused to grant its request for rezoning to allow MIA to build a new school on a vacant parcel of land in the township.  MIA, a pre-K through grade 12 school currently located in Ann Arbor, Michigan, sought to build a new facility in Pittsfield because it had outgrown its current location. 

As part of the settlement, the township has agreed to permit MIA to construct a school on the vacant parcel of land, to treat the school and all other religious groups equally and to publicize its non-discrimination policies and practices.  The township also agreed that its leaders and various township employees will attend training on the requirements of RLUIPA.  In addition, the county will report periodically to the Justice Department.  In the separate settlement between MIA and the township, Pittsfield agreed to pay $1.7 million to resolve MIA’s claims for damages and attorney’s fees caused by the 2011 denial and the resulting delay in construction of the school.

“Federal law protects the religious beliefs, freedoms and practices of all communities, including the right to build religious institutions free from unlawful and unfair barriers,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division.  “This agreement will allow the Michigan Islamic Academy to build the facility it needs to serve its members and contribute to the community of Pittsfield.”

“The law prohibits the government from imposing land use regulations that substantially burden religious exercise unless there is a compelling government interest and the government uses the least restrictive means of achieving that interest,” said U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan.  “We filed this lawsuit to protect the right of all Americans to practice their religion and receive the religious instruction and education of their choice.  This settlement will permit the families of the Michigan Islamic Academy to exercise the same rights as all Americans.”

The case was brought by the Civil Rights Division’s Housing and Civil Enforcement Section and the U.S. Attorney’s Office of the Eastern District of Michigan. 

RLUIPA prohibits religious discrimination in land use and zoning decisions.  People who believe they were subjected to religious discrimination in land use or zoning may contact the Housing and Civil Enforcement Section at 1-800-896-7743.  More information about RLUIPA, including a report on the department’s enforcement, may be found at www.justice.gov/crt/about/hce/rluipaexplain.php.

Pittsfield Consent Order

A twenty-one year-old Detroit man was taken into custody after a criminal complaint was filed in federal court charging him with using the Internet to transmit a threat, announced United States Attorney Barbara L. McQuade.

McQuade was joined in the announcement by Special Agent in Charge David P. Gelios, Federal Bureau of Investigation and Chief James Craig, Detroit Police Department.

Deshawn Maurice Lanton was charged in the complaint. 

The criminal complaint alleges that on September 23, 2016, a threatening post was made to the WXYZ (Channel 7) live stream webcast of Detroit Police Sgt. Kenneth Steil’s funeral.  The post read “Maybe I should drop a bomb on tha building to get rid of the rest of y’all.”  The post was on the live stream showing the inside of the church where the funeral was taking place as hundreds of uniformed police officers entered the building.   Investigation into the threat identified Lanton as the man who made the threat. 

According to the criminal complaint, Lanton attempted to sell a firearm and ammunition on a Facebook page commonly used to buy and sell property online.  Lanton’s Facebook page shows multiple videos of police officers getting injured with comments expressing his pleasure seeing the officers injured.

"This case is different from some other generalized threats on social media against police officers and other groups because this statement threatens specific harm to a particular group of people at a precise location," McQuade said. 

“Threats to harm or kill police officers are an affront to the men and women who risk their lives daily to protect the communities of Michigan they have pledged to serve.  The FBI takes these threats seriously and works closely with our law enforcement partners to ensure threats are evaluated, investigated, and those responsible brought to justice.” said David P. Gelios, Special Agent in Charge, Detroit Division of the FBI. “Just as we are prepared to tirelessly investigate individuals who threaten police officers and other first responders, the FBI remains committed to safeguarding the rights of all individuals specifically targeted because of their race, gender, religion, or other affiliation.”

Lanton made his initial appearance this afternoon in federal court and was temporarily detained until his bond hearing tomorrow at 1pm.

A criminal complaint contains allegations that a defendant has committed a crime.  Every defendant is presumed innocent until and unless proven guilty.

If found guilty, Lanton faces up to 5 years in prison and a $250,000 fine.