District Not Recorded

The Justice Department announced today that the U.S. District Court for the District of Rhode Island terminated the Interim Settlement Agreement (ISA), with the City of Providence (City), in U.S. v. Rhode Island and City of Providence.  The independent Court Monitor has found that the City has substantially complied with the ISA’s requirements.  Because of the City’s commitment to complying with the ISA, the City now provides transitional services and supports to students with intellectual and developmental disabilities (IDD) at Mount Pleasant High School, including community experiences, to enable those students to prepare for and obtain competitive jobs in businesses in the community. 

“The Interim Settlement Agreement changed lives,” said Assistant Attorney General Eric Dreiband of the Justice Department’s Civil Rights Division.  “Mount Pleasant students are now able to experience employment and other activities in integrated settings, thereby enabling them to prepare for and obtain competitive jobs in the community.  We commend the City for its efforts in achieving compliance with the ISA.”  

The ISA was the first in the nation to address the rights of individuals with disabilities to receive integrated employment services in the broader community instead of in segregated workshops exclusively for individuals with disabilities.  Prior to the ISA, students with IDD at Mount Pleasant spent school days bagging, labeling, and collating jewelry and similar tasks in an in-school sheltered workshop, apart from their classmates without disabilities.  Upon exiting school, most of these students did similar work for sub-minimum wage at a sheltered workshop near the school, despite their ability and willingness to work in integrated settings.  Now, the students are integrated with their classmates without disabilities and receive services to prepare them for integrated work in careers that match their interests and abilities, in accordance with the ADA. 

The papers related to the ISA, including the findings letter, agreement, Court Monitor’s reports, and papers related to the termination as to the City are available here.  The ISA still remains in effect as to the State of Rhode Island.  The papers related to the State, including the agreements signed by the State and Court Monitor’s reports, are available here.  For more information about the ADA, please visit http://www.ada.gov or call the toll-free ADA Information Line at (800) 514-0301 or (800) 514-0383 (TTY).

Anchorage, Alaska -- U.S. Attorney Bryan Schroder announced that on Wednesday, Sept. 18 and Thursday, Sept. 19, the U.S. Attorney’s Office and Department of Justice’s Civil Rights Division hosted roundtable discussions on combating sexual harassment and racial discrimination in housing in Fairbanks and Anchorage. 

The events included state, tribal, and federal agencies, non-profit organizations, and crisis and legal service providers that often work with Alaska’s most vulnerable populations, who could also become victims of sexual harassment or racial discrimination in housing.

“These roundtables compliment the mission of the Attorney General’s Rural Alaska Anti-Violence Enforcement Network (RAAVEN).  Many women facing violence and abuse in rural Alaska come to Anchorage or Fairbanks looking for a fresh start and new opportunities.  These roundtables will help ensure that women and other vulnerable populations from all over Alaska are treated respectfully and fairly as they seek housing,” said U.S. Attorney Bryan Schroder.

The Department of Justice, through the U.S. Attorney’s Offices and the Civil Rights Division, enforces the Fair Housing Act, which prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin, and disability.

Because victims may not be aware that the conduct they have experienced violates the Fair Housing Act or may not know where to turn, the U.S. Attorney’s Office and Department of Justice hope to collaborate with community organizations to raise awareness and help victims report abuse.

The Justice Department brings cases each year involving egregious conduct, including allegations that defendants have requested sexual favors in exchange for reduced rents or making necessary repairs, made unrelenting and unwanted sexual advances to tenants, and evicted tenants who resisted their sexual overtures. In 2017, the Justice Department recovered more than $1 million in damages for victims. The Justice Department’s investigations frequently uncover sexual harassment or racial discrimination that has been ongoing for years or decades and identify numerous victims who never reported the conduct to federal authorities. Many instances of sexual harassment or racial discrimination in housing continue to go unreported.

The roundtables were coordinated by Lauren Marks of the Housing and Civil Enforcement Section of the Civil Rights Division of Department of Justice.

The Department encourages anyone who has experienced sexual harassment or discrimination in housing, or knows someone who has, to contact the Civil Rights Division by calling (844) 380-6178 or emailing: fairhousing@usdoj.gov.

usao/ak/19-066

Prepared by: Katie Schurig, 907-271-5022, Katie.Schurig@usdoj.gov

The Department of Justice today announced a new online system for filing, storing, and searching registrations under the Foreign Agents Registration Act of 1938 (FARA).  

This enhanced system (known as eFile) will increase public transparency and allow for better analysis of new filings.  The system will also benefit new registrants who will file using fillable web-forms (instead of by filling out PDFs), making it easier for them to upload information and to update registrations, as the statute requires. These improvements build on the FARA Unit’s expansion, earlier this summer, of the website’s search features, which enable full-text searches and downloads of results in bulk format (e.g. CSV, XML) or via machine-readable API endpoints (e.g. CSV, XML, JSON) of more than 80,000 online FARA filings, and last year’s decision to publish its advisory opinions online.

“FARA helps protect the integrity of American democracy by combating covert foreign government influence in our political process,” said Assistant Attorney General John C. Demers.  “Improving the FARA filing system is part of the Department’s commitment to improving transparency of foreign influence activities. This new system will make it easier for registrants to comply with their legal obligations and for the public to remain informed of their activities. The more accessible we make information on foreign political activities to the public, the better we accomplish our mission.”

            The Department’s commitment to transparency and enforcement of the statute has borne fruit:

• In 2018 alone, more than 20 individuals and entities were criminally charged with violations involving FARA.  That is more than the total number of individuals and entities charged in the prior 50 years.
• In May, the Division used its civil enforcement authority for the first time since 1991 to obtain a court order requiring RM Broadcasting to register as the agent of a Russian state-owned media enterprise.
• At current rates, the Department is on track to double the number of new registrants and new foreign principals registering annually as of 2016.   Moreover, almost twice the number of individuals who work for registrants (known as “short-form registrants”) have registered, increasing transparency concerning the individuals (and not just the entities) engaged in foreign influence activities.
• The FARA Unit has increased the number of inspections of FARA registrants, to audit compliance with their record-keeping and reporting obligations, by over 30 percent, from an average of about 14 a year (from 2010 to 2018) to 20.

The revamped FARA eFile system will streamline the registration process and improve searching and analysis of FARA filings. The new process is self-guided, provides instructions and definitions, and automatically pre-populates data in subsequent filings.  Importantly, eFile will help ensure all required fields are completed and responses are standardized, which will promote transparency and efficiency. Applicants can prepare their materials offline, using templates, which they can upload at the time of filing. Although only new FARA registrants will use the web-fillable eFile system at this time, and existing registrants will continue to use the legacy method, further updates to the website are planned that will transition all filings to the new platform.  Additional details regarding this feature, including the templates, are posted on the FARA website.

The National Telecommunications and Information Administration (NTIA) has released a report on the effectiveness of a new technology used to block illegal cellphone signals in correctional institutions. Department officials are encouraged by the promising results and the potential for the technology to disable contraband cellphones in prisons. 

The NTIA report details the results of an April 2019 Federal Bureau of Prisons (BOP) pilot test of micro-jamming technology at a state prison in Columbia, S.C. The results are promising, showing that the new technology could be effective in preventing the use of contraband cellphones in prisons. As detailed in the report, NTIA observed micro-jamming technology installed and operated within half of an inmate housing unit. The testing was overseen by BOP staff who observed that cell signals inside the housing unit were blocked, while legitimate calls could be made one foot outside of the housing unit perimeter. This test followed two earlier tests at a federal corrections facility in Cumberland, Md., one of which included a micro-jamming test showing that the technology rendered cellular signals inoperable inside a single cell. 

Contraband cellphones are used by inmates to engage in criminal activity, or even run entire criminal enterprises, while incarcerated, endangering law enforcement officers (including correctional staff) and the public. For instance, in June 2019, the Department of Justice announced charges against members and associates of the Aryan Brotherhood, many of whom are currently serving life prison sentences for murder. Some of the charged defendants allegedly used cellphones that had been smuggled into prison to order murders and oversee other criminal activities. 

There are countless examples of prisoners using illegal cellphones from behind bars to engage in illicit activities, such as sextortion schemes and conspiracies to purchase a mail bomb over the Dark Web or traffic drugs. “We are pleased with the most recent test results, and our efforts to test and employ new technology will continue until inmates cannot use contraband cellphones to terrorize, threaten, or harm our communities,” said Assistant Attorney General Beth Williams. “We also want to thank Senators Lindsey Graham and Tom Cotton and Congressman David Kustoff for their leadership on this important issue."

The BOP will continue to evaluate cell signal detection and interception technologies and work with its partners and Congress to achieve cost-effective options to combat this threat to corrections and public safety. BOP does not endorse any specific vendor or product.

Earlier today, Principal Deputy Assistant Attorney General John P. Cronan of the U.S. Department of Justice’s (DOJ) Criminal Division met with Vice-President Hugo Velazquez, Minister of the Anti-Money Laundering Secretariat Carlos Arregui, and Minister of Intelligence Esteban Aquino of Paraguay in Washington, DC.

They discussed coordination on law enforcement matters including extraditions and the need to join forces to combat drug trafficking, illicit financial schemes, investigating and prosecuting complex financial and terrorism financing cases and other transnational crimes.

The past two years have seen a significant increase in bilateral law enforcement cooperation, given the global reach of transnational crime.  Principal Deputy Assistant Attorney General Cronan expressed his gratitude to Paraguay for the successful extradition of multiple fugitives in the past two years. Principal Deputy Assistant Attorney General Cronan also commended Paraguay’s action last month to designate ISIS, al-Qaida, Hamas, and Hizballah as terrorist organizations.  The Justice Department has offered to support Paraguay in combatting terrorism and fully and effectively implementing these designations. 

They discussed their cooperative criminal investigative efforts between the United States and Paraguay as well as the case-based mentoring and technical assistance that the Office of Overseas Prosecutorial Development, Assistance, and Training (OPDAT), and its Asuncion-based Resident Legal Advisor (RLA) is providing.

Both sides agreed to continued collaboration between Justice Department entities and counterparts in the region to achieve their law enforcement priorities.

Igor Yurkovetsky pleaded guilty today in connection with an ongoing investigation into a conspiracy to rig bids submitted to the General Services Administration (GSA), the Department of Justice announced.

According to the one-count felony charge filed in the U.S. District Court for the District of Minnesota in Minneapolis, Yurkovetsky conspired to rig bids at online public auctions of surplus government equipment conducted by the GSA. Yurkovetsky, a Pennsylvania resident, is charged with participating in the conspiracy from about July 2012 until as late as May 2018.  He is the second individual charged in this investigation, and he has agreed to cooperate in the Department’s ongoing investigation.

“Today’s charge brings to justice another participant in a long-running conspiracy to corrupt online markets and cheat taxpayers and the federal government of the benefits of competition,” said Assistant Attorney General Makan Delrahim of the Department of Justice’s Antitrust Division.  “This charge will not be the last in this investigation.  The Department and its law enforcement partners are committed to prosecuting individuals who rig bids at government auctions.”

The GSA operates GSA Auctions, which offers the public the opportunity to bid electronically on a wide variety of federal assets, including computer equipment that is no longer needed by government agencies.  GSA Auctions sells that equipment via its online auctions, and the proceeds of the auctions are distributed to the government agencies or the U.S. Treasury general fund.  According to the charge, the primary purpose of the conspiracy was to suppress and eliminate competition.  Additionally, the co-conspirators obtained the equipment by agreeing which co-conspirators would submit bids for particular lots offered for sale by GSA Auctions and which co-conspirator would be designated to win a particular lot.

“The integrity of GSA’s online systems and programs is vital to good government,” said Assistant Inspector General for Investigations James. E. Adams of the GSA.  “The GSA Office of Inspector General will continue to ensure these systems and programs are free from corruption and manipulation.”

A criminal violation of Section 1 of the Sherman Act carries a maximum of 10 years in prison and a $1 million criminal fine for individuals.  The maximum fines may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

The ongoing investigation into bid rigging at GSA auctions is being conducted by the Antitrust Division’s Chicago Office and the GSA Office of Inspector General’s Great Lakes Regional Investigations Office in Chicago, Illinois.  Anyone with information concerning bid rigging or fraud related to GSA auctions should contact the Chicago Office of the Antitrust Division at 312-984-7200, the Antitrust Division’s Citizen Complaint Center at 888-647-3258, visit www.justice.gov/atr/report-violations or email the GSA Office of Inspector General at fraudnet@gsaig.gov.

A former U.S. Army Reserve employee was sentenced today to 18 months’ imprisonment followed by three years of supervised release on charges of wire fraud and theft of government money as part of a scheme to steal more than $400,000 from the 63rd Regional Support Command at Moffett Field in Mountain View, California.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division made the announcement.

Ramon Torry, 55, of Irvine, California, was sentenced by U.S. District Court Judge Beth Labson Freeman in the Northern District of California, San Jose Division, who also ordered Torry to pay restitution in the amount of $302,982.29 and forfeiture the same amount.

 According to admissions that he made during his guilty plea, Torry devised a scheme to steal money from the 63rd Regional Support Command related to a contract for the creation of a Public Service Announcement (PSA) touting the Command’s accomplishments.  In February 2016, Torry began creating fake invoices for work allegedly performed by the Calfornia production company for the production of the PSA as well as for training and other services that were never performed.  Torry then directed others in the Command to make payments to the company contracted to produce the PSA by both government purchase card and wire payments.  Between December 2015 and October 2017, Torry directed payments from the 63rd to the production company totaling more than $414,000.  He then directed Person A at the company to kick back more than $300,000 of those funds to Torry, which he converted to his own use and that of others. 

The General Services Administration Office of Inspector General and the U.S. Army Criminal Investigation Command investigated the case.  Trial Attorney Richard B. Evans of the Criminal Division’s Public Integrity Section is prosecuting the case.  Assistant United States Attorney Marissa Harris from the Northern District of California has provided assistance with the case.

Today, the Department of Justice announced its Interim Policy on forensic genetic genealogy (FGG), an emerging investigative technique that will combine technological advancements in DNA analysis and searching with traditional genealogy research. FGG is a unique investigative method that can generate leads used by law enforcement to not only identify unknown suspects but to help identify the remains of homicide victims.

“Prosecuting violent crimes is a Department priority for many reasons, including to ensure public safety and to bring justice and closure to victims and victims’ families,” said Deputy Attorney General Jeffrey A. Rosen. “We cannot fulfill our mission if we cannot identify the perpetrators. Forensic genetic genealogy gets us that much closer to being able to solve the formerly unsolvable. But we must not prioritize this investigative advancement above our commitments to privacy and civil liberties; and that is why we have released our Interim Policy – to provide guidance on maintaining that crucial balance.”

The Department’s policy, which will go into effect on Nov. 1, 2019, is designed to balance the Department’s relentless commitment to solving violent crimes and protecting public safety against equally important public interests – such as preserving the privacy and civil liberties of all citizens. In order to do so, the Department’s Interim Policy on Forensic Genetic Genealogical DNA Analysis and Searching (found at www.justice.gov/forensics) provides the first comprehensive guidance to law enforcement on the use of FGG.

The Interim Policy contains nine sections that lay out critical requirements for the use of FGG by law enforcement, including the collaborative interdisciplinary use of the technique, the criteria a case must meet in order to use FGG, and how the practice is used to generate leads for unsolved crimes.

As genetic genealogy websites become more popular and individuals continue to voluntarily submit their DNA or enter their genetic profiles onto publically available genetic genealogy sites, the more biological information there is to compare with DNA samples from crime scenes.

In essence, a DNA sample taken from the scene of a violent crime that does not match any samples available in the FBI’s Combined DNA Index System (CODIS) will not generate a lead for law enforcement. FGG provides an alternative option. However, FGG requires a type of DNA testing that Department laboratories currently do not perform, so the sample must be outsourced to a vender laboratory. After the vender laboratory completes a more comprehensive analysis on the sample, the resulting genetic profile is entered into one or more publicly-available genetic genealogy services and compared by automation against the genetic profiles of individuals who have voluntarily submitted their own samples. The computer’s algorithm then evaluates potential familial relationships between the sample donor and the website’s users. If an association is detected, it generates a lead. Subsequently, law enforcement can use that lead to advance their investigation using traditional investigative and genealogical methods.  

The personal genetic information is not transferred, retrieved, downloaded, or retained by the genetic genealogy users – including law enforcement. And before FGG is an option, all other available techniques, including a search of CODIS, must be exhausted.

A final Department policy on forensic genetic genealogy will be issued in 2020.

TOPEKA, KAN. B A soldier stationed at Fort Riley was charged in federal court here today with sending over social media instructions for making bombs, U.S. Attorney Stephen McAllister said.

Jarrett William Smith, 24, Fort Riley, Kan., was charged with one count of distributing information related to explosives and weapons of mass destruction.

Smith, a private first class infantry soldier, joined the Army June 12, 2017, and was transferred to Fort Riley, Kan., on July 8, 2019. According to an FBI investigator’s affidavit, Smith said on Facebook he was interested in traveling to the Ukraine to fight with a paramilitary group called the Azov Batallion.

During a Facebook chat, Smith offered to teach other Facebook users to make cell phone explosive devices “in the style of the Afghans.” On Aug. 19, 2019, Smith told an undercover investigator he was looking for “radicals” like himself. Smith talked about killing members of Antifa and destroying nearby cell towers or a local news station. On Aug. 21, Smith told an undercover investigator about how to make a vehicle bomb. When the investigator commented that most of the components were household items, Smith said: “Making AK47s out of expensive parts is cool, but imagine if you will if you were going to WalMart instead of a gun store to buy weapons.”

Smith also described in detail to the undercover investigator how to build a bomb that could be triggered by calling a cell phone.

“Be very careful with the fully armed device,” Smith warned the investigator.

If convicted, Smith could face up to 20 years in federal prison and a fine up to $250,000. The FBI investigated. Assistant U.S. Attorney Tony Mattivi is prosecuting. 

In all cases, defendants are presumed innocent until and unless proven guilty. The indictments merely contain allegations of criminal conduct.

 

 

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Aradondo Haskins, 48, the former Field Operations Manager for the City of Detroit Building Authority overseeing the demolition program in Detroit, was sentenced today to 12 months in prison after having pleaded guilty to charges of conspiracy to commit bribery and honest services fraud in connection with the Detroit Demolition Program.

The Honorable Victoria Roberts sentenced Haskins to serve 12 months in federal prison following his conviction for conspiracy to commit honest services fraud by taking bribes while he was employed at Adamo Group and at the City of Detroit.  Following his release from prison, Haskins will serve a two-year term of supervised release.  The Court also ordered that Haskins pay a $5,000 fine and that Haskins forfeit $26,500 for the bribes that he took while employed by Adamo and by the City.

The United States Treasury Department created the Blight Elimination Program, which focused on helping communities demolish vacant houses.  The program was paid for through the Hardest Hit Fund (HHF), a housing support program intended to protect home values, preserve home ownership and promote economic growth.  The City of Detroit was one of the recipients of this HHF money.  Approximately $258,656,459 in Hardest Hits Funds have been allocated to the City of Detroit since Oct. 7, 2013.

As stated during Haskins’s guilty plea, from January 2013 through April 2015, Haskins was employed as an "estimator" with Adamo.  Adamo is a private, "for profit," company which provides demolition services throughout the United States and Canada, including the City of Detroit.  Haskins’s responsibilities at Adamo included assembling bid packages in response to "Requests for Proposals" (RFPs) issued by the City of Detroit.  Adamo responded to the RFPs by submitting bids to the City hoping to secure demolition contracts by being the lowest bidder.  In assembling the bid packages, Haskins contacted various subcontractors requesting bids for work to be included in Adamo’s submissions.  "Contractor A" was one of the subcontractors who received Haskins’s invitation to bid.  On several occasions, Contractor A paid Haskins money for disclosing confidential information about bids from Contractor A’s competitors.  In return for these payments, Haskins disclosed confidential information about the lowest competitor bid which allowed Contractor A to submit an even lower bid, ensuring that Contractor A was awarded lucrative contracts.  Haskins accepted bribes on at least eight occasions while he worked at Adamo totaling approximately $14,000.

According to the plea, due in large part to his experience at Adamo, Haskins was hired by the City of Detroit Building Authority (DBA) as a "Field Operations Manager" for its demolition program.  As an official of the City of Detroit, Haskins was the primary point of contact for demolition contractors and he opened and read bids contractors submitted in response to RFPs.  Contractor A, knowing that Haskins was still in a position to influence the demolition contract bidding process, continued to pay Haskins to use his official authority to influence the awarding of demolition related contracts to Contractor A.  Haskins accepted the cash bribe payments from Contractor A in exchange for providing Contractor A confidential information about bids submitted to the DBA.  With the confidential information, Contractor A was able to submit bids low enough to ensure that Contractor A was awarded City of Detroit demolition related contracts.  In total, Haskins accepted approximately $11,500 in bribes from Contractor A.  After his employment with the City of Detroit, Haskins accepted an additional approximately $1,000 from Contractor A for information Contractor A received while Haskins was employed with the City.

First Assistant U.S. Attorney Saima Mohsin of the Eastern District of Michigan and Assistant Attorney General Makan Delrahim of the Justice Department's Antitrust Division commended the outstanding work of the Special Inspector General of the Troubled Asset Relief Program (SIGTARP) and the Federal Bureau of Investigation (FBI) in conducting a comprehensive criminal investigation into the demolition program.

"The Antitrust Division will aggressively pursue collusion that corrupts the government contracting process, especially where the illicitly shared bid information enables the government contractor to submit anti-competitive bids to the detriment of taxpayer-funded programs," said Assistant Attorney General Delrahim.

"The City of Detroit and its demolition program were entrusted with millions of taxpayer dollars to tear down abandoned houses in Detroit’s neighborhoods.  The corruption of the government contracting process by Aradondo Haskins damaged the integrity of the demolition program and broke the public trust.  This prosecution serves as a warning to public officials that soliciting or accepting bribes will be punished and as a promise to the taxpaying public that such violations of the public trust will not be tolerated," said First Assistant U.S. Attorney Mohsin.

"Anti-competitive corruption by city officials that award contracts in the Hardest Hit Fund’s Blight Elimination Program will be met by justice and accountability," said Special Inspector General Christy Goldsmith Romero of the Troubled Asset Relief Program (SIGTARP). "Defendant Haskins started taking bribes from subcontractors when he worked for lead contractor Adamo and continued his crimes as a city official. I commend U.S. Attorney Matthew Schneider and Assistant Attorney General for Antitrust Delrahim for standing united with SIGTARP in fighting corruption in this TARP program."

"Mr. Haskins was sentenced today for corrupting the bidding process both while he was seeking contracts through a federally-funded program and after he became a City of Detroit employee," said Special Agent in Charge Steven M. D'Antuono of the FBI's Detroit Field Office.  "The FBI’s Detroit Area Public Corruption Task Force will continue to investigate and fight corruption by those who give illegal, preferential treatment at the expense of honest American business. I would encourage anyone with information about potential public corruption in Michigan to contact FBI Detroit's Public Corruption tipline at 313-965-2222 or our main number at 313-965-2323."

The case was prosecuted by Assistant U.S. Attorneys Sarah Resnick Cohen, Karen Reynolds, Adriana Dydell and DOJ Antitrust Trial Attorney Matthew Stegman.

The Department of Justice has released the agenda and list of participants for its public workshop on the role of antitrust enforcement in labor markets and promoting robust competition for the American worker.  The workshop will be the first in a two-part series hosted together with the U.S. Federal Trade Commission.

The first workshop, which the Justice Department will host on Sept. 23, 2019, will cover a variety of labor competition issues, including, among other topics, anticompetitive no-poach and wage-fixing agreements, approaches to labor market definition, the role of employer collaboration and contractual arrangements between employers on competition for workers, labor monopsony in merger enforcement, and antitrust exemptions for union activity and collective bargaining. Panelists will discuss recent developments in the law, economic research, and policy proposals, as well as how to effectively develop cases challenging labor monopsony. 

The agenda for the workshop includes a morning session from 10 a.m. to 12:30 p.m. and an afternoon session from 2 p.m. to 5:30 p.m. Details are as follows:

Morning Session

Opening Remarks

• Makan Delrahim, Assistant Attorney General for Antitrust, U.S. Department of Justice

Presentation: Economics of Labor Markets and Key Questions for the Workshop

• Ioana Marinescu, Assistant Professor, School of Social Policy & Practice, University of Pennsylvania
• Elena Prager, Assistant Professor of Strategy, Kellogg School of Management, Northwestern University

Panel 1: Approaching Labor Market Definition

Panelists will discuss how labor markets should be defined in antitrust analysis and the appropriate tools, methods and categories of information required for such analysis.  The panel also will discuss market definition in merger and non-merger cases, and when antitrust enforcers should investigate labor monopsony theories in merger reviews.

• Orley Ashenfelter, Professor of Economics, Princeton University
• Patrick Greenlee, Economist, Antitrust Division, U.S. Department of Justice
• Dean Harvey, Lieff Cabraser Heimann & Bernstein, LLP
• Kevin Murphy, Professor of Economics, Booth School of Business, University of Chicago

Afternoon Session

Afternoon Remarks

• Ramogi Huma, Executive Director, National College Players Association

Panel 2: Ancillarity, Collaborations and Contractual Arrangements: Assessing Antitrust Harm in Complex Business Settings

Restraints on worker mobility are not always purely horizontal or purely vertical, and they sometimes arise in complex business settings, including a variety of collaborations, that blur the lines between interbrand and intrabrand competition. The panel will explore recent developments in the case law and economic literature and discuss how antitrust enforcers should assess restraints on worker mobility, including restraints that arise within franchise systems and for workers in the “gig” economy.

• Rachel Brass, Partner, Gibson, Dunn & Crutcher LLP
• Darrell Johnson, CEO, FranDATA
• Rahul Rao, Assistant Attorney General, Washington State Attorney General
• Marshall Steinbaum, Assistant Professor, Department of Economics, University of Utah
• Randy Stutz, Vice President of Legal Advocacy, American Antitrust Institute
• Samuel Weglein, Managing Principal, Analysis Group, Inc.

Panel 3: Labor Unions and Collective Bargaining

The panel will address the latest developments in case law and public policy regarding statutory and non-statutory labor exemptions from the antitrust laws for collective bargaining and other union activity.  Panelists also will discuss how the evolving status and classification of workers, including workers in the digital economy, dovetails with these labor exemptions. 

• Jonathan Berry, Principal Deputy Assistant Secretary for Policy, U.S. Department of Labor
• W. Stephen Cannon, Constantine Cannon LLP
• Matthew Ginsburg, Associate General Counsel, AFL-CIO
• Jeffrey Kessler, Winston & Strawn LLP
• Derek Ludwin, Covington & Burling LLP
• Sanjukta Paul, Assistant Professor of Law, Wayne State University

Closing Remarks

• Ronald Drennan, Acting Economics Director of Enforcement

The Department of Justice invites comments from the public on the topics covered by this workshop.  Interested parties may submit public comments online now through Oct. 23, 2019 at ATR.LaborWorkshop.Info@usdoj.gov. 

The workshop is free and open to the public and will take place in the DOJ Conference Center, Room 7411 of the Robert F. Kennedy Department of Justice Building, 950 Pennsylvania Avenue NW, Washington, D.C., from 10 a.m. to 5:30 p.m. EDT on Sept. 23, 2019.  A recording of the workshop will be available on the Antitrust Division’s website.  Registration information, an agenda, directions to the event, and a list of speakers are available on the event webpage.  Attendees are encouraged, but not required, to register in advance for the workshop here.  Members of the press also should email Alexei.Woltornist@usdoj.gov.  Seating will be on a first-come, first-served basis. Attendees should bring a valid government-issued photo ID (government badge, license, passport, etc.) and arrive in time to go through security.

Reasonable accommodations for people with disabilities are available upon request.  If you need such an accommodation, please contact Alexei Woltornist in the Office of Public Affairs at Alexei.Woltornist@usdoj.gov.  Such requests should include a detailed description of the accommodations needed and a way to contact you if we need more information.

The second day of the workshop will be hosted by the Federal Trade Commission and will focus on the legal, economic and consumer protection issues associated with the use of non-compete clauses in employment contracts.  The workshop will examine the current state of economic research on the effects of non-compete clauses, and whether additional research would allow the agencies to better understand the short-term and long-term micro and macro effects of such clauses.  The Federal Trade Commission will announce the date and agenda for the second workshop at www.ftc.gov. 

NEW ORLEANS – On September 19, 2019 United States District Judge Barry Ashe sentenced two Colombians, JHONNY RODRIGUEZ ALVAREZ, age 36, and ARIEL CALVO HENAO, age 52, two Ecuadorians, HECTOR RAFAEL GOMEZ LIMONES, age 38, VICENTE LOPEZ MERO, age 61, and four Peruvians JESUS JUSTO TASA CERVANTES, age 65, BORIS WISMARK VERGARA MONCADA, age 54, WALTER REYNALDO VIERA SULLON, age 45 and EDISON OMAR OTERO CRUZ, age 26, for conspiring to import 3,400 kilograms of cocaine into the United States.  The sentencings took place over the last several weeks, with the final defendant being sentenced today.

All of the defendants were crewmembers aboard a container vessel that was traveling from Chimbote, Peru to Ensenada, Mexico, which is near the border with the United States.  The U.S. Coast Guard interdicted the vessel in international waters south of Costa Rica.  After extensive searching, law enforcement found a hidden compartment inside a ballast tank on the vessel.  Inside the hidden compartment, law enforcement located approximately 3,400 kilograms of cocaine.

As part of the plea agreement, the crewmembers all acknowledged that after the vessel left port in Peru, it met up at sea with speedboats sent from near the Colombia/Ecuador border.  The vessel crew used an onboard crane to load the tons of cocaine off of the speedboats and onto the deck of the container vessel.  The crewmembers then moved the cocaine into a secret compartment that had been constructed specifically to hide the cocaine.  The sophisticated compartment was secured with headless screws and covered with putty so that it was virtually impossible to detect. 

Pursuant to the plea agreement with the United States, the crewmembers, many of whom claimed they were forced into participating in the smuggling operation by the individuals who organized the shipment, faced a statutory maximum sentence of sixty months.  District Judge Ashe sentenced each of them to the statutory maximum term, as well as one year of supervised release.

This case was investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and the Drug Enforcement Administration, with assistance from the United States Coast Guard. This case is being prosecuted by Assistant United States Attorney David Haller.

 

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A Colombian Cali Cartel cocaine trafficker was sentenced today to 27 months in prison followed by three years of supervised release in the Southern District of Florida for bribing a former special agent with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI) to secure the dismissal of a drug trafficking indictment filed against him.

According to admissions in the plea agreement, Jose Bayron Piedrahita-Ceballos, 60, of Medellin, Colombia, offered and gave things of value to Christopher Ciccione II, 54, a former federal law enforcement agent, in exchange for Ciccione using his official position to cause a drug trafficking indictment against Piedrahita-Ceballos to be dismissed and to obtain official authorization for Piedrahita-Ceballos to enter the United States.  At the time of the dismissal, Ciccione was the case agent for Operation Cornerstone, a large-scale Organized Crime Drug Enforcement Task Force case that resulted in indictments of over 100 Colombia-based cocaine traffickers from the Cali Cartel.   

“This defendant was a drug kingpin who paid a Special Agent to bribe his way out of a criminal indictment,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division.  “As today’s sentence shows, the Department of Justice will work diligently to ensure that our justice system is never corrupted in this manner.”

“ICE takes responsibility in ensuring its employees have the trust of the American public,” said Special Agent in Charge Southeast Michael T. Moreland of ICE’s Office of Professional Responsibility (OPR).  “To erode that trust, Mr. Piedrahita sought to use an employee for his personal gain and his sentence today conveys to other bad actors that ICE will not tolerate the exploitation of its employees or the American justice system.”  

“This case demonstrates the power of collaboration between the U.S. law enforcement and our counterparts abroad,” said Department of Homeland Security Inspector General (DHS-OIG) Dr. Joseph V. Cuffari.  “Today’s sentence constitutes a substantial step toward our commitment to thwart any scheme that attempts to corrupt the integrity of U.S. law enforcement personnel and circumvent our justice system.”

Piedrahita-Ceballos, an Operation Cornerstone defendant, and Colombian national Juan Carlos Velasco, 51, gave Ciccione approximately $20,000 in cash, dinner, drinks and prostitution during an extended hotel stay in Bogota, Colombia, in exchange for official acts that resulted in the dismissal of the indictment against Piedrahita-Ceballos.  Velasco served as the intermediary between Ciccione and Piedrahita-Ceballos.  Velasco and Ciccione have previously pleaded guilty for their conduct in this matter.  On Feb. 9, 2018, Ciccione was sentenced to 36 months in prison.  On Jan. 19, 2018, Velasco was sentenced to 27 months in prison.

In furtherance of this scheme to obstruct justice, Ciccione misled the U.S. Attorney’s Office, HSI management, and altered TECS records to secure the dismissal.  Ciccone also falsified the concurrence of several other federal agents and attempted to obtain entry for Piedrahita-Ceballos into the United States.

The U.S. Department of the Treasury’s Office of Foreign Assets Control designated Piedrahita as a Specially Designated Narcotics Trafficker pursuant to the Foreign Narcotics Kingpin Designation Act on May 3, 2016.

ICE-OPR, DHS-OIG and the FBI investigated the case.  The Criminal Division’s Office of International Affairs, the Office of the Judicial Attaché in Colombia and the Drug Enforcement Administration provided valuable assistance to the investigation.  The Colombian Attorney General’s Office also provided invaluable support.  Trial Attorney Jennifer A. Clarke of the Criminal Division’s Public Integrity Section is prosecuting the case.

Attorney General William P. Barr today announced the appointment of the following nine U.S. Attorneys to serve on the Attorney General’s Advisory Committee (AGAC): David Anderson, Northern District of California; Scott Brady, Western District of Pennsylvania; Maria Chapa Lopez, Middle District of Florida; Halsey Frank, District of Maine; Erica MacDonald, District of Minnesota; Christina Nolan, District of Vermont; Zach Terwilliger, Eastern District of Virginia; Tom Kirsch, Northern District of Indiana; and Nicholas Trutanich, District of Nevada.

“I am pleased to appoint these nine outstanding U.S. Attorneys to this key advisory committee. I am confident that they will serve with distinction,” Attorney General William P. Barr said. “The U.S. Attorneys who comprise the Attorney General’s Advisory Committee play a critical role in carrying out the Department of Justice’s important work, including its efforts to reduce violent crime, combat the opioid crisis, protect the most vulnerable, and enforce the rule of law.”

The Attorney General also thanked the following U.S. Attorneys who have completed their terms and are rotating off the committee: Louis Franklin, Middle District of Alabama; Robert Higdon, Eastern District of North Carolina; John Huber, District of Utah; Rob Hur, District of Maryland; Jeff Jensen, Eastern District of Missouri; Andrew Lelling, District of Massachusetts; Joshua Minkler, Southern District of Indiana; Richard Moore, Southern District of Alabama; Bryan Schroder, District of Alaska; and David Weiss, District of Delaware.  

Chaired by U.S Attorney for the District of Columbia, Jessie K. Liu, the AGAC represents the voice of the U.S. Attorneys and provides advice and counsel to the Attorney General on policy, management, and operational issues impacting U.S. Attorneys’ Offices.

Attorney General Barr also announced that U.S. Attorney for the Northern District of Texas Erin Nealy Cox, a current member, will replace U.S. Attorney John Huber as the Vice Chair of the AGAC.

The bios of all U.S. Attorneys are available here.

The former owner of a marble mining company in Afghanistan was sentenced to 54 months in prison today for his role in a scheme to defraud the Overseas Private Investment Corporation (OPIC), a U.S. government agency, which led to the default on a $15.8 million loan.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, Special Inspector General for Afghanistan Reconstruction (SIGAR) John F. Sopko and Assistant Director in Charge Timothy R. Slater of the FBI’s Washington Field Office made the announcement.

Azam Doost, aka “Adam Doost,” “Mohammad Azam Doost” and “Mohammad Azim,” 41, most recently of Union City, California, was sentenced by U.S. District Judge Amit P. Mehta of the District of Columbia, who also ordered Doost to serve 36 months of supervised release and to pay $8.9 million in forfeiture and separate restitution in the same amount.  After a seven-day jury trial in September 2018, presided over by Judge Mehta, Doost was found guilty of three counts of major fraud against the United States, eight counts of wire fraud, four counts of false statements on loan applications or extensions and eight counts of money laundering.  

The evidence at trial showed that in February 2010, while working at his company, Equity Capital Mining LLC, Doost, along with his brother, obtained a $15.8 million loan from OPIC for the development, maintenance and operation of a marble mine in western Afghanistan. The loan proceeds were paid directly from OPIC to the alleged vendors who provided equipment for the mine, as reported to OPIC by Doost or his consultant.  Doost was required to deal with these companies in arms-length transactions or, to the extent any transactions were other than at arms-length, he was required to report any affiliation he had with a vendor.  Doost falsely informed OPIC that he had no affiliation with any of the vendors with whom he dealt, when in fact he had financial relationships with several of them. 

The evidence also showed that Doost’s business partner was listed on the bank accounts for a number of these vendors and that, upon receipt of money from OPIC into the respective accounts, Doost caused significant amounts of this money to be transferred from that respective account to companies and individuals with whom Doost was associated, or to pay debts Doost owed.  Doost’s consultant received a commission of $444,000 for his purported consulting services with the first of three disbursements from OPIC, and shortly after $40,000 was transferred from the consultant’s account to a Doost company in California.

The evidence at trial further showed that when the time came for Equity Capital Mining LLC to repay the loan to OPIC, Doost provided purported reasons to OPIC why it was not able to make those repayments at a time when Doost had control of sufficient funds to make those repayments.  Doost and his brother failed to repay any of the principal on the OPIC loan, and only a limited amount of interest, and ultimately defaulted on the loan, the evidence showed.

SIGAR investigated the case with assistance from the FBI.  Trial Attorneys Daniel Butler and Michael McCarthy of the Criminal Division’s Fraud Section prosecuted the case.  The Criminal Division’s Office of International Affairs also provided important assistance. 

The former president of a drug compounding company was sentenced to prison for his convictions for conspiring to defraud the Food and Drug Administration (FDA) and for multiple counts of distributing adulterated drugs, the Department of Justice announced today.

U.S. District Judge James R. Sweeney II sentenced Paul J. Elmer, 68, the former president and owner of Pharmakon Pharmacueticals Inc. to 33 months in prison.  Elmer also was ordered to pay a $25,000 fine and serve one year of supervised release after serving his prison sentence.

“The Department of Justice takes seriously conduct that unlawfully undermines the safety of compounded drugs,” said Assistant Attorney General Jody Hunt of the Department of Justice's Civil Division.  “We will not tolerate actions that impede the FDA’s efforts to ensure the safety of such drugs, and we will thoroughly investigate and prosecute those who knowingly endanger patients.”

On April 10, 2019, after an eight-day trial, a jury in Indianapolis, Indiana, convicted Elmer, formerly a licensed pharmacist, of one felony count of conspiracy to defraud the FDA and to obstruct FDA inspections, three misdemeanor counts of introducing adulterated drugs into interstate commerce, and six misdemeanor counts of adulterating drugs while held for sale after shipment of a drug component in interstate commerce.

Pharmakon was a Noblesville, Indiana, drug compounding company, founded by Elmer, which made and distributed compounded, sterile, intravenous drugs to military and civilian hospitals throughout the United States.

In June 2017, a grand jury returned an indictment against Elmer and Pharmakon’s former compliance director, Caprice R. Bearden, for the conspiracy and adulteration offenses.  On April 29, 2019, Bearden was sentenced to five months in prison and three years of supervised release, following her entry of a guilty plea to all charges.

The evidence at trial showed that, between 2013 and 2016, at Elmer’s direction, Pharmakon routinely shipped compounded drugs to hospitals without having received laboratory test results that verified that the drugs were their purported strengths.  Furthermore, evidence shows that, despite later receiving laboratory test results showing potency failures, Elmer did not recall over- or under-potent drugs, notify the FDA of the potency failures, or conduct any investigation to determine the cause of the potency failures.  The evidence showed that Pharmakon shipped customers at least 70 lots of over- or under-potent drugs from 2013 to 2016.

FDA consumer safety officers testified at trial about two inspections of Pharmakon they conducted in 2014.  One inspection was prompted by Pharmakon’s distribution of 200 percent potent midazolam, a sedative that was used to treat premature infants, to an Indianapolis hospital.  The consumer safety officers testified to observing — and informing Elmer of — numerous violations of FDA regulations during each inspection.  Former Pharmakon employees testified that Elmer and Bearden misled and interfered with these FDA inspections to prevent the FDA from knowing about the potency failures as well as other aspects of the business.  Former employees also testified that certain changes in process that Elmer and Bearden told the FDA Pharmakon would enact never happened.

According to other evidence at the trial, in February 2016, Pharmakon distributed 2,460 percent super-potent morphine sulfate, an opioid pain medication, to hospitals in Indianapolis and Chicago.  Nurses at the Indianapolis hospital administered the morphine, not knowing that it was 2,460 percent super potent, to infants in the pediatric unit.  Three infants suffered adverse effects from the narcotic overdose.  One infant needed to be revived through the administration of Naloxone (commonly known as Narcan) and sent by helicopter to a nearby hospital with a neo-natal intensive care unit.  These adverse events led to a final FDA inspection in which FDA consumer safety officers testified that they discovered evidence of multiple previous potency failures that had been concealed by Bearden during the first two inspections.  Former employees testified that Elmer and Bearden misled and interfered with this final FDA inspection as well.

“Pharmaceutical manufacturers, such as Pharmakon, have a duty to ensure they are producing drugs that are formulated correctly and are safe for public consumption,” said U.S. Attorney Josh Minkler for the Southern District of Indiana.  “The U.S. Attorney’s Office is committed to prosecuting those individuals who prioritize profit over safety and negligently compromise the integrity of their product.”

“Producing unsafe drugs puts patients at risk and is particularly concerning when they reach already vulnerable populations such as premature infants.  This conviction demonstrates that those, including drug compounders, who distribute harmful drugs will be held accountable under the law,” said Director Catherine A. Hermsen, FDA Office of Criminal Investigations.  “The FDA continues to play an important role in protecting patients — including young children — and we will continue to work with our law enforcement partners to pursue and bring to justice those who place profits before the health of U.S. patients.”

“When drug compounders disregard safety standards and violate the law, patient health can be put at significant risk. In this case, we saw unacceptable behavior from the defendant whose company distributed dangerous products that led to serious adverse events in infants,” said Stacy Amin, FDA Chief Counsel. “The FDA is fully committed to working with the Department of Justice to stop these bad actors and protect patients from potential public health risks.”

Assistant Attorney General Jody Hunt and U.S. Attorney Josh Minkler commended the FDA’s Office of Criminal Investigations, which conducted the investigation.  The case was prosecuted by Assistant U.S. Attorney Cindy J. Cho of the U.S. Attorney’s Office for the Southern District of Indiana and Senior Litigation Counsel David A. Frank of the Department’s Consumer Protection Branch, with assistance from Paul Joseph of the FDA’s Office of Chief Counsel.

For more information about the Consumer Protection Branch, visit its website at http://www.justice.gov/civil/consumer-protection-branch.  For more information about the U.S. Attorney’s Office for the Southern District of Indiana visit its website at https://www.justice.gov/usao-sdin.

Under a settlement with the U.S. Department of Justice and the U.S. Environmental Protection Agency (EPA), Hyundai Construction Equipment Americas Inc. (HCEA) and Hyundai Heavy Industries Co. Ltd (HHI) (collectively known as “Hyundai”)  has agreed to pay a $47 million civil penalty for violating Title II of the Clean Air Act.  The settlement resolves allegations that Hyundai sold heavy construction vehicles with diesel engines that were not certified to applicable emission standards.

From 2012 to 2015, Hyundai pre-purchased, or “stockpiled” engines that met outdated emissions standards and then illegally imported, marketed and sold heavy construction equipment with these engines installed, in violation of the Clean Air Act. Additionally, Hyundai imported, marketed and sold units of equipment in quantities that exceeded their exemption allowance limit under the Transition Program for Equipment Manufacturers (TPEM) program regulations.  Defendants allegedly introduced into United States commerce at least 2,269 illegal diesel nonroad vehicles. Under the terms of the settlement, Hyundai has agreed to pay a $47 million civil penalty to resolve their Clean Air Act violations.

“Hyundai put profits above the public’s health and the requirements of the law,” said Jeffrey Bossert Clark, Assistant Attorney General of the Justice Department’s Environment and Natural Resources Division.  “We will not tolerate such schemes that skirt the Clean Air Act, designed by Congress to improve air quality.”

“EPA is holding Hyundai accountable for importing and selling diesel engines and heavy-duty construction vehicles that did not meet Clean Air Act emission standards,” said Susan P. Bodine, EPA Assistant Administrator for the Office of Enforcement and Compliance Assurance.  “By ignoring regulatory requirements, Hyundai not only gained a market advantage over their competitors, but they also introduced higher polluting vehicles into the United States, undermining the protection of human health and the environment.”

In 2015, the EPA received a whistleblower tip reporting illegal importation of nonroad diesel equipment that did not meet applicable emission standards.  Based upon the information received from the whistleblower, the EPA initiated both criminal and civil investigations.  In the criminal proceeding, the court imposed a sentence of, among other things, a $1,950,000 criminal fine.  

Hyundai’s illegal nonroad diesel vehicles were not certified as meeting applicable pollutant emission standards, including for nitrogen oxides (NOx) and particulate matter (PM).  NOx is a reactive gas that contributes to the formation of PM and ozone.  PM is a form of air pollution composed of microscopic solids and liquids suspended in air.  Ozone is a highly reactive gas that is formed in the atmosphere, in part, from emissions of NOx.  Exposure to ozone and PM is linked to a number of health effects as well as premature death.  Children, older adults, people who are active outdoors (including outdoor workers), and people with heart or lung disease are particularly at risk for health effects related to ozone or PM exposure.

For more information on this settlement: https://www.epa.gov/enforcement/hyundai-construction-vehicles-clean-air-act-settlement-information-sheet.

The owner of a Detroit-area pain clinic and physical therapy clinic pleaded guilty today for her role in a drug diversion scheme.   

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, Special Agent in Charge Timothy J. Plancon of the U.S. Drug Enforcement Administration (DEA)’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.

Shirley Douglas, 70, of West Bloomfield, Michigan, pleaded guilty to one count of conspiracy to distribute controlled substances before U.S. District Judge David Lawson of the Eastern District of Michigan.  Sentencing has been scheduled for Dec. 19, 2019, before Judge Lawson.   

As part of her guilty plea, Douglas admitted that, as the owner and operator of Abyssinia Love Knot Physical Therapy L.L.C., which was purportedly a pain clinic and a physical therapy clinic, she conspired with her co-conspirators to employ physicians who would write medically unnecessary prescriptions for controlled substances, such as oxycodone, oxymorphone and other controlled substances. Douglas facilitated patient visits with doctors, and accepted payment from patients and patient recruiters/marketers in exchange for physician visits at which she knew that prescriptions for medically unnecessary controlled substances would be provided.  Medicare beneficiaries were also required to sign physical therapy documents as a condition to receive prescriptions for controlled substances, regardless of medical necessity. 

The total drug amount attributable to Douglas is in excess of 500,000 oxycodone pills, she admitted.

This case was investigated by the DEA and HHS-OIG.  Trial Attorney Patrick Suter and Assistant Chief Malisa Dubal of the Criminal Division’s Fraud Section are prosecuting the case.  The case was previously prosecuted by Assistant Chief Drew Bradylyons and Trial Attorney Thomas Tynan.

The Fraud Section leads the Medicare Fraud Strike Force, which is part of a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.  Since its inception in March 2007, the Medicare Fraud Strike Force, which maintains 15 strike forces operating in 24 districts, has charged nearly 4,000 defendants who have collectively billed the Medicare program for more than $14 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.

The Department of Justice announced today that compounding pharmacy Diabetic Care Rx LLC, or Patient Care America (PCA), PCA’s Chief Executive Officer Patrick Smith, PCA’s former Vice President of Operations Matthew Smith, and private equity firm Riordan, Lewis & Haden Inc. (RLH) have agreed to resolve a lawsuit alleging that they violated the False Claims Act through their involvement in a kickback scheme to generate referrals of prescriptions for expensive pain creams, scar creams, and vitamins, regardless of patient need, which were reimbursed by TRICARE, the federal health care program for military members and their families. PCA and RLH have agreed to pay $21,050,000, Patrick Smith has agreed to pay at least $300,000, and Matthew Smith has agreed to pay at least $12,788. These settlement amounts were based on defendants’ ability to pay.

“Kickback schemes taint decision-making and cause taxpayer-funded health care programs to pay for items or services that patients may not need,” said Assistant Attorney General Jody Hunt for the Department of Justice’s Civil Division. “We will hold accountable health care providers involved in such schemes designed to induce referrals of prescriptions that are reimbursed by federal health care programs.”

“The prosecution and resolution of this case demonstrates the U.S. Attorney’s Office continuing commitment to hold all responsible parties to account for the submission of claims to federal health care programs that are tainted by unlawful kickback arrangements,” said United States Attorney Ariana Fajardo Orshan. “Kickback schemes lead to unnecessary medical services and drive up the cost of health care for all.”

“This settlement sends a clear message about the Defense Criminal Investigation Service (DCIS) and its law enforcement partners’ unwavering commitment to protect the integrity of TRICARE, the Department of Defense’s health care program which serves to protect our U.S. military, their family members, and military retirees,” said Special Agent in Charge Cyndy Bruce of the DCIS Southeast Field Office. “Health care providers who manipulate and abuse the TRICARE program in order to seek financial gain by submitting false claims and demonstrating a lack of regard for TRICARE patients and the health care plan which is charged to provide their medical care, will be diligently investigated and held accountable for their actions.”

This settlement resolves a lawsuit pursued by the United States against PCA for allegedly paying kickbacks to outside “marketers” to target military members and their families for prescriptions for compounded creams and vitamins, which were formulated to ensure the highest possible reimbursement from TRICARE. The United States alleged that the marketers paid telemedicine doctors who prescribed the creams and vitamins without seeing the patients, or in some cases, even speaking to them. The settlement also resolves the United States’ allegations that PCA and a marketer routinely jointly paid the copayments owed by patients referred by the marketer, without any verification of the patients’ financial needs, and then disguised the payments as coming from a sham charitable organization, which was affiliated with the marketer. Finally, the settlement resolves the United States’ allegations that PCA continued to claim reimbursement for prescriptions referred by the marketers despite regularly receiving complaints from patients that revealed the prescriptions were being generated without patient consent or a valid patient-prescriber relationship. RLH, the private equity firm that managed PCA on behalf of its investors, allegedly knew of and agreed to the plan to pay outside marketers to generate the prescriptions and financed the kickback payments to the marketers. Patrick Smith and Matthew Smith were executives of PCA who allegedly executed the scheme. 

The lawsuit resolved by the settlement was originally filed under the whistleblower (or “qui tam”) provisions of the False Claims Act by Marisela Medrano and Ada Lopez, two former employees of PCA. The qui tam provisions permit private individuals to sue on behalf of the government for false claims and to share in any recovery. The False Claims Act authorizes the United States to intervene and take over such lawsuits, which the United States did here, in part. The share to be awarded in this case has not been determined yet.

This civil settlement was the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch (Fraud Section), the United States Attorney’s Office for the Southern District of Florida, the Defense Criminal Investigative Service, and the U.S. Food & Drug Administration’s Office of Criminal Investigations. 

The lawsuit is captioned United States ex rel. Medrano and Lopez v. Diabetic Care Rx LLC, d/b/a Patient Care America, et al., No. 15-CV-62617 (S.D. Fla.). The claims resolved by the settlement are allegations only and there has been no determination of liability.

The United States today filed a lawsuit against Edward Snowden, a former employee of the Central Intelligence Agency (CIA) and contractor for the National Security Agency (NSA), who published a book entitled Permanent Record in violation of the non-disclosure agreements he signed with both CIA and NSA.

The lawsuit alleges that Snowden published his book without submitting it to the agencies for pre-publication review, in violation of his express obligations under the agreements he signed. Additionally, the lawsuit alleges that Snowden has given public speeches on intelligence-related matters, also in violation of his non-disclosure agreements.

The United States’ lawsuit does not seek to stop or restrict the publication or distribution of Permanent Record. Rather, under well-established Supreme Court precedent, Snepp v. United States, the government seeks to recover all proceeds earned by Snowden because of his failure to submit his publication for pre-publication review in violation of his alleged contractual and fiduciary obligations. 

The lawsuit also names as nominal defendants the corporate entities involved in publishing Snowden’s book. The United States is suing the publisher solely to ensure that no funds are transferred to Snowden, or at his direction, while the court resolves the United States’ claims. Snowden is currently living outside of the United States. 

“Edward Snowden has violated an obligation he undertook to the United States when he signed agreements as part of his employment by the CIA and as an NSA contractor,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “The United States’ ability to protect sensitive national security information depends on employees’ and contractors’ compliance with their non-disclosure agreements, including their pre-publication review obligations. This lawsuit demonstrates that the Department of Justice does not tolerate these breaches of the public’s trust.  We will not permit individuals to enrich themselves, at the expense of the United States, without complying with their pre-publication review obligations.”

“Intelligence information should protect our nation, not provide personal profit,” said G. Zachary Terwilliger, U.S. Attorney for the Eastern District of Virginia. “This lawsuit will ensure that Edward Snowden receives no monetary benefits from breaching the trust placed in him.”

This lawsuit is separate from the criminal charges brought against Snowden for his alleged disclosures of classified information. This lawsuit is a civil action, and based solely on Snowden’s failure to comply with the clear pre-publication review obligations included in his signed non-disclosure agreements. 

This matter is being handled by the Department of Justice’s Civil Division and the U.S. Attorney’s Office for the Eastern District of Virginia. 

The claims asserted by the United States are allegations only; there has been no determination of liability.

Dip Shipping Company LLC, a Louisiana-based freight forwarder, has agreed to plead guilty to an antitrust charge for its role in a conspiracy to fix prices of freight forwarding services sold to customers in the United States and elsewhere, the Department of Justice announced today.  Under the terms of its plea agreement, Dip Shipping agreed to pay a $488,250 criminal fine. 

According to a one-count felony charge filed today in the U.S. District Court for the Southern District of Florida in Miami, Dip Shipping conspired with other providers of freight forwarding services to fix, raise and maintain prices charged to customers from September 2010 until at least March 2015.  According to court documents, Dip Shipping and its co-conspirators met in the United States and elsewhere to discuss and agree to fix prices.  Freight forwarders arrange for and manage the shipment of goods, including receiving, packaging and otherwise preparing cargo destined for international ocean shipment.  Dip Shipping is the first company to be charged and to agree to plead guilty in the Justice Department’s ongoing investigation in the freight forwarding industry.  The plea agreement is subject to court approval.    

As a result of this ongoing federal investigation, Dip Shipping executives Roberto Dip and Jason Handal earlier had pleaded guilty to price fixing.  Dip and Handal were sentenced in June 2019 to 18-month and 15-month terms of imprisonment, respectively, for their roles in the conspiracy.

“Dip Shipping and its executives and co-conspirators sought to profit by cheating some of the most vulnerable American consumers,” said Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division.  “The Sherman Act provides for prosecution of both individuals and the companies on whose behalf they act.  Today’s charge is further proof that crime does not pay and that we will prosecute those who conspire to violate the antitrust laws to the fullest extent of the law.”

“The FBI remains committed to upholding the Constitution and protecting the American people,” said Acting Special Agent in Charge Anthony Riedlinger of the FBI New Orleans Field Office.  “Throughout this investigation the men and women of the FBI, in conjunction with the Department of Justice’s Antitrust Division, were focused on holding accountable those who illegally profited from U.S. consumers.  Let today’s plea serve as a stern warning to all companies seeking to defraud the American people, that price fixing will be aggressively investigated and prosecuted to the fullest extent of the law.”

A criminal violation of Section 1 of the Sherman Act carries a maximum fine of $100 million for corporations.  The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

The ongoing investigation into price fixing in the international freight forwarding industry is being conducted by the Antitrust Division’s Washington Criminal I Section and the FBI’s New Orleans Field Office.  Anyone with information in connection with this investigation is urged to call the Antitrust Division’s Washington Criminal I Section at 202-307-6694, visit www.justice.gov/atr/contact/newcase.html or call the FBI tip line at 415-553-7400.  

The Department of Justice established the National Center for Disaster Fraud (NCDF) in the wake of Hurricane Katrina, when billions of dollars in federal disaster relief poured into the Gulf Coast region, which opened opportunities for criminals to exploit people during vulnerable times.  The NCDF, a national coordinating agency within the Department’s Criminal Division, operates a call center at Louisiana State University in Baton Rouge and serves as a centralized clearinghouse for disaster fraud complaints and information relating to both natural and man-made disasters.  The NCDF seeks to improve and further the detection, prevention, investigation, and prosecution of fraud related to natural and man-made disasters, and to advocate for victims of such fraud.  More than 20 federal, state, and local agencies participate in the NCDF, which allows them to forward on complaints to the appropriate agency for investigation.

“In the aftermath of Hurricane Dorian, I urge the public to be wary of fraudsters looking to exploit victims of the hurricane through identity theft schemes, solicitations for fake charities, or other types of fraud. Report suspected disaster fraud to the National Center for Disaster Fraud,” said U.S. Attorney Brandon J. Fremin for the Middle District of Louisiana, who is also the NCDF’s Executive Director.

Since Hurricane Dorian’s landfall, many people are left without food, water, or shelter, and are experiencing devastating damage to life and property.  Unfortunately, there are criminals ready to take advantage of victims before, during, and especially after a natural disaster.  They are looking to strike those at their most vulnerable time.

While compassion, assistance, and solidarity are generally prevalent in the aftermath of natural disasters, unscrupulous individuals and organizations also use these tragic events to take advantage of those in need.  Examples of illegal activity being reported to the NCDF and law enforcement include:

• Impersonation of federal law enforcement officials;
• Identity theft;
• Fraudulent submission of claims to insurance companies and the federal government;
• Fraudulent activity related to solicitations for donations and charitable giving;
• Fraudulent activity related to individuals and organizations promising high investment returns from profits from recovery and cleanup efforts;
• Price gouging;
• Contractor Fraud;
• Debris removal fraud;
• Theft, looting, and other violent crime 

Numerous U.S. Attorneys’ offices have established task forces comprised of local, state and federal agencies in their respective areas to combat disaster fraud. 

Members of the public are reminded to apply a critical eye and exercise due diligence before trusting anyone purporting to be working on behalf of disaster victims.  They should also exercise the same care before giving contributions to anyone soliciting donations on behalf of disaster victims as well as being extremely cautious before providing personal identifying or financial information to anyone, especially those who may contact you after a natural disaster.  Solicitations can originate from e-mails, websites, door-to-door collections, mailings and telephone calls, and similar methods.  Members of the public who suspect fraud, waste, abuse, or allegations of mismanagement involving disaster relief operations, or believe they have been the victim of fraud from a person or organization soliciting relief funds on behalf of disaster victims, should contact the National Disaster Fraud Hotline toll free at (866) 720-5721.   The telephone line is staffed by live operators 24 hours a day, seven days a week. You can also fax information to the Center at (225) 334-4707, or email it to disaster@leo.gov.  Learn more about the NCDF at www.justice.gov/disaster-fraud and watch a public service announcement here.  Tips for the public on how to avoid being victimized of fraud are at https://www.justice.gov/opa/pr/tips-avoiding-fraudulent-charitable-contribution-schemes.

Two current precious metals traders and one former trader in the New York offices of a U.S. bank (Bank A) were charged in an indictment unsealed today for their alleged participation in a racketeering conspiracy and other federal crimes in connection with the manipulation of the markets for precious metals futures contracts, which spanned over eight years and involved thousands of unlawful trading sequences.

Charged in the indictment are:

• Gregg Smith, 55, of Scarsdale, New York.  Smith was an executive director and trader on Bank A’s precious metals desk in New York.  He joined Bank A in May 2008 after it acquired another U.S. bank (Bank B).
• Michael Nowak, 45, of Montclair, New Jersey.  Nowak was a managing director and ran Bank A’s global precious metals desk.  He joined Bank A in July 1996.
• Christopher Jordan, 47, of Mountainside, New Jersey.  Jordan joined Bank A in March 2006 and was an executive director and trader on Bank A’s precious metals desk in New York.  Jordan left Bank A in December 2009 and worked as a precious metals trader at a Swiss bank (Bank C) in New York from March 2010 until August 2010.  From June 2011 until October 2011, Jordan traded precious metals futures contracts as an employee of a financial service company (Company D) in New York.

“The defendants and others allegedly engaged in a massive, multiyear scheme to manipulate the market for precious metals futures contracts and defraud market participants,” said Assistant Attorney General Brian A. Benczkowski.  “These charges should leave no doubt that the Department is committed to prosecuting those who undermine the investing public’s trust in the integrity of our commodities markets.”

“Smith, Nowak, Jordan, and their co-conspirators allegedly engaged in a complex scheme to trade precious metals in a way that negatively affected the natural balance of supply-and-demand,” said FBI Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York Field Office. “Not only did their alleged behavior affect the markets for precious metals, but also correlated markets and the clients of the bank they represented. For as long as we continue to see this type of illegal activity in the marketplace, we’ll remain dedicated to investigating and bringing to justice those who perpetrate these crimes.”  

Each of the three defendants was charged with one count of conspiracy to conduct the affairs of an enterprise involved in interstate or foreign commerce through a pattern of racketeering activity (more commonly referred to as RICO conspiracy); one count of conspiracy to commit wire fraud affecting a financial institution, bank fraud, commodities fraud, price manipulation and spoofing; one count of bank fraud and one count of wire fraud affecting a financial institution.  In addition, Smith and Nowak were each charged with one count of attempted price manipulation, one count of commodities fraud and one count of spoofing.

Smith is expected to make an initial appearance in the Southern District of New York before U.S. Magistrate Judge Judith C. McCarthy, and Nowak and Jordan are expected to make their initial appearances in the District of New Jersey before U.S. Magistrate Judge Michael A. Hammer.  The case was indicted in the Northern District of Illinois and has been assigned to U.S. District Judge Edmond E. Chang.

As alleged in the indictment, between approximately May 2008 and August 2016, the defendants and their co-conspirators were members of Bank A’s global precious metals trading desk in New York, London and Singapore with varying degrees of seniority and supervisory responsibility over others on the desk.  As it relates to the RICO conspiracy, the defendants and their co-conspirators were allegedly members of an enterprise—namely, the precious metals desk at Bank A—and conducted the affairs of the desk through a pattern of racketeering activity, specifically, wire fraud affecting a financial institution and bank fraud.

The indictment alleges that the defendants engaged in widespread spoofing, market manipulation and fraud while working on the precious metals desk at Bank A through the placement of orders they intended to cancel before execution (Deceptive Orders) in an effort to create liquidity and drive prices toward orders they wanted to execute on the opposite side of the market.  In thousands of sequences, the defendants and their co-conspirators allegedly placed Deceptive Orders for gold, silver, platinum and palladium futures contracts traded on the New York Mercantile Exchange Inc. (NYMEX) and Commodity Exchange Inc. (COMEX), which are commodities exchanges operated by CME Group Inc.  By placing Deceptive Orders, the defendants and their co-conspirators allegedly intended to inject false and misleading information about the genuine supply and demand for precious metals futures contracts into the markets, and to deceive other participants in those markets into believing something untrue, namely that the visible order book accurately reflected market-based forces of supply and demand.  This false and misleading information was intended to, and at times did, trick other market participants into reacting to the apparent change and imbalance in supply and demand by buying and selling precious metals futures contracts at quantities, prices and times that they otherwise likely would not have traded, the indictment alleges.

As also alleged in the indictment, the defendants and their co-conspirators defrauded Bank A’s clients who had bought or sold “barrier options” by trading precious metals futures contracts in a manner that attempted to push the price towards a price level at which Bank A would make money on the option (barrier-running), or away from a price level at which Bank A would lose money on the option (barrier-defending).  Namely, when barrier-running, the defendants and their co-conspirators would allegedly place orders for precious metals futures contracts in a way that was intended to deliberately trigger the barrier option held by Bank A.  Conversely, when barrier-defending, the defendants and their co-conspirators would allegedly place orders for precious metals futures contracts in a way that was intended to deliberately avoid triggering the barrier option held by clients of Bank A.

The indictment also identifies two former Bank A precious metals traders, John Edmonds and Christian Trunz, as being among the defendant’s co-conspirators.  Edmonds worked at Bank A from 2004 to 2017 and was a trader on Bank A’s precious metals desk, leaving as a vice president.  On Oct. 9, 2018, Edmonds pleaded guilty in the District of Connecticut to an information charging him with one count of commodities fraud and one count of conspiracy to commit wire fraud, commodities fraud, price manipulation and spoofing.  Trunz is a former precious metals trader at Bank A who worked at the bank from 2007 to August 20, 2019, leaving as an executive director.  On Aug. 20, 2019, Trunz pleaded guilty in the Eastern District of New York to an information charging him with one count of conspiracy to engage in spoofing and one count of spoofing.

This case is the result of an ongoing investigation by the FBI’s New York Field Office. The Commodity Futures Trading Commission’s Division of Enforcement provided assistance in this case.  Trial Attorneys Avi Perry and Matthew F. Sullivan of the Criminal Division’s Fraud Section are prosecuting the case.

The charges in the indictment are merely allegations, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

Individuals who believe that they may be a victim in these cases should visit the Fraud Section’s Victim Witness website for more information at https://www.justice.gov/criminal-fraud/victim-witness-program.

The Department of Justice announced today that United Parcel Service Inc. (UPS) has agreed to pay the United States $8.4 million to resolve allegations that it overcharged federal agencies for package delivery services under a General Services Administration (GSA) contract.

“Contractors are expected to carefully comply with the pricing requirements of GSA contracts and other federal contracts,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division.  “This settlement demonstrates that the government will hold accountable contractors that overcharge federal agencies by failing to follow the pricing terms of federal contracts.”

The settlement announced today resolves allegations that from 2007 to 2014, UPS failed to follow the Price Reductions Clause of the GSA contract, which required UPS to provide GSA with certain lower prices offered to another customer, resulting in the government paying more than it should have for package deliveries.  Under the GSA contract, which is known as a Multiple Award Schedule Contract, UPS provided ground delivery service and air delivery service.  The settlement covers ground delivery service.

"GSA's Office of Inspector General will continue to work with the Department of Justice to put the taxpayer first," said GSA Inspector General Carol Fortine.

This matter was jointly investigated by the GSA, Office of the Inspector General, and the Department of Justice’s Civil Division.  The claims settled in this case are allegations only, and there has been no determination of liability.

Today, the U.S. Department of Justice and the Environmental Protection Agency (EPA) announced a settlement with Performance Diesel Inc. (PDI) to resolve alleged violations of the Clean Air Act (CAA) associated with the manufacture, sale and installation of aftermarket products that defeat the emissions control systems of heavy-duty diesel engines.  As part of the settlement, PDI has agreed to stop the sale of all products the government alleges violate the CAA.  PDI will also pay a civil penalty of $1,100,000 over two years due to their limited financial ability to pay a higher penalty.

“This settlement prohibits PDI from selling illegal devices that defeat motor vehicle emissions controls and make an end run around federal laws that protect the public’s health,” said Principal Deputy Assistant Attorney General Jonathan D. Brightbill of the Justice Department’s Environment and Natural Resources Division.  “The Justice Department will not tolerate this abuse of law and will continue to prosecute those responsible for trading in these illegal products.”

“Performance Diesel Inc. manufactured, sold and installed thousands of aftermarket defeat devices, and as a result thousands of heavy-duty trucks now operate without the filters, catalysts  and other emissions controls that keep our air clean,” said EPA Assistant Administrator for Enforcement and Compliance Assurance Susan Bodine.  “Today’s settlement will prevent future violations by requiring PDI to ensure that their products do not adversely affect emissions.”   

The United States alleges that PDI sold at least 5,549 aftermarket products that defeat the emissions control systems of heavy-duty diesel engines in violation of the CAA.  Before May 1, 2018, PDI manufactured, sold and installed electronic tuning software, known as “tunes,” that allowed PDI to disable emissions control devices, or otherwise bypass, defeat or render inoperative parts of the engine used to comply with CAA emission standards.  PDI’s aftermarket products are designed for use with numerous models of heavy-duty diesel engines manufactured by Caterpillar, Cummins, Detroit Diesel, International and Paccar.   

Included in the terms of this settlement, PDI must:

• Stop sale of all products that violate the CAA according to the government’s complaint.
• For new tuning products, demonstrate a reasonable basis that their products do not increase emissions by obtaining a California Air Resources Board (CARB) Executive Order (EO) prior to manufacture, sale, offering for sale and installation of products.
• For existing products not currently covered by a CARB EO, demonstrate a reasonable basis by submitting a complete application to CARB that covers the tunes prior to manufacture, sale, offering for sale and installation.  Under this consent decree, a complete application includes emission test results sufficient to satisfy CARB’s requirements for obtaining a CARB EO.

The settlement has been lodged in the U.S. District Court for the State of Utah for a period of 30 days for public notice and comment.  The first penalty payment is due within thirty days of entry of the Consent Decree. To read the Consent Decree: https://www.justice.gov/enrd/consent-decrees.
 
EPA has recently added a National Compliance Initiative on Stopping Aftermarket Defeat Devices for Vehicles and Engines.  This case is an important step in that initiative.  To read about EPA’s National Compliance Initiative: https://www.epa.gov/enforcement/national-compliance-initiative-stopping-aftermarket-defeat-devices-vehicles-and-engines.

For more information on the settlement, please visit: https://www.epa.gov/enforcement/performance-diesel-inc-clean-air-act-settlement-information-sheet.

 

NEW ORLEANS –  U.S. Attorney Peter G. Strasser announced that GERARD LAWLESS, age 39, of New Orleans, pled guilty on September 11, 2019 to a one-count superseding bill of information charging him with being a felon in possession of a firearm, in violation of 18 U.S.C. §§ 922(g)(1) and 924(a)(2). 

According to court documents, on August 4, 2018, LAWLESS possessed a Ruger .38 caliber firearm in New Orleans.  LAWLESS had previously been convicted of a felony offense punishable by more than 1 year of imprisonment in the Orleans Parish Criminal District Court. 

LAWLESS faces a maximum sentence of 10 years imprisonment, a fine of up to $250,000, up to three years of supervised release, and a mandatory $100 special assessment. 

U.S. Attorney Strasser praised the work of the Federal Bureau of Investigation, Drug Enforcement Administration, and New Orleans Police Department in investigating this case.  Assistant United States Attorneys Elizabeth Privitera and Jonathan L. Shih are in charge of the prosecution.

This prosecution is part of an extensive investigation by the Organized Crime Drug Enforcement Task Force (“OCDETF”). OCDETF is a joint federal, state and local cooperative approach to combat drug trafficking and is the nation’s primary tool for disrupting and dismantling major drug trafficking organizations, targeting national and regional level drug trafficking organizations and coordinating the necessary law enforcement entities and resources to disrupt or dismantle the targeted criminal organization and seize their assets.

 

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The United States filed a civil injunction suit seeking to bar Simple Solutions FL LLC, Angela Nurse, Joe Leon, and Wendy Edwards from owning or operating a tax return preparation business and preparing tax returns for others, the Justice Department announced today. 

The complaint, filed in United States District Court in Orlando, Florida, also requests that the court require Nurse, Leon, Edwards, and Simple Solutions FL LLC to disgorge ill-gotten fees that they obtained from the U.S. Treasury through the alleged false tax return preparation.

The government’s complaint alleges that the defendants prepare and file tax returns to falsely increase their customers’ refunds, and profit through high, often undisclosed fees—at the expense of their customers and the Treasury. The complaint alleges that the defendants engaged in misconduct, including:

            •           Falsely claiming the Earned Income Tax Credit;

            •           Fabricating businesses and related business income and expenses;

            •           Fabricating deductions, such as charitable contributions and phony job-related expenses; and

            •           Reporting fabricated income tax withholdings

The complaint further alleges that Nurse and Edwards previously prepared tax returns at D&M Tax Services, and that Leon prepared returns at UJM Tax Services. In a separate action, the court previously barred the owners of D&M Tax Solutions and UJM Tax Services from owning or operating a tax preparation business and preparing tax returns for others.

The government alleges that Simple Solutions FL LLC operates at two locations that were previously occupied by D&M Tax Solutions, in Daytona Beach and Palatka. In addition, the complaint alleges that the business operates at a third location in Bunnell.

Return preparer fraud is one of the IRS’s Dirty Dozen Tax Scams and taxpayers seeking a return preparer should remain vigilant. The IRS has information on its website for choosing a return preparer and has launched a free directory of federal tax preparers.

In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department’s website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.

NEW ORLEANS – SAMUEL TAYLOR (“TAYLOR”), age 25, of Harvey, Jefferson Parish, Louisiana, was sentenced today to 198 months in the Bureau of Prisons to be followed by a term of five (5) years of supervised release for Hobbs Act Robbery in violation of Title 18, United States Code, Section 1951(a), Bank Robbery with a Firearm in violation of Title 18, United States Code, Sections 2113(a) and (d), Conspiracy to Commit Bank Robbery with a Firearm in violation of Title 18, United States Code, Sections 371, 2113(a) and (d), and two counts of Brandishing a Firearm during a Crime of Violence, in violation of Title 18, United States Code, Section 924(c), announced United States Attorney Peter G. Strasser.

On the morning of Wednesday, September 27, 2017, members of the New Orleans Police Department responded to a complaint of an active burglary of a residence in uptown New Orleans, Louisiana. Police entered the residence, and discovered TAYLOR and his two co-defendants inside of the residence.  Law enforcement officers also located a loaded Harrington and Richardson “Pardner” Pump 12 gauge shotgun and a Taurus .38 caliber revolver handgun in the residence, as well as homemade ski masks. 

Law enforcement agents determined TAYLOR and the other defendants were using the residence as a safe house in anticipation of an armed robbery of a bank on South Carrollton Avenue in New Orleans.  Agents also determined that TAYLOR had been responsible for the September 7, 2017, armed robbery of the Fidelity Bank on General De Gaulle Boulevard, in the Algiers neighborhood of New Orleans, as well as the July 9, 2017, armed robbery of the Dollar General store in Avondale, Louisiana.

U.S. Attorney Strasser praised the work of the Federal Bureau of Investigation’s Violent Crime Task Force, officers with the New Orleans Police Department, and deputies with the Jefferson Parish Sheriff’s Office. The prosecution of was handled by Assistant U.S. Attorney Myles Ranier.

A former president of Local 2463 of the American Federation of Government Employees pleaded guilty today to Interstate Transportation of Stolen Property, in connection with his theft of tens of thousands of dollars from the union, announced Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and District Director Mark Wheeler of the Department of Labor’s Office of Labor Management Standards Washington District Office.

Audonus A. Duplessis, 25, of Washington, D.C., appeared before Judge Richard J. Leon in the U.S. District Court for the District of Columbia and pleaded guilty to the sole count in an indictment returned against him in June 2018.  Judge Leon scheduled sentencing of this matter for Dec. 5, 2019.

According to a statement of facts signed by Duplessis in connection with his guilty plea,

Duplessis stole more than $80,000 from the union during his tenure as President of Local 2463, making unauthorized cash withdrawals from the Local’s checking account and charging purchases of personal items to a debit card associated with that account. As charged in the indictment, on Sept. 25, 2017, Duplessis withdrew $11,300 from the Local 2463 checking account at a Wells Fargo branch in Washington, D.C. He then transported that stolen money to the Honda dealership in Tysons Corner, Virginia, where he used it to purchase a 2013 Dodge Charger for his personal use.  Other unauthorized items that Duplessis purchased with union money included clothing from Armani, a Smith & Wesson 9mm handgun and a subscription to an online dating service.

The American Federation of Government Employees (AFGE) represents over 700,000 federal and D.C. government workers nationwide.  Local 2463 represents approximately 2,400 employees at the Smithsonian Institution and Kennedy Center, the majority of whom are located in the Washington, D.C. area.  Duplessis, a security guard at the Smithsonian Museum of African-American History and Culture, was elected to serve as President of Local 2463 in May 2017.  While serving as President, Duplessis worked one day a week at the Smithsonian and received four days of “official time” to work full-time at the union.

The case was investigated by the U.S. Department of Labor, Office of Labor-Management Standards and Office of Inspector General.  The case is being prosecuted by Trial Attorney Alexander Gottfried of the Criminal Division’s Organized Crime and Gang Section.

A former District of Columbia attorney was sentenced to prison today in U.S. District Court in the District of Columbia for operating a fraudulent trading program for investors and failing to file a tax return announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division.

Brynee Baylor, was sentenced to 25 months in prison for conspiracy and securities fraud, one year of prison (concurrent) for her other fraud convictions and for failure to file a tax return and pay taxes, three years of supervised release, and restitution to her victims in the amount of $2.2 million dollars. In May 2019, a jury convicted Baylor of one count of conspiracy to commit securities fraud, one count of securities fraud, and five counts of first-degree fraud under District of Columbia law. In June 2019, Baylor pleaded guilty to one count of willfully failing to timely file a 2010 individual income tax return and to pay taxes.

According to court documents, Baylor, a former partner in the D.C. law firm Baylor & Jackson PLLC, conspired with a Pennsylvania man and his company, the Milan Group, to recruit investors to a purported trading program. Investors were promised extremely large profits in a short time with little or no risk.

The evidence presented at trial showed that in 2010 and 2011, Baylor caused more than $2 million of investor funds to pass through the Baylor & Jackson lawyer trust account. More than half of the investor funds were used for the benefit of Baylor, the Pennsylvania man, the Milan Group, and Baylor & Jackson. Baylor falsely assured investors that the purported trading program was legitimate and that she had personally observed investors successfully complete transactions with the Milan Group. In reality, the Milan Group did not complete any such transactions and the investors lost all their funds.

In 2011, the Securities and Exchange Commission (SEC) sued Baylor and others for fraud in connection with the purported trading program. In 2013, Baylor was permanently enjoined from promoting investment programs and ordered to pay disgorgement and a civil penalty.

Principal Deputy Assistant Attorney General Zuckerman thanked the SEC for its invaluable assistance and commended special agents of IRS-Criminal Investigation, who conducted the investigation, and Trial Attorneys Jeffrey McLellan and Eric Powers of the Tax Division, who prosecuted the case.

Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.

Attorney General William P. Barr today announced that Corey F. Ellis has been named Acting Director of the Executive Office for U.S. Attorneys (EOUSA). Ellis is filling the position that has been held since December 2017 by James A. Crowell IV, who was nominated by President Donald Trump and confirmed by the U.S. Senate to serve as a judge on the Superior Court of the District of Columbia.

“Jim Crowell has provided exemplary leadership to EOUSA and the United States Attorneys’ community,” said Attorney General Barr. “Jim’s commitment to ensuring justice is served for everyone has been the hallmark of his distinguished career. The Department’s loss is very much the Judiciary’s gain.” 

Prior to this appointment, which will be effective September 16, Ellis served in several positions in the Office of the Deputy Attorney General, including Chief of Staff to Deputy Attorney General Rod J. Rosenstein. Before joining the Deputy Attorney General's office, Ellis was the First Assistant United States Attorney in the U.S. Attorney’s Office for the Western District of North Carolina, where he began as an Assistant United States Attorney in 2005.  During his tenure in the United States Attorney’s Office, Mr. Ellis handled a range of cases including organized crime, computer hacking and intellectual property, international money laundering, public corruption, violent crimes, financial fraud and capital crime cases. 

“I look forward to continuing to work with Corey in his new role as Director of EOUSA,” said Attorney General Barr. “As a career prosecutor with a stellar record, he brings a wealth of experience and knowledge about the United States Attorneys’ community to the job, and I am confident he will help continue to build upon our many successes in enforcing the rule of law, deterring crime, and bringing criminals to justice.”

StarKist Co. was sentenced to pay a criminal fine of $100 million, the statutory maximum, for its role in a conspiracy to fix prices for canned tuna sold in the United States.  StarKist was also sentenced to a 13-month term of probation. 

StarKist faced a criminal fine of up to $100 million, the statutory maximum, for its participation in a conspiracy to fix the prices of canned tuna fish from as early as November 2011 through at least as late as December 2013.  As part of today’s sentencing hearing, U.S. District Judge Edward M. Chen found that StarKist had not proven that its financial circumstances justified a lower criminal fine.  The Antitrust Division opposed StarKist’s request for a fine reduction, arguing that StarKist had sufficient financial resources to pay a $100 million criminal fine.  In addition to the criminal fine and term of probation, StarKist has also agreed to cooperate in the Antitrust Division’s ongoing investigation. 

“Today’s result demonstrates our commitment to enforcing the antitrust laws aggressively against companies that fix prices,” said Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division.  “Hard-working Americans deserve the benefits of open competition when they spend their hard-earned money on items that stock kitchen shelves.  When a corporation cheats customers at the checkout line, the Antitrust Division will hold it accountable to the greatest extent.”

“The consequences for greedy companies who cheat the marketplace and American consumers are significant and clear,” said FBI San Francisco Special Agent in Charge John F. Bennett.  “The FBI, along with our law enforcement colleagues, will continue to pursue those who conspire to fix prices and bring them to justice.” 

A total of six charges have resulted from an ongoing federal antitrust investigation into the packaged-seafood industry, which is being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco Field Office.  Anyone with information on price fixing, bid rigging or other anticompetitive conduct related to the packaged-seafood industry should contact the Antitrust Division’s San Francisco Office at 415-934-5300, visit www.justice.gov/atr/contact/newcase.html, or call the FBI tip line at 415-553-7400.

The U.S. Drug Enforcement Administration (DEA) is proposing to reduce the amount of five Schedule II opioid controlled substances that can be manufactured in the United States next year compared with 2019, per the Notice of Proposed Rulemaking being published in the Federal Register tomorrow and available for public inspection here today. 

DEA proposes to reduce the amount of fentanyl produced by 31 percent, hydrocodone by 19 percent, hydromorphone by 25 percent, oxycodone by nine percent and oxymorphone by 55 percent. Combined with morphine, the proposed quota would be a 53 percent decrease in the amount of allowable production of these opioids since 2016.

DEA proposes to increase the amount of marijuana that can be produced for research by almost a third over 2019’s level, from 2,450 kilograms to 3,200 kilograms, which is almost triple what it was in 2018. This will meet the need created by the increase in the amount of approved research involving marijuana. Over the last two years, the total number of individuals registered by DEA to conduct research with marijuana, marijuana extracts, derivatives and delta-9-tetrahydrocannabinol (THC) has increased by more than 40 percent, from 384 in January 2017 to 542 in January 2019.

“The aggregate production quota set by DEA each calendar year ensures that patients have the medicines they need while also reducing excess production of controlled prescription drugs that can be diverted and misused,” said Acting Administrator Uttam Dhillon. “DEA takes seriously its obligations to both protect the public from illicit drug trafficking and ensure adequate supplies to meet the legitimate needs of patients and researchers for these substances.”

The Proposed Aggregate Production Quotas and Assessment of Annual Needs being published in the Federal Register addresses more than 250 Schedule I and II controlled substances and three List I chemicals, which include ephedrine, pseudoephedrine, and phenylpropanolamine. This reflects the total amount of substances needed to meet the country’s legitimate medical, scientific, research, industrial and export needs for the year and for the maintenance of reserve stocks. DEA endeavors to set production limits at a level required to meet these needs, without resulting in an excessive amount of these potentially harmful substances.

In setting the aggregate proposed quota (APQ), DEA considers data from many sources, including estimates of the legitimate medical need from the Food and Drug Administration; estimates of retail consumption based on prescriptions dispensed; manufacturers’ disposition history and forecasts; data from DEA’s internal system for tracking controlled substance transactions; and past quota histories. As a result of new laws and regulations that took effect in 2018, the number of factors that DEA considers in setting the APQ has increased. Information on these factors and how they were assessed appears in the Notice.

The five opioid substances were subject to special scrutiny following the enactment last year of the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act, known as the SUPPORT Act, which requires DEA to “estimate the amount of diversion of the covered substance that occurs in the United States” and “make appropriate quota reductions. DEA’s estimates of the amount of diversion that took place for each of these five opioid substances and how those estimates were calculated appear in the Notice.

Interested parties may submit public comments on the proposed APQ until 11:59 p.m. on October 10, following the instructions in the Notice. After taking the comments into account, DEA will publish another notice later in the year informing the public of the established APQ. After that, DEA allocates individual manufacturing and procurement quotas to those manufacturers that apply for them. DEA may revise a company’s quota at any time during the year if change is warranted due to increased sales or exports, new manufacturers entering the market, new product development, or product recalls. 

WASHINGTON – Federal authorities announced September 10, 2019 a significant coordinated effort to disrupt Business Email Compromise (BEC) schemes that are designed to intercept and hijack wire transfers from businesses and individuals, including many senior citizens.  Operation reWired, a coordinated law enforcement effort by the U.S. Department of Justice, U.S. Department of Homeland Security, U.S. Department of the Treasury, U.S. Postal Inspection Service, and the U.S. Department of State, was conducted over a four-month period, resulting in 281 arrests in the United States and overseas, including 167 in Nigeria, 18 in Turkey and 15 in Ghana.  Arrests were also made in France, Italy, Japan, Kenya, Malaysia, and the United Kingdom (UK).  The operation also resulted in the seizure of nearly $3.7 million.

BEC, also known as “cyber-enabled financial fraud,” is a sophisticated scam often targeting employees with access to company finances and businesses working with foreign suppliers and/or businesses that regularly perform wire transfer payments.  The same criminal organizations that perpetrate BEC also exploit individual victims, often real estate purchasers, the elderly, and others, by convincing them to make wire transfers to bank accounts controlled by the criminals. This is often accomplished by impersonating a key employee or business partner after obtaining access to that person’s email account or sometimes done through romance and lottery scams.  BEC scams may involve fraudulent requests for checks rather than wire transfers; they may target sensitive information such as personally identifiable information (PII) or employee tax records instead of, or in addition to, money; and they may not involve an actual “compromise” of an email account or computer network.  Foreign citizens perpetrate many BEC scams.  Those individuals are often members of transnational criminal organizations, which originated in Nigeria but have spread throughout the world.

“The Department of Justice has increased efforts in taking aggressive enforcement action against fraudsters who are targeting American citizens and their businesses in business email compromise schemes and other cyber-enabled financial crimes,” said Deputy Attorney General Jeffrey Rosen.  “In this latest four-month operation, we have arrested 74 people in the United States and 207 others have been arrested overseas for alleged financial fraud. The coordinated efforts with our domestic and international law enforcement partners around the world has made these most recent actions more successful. I want to thank the FBI, more than two dozen U.S. Attorney’s Offices, U.S. Secret Service, U.S. Postal Inspection Service, Homeland Security Investigations, IRS Criminal Investigation, U.S. Department of State’s Diplomatic Security Service, our partners in Nigeria, Ghana, Turkey, France, Italy, Japan, Kenya, Malaysia, and the UK, and our state and local law enforcement partners for all of their hard work to combat these fraud schemes and protect the hard-earned assets of our citizens.  Anyone who engages in deceptive practices like this should know they will not go undetected and will be held accountable.”

“The FBI is working every day to disrupt and dismantle the criminal enterprises that target our businesses and our citizens,” said FBI Director Christopher A. Wray.  “Cooperation is the backbone to effective law enforcement; without it, we aren’t as strong or as agile as we need to be.  Through Operation reWired, we’re sending a clear message to the criminals who orchestrate these BEC schemes: We’ll keep coming after you, no matter where you are.  And to the public, we’ll keep doing whatever we can to protect you.  Reporting incidents of BEC and other internet-enabled crimes to the IC3 brings us one step closer to the perpetrators.”

“The Secret Service has taken a multi-layered approach to combating Business Email Compromise schemes through our Global Investigative Operations Center (GIOC),” said U.S. Secret Service Director James M. Murray. “Domestically, the GIOC assists Secret Service Field Offices and other law enforcement partners with analysis and investigative tactics to enhance the impact of local BEC investigations.  Internationally, the GIOC targets and identifies transnational organized crime networks that perpetrate these cyber-enabled financial fraud schemes.  Through this approach, the Secret Service continues to strive to protect the citizens of the United States and our financial infrastructure from these complex crimes.”

“Homeland Security Investigations (HSI), together with its law enforcement partners, has proven once again, that cyber-enabled financial fraud will not be tolerated in the United States,” said Acting Director Matthew T. Albence of U.S. Immigration and Customs Enforcement (ICE). “Operation reWired sends a clear message to criminals, that no matter how or where crimes are committed, we will do everything within our means to dismantle criminal enterprises that seek to manipulate U.S. institutions and taxpayers.”

“The consequences of this type of fraud scheme are far reaching, affecting not only people in the United States, but also across the world,” said Chief Postal Inspector Gary Barksdale.  “This investigation is just another example of how effective law enforcement agencies can be when they join forces.  By working together, we can keep our communities and our vulnerable populations safe from financial exploitation.  The U.S. Postal Inspection Service is proud to be at the forefront of the fight against fraud and Postal Inspectors will continue to adapt to the ever changing landscape to stop the scammers and protect our customers.”

“In unraveling this complex, nationwide identity theft and tax fraud scheme, we discovered that the conspirators stole more than 250,000 identities and filed more than 10,000 fraudulent tax returns, attempting to receive more than $91 million in refunds,” said Chief Don Fort of IRS Criminal Investigation.  “We will continue to work with our international, federal and state partners to pursue all those responsible for perpetrating this fraud, preying on innocent victims and attempting to cheat the U.S. out of millions of dollars.”

“The investigation of these crimes crossed international borders,” said Director Todd J. Brown of the U.S. Department of State’s Diplomatic Security Service (DSS).  “Today’s charges are another successful example of our commitment to working together with both foreign colleagues abroad as well as local, state and federal law enforcement partners here at home in the pursuit of those who commit cyber-related financial crimes.”

A number of cases involved international criminal organizations that defrauded small to large sized businesses, while others involved individual victims who transferred high dollar funds or sensitive records in the course of business.  The devastating effects these cases have on victims and victim companies affect not only the individual business but also the global economy.  According to the Internet Crime Complaint Center (IC3), nearly $1.3 billion in loss was reported in 2018 from BEC and its variant, Email Account Compromise (EAC), nearly twice as much as was reported the prior year.  BEC and EAC are prevalent scams and the Justice Department along with our partners will continue to aggressively pursue and prosecute the perpetrators, including money mules, regardless of where they are located. 

Money mules may be witting or unwitting accomplices who receive ill-gotten funds from the victims and then transfer the funds as directed by the fraudsters.  The money is wired or sent by check to the money mule who then deposits it in his or her own bank account.  Usually the mules keep a fraction for “their trouble” and then wire the money as directed by the fraudster.  The fraudsters enlist and manipulate the money mules through romance scams or “work-at-home” scams, though some money mules are knowing co-conspirators who launder the ill-gotten gains for profit.   

BEC scams are related to, and often conducted together with, other forms of fraud such as:

• “Romance scams,” where victims are lulled into believing they are in a legitimate relationship, and are tricked into sending or laundering money under the guise of assisting the paramour with an international business transaction, a U.S. visit, or some other cover story;
• “Employment opportunities scams,” where victims are convinced to provide their PII to apply for work-from-home jobs, and, once “hired” and “overpaid” by a bad check, to wire the overpayment to the “employer’s” bank before the check bounces;
• “Fraudulent online vehicle sales scams,” where victims are convinced they are purchasing a nonexistent vehicle and must pay for it by sending the codes of prepaid gift cards in the amount of the agreed upon sale price to the “seller;”
• “Rental scams,” where a scammer agrees to rent a property, sends a bad check in excess of the agreed upon deposit, and requests the overpayment be returned via wire before the check bounces; and
• “Lottery scams,” where victims are convinced they won an international lottery but must pay fees or taxes before receiving the payout.

 

Starting in May 2019, this coordinated enforcement action targeted hundreds of BEC scammers.  Law enforcement agents executed over 214 domestic actions including arrests, money mule warning letters, and asset seizures and repatriations totaling nearly $3.7 million.  Local and state law enforcement partners on FBI task forces across the country, with the assistance of multiple District Attorney’s Offices, also arrested alleged money mules for their role in defrauding victims. 

Among those arrested on federal charges in BEC schemes include:

• Following an investigation led by the FBI’s Chicago Division, Brittney Stokes, 27, of Country Club Hills, Illinois, and Kenneth Ninalowo, 40, of Chicago, Illinois, were charged in the Northern District of Illinois with laundering over $1.5 million from proceeds of BEC scams.  According to the indictment, a community college and an energy company were defrauded into sending approximately $5 million to fraudulent bank accounts controlled by the scammers.  Banks were able to freeze approximately $3.6 million of the $5 million defrauded in the two schemes.  Law enforcement officials seized a 2019 Range Rover Velar S from Stokes and approximately $175,909 from Stokes and Ninalowo. 
   

• As a result of a joint investigation by the FBI, HSI, and DSS, Opeyemi Adeoso, 44, of Dallas, Texas, and Benjamin Ifebajo, 45, of Richardson, Texas, were arrested and charged in the Northern District of Texas with bank fraud, wire fraud, money laundering, and conspiracy.  Adeoso and Ifebajo are alleged to have received and laundered at least $3.4 million.  In furtherance of their scheme, they are alleged to have assumed 12 fictitious identities and defrauded 37 victims from across the United States.
   
• As part of a larger investigation by the FBI and the USSS in Miami, Yamel Guevara Tamayo, 36, of Miami, Florida, and Yumeydi Govantes, 39, of Miami, Florida, were charged in the Southern District of Florida with laundering more than $950,000 of proceeds of BEC scams.  The two individuals were also responsible for recruiting approximately 18 other individuals to serve as money mules, who laundered proceeds of BEC scams for an international money laundering network.  The victims of the BEC scams included title companies, corporations, and individuals.  The individuals were indicted June 18, 2019 and arrested June 20, 2019.  The change of plea for both individuals is scheduled for Sept. 16.
   
• In an investigation by FBI Atlanta, two individuals were charged in the Northern District of Georgia for their involvement in a Nigeria-based BEC scheme that began with a $3.5 million transfer of funds fraudulently misdirected from a Georgia-based health care provider to accounts across the United States.  Two Nigerian nationals, Emmanuel Igomu, 35, of Atlanta, Georgia, and Jude Balogun, 29, of San Francisco, California, have been arrested on charges of aiding and abetting wire fraud for their part in receiving and transmitting monies derived from the BEC. 
   
• Following an investigation by the FBI, Cyril Ashu, 34, of Austell, Georgia; Ifeanyi Eke, 32, of Sandy Springs, Georgia; Joshua Ikejimba, 24, of Houston, Texas; and Chinedu Ironuah, 32, of Houston, Texas, were charged in the Southern District of New York with one count of conspiracy to commit wire fraud and one count of wire fraud for their involvement in a Nigeria-based BEC scheme that impacted hundreds of victims in the United States, with losses in excess of $10 million. 

 

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

The cases were investigated by the FBI, U.S. Secret Service, U.S. Postal Inspection Service, ICE’s Homeland Security Investigations (HSI), IRS Criminal Investigation and U.S. Department of State’s Diplomatic Security Service.  U.S. Attorney’s Offices in the Districts of Arizona; Central, Eastern and Southern California; Colorado; Delaware; Southern Florida; Northern Georgia; Northern Illinois; Kansas; Eastern Louisiana; Massachusetts; Nebraska; Nevada; Southern New York; Middle North Carolina; Northern Ohio; Oregon; Northern, Western and Southern Texas; Western Tennessee; Eastern Virginia; Eastern Washington, and elsewhere have ongoing investigations some of which have resulted in arrests in Nigeria.  The Justice Department’s Computer Crime and Intellectual Property Section, Money Laundering and Asset Recovery Section, and Office of International Affairs of the Criminal Division provided assistance.  District Attorney’s Offices of Harris County, Texas; Fort Bend County, Texas; and Washington County, Arkansas are handling state prosecutions.  Additionally, private sector partners and the Nigerian Economic and Financial Crimes Commission, Ghana Police Service (GPS) and Economic and Organized Crime Office (EOCO), Turkish National Police (TNP) Cyber Department, Direction Centrale de la Police aux Frontieres (PAF) of France, Squadra Mobile Di Caserta and Italian National Police, National Police Agency of Japan, Tokyo Metropolitan Police Department (TPMD), Royal Malaysian Police, Directorate of Criminal Investigations (DCI) of Kenya and the National Crime Agency (NCA), North Wales Police, Metropolitan Police Service and Hertfordshire Constabulary of the UK provided significant assistance.  

This operation serves as a model for international cooperation against specific threats that endanger the financial well-being of each member country’s residents.  Deputy Attorney General Rosen expressed gratitude for the outstanding efforts of the participating countries, including law enforcement actions that were coordinated and executed by the Economic and Financial Crimes Commission (EFCC) in Nigeria to curb business email compromise schemes that defraud businesses and individuals alike.

The Justice Department’s efforts to confront the growing threat of cyber-enabled financial fraud led to the formation of the BEC Counteraction Group (BCG), which assists U.S. Attorney’s Offices and the Department with the coordination of BEC cases and the centralization of related expertise.  The BCG facilitates communication and coordination between federal prosecutors, serves as a bridge between federal prosecutors and federal agents, centralizes and manages institutional knowledge and training, and participates in efforts to educate the public about protecting themselves and their organizations from BEC scams.

The BCG draws upon the expertise of the following sections within the Department’s Criminal Division: the Computer Crime and Intellectual Property Section, which regularly investigates and prosecutes cases involving computer crimes, including network intrusions; the Fraud Section, which manages complex litigation involving sophisticated fraud schemes; the Money Laundering and Asset Recovery Section, which brings experience in seizing assets obtained through criminal activity; the Office of International Affairs, which plays a central role in securing international evidence and extradition; and the Organized Crime and Gang Section, which contributes strategic guidance in prosecuting complex transnational criminal cases.

Operation reWired was funded and coordinated by the FBI and the Justice Department’s International Organized Crime Intelligence and Operations Center (IOC-2) and follows “Operation Wire Wire,” the first coordinated enforcement action targeting hundreds of BEC scammers.  That effort, announced in June 2018, resulted in the arrest of 74 individuals, the seizure of nearly $2.4 million, and the disruption and recovery of approximately $14 million in fraudulent wire transfers.

Victims are encouraged to file a complaint online with the IC3 at bec.ic3.gov.  The IC3 staff reviews complaints, looking for patterns or other indicators of significant criminal activity, and refers investigative packages of complaints to the appropriate law enforcement authorities in a particular city or region. The FBI provides a variety of resources relating to BEC through the IC3, which can be reached at www.ic3.gov.

For more information on BEC scams, visit: https://www.ic3.gov/media/2019/190910.aspx.

 

                                                                     # # #

19-955

The owner of a chiropractic business was sentenced to 6 months in prison for tax evasion after pleading guilty to the charge in June 2019, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division.

Richard Rogers, a Northborough, Massachusetts chiropractor, operated his practice from his residence.  According to court documents, Rogers evaded his taxes from 2012 through 2016 by concealing his income from the Internal Revenue Service (IRS). Rogers encouraged his clients to pay in cash and used a nominee bank account to negotiate check payments when he was not paid in cash. He paid creditors using postal money orders, and used credit card accounts opened with a fictitious social security number. Rogers also concealed the ownership of his residence by titling the property in the name of a trust. Rogers did not file federal tax returns from at least 2008 through 2016, despite his obligation to do so.

United States District Judge Timothy S. Hillman also ordered Rogers to pay $155,164 in restitution to the IRS.

Principal Deputy Assistant Attorney General Zuckerman thanked special agents of IRS-Criminal Investigation, who conducted the investigation, and Assistant Chief John N. Kane and Trial Attorney Carl F. Brooker of the Tax Division, who prosecuted the case.

Credit: Department of Justice

On September 10, 2019, United States Attorney General William Barr met with Georgian Minister of Justice Thea Tsulukiani, to reaffirm the law enforcement partnership between the United States Department of Justice and the Ministry of Justice of Georgia.   

Both officials recognized that an independent judiciary, an effective criminal justice system and the protection of human rights, particularly those of the most vulnerable members of society, such as children, are fundamental to the rule of law and an accountable government and democracy.

Attorney General Barr noted the excellent level of cooperation between the United States and Georgia on extradition matters and mutual legal assistance. Minister Tsulukiani, in turn, expressed gratitude for the capacity building support provided by the United States Department of Justice, the Office of Overseas Prosecutorial Development, Assistance, and Training (OPDAT) and its Tbilisi-based Resident Legal Advisors (RLA), particularly in terms of legislative drafting advice and skills development training within the criminal justice sector.

The Attorney General and Minister of Justice committed to continue cooperation in support of Georgia’s efforts to advance judicial reforms and further modernize the country’s criminal justice system. In particular, they expressed an intent to explore opportunities for the Department of Justice to furnish expertise and assistance to the Ministry of Justice with its work to reform Georgia’s penitentiary and probation systems with enhanced rehabilitation and resocialization services.

Federal authorities announced today a significant coordinated effort to disrupt Business Email Compromise (BEC) schemes that are designed to intercept and hijack wire transfers from businesses and individuals, including many senior citizens.  Operation reWired, a coordinated law enforcement effort by the U.S. Department of Justice, U.S. Department of Homeland Security, U.S. Department of the Treasury, U.S. Postal Inspection Service, and the U.S. Department of State, was conducted over a four-month period, resulting in 281 arrests in the United States and overseas, including 167 in Nigeria, 18 in Turkey and 15 in Ghana.  Arrests were also made in France, Italy, Japan, Kenya, Malaysia, and the United Kingdom (UK).  The operation also resulted in the seizure of nearly $3.7 million.

BEC, also known as “cyber-enabled financial fraud,” is a sophisticated scam often targeting employees with access to company finances and businesses working with foreign suppliers and/or businesses that regularly perform wire transfer payments.  The same criminal organizations that perpetrate BEC also exploit individual victims, often real estate purchasers, the elderly, and others, by convincing them to make wire transfers to bank accounts controlled by the criminals. This is often accomplished by impersonating a key employee or business partner after obtaining access to that person’s email account or sometimes done through romance and lottery scams.  BEC scams may involve fraudulent requests for checks rather than wire transfers; they may target sensitive information such as personally identifiable information (PII) or employee tax records instead of, or in addition to, money; and they may not involve an actual “compromise” of an email account or computer network.  Foreign citizens perpetrate many BEC scams.  Those individuals are often members of transnational criminal organizations, which originated in Nigeria but have spread throughout the world.

“The Department of Justice has increased efforts in taking aggressive enforcement action against fraudsters who are targeting American citizens and their businesses in business email compromise schemes and other cyber-enabled financial crimes,” said Deputy Attorney General Jeffrey Rosen.  “In this latest four-month operation, we have arrested 74 people in the United States and 207 others have been arrested overseas for alleged financial fraud. The coordinated efforts with our domestic and international law enforcement partners around the world has made these most recent actions more successful. I want to thank the FBI, more than two dozen U.S. Attorney’s Offices, U.S. Secret Service, U.S. Postal Inspection Service, Homeland Security Investigations, IRS Criminal Investigation, U.S. Department of State’s Diplomatic Security Service, our partners in Nigeria, Ghana, Turkey, France, Italy, Japan, Kenya, Malaysia, and the UK, and our state and local law enforcement partners for all of their hard work to combat these fraud schemes and protect the hard-earned assets of our citizens.  Anyone who engages in deceptive practices like this should know they will not go undetected and will be held accountable.”

“The FBI is working every day to disrupt and dismantle the criminal enterprises that target our businesses and our citizens,” said FBI Director Christopher A. Wray.  “Cooperation is the backbone to effective law enforcement; without it, we aren’t as strong or as agile as we need to be.  Through Operation reWired, we’re sending a clear message to the criminals who orchestrate these BEC schemes: We’ll keep coming after you, no matter where you are.  And to the public, we’ll keep doing whatever we can to protect you.  Reporting incidents of BEC and other internet-enabled crimes to the IC3 brings us one step closer to the perpetrators.”

“The Secret Service has taken a multi-layered approach to combating Business Email Compromise schemes through our Global Investigative Operations Center (GIOC),” said U.S. Secret Service Director James M. Murray. “Domestically, the GIOC assists Secret Service Field Offices and other law enforcement partners with analysis and investigative tactics to enhance the impact of local BEC investigations.  Internationally, the GIOC targets and identifies transnational organized crime networks that perpetrate these cyber-enabled financial fraud schemes.  Through this approach, the Secret Service continues to strive to protect the citizens of the United States and our financial infrastructure from these complex crimes.”

“Homeland Security Investigations (HSI), together with its law enforcement partners, has proven once again, that cyber-enabled financial fraud will not be tolerated in the United States,” said Acting Director Matthew T. Albence of U.S. Immigration and Customs Enforcement (ICE). “Operation reWired sends a clear message to criminals, that no matter how or where crimes are committed, we will do everything within our means to dismantle criminal enterprises that seek to manipulate U.S. institutions and taxpayers.”

“The consequences of this type of fraud scheme are far reaching, affecting not only people in the United States, but also across the world,” said Chief Postal Inspector Gary Barksdale.  “This investigation is just another example of how effective law enforcement agencies can be when they join forces.  By working together, we can keep our communities and our vulnerable populations safe from financial exploitation.  The U.S. Postal Inspection Service is proud to be at the forefront of the fight against fraud and Postal Inspectors will continue to adapt to the ever changing landscape to stop the scammers and protect our customers.”

“In unraveling this complex, nationwide identity theft and tax fraud scheme, we discovered that the conspirators stole more than 250,000 identities and filed more than 10,000 fraudulent tax returns, attempting to receive more than $91 million in refunds,” said Chief Don Fort of IRS Criminal Investigation.  “We will continue to work with our international, federal and state partners to pursue all those responsible for perpetrating this fraud, preying on innocent victims and attempting to cheat the U.S. out of millions of dollars.”

“The investigation of these crimes crossed international borders,” said Director Todd J. Brown of the U.S. Department of State’s Diplomatic Security Service (DSS).  “Today’s charges are another successful example of our commitment to working together with both foreign colleagues abroad as well as local, state and federal law enforcement partners here at home in the pursuit of those who commit cyber-related financial crimes.”

A number of cases involved international criminal organizations that defrauded small to large sized businesses, while others involved individual victims who transferred high dollar funds or sensitive records in the course of business.  The devastating effects these cases have on victims and victim companies affect not only the individual business but also the global economy.  According to the Internet Crime Complaint Center (IC3), nearly $1.3 billion in loss was reported in 2018 from BEC and its variant, Email Account Compromise (EAC), nearly twice as much as was reported the prior year.  BEC and EAC are prevalent scams and the Justice Department along with our partners will continue to aggressively pursue and prosecute the perpetrators, including money mules, regardless of where they are located. 

Money mules may be witting or unwitting accomplices who receive ill-gotten funds from the victims and then transfer the funds as directed by the fraudsters.  The money is wired or sent by check to the money mule who then deposits it in his or her own bank account.  Usually the mules keep a fraction for “their trouble” and then wire the money as directed by the fraudster.  The fraudsters enlist and manipulate the money mules through romance scams or “work-at-home” scams, though some money mules are knowing co-conspirators who launder the ill-gotten gains for profit.   

BEC scams are related to, and often conducted together with, other forms of fraud such as:

• “Romance scams,” where victims are lulled into believing they are in a legitimate relationship, and are tricked into sending or laundering money under the guise of assisting the paramour with an international business transaction, a U.S. visit, or some other cover story;
   
• “Employment opportunities scams,” where victims are convinced to provide their PII to apply for work-from-home jobs, and, once “hired” and “overpaid” by a bad check, to wire the overpayment to the “employer’s” bank before the check bounces;
   
• “Fraudulent online vehicle sales scams,” where victims are convinced they are purchasing a nonexistent vehicle and must pay for it by sending the codes of prepaid gift cards in the amount of the agreed upon sale price to the “seller;”
   
• “Rental scams,” where a scammer agrees to rent a property, sends a bad check in excess of the agreed upon deposit, and requests the overpayment be returned via wire before the check bounces; and
   
• “Lottery scams,” where victims are convinced they won an international lottery but must pay fees or taxes before receiving the payout.

Starting in May 2019, this coordinated enforcement action targeted hundreds of BEC scammers.  Law enforcement agents executed over 214 domestic actions including arrests, money mule warning letters, and asset seizures and repatriations totaling nearly $3.7 million.  Local and state law enforcement partners on FBI task forces across the country, with the assistance of multiple District Attorney’s Offices, also arrested alleged money mules for their role in defrauding victims. 

Among those arrested on federal charges in BEC schemes include:

• Following an investigation led by the FBI’s Chicago Division, Brittney Stokes, 27, of Country Club Hills, Illinois, and Kenneth Ninalowo, 40, of Chicago, Illinois, were charged in the Northern District of Illinois with laundering over $1.5 million from proceeds of BEC scams.  According to the indictment, a community college and an energy company were defrauded into sending approximately $5 million to fraudulent bank accounts controlled by the scammers.  Banks were able to freeze approximately $3.6 million of the $5 million defrauded in the two schemes.  Law enforcement officials seized a 2019 Range Rover Velar S from Stokes and approximately $175,909 from Stokes and Ninalowo. 
   
• As a result of a joint investigation by the FBI, HSI, and DSS, Opeyemi Adeoso, 44, of Dallas, Texas, and Benjamin Ifebajo, 45, of Richardson, Texas, were arrested and charged in the Northern District of Texas with bank fraud, wire fraud, money laundering, and conspiracy.  Adeoso and Ifebajo are alleged to have received and laundered at least $3.4 million.  In furtherance of their scheme, they are alleged to have assumed 12 fictitious identities and defrauded 37 victims from across the United States.
   
• As part of a larger investigation by the FBI and the USSS in Miami, Yamel Guevara Tamayo, 36, of Miami, Florida, and Yumeydi Govantes, 39, of Miami, Florida, were charged in the Southern District of Florida with laundering more than $950,000 of proceeds of BEC scams.  The two individuals were also responsible for recruiting approximately 18 other individuals to serve as money mules, who laundered proceeds of BEC scams for an international money laundering network.  The victims of the BEC scams included title companies, corporations, and individuals.  The individuals were indicted June 18, 2019 and arrested June 20, 2019.  The change of plea for both individuals is scheduled for Sept. 16.
   
• In an investigation by FBI Atlanta, two individuals were charged in the Northern District of Georgia for their involvement in a Nigeria-based BEC scheme that began with a $3.5 million transfer of funds fraudulently misdirected from a Georgia-based health care provider to accounts across the United States.  Two Nigerian nationals, Emmanuel Igomu, 35, of Atlanta, Georgia, and Jude Balogun, 29, of San Francisco, California, have been arrested on charges of aiding and abetting wire fraud for their part in receiving and transmitting monies derived from the BEC. 
   
• Following an investigation by the FBI, Cyril Ashu, 34, of Austell, Georgia; Ifeanyi Eke, 32, of Sandy Springs, Georgia; Joshua Ikejimba, 24, of Houston, Texas; and Chinedu Ironuah, 32, of Houston, Texas, were charged in the Southern District of New York with one count of conspiracy to commit wire fraud and one count of wire fraud for their involvement in a Nigeria-based BEC scheme that impacted hundreds of victims in the United States, with losses in excess of $10 million. 

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

The cases were investigated by the FBI, U.S. Secret Service, U.S. Postal Inspection Service, ICE’s Homeland Security Investigations (HSI), IRS Criminal Investigation and U.S. Department of State’s Diplomatic Security Service.  U.S. Attorney’s Offices in the Districts of Arizona; Central, Eastern and Southern California; Colorado; Delaware; Southern Florida; Northern Georgia; Northern Illinois; Kansas; Eastern Louisiana; Massachusetts; Nebraska; Nevada; Southern New York; Middle North Carolina; Northern Ohio; Oregon; Northern, Western and Southern Texas; Western Tennessee; Eastern Virginia; Eastern Washington, and elsewhere have ongoing investigations some of which have resulted in arrests in Nigeria.  The Justice Department’s Computer Crime and Intellectual Property Section, Money Laundering and Asset Recovery Section, and Office of International Affairs of the Criminal Division provided assistance.  District Attorney’s Offices of Harris County, Texas; Fort Bend County, Texas; and Washington County, Arkansas are handling state prosecutions.  Additionally, private sector partners and the Nigerian Economic and Financial Crimes Commission, Ghana Police Service (GPS) and Economic and Organized Crime Office (EOCO), Turkish National Police (TNP) Cyber Department, Direction Centrale de la Police aux Frontieres (PAF) of France, Squadra Mobile Di Caserta and Italian National Police, National Police Agency of Japan, Tokyo Metropolitan Police Department (TPMD), Royal Malaysian Police, Directorate of Criminal Investigations (DCI) of Kenya and the National Crime Agency (NCA), North Wales Police, Metropolitan Police Service and Hertfordshire Constabulary of the UK provided significant assistance.  

This operation serves as a model for international cooperation against specific threats that endanger the financial well-being of each member country’s residents.  Deputy Attorney General Rosen expressed gratitude for the outstanding efforts of the participating countries, including law enforcement actions that were coordinated and executed by the Economic and Financial Crimes Commission (EFCC) in Nigeria to curb business email compromise schemes that defraud businesses and individuals alike.

The Justice Department’s efforts to confront the growing threat of cyber-enabled financial fraud led to the formation of the BEC Counteraction Group (BCG), which assists U.S. Attorney’s Offices and the Department with the coordination of BEC cases and the centralization of related expertise.  The BCG facilitates communication and coordination between federal prosecutors, serves as a bridge between federal prosecutors and federal agents, centralizes and manages institutional knowledge and training, and participates in efforts to educate the public about protecting themselves and their organizations from BEC scams.

The BCG draws upon the expertise of the following sections within the Department’s Criminal Division: the Computer Crime and Intellectual Property Section, which regularly investigates and prosecutes cases involving computer crimes, including network intrusions; the Fraud Section, which manages complex litigation involving sophisticated fraud schemes; the Money Laundering and Asset Recovery Section, which brings experience in seizing assets obtained through criminal activity; the Office of International Affairs, which plays a central role in securing international evidence and extradition; and the Organized Crime and Gang Section, which contributes strategic guidance in prosecuting complex transnational criminal cases.

Operation reWired was funded and coordinated by the FBI and the Justice Department’s International Organized Crime Intelligence and Operations Center (IOC-2) and follows “Operation Wire Wire,” the first coordinated enforcement action targeting hundreds of BEC scammers.  That effort, announced in June 2018, resulted in the arrest of 74 individuals, the seizure of nearly $2.4 million, and the disruption and recovery of approximately $14 million in fraudulent wire transfers.

Victims are encouraged to file a complaint online with the IC3 at bec.ic3.gov.  The IC3 staff reviews complaints, looking for patterns or other indicators of significant criminal activity, and refers investigative packages of complaints to the appropriate law enforcement authorities in a particular city or region. The FBI provides a variety of resources relating to BEC through the IC3, which can be reached at www.ic3.gov.

For more information on BEC scams, visit: https://www.ic3.gov/media/2019/190910.aspx.

In Central Islip, New York, a Brentwood, New York, business owner pleaded guilty to corruptly endeavoring to obstruct and impede the due administration of the internal revenue laws, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division.

According to court filings and facts presented at the plea proceeding, Jose Cerritos (Cerritos) owned and operated La Centro Americana Corp. (La Centro), a wholesale food distribution business based in Bay Shore, New York, that sold imported food products for resale to New York metropolitan area customers. Cerritos diverted cash receipts from the business bank accounts, which caused La Centro’s tax returns for 2011 and 2012 to significantly underreport the size of the business - and its profits - to the Internal Revenue Service (IRS).  He also filed his own individual income tax returns, falsely understating the income he received from La Centro.  Cerritos also gave the IRS false business records, which purported to show La Centro’s yearly sales for 2011 and 2012, but omitted millions of dollars in gross receipts for each year.

United States District Court Judge Joanna Seybert, who accepted Cerritos’ guilty plea, scheduled sentencing for March 6, 2020.  Cerritos faces a statutory maximum sentence of three years in prison.  He also faces a period of supervised release, restitution, and monetary penalties.

Principal Deputy Assistant Attorney General Zuckerman thanked special agents of the Internal Revenue Service-Criminal Investigation, who conducted the investigation, and Trial Attorneys Sarah Ranney and Mark Kotila of the Tax Division, who are prosecuting the case.

The Department of Justice today renewed its commitment to reducing violent crime in America, holding its third annual National Public Safety Partnership Symposium. 

The National Public Safety Partnership provides a framework for enhancing federal support of state, local and tribal law enforcement officials and prosecutors as they investigate and pursue violent criminals, specifically those involved in gun crime, drug trafficking and gang violence.

“The National Public Safety Partnership is a hallmark program of this administration,” said Katharine T. Sullivan, Principal Deputy Assistant Attorney General for the Department’s Office of Justice Programs. “It effectively works to reduce violent crime, a priority of both Attorney General Barr and President Trump.”

Jon Adler, Director of the Bureau of Justice Assistance – which oversees the partnership program – announced $28 million to provide training and technical assistance to designated partnership sites, as well as to support law enforcement-led and prosecution-based crime reduction efforts in cities across the nation. Funds will also support crime gun intelligence centers in eight sites across the country. These centers focus on the immediate collection, management and analysis of crime gun evidence, such as shell casings, in real time, in an effort to identify violent criminals, disrupt criminal activity and prevent future violence.

“These funds are just the tip of the spear to help law enforcement develop and implement innovative – and proven – strategies to help increase public safety,” said Adler. “In coming weeks, the Justice Department will continue to announce funding awards to communities in support of law enforcement’s commitment to drive down violent crime, aid crime victims and improve justice systems.”

This year’s symposium, which lasts through Sept. 11, brings together more than 400 law enforcement leaders, prosecutors and other officials representing 17 of 41 partnered cities across the U.S. Law enforcement officials from the tristate area surrounding Memphis are also attending.

In June, Attorney General William P. Barr announced the addition of 10 cities and counties to the National Public Safety Partnership, which provides advanced training and technical assistance to cities and counties with elevated rates of violent crime.

“The addition of 10 more partnered sites this year is another critical step in fulfilling President Trump’s commitment to reducing violent crime in America,” said Adler. “The three-year engagement between the Department and each partnered city allows agencies to respond to the diverse needs within their jurisdictions by streamlining access to federal resources for those communities most affected by violent crime.”

To date, the Justice Department has worked with more than 40 cities under the National Public Safety Partnership (PSP) program. Many participating cities have already seen dramatic reductions in violent crime. For example, in Memphis, carjackings decreased 43 percent year-to-date, from March 2018 to March 2019. Additionally, collaboration between the Memphis Police Department and the Federal Bureau of Investigation to process cold-case sexual assault kits resulted in the conviction of a sexual predator in May 2019 who was responsible for kidnapping and raping six women, and attempting to kidnap and rape a seventh, over a period of seven years.

"The U.S. Attorney’s Office for the Western District of Tennessee is proud to participate in the National Public Safety Partnership Initiative here in Memphis and Jackson, Tennessee,” said U.S. Attorney Michael Dunavant. “PSP has allowed us to receive meaningful federal resources of law enforcement training and technical assistance in an innovative framework to enhance data-driven, evidence-based local strategies for violence reduction. The good work of the PSP team stakeholders, including the commitment to targeted enforcement by our federal, state and local law enforcement partners, has resulted in significant reductions in the violent crime rate in key categories, such as business robbery, carjacking and reported gun crimes. We are thankful for all of these resources from the Department of Justice, and we are committed to the continued effective use of these PSP tools to further reduce violent crime in the future."

Other PSP sites have achieved notable successes, as well. For example, New Orleans, Louisiana, ended 2018 with its lowest number of homicides since the early 1970s. In Milwaukee, Wisconsin, homicides declined in 2018 for a third straight year after hitting a peak in 2015.

In addition to local law enforcement and prosecutorial leaders from the participating PSP sites, components in attendance at this year’s symposium include: the Federal Bureau of Investigation; the Office of Community Oriented Policing Services; the Office of Justice Programs; the Office on Violence Against Women; the U.S. Attorneys’ Offices; the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives; the U.S. Drug Enforcement Administration; and the U.S. Marshals Service.

The Justice Department created the National Public Safety Partnership and the Task Force on Crime Reduction and Public Safety in response to President Trump’s Feb. 9, 2017, Executive Order charging the agency with leading a national effort to combat violent crime. The Department announced the formation of the National Public Safety Partnership initiative in June 2017.

For more information about the PSP sites and the Justice Department’s work to reduce violent crime and enhance public safety, visit https://www.nationalpublicsafetypartnership.org.

The owner and chief executive officer (CEO) of a telemedicine company pleaded guilty today for his role in one of the largest health care fraud schemes ever investigated by the FBI and the U.S. Department of Health and Human Services Office of the Inspector General (HHS-OIG) and prosecuted by the Department of Justice, which resulted in charges in April 2019 against 24 defendants. 

Lester Stockett, 52, of Medellin, Colombia, pleaded guilty today to one count of conspiracy to defraud the United States and pay and receive health care kickbacks, and one count of conspiracy to commit money laundering.  Stockett was the owner of Video Doctor USA (Video Doctor) and Telemed Health Group LLC (AffordADoc) (collectively, the Video Doctor Network), and was the CEO of AffordADoc.  In connection with his plea agreement, Stockett agreed to pay $200 million in restitution to the United States, as well as forfeit assets and property traceable to proceeds of the conspiracy to defraud the United States and conspiracy to commit money laundering.  Stockett’s sentencing is set for Dec. 16 before U.S. District Judge Madeline Cox Arleo of the District of New Jersey, who accepted his plea today.

“This CEO and his co-conspirators lined their own pockets with hundreds of millions of dollars by exploiting telemedicine technology meant to help elderly and disabled patients in need of health care,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division.  “Today’s plea shows that the Department of Justice remains laser-focused on uprooting corporate health care fraud schemes, especially those built on the backs of the most vulnerable members of our community.”

“Health care fraud results in billions of dollars in losses and affects a multitude of people across American communities,” said FBI Assistant Director Robert Johnson.  “We take violations of these laws extremely seriously.  The FBI will use our full investigative resources and continue to collaborate with HHS-OIG, IRS-CI, and other partners to stop this type of illegal activity.”  

“The extent of Mr. Stockett's fraud and money laundering, literally, knew no bounds,” said Special Agent in Charge Gregory W. Ehrie of the FBI’s Newark Field Office.  “From the U.S. to Latin America, the Philippines, and the Dominican Republic, the FBI followed the trail of ill-gotten gains back to Stockett and his conspirators.  They stole precious federal funds earmarked to assist the elderly.  His admission today should resonate with anyone who is committing fraud against the U.S. government – the FBI will find you and your criminal efforts will not pay off.”

“This global scheme that took advantage of hundreds of thousands of vulnerable individuals was fueled by unbounded greed without regard for the rules of law,” said Deputy Inspector General for Investigations Gary L. Cantrell of the U.S. Department of Health and Human Services Office of Inspector General.  “We will continue to work with our law enforcement partners to bring to justice those that prey on unsuspecting beneficiaries and steal from taxpayer-funded health care programs.”

“Bribes and illegal kickbacks will not be tolerated as part of our nation’s healthcare system,” said Special Agent in Charge John R. Tafur of IRS Criminal Investigation, Newark Field Office.  “Medical equipment should only be ordered when medically necessarily, not when criminals wish to line their own pockets.  Today’s guilty plea should let the American public know that IRS Criminal Investigation and our law enforcement partners will continue to root out individuals like Mr. Stockett who look to illegally profit off of our health care system.”

In connection with his guilty plea, Stockett admitted that he and others agreed to solicit and receive illegal kickbacks and bribes from patient recruiters, pharmacies, brace suppliers and others in exchange for arranging for doctors to order medically unnecessary orthotic braces (braces) for beneficiaries of Medicare and other insurance carriers.  The beneficiaries were contacted through an international telemarketing network that lured hundreds of thousands of elderly and/or disabled patients into a criminal scheme that crossed borders, involving call centers in the Philippines and throughout Latin America.

Stockett admitted that, in order to obtain the orders that were transmitted in exchange for kickbacks and bribes, he and other executives and employees of the Video Doctor Network paid illegal kickbacks and bribes to health care providers to order medically unnecessary braces for Medicare beneficiaries.  Many of these orders were written after only a short telephone call between the health care provider and the beneficiary, with whom the health care provider had no prior doctor-patient relationship. 

Stockett and others transferred the brace orders to co-conspirator brace suppliers to support more than $424 million in false and fraudulent claims to Medicare that were submitted by brace suppliers, he admitted.  Medicare paid these brace suppliers in excess of $200 million for these claims.  

Stockett admitted that he and other executives and employees of the Video Doctor Network were aware that it was a violation of the Anti-Kickback Statute for the Video Doctor Network or its owners or investors to receive money, directly or indirectly, from patient recruiters, purported marketers or marketing organizations, brace suppliers or pharmacies.  Stockett and his co-conspirators concealed the illegal kickbacks and bribes by causing them to be paid indirectly through nominee companies and bank accounts, opened by Stockett and others in nominee names both in the United States and in foreign countries, including in the Dominican Republic, Stockett admitted.  Stockett further admitted that he and others hid the existence of the foreign companies and bank accounts by making, or causing to be made, false statements to financial institutions and falsely reporting to the IRS and others that they and others had no influence over foreign bank accounts.

In addition, Stockett admitted that he and other owners and executives of the Video Doctor Network schemed to defraud investors and others by making false and fraudulent representations that the Video Doctor Network was a legitimate telemedicine enterprise that made revenue of “$10 million per year” and “20% profit” from payments by beneficiaries who enrolled in a membership program and paid for the telemedicine consultations.  These statements were false because revenue was obtained by the Video Doctor Network through the receipt of illegal kickbacks and bribes, Stockett admitted.  

With regard to money laundering, Stockett admitted that beginning about March 2016 and continuing to about April 2019, he and other owners and executives of the Video Doctor Network conspired to engage in domestic and international money laundering.  Specifically, Stockett and his coconspirators transferred in excess of approximately $10 million in illegal kickback payments that they received, from a bank account of PCS CC LLC, a corporation located in the United States, to the bank account of Droneza Consulting, a corporation located in the Dominican Republic.  Stockett and others then transferred more than $9.8 million from a bank account of Droneza Consulting to bank accounts of AffordADoc in the United States, in order to conceal that the Video Doctor Network was receiving kickbacks from brace suppliers in exchange for arranging for doctors to write orders that the Video Doctor Network provided to the brace suppliers, Stockett admitted.

Stockett was charged along with Creaghan Harry, 51, of Highland Beach, Florida, and Elliot Loewenstern, 56, of Boca Raton, Florida, in an indictment charging one count of conspiracy to defraud the United States and pay and receive health care kickbacks and four counts of health care kickbacks.  Stockett and Harry were separately charged with one count of conspiracy to commit money laundering.  The case against Harry and Loewenstern is pending before Judge Arleo.  Trial has not been set. 

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

This case was investigated by the FBI, HHS-OIG and IRS-CI.  Acting Assistant Chief Jacob Foster and Trial Attorney Darren Halverson of the Criminal Division’s Fraud Section are prosecuting the case.

The Fraud Section leads the Medicare Fraud Strike Force.  Since its inception in March 2007, the Medicare Fraud Strike Force, which maintains 14 strike forces operating in 23 districts, has charged nearly 4,000 defendants who have collectively billed the Medicare program for more than $14 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.

Any doctors or medical professionals who have been involved with alleged fraudulent telemedicine and DME marketing schemes – including Video Doctor USA and AffordADoc – should call to report this conduct to the FBI hotline at 1-800-CALL-FBI.

Additional documents related to the investigation and prior indictments are available here: https://www.justice.gov/opa/documents-and-resources-april-9-2019-press-release-health-care-fraud.

A Houston, Texas, attorney was convicted today of one count of conspiracy to defraud the United States and three counts of tax evasion, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Department of Justice’s Tax Division and U.S. Attorney Ryan K. Patrick for the Southern District of Texas.

According to the evidence presented at trial, Jack Stephen Pursley, also known as Steve Pursley, conspired with a former client to repatriate more than $18 million in untaxed income that the client had earned through his company, Southeastern Shipping. Knowing that his client had never paid taxes on these funds, Pursley designed and implemented a scheme whereby the untaxed funds were transferred from Southeastern Shipping’s business bank account, located in the Isle of Man, to the United States. Pursley helped to conceal the movement of funds from the Internal Revenue Service (IRS) by disguising the transfers as stock purchases in United States corporations owned and controlled by Pursley and his client.

At trial, the government proved that Pursley received more than $4.8 million and a 25% ownership interest in the co-conspirator’s ongoing business for his role in the fraudulent scheme. For tax years 2009 and 2010, Pursley evaded the assessment of and failed to pay the income taxes he owed on these payments by, among other means, withdrawing the funds as purported non-taxable loans and returns of capital. The government showed at trial that Pursley used the money he garnered from the fraudulent scheme for personal investments, and to purchase assets for himself, including a vacation home in Vail, Colorado and property in Houston, Texas.

Judge Lynn Hughes has set sentencing for Dec. 9. Pursley faces a statutory maximum sentence of five years in prison for the conspiracy count, and five years in prison for each count of tax evasion. He also faces a period of supervised release, monetary penalties, and restitution.

Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney Patrick commended special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorneys Sean Beaty, Grace Albinson, and Jack Morgan of the Tax Division, who prosecuted this case.

Additional information about the Tax Division’s enforcement efforts can be found on the division’s website.

The United States District Court for the Middle District of Florida has permanently barred defendant Gladys Quiles from preparing federal tax returns for others, the Justice Department announced today.

The complaint filed by the United States alleged that Quiles did not sign the tax returns she prepares and does not identify herself in any way on the returns, instead operating as a “ghost preparer.” The complaint further alleged that she repeatedly and continually prepared tax returns that understated liabilities and overstated refunds. Her alleged schemes included fabricating business income or expenses reported on Schedule C, Profit or Loss from Business, and deducting false employee business expenses on Schedule A, Itemized Deductions.

The injunction was entered against Quiles by default because she failed to defend against the government’s allegations. The complaint alleges that Quiles lives in Orlando, Florida.

Return preparer fraud is one of the IRS’ Dirty Dozen Tax Scams for 2019 and taxpayers seeking a return preparer should remain vigilant. Ghost preparers neither sign the returns they prepare nor include their Preparer Tax Identification Number (PTIN) on those returns, despite their obligations to do so. The IRS has cautioned taxpayers about ghost preparers because ghost preparers can hurt honest taxpayers who are simply trying to do the right thing and file a legitimate tax return. The IRS has information on its website about selecting a return preparer and has launched a free directory of federal tax preparers.

In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department’s website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.

Two Austin, Texas, residents were sentenced today for criminal offenses arising out of a seven-year scheme to defraud the Internal Revenue Service (IRS), announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division. 

United States District Court Judge Xavier Rodriguez sentenced Michael Herman to 21 months in prison, and Cynthia Herman to five years of probation. On May 20, 2019, an Austin jury convicted Michael Herman and Cynthia Herman (the “Hermans”) of conspiring to defraud the United States by impeding and impairing the IRS and filing false 2010 and 2011 individual income tax returns. Michael Herman was also convicted of filing false 2010 through 2012 corporate income tax returns.

According to evidence introduced at trial and witness testimony, the Hermans owned and operated: Cindy’s Gone Hog Wild, a restaurant and bar in Travis County, Texas, and two restaurants in Bastrop County, Texas, Cindy’s Downtown and Hasler Brothers Steakhouse. The Hermans skimmed cash from the restaurants by depositing only a portion of the cash receipts into their business bank accounts and reporting only those limited deposits on the corporate and individual income tax returns. The Hermans also paid for personal expenses out of the business accounts, including repair of their swimming pool, utilities for their home and the salary of a household employee. As a result, the personal returns filed by the Hermans falsely underreported income and businesses’ corporate returns and falsely deducted personal expenses as business expenses.

Judge Rodriguez also ordered the defendants to pay $157,719 in restitution, and Michael Herman to serve three years of supervised release.

Principal Deputy Assistant Attorney General Zuckerman thanked agents of IRS-Criminal Investigation, who conducted the investigation, and Trial Attorneys Robert A. Kemins and David Zisserson, who prosecuted the case. Principal Deputy Assistant Attorney General Zuckerman also thanked the U.S. Attorney’s Office for the Western District of Texas (Austin Division) for their substantial assistance.

Additional information about the Tax Division’s enforcement efforts can be found on the division’s website.

The Department of Justice filed a civil antitrust lawsuit today seeking to block Novelis Inc.’s proposed acquisition of Aleris Corporation in order to preserve competition in the North American market for rolled aluminum sheet for automotive applications, commonly referred to as aluminum auto body sheet. 

The Antitrust Division’s lawsuit alleges that the transaction would combine two of only four North American producers of aluminum auto body sheet.  Automakers rely on Novelis and Aleris to produce aluminum parts for automobiles to make cars lighter, more fuel-efficient, safer and more durable.  The department filed its lawsuit in the U.S. District Court for the Northern District of Ohio.

The Antitrust Division has agreed with defendants to refer the matter to binding arbitration should certain conditions be triggered.  The arbitration would resolve the issue of product market definition.  The arbitration would take place pursuant to the Administrative Dispute Resolution Act of 1996 (5 U.S.C. § 571 et seq.) and the Antitrust Division’s implementing regulations (61 Fed. Reg. 36,896 (July 15, 1996)).  This would mark the first time the Antitrust Division is using this arbitration authority to resolve a matter. 

“Automakers increasingly need aluminum auto body sheet to satisfy American consumers’ demand for larger vehicles that are lighter and more fuel-efficient.  The loss of a competing supplier of aluminum auto body sheet ultimately would harm American car buyers,” said Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division.  “This arbitration would allow the Antitrust Division to resolve the dispositive issue of market definition in this case efficiently and effectively, saving taxpayer resources.  Alternative dispute resolution is an important tool that the Antitrust Division can and will use, in appropriate circumstances, to maximize its enforcement resources to protect American consumers.”

As alleged in the complaint, Aleris is an aggressive competitor whose expansion into the North American market had an immediate impact on pricing in North America.  If this deal were allowed to proceed, Novelis would lock up 60 percent of projected total domestic capacity and the vast majority of uncommitted capacity, enabling the company to raise prices, reduce innovation and provide less favorable terms of service to the detriment of automakers and ultimately American consumers.  Novelis’s acquisition of Aleris would eliminate a rival it described as “poised for transformational growth.”  The complaint quotes internal presentations and emails describing an anticompetitive rationale for the transaction:

• Novelis worried that Aleris could be sold to a “[n]ew market entrant in the US with lower pricing discipline” than Novelis, and that an “[a]lternative buyer [was] likely to bid aggressively and negatively impact pricing” in the market.
• “[A]n acquisition by us as the market leader will help preserve the industry structure versus a new player . . . coming into our growth markets and disturbing the industry structure to create space for himself, while hurting us the most.” 

Novelis is a Canadian corporation headquartered in Atlanta, Georgia.  It offers flat-rolled aluminum products in three segments: automotive, beverage can and specialty products.  In the fiscal year ending March 31, 2019, Novelis’s revenues were approximately $12.3 billion.  Novelis is a wholly-owned subsidiary of Hindalco Industries Ltd., an Indian company headquartered in Mumbai, India. 

Aleris is a Delaware corporation headquartered in Cleveland, Ohio.  It offers flat-rolled aluminum products to the automotive, aerospace, and building and construction industries, among others.  In 2018, Aleris’s revenues were approximately $3.4 billion. 

A federal district court in Washington, D.C. today entered a final order giving effect to the settlement that the Department of Justice reached with CVS Health Corporation and Aetna Inc., which required the parties to divest Aetna’s Medicare Part D prescription drug plan (PDP) business for individuals in order to proceed with their $69 billion merger.  The divestiture to WellCare Health Plans Inc., an experienced health insurer focused on government-sponsored health plans, including Medicare Part D individual prescription drug plans, resolved the department’s competition concerns with the underlying transaction.

“I am pleased with the Court’s decision finally to enter the judgment as ‘well within the reaches of the public interest’ !” said Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division.  “The divestiture of Aetna’s individual PDP business provides a comprehensive remedy to the harms the Justice Department identified.  The entry of the Final Judgment protects seniors and other vulnerable customers of individual PDPs from the anticompetitive effects that would have occurred if CVS and Aetna had merged their individual PDP businesses.”   

The department’s Antitrust Division, along with the offices of five state Attorneys General, filed a civil antitrust lawsuit on Oct. 10, 2018, in the U.S. District Court for the District of Columbia to enjoin the proposed transaction.  At the same time, the department and the Plaintiff States filed the proposed settlement, which the Court entered today.  The participating state Attorneys General offices represent California, Florida, Hawaii, Mississippi and Washington.

CVS, headquartered in Woonsocket, Rhode Island, is the nation’s second-largest provider of individual prescription drug plans, with approximately 4.8 million members.  It also operates a retail pharmacy chain and a pharmacy benefit manager called Caremark.  CVS earned revenues of approximately $185 billion in 2017.  

Aetna, headquartered in Hartford, Connecticut, was the nation’s third-largest health-insurance company and fourth-largest individual prescription drug plan insurer, with over two million prescription drug plan members.  Aetna earned revenues of approximately $60 billion in 2017.  

The Department of Justice announced today that it has reached a settlement agreement with U.S. Security Associates Inc. (USSA), which was recently acquired by Allied Universal Holdco LLC (Allied Universal) – the largest private security firm in the United States. Prior to its acquisition, USSA provided security services to hospitals, schools, financial institutions, government facilities, events, and other businesses. The settlement resolves a claim that USSA’s Falls Church, Virginia office violated the anti-discrimination provision of the Immigration and Nationality Act (INA) by discriminating against work-authorized non-U.S. citizens when verifying their work authorization. The settlement applies to USSA and Allied Universal.

“The Department of Justice is committed to ensuring that employers do not unlawfully discriminate because of citizenship status or national origin when requesting documents to verify employees’ work authorization,” said Assistant Attorney General Eric Dreiband of the Civil Rights Division. “We are pleased that USSA and its successor, Allied Universal, have agreed to resolve this matter with the Division and ensure that their Falls Church office complies with the anti-discrimination provision of the INA.”

The Department’s independent investigation concluded that, from at least Jan. 1, 2015, to July 30, 2018, USSA’s Falls Church, Virginia, office required lawful permanent residents to provide specific documentation to prove their work authorization, while not imposing a similar requirement on U.S. citizens. Federal law allows all work-authorized individuals, regardless of citizenship status, to choose which valid, legally acceptable documents to present to demonstrate their ability to work in the United States. The anti-discrimination provision of the INA prohibits employers from requesting more or different documents than necessary to prove work authorization based on employees’ citizenship status or national origin.

Under the settlement, USSA or its successor will pay $194,000 in civil penalties to the United States and be subject to departmental monitoring and reporting requirements. Additionally, certain employees will be required to attend training on the requirements of the INA’s anti-discrimination provision.

The Division’s Immigrant and Employee Rights Section (IER) is responsible for enforcing the anti-discrimination provision of the INA. Among other things, the statute prohibits citizenship status and national origin discrimination in hiring, firing, or recruitment or referral for a fee; unfair documentary practices; and retaliation and intimidation. 

For more information about protections against employment discrimination under immigration laws, call IER’s worker hotline at 1-800-255-7688 (1-800-237-2515, TTY for hearing impaired); call IER’s employer hotline at 1-800-255-8155 (1-800-237-2515, TTY for hearing impaired); sign up for a free webinar; email IER@usdoj.gov; or visit IER’s English and Spanish websites.

Applicants or employees who believe they were subjected to retaliation; different documentary requirements based on their citizenship, immigration status, or national origin; or discrimination based on their citizenship, immigration status, or national origin in hiring, firing, or recruitment or referral for a fee, should contact IER’s worker hotline for assistance.

A federal court entered a consent decree of permanent injunction against defendants Basic Reset and Biogenyx, as well as their owner, Fred R. Kaufman III, and Kimberly Kaufman, the Department of Justice announced today.  The permanent injunction enjoins the defendants from distributing unapproved new drugs and misbranded and adulterated dietary supplements, and a misbranded and adulterated device in violation of the federal Food, Drug, and Cosmetic Act (FD&C Act).

The Department filed a complaint in the Middle District of Tennessee on Aug. 26, at the request of the U.S. Food and Drug Administration (FDA), alleging, among other things, that defendants unlawfully distributed unapproved new drugs and an adulterated and misbranded device.  Defendants market their drugs and device with claims that their products can be used to diagnose, cure, mitigate, treat, or prevent conditions, such as inflammation, chronic diarrhea, bacterial infections, head lice, allergies, and pain.  The FDA has not approved Basic Reset’s or Biogenyx’s drugs or device for any use.

“Drug and dietary supplement distributors who do not comply with the law risk endangering consumers,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division.  “We work closely with the FDA in our efforts to enforce the laws that are designed to keep consumers safe.”

“The public has the right to expect that products perform according to claims included in their labeling and that the products are safe for use,” said U.S. Attorney Don Cochran.  “FDA regulations exists to safeguard consumers and when those regulations are circumvented we will take whatever action is necessary to protect the public.”

“Americans expect and deserve products that meet appropriate standards for quality.  To ensure safe use by consumers, it’s important that companies who sell products adhere to standards set forth by the FD&C Act, including product labeling and quality,” said Acting FDA Commissioner Ned Sharpless, M.D. “Despite previous warnings, Basic Reset and Biogenyx placed consumers at risk by distributing certain products in violation of current good manufacturing practice (CGMP) requirements and products which failed to adequately meet labeling standards.  The U.S. Food and Drug Administration remains fully committed to taking enforcement action against companies and owners who place unsuspecting American consumers at risk.”

The complaint also alleges that Basic Reset and Biogenyx misbranded and adulterated dietary supplements.  Several of Defendants’ dietary supplements are missing information on their labels required by law.  FDA inspections also uncovered numerous violations of the agency’s CGMP regulations for dietary supplements, including failing to establish and follow written procedures to review and investigate product complaints and failing to establish specifications to assure that the products they receive for labeling are adequately identified and consistent with the purchase order.  Because Defendants failed to follow CGMP regulations, their dietary supplements are adulterated under the FD&C Act.

Basic Reset/Biogenyx is an own label distributor of various drugs, dietary supplements, and a device, and include, but are not limited to, AquaLyte, Bee Gold, Beta Factor, Body Mass Reset, CBD Reset, Dino-Min, Earth Wash, Energy FX, GH-C, Ionyte, Mello-Tonin, Miracle Facelift Masque, Nuovi Firming Masque, Nuovi Skin Toner, pH-FX, Q-min, SlimUp, TrimUp, Vibrant Energy Drink, and Energy FX.

As part of the court-ordered permanent injunction, Basic Reset, Biogenyx, and the other defendants are prohibited from receiving, labeling, holding, or distributing dietary supplements, drugs, or devices at their facility until they, among other things, recall their drugs, dietary supplements, and device, hire qualified experts, and receive written permission from the FDA to resume operations.

The United States is represented by Trial Attorney Charles Biro of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Christopher Sabis of the U.S. Attorney’s Office for the Middle District of Tennessee, with the assistance of Associate Chief Counsel Laura Akowuah of the FDA’s Office of the Chief Counsel.

Additional information about the Consumer Protection Branch and its enforcement efforts may be found at http://www.justice.gov/civil/consumer-protection-branch.  

Four residents of Lima, Peru, charged with overseeing a series of call centers that threatened and extorted Spanish-speaking victims in the United States, have been sentenced to prison, the Department of Justice and U.S. Postal Inspection Service announced.

Jesus Gutierrez Rojas, 37, Alexandra Podesta Bengoa, 38, Virgilio Polo Davila, 43, and Omar Portocarrero Caceres, 39, were extradited from Peru in April.  Each pleaded guilty to extortion and has now been sentenced to prison by U.S. District Court Judge Roy K. Altman in Fort Lauderdale.  As part of his guilty plea, Gutierrez admitted that he oversaw a series of affiliated call centers in Peru that falsely told Spanish-speaking victims across the United States that they had incurred debts and would suffer various consequences for failure to pay off the debts that they did not, in fact, owe.  As part of their guilty pleas, Podesta, Polo, and Portocarrero admitted that they managed and supervised three of these affiliated call centers that used extortion to obtain money from vulnerable U.S. consumers. 

Yesterday, Judge Altman sentenced Gutierrez to 51 months in federal prison for his role overseeing the affiliated call centers and sentenced Podesta and Polo to 46 months imprisonment.  Judge Altman sentenced Portocarrero to 46 months in federal prison on July 24.  Each defendant was also ordered to serve three years’ supervised release following their terms of incarceration and to make restitution payments to the victims of their scheme. 

“The Department of Justice is committed to identifying and prosecuting foreign-based fraud schemes that target and extort U.S. consumers,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “Today’s prison sentences reflect that those who unlawfully take advantage of U.S. consumers by phone cannot escape justice by placing their calls from abroad.  The Department of Justice’s Consumer Protection Branch will continue to work hand-in-hand with our Transnational Elder Fraud Strike Force partners to bring to justice international fraudsters who prey on vulnerable U.S. consumers.” 

As part of their guilty pleas, Podesta, Polo, and Portocarrero each admitted that their Peruvian call centers contacted U.S. consumers, many of whom were elderly and vulnerable, using Internet-based calls.  Falsely claiming to be attorneys and government representatives, Podesta, Polo, Portocarrero, and their employees falsely told victims that they failed to pay for or receive a delivery of products and threatened them into paying fraudulent settlements for nonexistent debts.  The callers falsely threatened victims with lawsuits, negative marks on their credit reports, imprisonment, or immigration consequences if they did not immediately pay for the purportedly delivered products and “settlement fees.”  Many victims made monetary payments based on these baseless extortionate threats.  

Gutierrez was the general manager of a larger company where he worked in partnership with Podesta, Polo, Portocarrer, and others to facilitate their extortion scheme.  The defendants’ associates in Miami collected the payments from thousands of victims across the U.S. 

“The reach of our U.S. justice system is long,” said U.S. Attorney for the Southern District of Florida Ariana Fajardo Orshan.  “The sentences imposed demonstrate that we are committed to prosecuting those individuals who threaten U.S. consumers no matter where they are located.”

“The U.S. Postal Inspection Service will continue to aggressively pursue and bring to justice international criminal enterprises that prey on our most vulnerable citizens by fraudulently using the U.S. Mail to further their schemes,” said Acting Miami Division Postal Inspector in Charge Lesley Allison.

At Portocarrero’s July 24 sentencing, Judge Altman said that the brazen, large-scale nature of the defendants’ scheme was “shocking.”  Judge Altman noted that the defendants exploited “the most vulnerable people in our country” and said that their offense conduct was “terribly disgraceful.”    

With yesterday’s three sentencings by Judge Altman, all five defendants who have been charged in connection with this large-scale extortion scheme have now been sentenced to terms of imprisonment.

Trial Attorney Phil Toomajian of the Department of Justice’s Consumer Protection Branch is prosecuting the case.  The U.S. Postal Inspection investigated the case.  The Criminal Division’s Office of International Affairs secured the extradition of the defendants, and the U.S. Attorney’s Office of the Southern District of Florida, the Diplomatic Security Service, and the Peruvian National Police provided critical assistance.

Since President Trump signed the bipartisan Elder Abuse Prevention and Prosecution Act (EAPPA) into law, the Department of Justice has participated in hundreds of enforcement actions in criminal and civil cases that targeted or disproportionately affected seniors. In particular, this past March the Department announced the largest elder fraud enforcement action in American history, charging more than 260 defendants in a nationwide elder fraud sweep.  The Department has likewise conducted hundreds of trainings and outreach sessions across the country since the passage of the Act.   

WASHINGTON - A U.S. Drug Enforcement Administration (DEA) special agent was convicted on August 27, 2019 by a federal jury in New Orleans, Louisiana of perjury, obstruction of justice and falsifying government records.

After a seven-day trial, Chad A. Scott, 51, of Covington, Louisiana, was found guilty of two counts of perjury, three counts of obstruction of justice and two counts of falsifying government records.  U.S. District Judge Jane Triche Milazzo of the Eastern District of Louisiana, who presided over the trial, has scheduled sentencing for Dec. 4, 2019.

According to the evidence presented during the seven-day trial, Scott, while a DEA special agent in New Orleans, committed these crimes in and around the New Orleans, Louisiana, and Houston, Texas, areas.  Specifically, the evidence showed that Scott directed a Houston-based drug trafficker to buy a Ford F-150 truck worth approximately $43,000 and forfeit the truck to Scott as part of the drug trafficker’s cooperation.  Scott then falsified the seizure paperwork for the truck in various aspects, including falsely claiming that he had seized the truck in New Orleans instead of Houston, in order to facilitate the vehicle being forfeited and given to Scott as his official government vehicle.

“Chad Scott violated his sworn commitment to serve the public and uphold justice, dishonoring the special trust that we place in each of our federal law enforcement agents,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division.  “Today’s conviction sends a clear message to the public that malfeasance by federal law enforcement officers will not be tolerated.”

“The conviction of Chad Scott reinforces the message that no one is above law,” said FBI Assistant Special Agent in Charge Riedlinger.  “Scott’s actions were selfish and placed an unnecessary stain on an otherwise stellar agency.  We commend our partners at the DEA for their unprecedented level of cooperation throughout this investigation.”

“The criminal justice system relies on law enforcement agents to act with integrity and honesty.  By soliciting bribes and compromising cases, Scott undermined the values he swore to uphold as a federal agent,” said Special Agent in Charge Robert A. Bourbon of the Justice Department’s Office of the Inspector General (DOJ-OIG).  “The Office of the Inspector General will continue to be vigilant that corrupt law enforcement agents are held accountable.”

“At its core, DEA is a law enforcement agency committed to faithful and effective service to our country and its citizens, as well as uncompromising personal and institutional integrity,” said DEA Chief Inspector Brian McKnight.  “Throughout the course of this investigation and its ultimate trial, DEA was appreciative of the professionalism and support that we received from our law enforcement partners.”

Additionally, the evidence showed that Scott convinced the same Houston-based drug trafficker, as well as another drug trafficker in Houston, to testify falsely at a federal trial in New Orleans as to the identification of a major cocaine and heroin supplier in the Houston area.  Along with obstructing justice by inducing this false testimony, Scott then himself committed perjury during a motion session as well as during the federal trial, the evidence showed.  After a trial including this false testimony, the alleged supplier was found guilty.  Once Scott’s actions and the false testimony came to light, the case against the alleged supplier was dismissed by the court at the request of the United States.

Scott has been indefinitely suspended as a DEA special agent.

Two other former Tangipahoa Parish, Louisiana Sheriff’s Office deputies who were serving as DEA task force officers in New Orleans have pleaded guilty in this investigation.  Karl Emmett Newman, 52, of Kentwood, Louisiana, pleaded guilty to unlawfully carrying a firearm in furtherance of an August 2015 robbery, which was disguised as the execution of a search warrant, as well as misappropriating money confiscated by the DEA during another search.  Johnny Domingue, 30, of Maurepas, Louisiana, pleaded guilty to possession of cocaine and misappropriating money confiscated by the DEA.

Scott is additionally charged, along with Rodney Gemar, 43, of Ponchatoula, Louisiana, a former Hammond, Louisiana police officer and DEA task force officer, with various counts, including unlawful conversion of property by a government officer or employee and removing property to prevent seizure.  Trial on those charges is set for October 2019.  Those charges are only allegations and the defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

This case was initially investigated by the Louisiana State Police and later investigated by the FBI’s New Orleans Field Division, DEA-OPR and DOJ-OIG.  Acting Deputy Chief Charles Miracle of the Criminal Division’s Narcotic and Dangerous Drug Section and Trial Attorney Timothy Duree of the Criminal Division’s Fraud Section are prosecuting the case.

 

 

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A federal court permanently enjoined a Houston, Texas, company from processing and distributing adulterated seafood products in violation of federal law, the Department of Justice announced today. 

The entered consent decree of permanent injunction follows an August 2019 complaint filed by the Department for the U.S. Food and Drug Administration (FDA) in the U.S. District Court for the Southern District of Texas.  The complaint alleged that Topway Enterprises, doing business as Kazy’s Gourmet, and the principals of the business, Jeff Liao, Ying Chen, and Adwin Liao, sold ready-to-eat fish and fishery products in a facility with serious insanitary conditions.  Specifically, the complaint alleged that FDA inspections found that the defendants failed to adequately control the growth of Listeria monocytogenes (L. mono) at their facility.

The defendants agreed to settle the litigation by the entered consent decree of permanent injunction.  As part of the settlement, the defendants must comply with specific remedial measures set forth in the injunction.  In addition, the settlement provides safeguards to ensure that future processing of ready-to-eat raw fish at the defendants’ facility comports with the requirements of the law.  The filing of the complaint and agreed settlement follows FDA’s decision in July 2019 to exercise its authority under federal law to suspend the defendants’ food facility registration.  The complaint alleges that, since the suspension, the defendants have taken positive steps to correct the problems at their facility. 

“The Department of Justice is committed to enforcing laws designed to ensure that the food we put on our tables is safe,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “We will continue to work with the FDA to take steps necessary to protect the public from potentially unsafe food.”

“One of our many important enforcement priorities is to help ensure food is safe,” said U.S. Attorney Ryan K. Patrick. “This action will help ensure compliance with federal law and FDA rules and regulations. I’m glad we were able to reach this resolution.”

“After documenting food safety violations at the Topway facility, the FDA took action to suspend Topway’s food facility registration, which prohibits the company from selling or distributing food from the facility into commerce,” said FDA Deputy Commissioner for Food Policy and Response Frank Yiannas. “We are happy the company is taking steps to correct the severe problems at their facility and the FDA continues to work with the company as it brings its facility into compliance.”

This matter was handled by Trial Attorney Joshua D. Rothman of the Civil Division’s Consumer Protection Branch, with the assistance of Assistant U.S. Attorney Andrew A. Bobb of the U.S. Attorney’s Office for the Southern District of Texas and Senior Counsel Barbara Alkalay of the Food and Drug Administration’s Office of the Chief Counsel.

For more information about the Consumer Protection Branch and its enforcement efforts, visit its website at https://www.justice.gov/civil/consumer-protection-branch.   For more information about the U.S. Attorney’s Office for the Southern District of Texas, visit its website at https://www.justice.gov/usao-sdtx.