District Not Recorded

Chairman Hoeven, Vice Chairman Udall, and Members of the Committee, thank you for this opportunity to discuss President Trump’s budget request for fiscal year (FY) 2020, particularly the substantial investments he proposes to support public safety in American Indian and Alaska Native communities. My name is Matt Dummermuth, and I am the Principal Deputy Assistant Attorney General in charge of the Office of Justice Programs (OJP), the research, statistical, and primary funding arm of the Department of Justice (DOJ).

I appear before you today on behalf of the entire Department. As you know, the Department plays a central role in carrying out federal Indian policy, alongside other agencies such as the Department of the Interior and the Department of Health and Human Services. Under the leadership of Attorney General Barr, DOJ is committed to honoring tribal sovereignty and working with tribal leaders on a government-to-government basis to help ensure public safety in native communities.

This committee hardly needs to be reminded of the serious challenges tribes face in combating violence and administering justice. As the President noted in his recent Missing and Murdered American Indians and Alaska Natives Awareness Day Proclamation, “Too many American Indians and Alaska Natives are the victims of abuse, sexual exploitation, or murder — or are missing from their communities.” Indeed, the issues facing tribal communities are both prevalent and pervasive. According to a landmark study of intimate partner violence funded by our National Institute of Justice (NIJ) and released in 2016, more than four in five American Indian and Alaska Native adults have experienced some form of violence in their lifetime, and more than half of all American Indian and Alaskan Native women experienced sexual violence in their lifetime. That is almost three million people who have experienced stalking, physical or sexual violence, or psychological aggression by intimate partners. It is also worth noting that almost all American Indian and Alaska Native victims reported experiencing violence at the hands of a non-native perpetrator at least once in their lifetime. In addition, reports funded by DOJ have exposed the staggering rates at which American Indian and Alaska Native children and youth experience violence and post-traumatic stress.

As if the sheer scale of violence were not enough, the resources that tribal professionals have at their disposal are often limited. It is an understatement to say that these men and women are often overstretched. Another NIJ report on policing in Indian country found that the typical tribal police department serves an area the size of the state of Delaware with a patrol of no more than three officers. I just had the privilege of visiting several native villages in Alaska, a truly eye-opening experience. I met with tribal leaders and justice system officials, who also showed me around their communities. I learned much about Alaska Native villages and the numerous challenges they face. On May 1, I participated in OJP’s Office for Victims of Crime (OVC) consultation with tribal leaders and representatives, and I can speak firsthand about the lack of resources available to tribal authorities to ensure law and order and respond to victims. Native villagers live in some of the most beautiful locations on earth, but the word “remote” does not begin to describe them. The President’s Budget recognizes the gravity of the problem, and proposes to direct considerable resources to supporting tribes as they develop solutions.

The Department of Justice has an extensive history of supporting tribal public safety and victim assistance. During FY 2018, DOJ’s grant-making offices—OJP, Office of Community Oriented Policing Services (COPS Office), and the Office on Violence Against Women (OVW)—awarded 225 grants totaling more than $113 million to 125 separate tribes under our Coordinated Tribal Assistance Solicitation (CTAS), which is our primary mechanism through which tribes apply for DOJ funding. CTAS enables tribes to apply for grants based on their own public safety needs, not according to some generic criteria that may or may not make sense for tribal applicants. Under CTAS, tribes can search grant opportunities by ten purpose areas—ranging from policing to services for sexual assault victims. They can then submit an application that outlines their public safety goals. We have seen success come from these awards. For example, the Pueblo of Jemez received a grant to start a community outreach and victim assistance program to combat elder abuse, a problem that is affecting a growing number of seniors throughout America. The Jemez program developed an elder code, created a system of elder advocacy services, and launched a public education campaign. This year, we established an additional purpose area to address violent crime in Native lands. The new purpose area (#10) is designed to provide key funding to Tribal justice systems to focus on combating, addressing, and responding to precipitous increases in crime within tribal communities. The goal is to assist tribes to increase their capacity to work with federal, state and local partners to investigate and prosecute serious and violent crimes, including any investigations of missing or murdered tribal members.

In addition to CTAS resources, a total of 154 grants totaling $88 million were awarded as part of OVC’s first Tribal Victim Service Set-Aside program supported by the Crime Victims Fund, a repository of federal criminal fines, fees, and special assessments. The fund includes zero tax dollars. These awards support child and elder victims, domestic violence and sexual assault survivors, victims of human trafficking, families of homicide victims, and people who have been victimized as a result of the opioid crisis. Even more funding—$168 million—will be available under the set-aside this year.

DOJ has also created and invested in innovative training and assistance programs, which will be instrumental to the tribes in developing victim service programs. For instance, programmatic technical assistance is available to help develop the programs proposed by the tribes, and likewise a Financial Management Training Center now offers the tools and training to establish strong accounting systems and other important principles to increase the chance of success for the grantees. This training is designed for individuals responsible for the financial administration of grants awarded from federal programs administered by various bureaus and offices at the Department, and DOJ is offering an online version of the seminars to give tribes the ability to complete federal grants management training, regardless of their location. All of these new programs will help improve the response of tribes to the victims of crime. This year, OJP will continue to support a range of critical training and technical assistance to tribes including regional trainings available for all tribes on ways to prepare for and apply for funding to support their work. In FY 2020, OJP’s Bureau of Justice Assistance is planning to launch new training and technical assistance specifically to support native Alaskan Villages and native corporations.

Much has been said about the levels of crime and violence in Indian country and the Alaska Native villages and the “missing and murdered crisis” within the American Indian and Alaska Native tribal communities. We know the loss, trauma, and need for answers span generations. To that end, NIJ’s National Missing and Unidentified Persons Program, also referred to as NamUs, is addressing the issue of missing and murdered indigenous women and children. In December 2018, NamUs added five tribal data fields to its system to assist all law enforcement and the families of the missing to add tribal detail to the cases that are entered. NamUs also started a Victim Services Unit in March of this year with funding from OVC. This unit will address the needs of all victims and the families of the missing persons that are entered into NamUs, including those in tribal communities. Recognizing that AI/AN cases were underrepresented in NamUs, NIJ and NamUs staff have made significant and targeted efforts to increase awareness over the past two years. We have launched an outreach campaign to tribal law enforcement, leadership, and community members to ensure the communities are aware of the technology and technical assistance, which is available free to all tribal nations.

Additionally, the Department is committed to improving the collection of tribal crime data. We are partnering with the Bureau of Indian Affairs (BIA), Office of Justice Services to conduct the 2019 Census of Tribal Law Enforcement Agencies, which we expect later this year. This is the first tribal law enforcement collection since the passage of the Tribal Law and Order Act (TLOA) in 2010, and will feature information on staffing and workload activities, including how both tribal and BIA police departments respond to domestic violence, opioids matters and human trafficking on tribal lands. We are also pleased to report that we are actively working with over 150 tribes on sex offender registration and notification, and 134 tribes have already substantially implemented the Sex Offender Registration and Notification Act (SORNA), Title I of the Adam Walsh Child Protection and Safety Act. These tribes are now added to the comprehensive nationwide network of jurisdictions sharing sex offender registration data and are connected to the National Sex Offender Public Website. We continue to provide extensive training and technical assistance to tribes to implement and maintain their sex offender registration and notification duties and, in FY 2018, OJP’s Office of Sex Offender Sentencing, Monitoring, Apprehending, Registering, and Tracking provided $5.1 million under the Support for Adam Walsh Act Implementation Grant Program to 21 tribes.

These are historic investments in tribal public safety and victim assistance programs, and the President’s Budget for FY 2020 proposes to build on this commitment. The budget requests a total of $523.1 million in tribal public safety resources, including $298 million in grant funding and $152 million for the Federal Bureau of Prisons to support the Native American inmate prison population. This would be an increase over FY 2019 funding.

In a demonstration of the Administration’s commitment to its tribal partners, the President’s FY 2020 Budget requests a set-aside of up to seven percent of OJP’s discretionary funds to support public safety and victim assistance in Indian country. This set-aside, which we estimate will amount to approximately $127.1 million, will provide a flexible and consistent source of grant funding for tribes by providing the resources for tribal efforts to prevent, treat, and address crime and substance abuse. This will be done through efforts such as tribal courts, prosecution, and healing to wellness courts, victim service programs, tribal criminal and civil legal assistance, and tribal probation, jails and reentry programs. The set-aside will also support tribal justice system planning, including activities outlined in TLOA, and critical investments in tribal justice infrastructure through renovation and repurposing of tribal justice facilities. In addition, it would fund tribal youth programs and a tribal youth resource center that provides free training and technical assistance to all federally recognized tribes.

The set-aside could also be used to support the Tribal Access Program (TAP), which allows tribal criminal and non-criminal justice agencies to access national crime databases, enabling them to enter and access protection orders and information about missing or wanted persons, obtain criminal histories, input sex offenders into the Federal Bureau of Investigation’s National Sex Offender Registry, and exchange critical data across the Criminal Justice Information Services systems.

In addition, the FY 2020 President’s Budget also requests an allocation of $115 million from the Crime Victims Fund for the Tribal Victim Service Set-Aside program and other efforts designed to serve American Indian and Alaska Native crime victims.

Turning to DOJ’s other grant-making components, the COPS Office includes two programs designed specifically for tribes—the Tribal Resources Grant Program and the COPS contribution to TAP. The Tribal Resources Grant Program will be supported by funding derived from OJP’s discretionary tribal assistance set-aside in FY 2020. This program, which is available to tribes through the CTAS, provides 100 percent of funding for an officer’s salary and benefits for three years. It also covers costs for equipment and training, as well as efforts to fight methamphetamine and heroin addiction.

In addition, tribes are eligible for funding under the COPS Hiring Program, which provides 75 percent funding for officer salary and benefits for three years. The FY 2020 President’s Budget requests $99 million in funding for this program under OJP’s State and Local Law Enforcement Assistance account. In addition to supporting the hiring of law enforcement officers, the COPS Hiring Program also supports the Collaborative Reform Initiative Technical Assistance Center, or CRI-TAC. This resource provides critical technical assistance to government law enforcement agencies, including tribal agencies. This assistance is tailored to the tribe’s specific needs and is available on a “by-the-field, for-the-field” approach that uses leading experts in a range of topics related to public safety, crime reduction, and community policing. Because different needs require different methods, CRI-TAC uses a variety of approaches, such as training, peer-to-peer consulting, analysis, coaching, and strategic planning.

The FY 2020 President’s Budget for OVW consists of $56 million to support programs and initiatives in Indian country. Of this amount, $40.2 million is for OVW’s Tribal Governments Program, which is designed to enhance the ability of tribes to respond to domestic violence, dating violence, sexual assault, and stalking; enhance victim safety; and develop education and prevention strategies. This amount also includes $6.8 million for the Tribal Coalitions Program, $3.5 million for the Tribal Sexual Assault Services Program, $500,000 for the Indian County Sexual Assault Clearinghouse, $1 million for Research on Violence Against Indian Women, and $4 million for the Tribal Special Domestic Violence Criminal Jurisdiction Program.

Within OVW, tribes are also eligible to apply for a number of other OVW discretionary grant programs, including programs focused on abuse in later life, the needs of victims with disabilities, and challenges faced by rural communities in addressing domestic violence, dating violence, sexual assault, and stalking.

The Department also seeks authority to use prior year OVW appropriations for tribal-specific sex offender and protection order registries to provide funds to tribes through TAP. The Department has concluded that, rather than investing funds in developing new and incomplete tribal-specific registries, the purpose for which these funds were appropriated—protecting tribal communities from perpetrators of domestic and sexual violence—would be better served by facilitating tribes’ ability to enter and obtain information from existing federal databases.

I hope you will agree that these are substantial investments that reflect a strong commitment on the part of this Administration to support our tribal partners. Of course, these budget items are only one element—albeit a significant element—of the Department’s efforts to enhance public safety in American Indian and Alaska Native communities.

We are moving forward with activities to address the crisis of missing persons in Indian country. In my dual role as National AMBER Alert Coordinator, I am devoting resources to fortifying the network of AMBER Alert systems in Indian country, including an AMBER Alert in Indian Country training conference that will be held at the end of July 2019. We continue to hold a regular series of government-to-government consultations and listening sessions with tribes, along with a biennial Indian Nations Conference that brings together hundreds of tribal officials from across the country to be trained on a range of public safety issues. We are helping to combat sex trafficking which can bring victims from American Indian and Alaska Native communities into urban areas where they are often lost and forgotten.

And beyond the Department’s grant-making components, DOJ works through the Office of Tribal Justice and the network of tribal liaisons in the Offices of the United States Attorneys to improve law enforcement functions and reduce crime. The Executive Office for U.S. Attorneys also trains federal, state, local, and tribal attorneys and law enforcement staff on law enforcement issues in Indian country. In addition, the Environment and Natural Resources Division represents the Department of the Interior and other federal agencies on litigation matters related to water rights, reservation boundaries, land-into-trust decisions, and other matters affecting federally recognized tribes and their members.

As I mentioned earlier, I visited a handful of tribes in Alaska of varying sizes, with varying needs, in different parts of the state with different geographic and climate challenges, in addition to having participated in a tribal consultation. The feedback I heard at our consultation, and the conversations I had through my additional meetings, both served to reinvigorate my commitment to finding solutions to address these issues tribes confront and deepened my understanding of the real, on-the-ground, practical challenges facing tribal communities.

The Department of Justice remains committed to working with our tribal partners. With the investments requested in the FY 2020 President’s Budget, I am confident that we will help deliver the resources they need to protect citizens, safeguard their communities, and serve crime victims. We will continue to work hard, along with this committee, on their behalf. Thank you, and I look forward to addressing your questions.

Today, the Attorney General will travel to El Salvador to meet with deployed Department of Justice employees, diplomats, and law enforcement officials from the Northern Triangle countries to advance key Department priorities, including interdicting illegal narcotics, dismantling MS-13, the 18th Street Gang and other transnational criminal organizations, and combatting illegal migration and human trafficking. While in El Salvador, the Attorney General will also tour the International Law Enforcement Academy and participate in the Third Ministerial of the Northern Triangle Attorneys General in order to further strengthen our international law enforcement partnerships, which are critical to stopping the flow of drugs, illegal guns, and human trafficking before they can reach our Southern Border.  

“International cooperation is the key to countering the scourge of MS-13 and other vicious transnational criminal organizations,” said Attorney General William P. Barr. “We have to eradicate these gangs wherever we find them before they threaten the safety of all of our communities. In order to incapacitate MS-13 and similar groups, we will use all lawful tools within and outside our borders to make sure these criminals face justice. This trip is an important step in furthering this Administration priority.”

Attorney General William P. Barr issued the following statement: 

“All who work with Claire Murray are impressed with her sharp intelligence, thoughtfulness, and work ethic. During her time at Kirkland & Ellis, she rose to become a partner within just two years of joining the firm. She also has a remarkable record of public service, including serving as an Associate White House Counsel, as a clerk for two of today's Supreme Court justices, and in both appellate and line prosecutor roles at the Department of Justice. I want to thank Jesse Panuccio for his hard work over these past two years as Principal Deputy Associate Attorney General, and I am pleased to appoint Claire to succeed him.” 

On May 1, 2019, the Antitrust Division joined the Framework on Competition Agency Procedures as a founding member.  This historic multilateral agreement recognizes fundamental principles of transparency and procedural fairness in antitrust enforcement and promotes review mechanisms to ensure that participating agencies abide by these norms.  The framework adopted the principles outlined by the Multilateral Framework on Procedures, as described by Assistant Attorney General Makan Delrahim in a speech at the Council on Foreign Relations on June 1, 2018.  It was adopted by the International Competition Network (ICN) on April 3, 2019, and it became open for all national, supranational, and customs territory-specific competition agencies, both ICN member and non-member agencies, to join as participants on May 1, 2019.

“I encourage our antitrust enforcement partners around the world to become founding members of this historic multilateral framework on procedures,” said Assistant Attorney General Makan Delrahim of the Antitrust Division.  “Broad participation in the new framework will demonstrate our universal commitment to transparency and fairness, and it will strengthen cooperation among and confidence in antitrust enforcement agencies across the globe.”

The Framework on Competition Agency Procedures will come into effect on May 15, 2019, at an inauguration ceremony of the founding members during the ICN annual conference in Cartagena, Colombia.

The ICN, founded by 15 agencies including the Department of Justice’s Antitrust Division, was created in October 2001 to increase understanding of competition policy and promote convergence toward sound antitrust enforcement around the world.  The ICN has grown to include 138 member agencies from 125 jurisdictions, supported by a wide network of non-governmental advisors from around the world.

The text of the Framework on Competition Agency Procedures can be found here.

Banca IMI Securities Corp. (Banca IMI), a New York broker-dealer, pleaded guilty to an antitrust charge and was sentenced to pay a criminal fine in excess of $2 million for its involvement in a bid-rigging conspiracy for certain financial instruments, the Department of Justice announced today.

Banca IMI admitted, as part of its guilty plea, that from March 2012 until at least August 2014, it conspired with other institutions and individuals to submit rigged bids to borrow pre-release American Depository Receipts (ADRs).  Worldwide, thousands of publicly traded companies list their shares of common stock only on foreign stock exchanges.  Most U.S. investors are unable to purchase or sell such foreign shares.  The U.S. Securities and Exchange Commission, however, permits four U.S. depository banks to create ADRs, which represent foreign ordinary shares and can be traded in the United States.  Through the purchase and sale of ADRs, U.S. investors are able to gain exposure to — including the ability to receive dividends from — companies whose common stock is listed only on foreign stock exchanges. 

Banca IMI pleaded guilty to conspiring to borrow pre-release ADRs from U.S. depository banks at artificially suppressed rates.  During the conspiracy, a U.S. depository bank began using an auction-style process for pre-release ADRs and invited Banca IMI and other broker-dealers to submit competitive bids for rates to borrow ADRs.  In response, Banca IMI and its co-conspirators intensified their coordination in an effort to increase artificially their profits under the auction-style process.  On at least 30 occasions, Banca IMI reached an agreement with one or more co-conspirators as to the bids they would submit to U.S. depository banks.  On many occasions, the conspirators agreed that they all would submit the same bid. 

“Today’s charge represents the commitment of the Department of Justice and its law enforcement partners to uncovering and prosecuting cheaters who corrupt our financial and capital markets,” said Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division.  “Complex financial markets are not beyond the reach of the antitrust laws.  The Antitrust Division will aggressively pursue criminals in technically complicated markets, including those that some wrongly presume may be beyond detection or the reach of antitrust enforcement.”

“The FBI is committed to rooting out corruption and fraud against the United States wherever it occurs,” said Assistant Director Robert Johnson of the FBI’s Criminal Investigative Division.  “The guilty plea today is the result of the FBI International Corruption Unit’s persistent and ongoing efforts to protect competition and identify those engaged in anticompetitive, fraudulent conduct. We will continue to pursue antitrust investigations aggressively with our DOJ partners.”

The Washington Criminal II Section of the Antitrust Division and the FBI’s International Corruption Unit are conducting the investigation into bid rigging in the market for pre-release ADRs.  Anyone with information in connection with this investigation is urged to call the Antitrust Division’s Washington Criminal II Section at 202-598-4000 or visit www.justice.gov/atr/contact/newcase.html.

The United States District Court for the Southern District of Florida entered a permanent injunction against Katiusca “Kathy” Rigaud (aka Kathy Leger), Andy Jean, and Bar Professional Services LLC (Tax Kings & Queens), barring them from preparing federal income tax returns for others, the Justice Department announced today.

The complaint alleges that Kathy Rigaud, Andy Jean, and Tax Kings & Queens — along with another defendant who was not subject to today’s order — prepared nearly 3,000 tax returns between 2013 and 2018, with the vast majority claiming a refund. According to the complaint, the defendants did not consistently identify themselves as the preparer on returns they prepared, as required by law. The complaint further alleges that the defendants’ practices included submitting false Schedules C (Profit or Loss from Business) for fictitious businesses to secure bogus earned income tax credits for their customers; and claiming false employee business expense deductions on Schedules A. 

Rigaud, Jean, and Tax King & Queens consented to the permanent ban. The fourth defendant, Janet Morales, has not responded to the complaint.

Return preparer fraud is one of the IRS’ Dirty Dozen Tax Scams and taxpayers seeking a return preparer should remain vigilant. 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.

A United States entertainer and businessman and a Malaysian financier were charged  in a four-count indictment unsealed today in the District of Columbia for conspiring to make and conceal foreign and conduit campaign contributions during the United States presidential election in 2012, announced Assistant Attorney General Brian Benczkowski of the Justice Department’s Criminal Division.

Prakazrel “Pras” Michel, 46, and Low Taek Jho, 37, also known as “Jho Low,” were charged with one count of conspiracy to defraud the United States government and for making foreign and conduit campaign contributions.  Michel also was charged with one count of a scheme to conceal material facts and two counts of making a false entry in a record in connection with the conspiracy.  Michel appeared today for his arraignment before U.S. Magistrate Judge G. Michael Harvey in the District of Columbia.  Low remains at large.

According to the indictment, between June 2012 and November 2012, Low directed the transfer of approximately $21,600,000 from foreign entities and accounts to Michel for the purpose of funneling significant sums of money into the United States presidential election as purportedly legitimate contributions, all while concealing the true source of the money.  To facilitate the excessive contributions and conceal their true source, Michel paid approximately $865,000 of the money received from Low to about 20 straw donors, or conduits, so that the straw donors could make donations in their names to a presidential joint fundraising committee.  In addition, Michel personally directed more than $1 million of the money received from Low to an independent expenditure committee also involved in the presidential election in 2012.

The indictment also alleges that by funneling campaign contributions through straw donors, Michel caused a presidential joint fundraising committee to submit false reports to the Federal Election Commission (FEC), including a false amended report in June 2013.  The committee’s reports were false because they identified the straw donors, rather than Low or Michel, as the true source of the contributions.  In addition, the indictment alleges that by contributing more than $1 million of the money he received from Low to an independent expenditure committee, Michel also caused that committee to submit false reports to the FEC, insofar as those reports identified Michel as the source of the contributions when, in fact, it was Low.  The indictment further alleges that in June 2015, Michel submitted a false declaration to the FEC in which he claimed that he had no reason to conceal the true source of his contributions to the independent expenditure committee in 2012, even though Michel knew that the true source of that money was Low and that Michel had funneled the foreign money into the election.       

Low was indicted previously, along with former banker Ng Chong Hwa, also known as “Roger Ng,” in the Eastern District of New York for conspiring to launder billions of dollars and to violate the Foreign Corrupt Practices Act.  That case remains pending.

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

The FBI’s International Corruption Squad in New York is investigating the case.  Trial Attorneys Sean F. Mulryne and Nicole Lockhart of the Criminal Division’s Public Integrity Section are prosecuting the case.

The Department of Justice filed a Statement of Interest today arguing that a proposed class action settlement involving hand soap would afford little value to consumers while handsomely compensating attorneys.

Plaintiffs in the case, In re: Dial Complete Marketing & Sales Practices Litig., alleged that The Dial Corp. falsely advertised its “Dial Complete” hand soaps containing triclosan as more effective at killing germs over other brands’ soap. Under a proposed settlement reached between the parties, Dial would pay $2.32 million to class members, with most class members receiving up to $8.10 in compensation for previous purchases of certain soap products. The settlement also provides for injunctive relief that would require Dial to refrain from using triclosan or claiming that its hand wash product “Kills 99% of Germs.”

Under the agreement, class counsel would seek a total of $3.825 million in attorney’s fees without opposition from Dial, including $1.9 million in fees specifically tied to obtaining the injunctive relief. In its Statement of Interest, the United States argues that the injunction would provide no benefit to consumers, given that Dial years ago voluntarily made the same changes to its soap products that are required by the proposed injunctive relief. Moreover, the U.S. Food and Drug Administration banned the use of triclosan in such products in 2016. The case is pending in U.S. District Court for the District of New Hampshire, which must approve any settlement.

“A class action settlement that affords little meaningful consumer benefit while rewarding attorneys with sizable fees is inappropriate,” said Assistant Attorney General Jody Hunt for the Department of Justice’s Civil Division. “Congress intended to prevent these types of unbalanced settlements with the Class Action Fairness Act.”

The Class Action Fairness Act of 2005 provides the Attorney General and state officials an opportunity to review federal class action settlements before district courts grant final approval. The United States recently filed a Statement of Interest in another class action case in the Northern District of Illinois, Cowen et al. v. Lenny & Larry’s. The government argued that the Cowen settlement directed most of the settlement’s value to attorney’s fees and non-class members rather than the consumer plaintiffs. The United States also filed an amicus brief in the Sixth Circuit Court of Appeals earlier this year arguing that a class action settlement involving pressure cookers did not provide sufficient relief to consumers.

Trial Attorney Kendrack Lewis of the Civil Division’s Consumer Protection Branch represents the United States in the matter. Additional information about the Consumer Protection Branch and its enforcement efforts may be found at www.justice.gov/civil/consumer-protection-branch.

A Colombian Cali Cartel cocaine trafficker pleaded guilty today for bribing a former Homeland Security Investigations Special Agent to secure the dismissal of a drug trafficking indictment filed against him, announced Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division.

Jose Bayron Piedrahita-Ceballos, 60, of Medellin, Colombia, was extradited from the Republic of Colombia on April 5, 2019, and will be sentenced on July 19, 2019, before U.S. District Judge Robert N. Scola Jr. of the Southern District of Florida. 

According to admissions in the plea agreement, Piedrahita-Ceballosoffered 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.   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 represent to decision makers that Piedrahita-Ceballos was “unidentified” and that his case should be dismissed because “all investigative efforts” were “exhausted” all while maintaining contact with Piedrahita-Ceballos.  Ciccone also falsified the concurrence of several other federal agents and attempted to parole Piedrahita-Ceballos into the United States through the United States Department of State.

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.

U.S. Immigration and Customs Enforcement’s Office of Professional Responsibility, Department of Homeland Security’s Office of Inspector General 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 issued the following statement:

“Yesterday in the Great Hall at the Department of Justice, we celebrated Rod Rosenstein's 29 years of outstanding service to the Department of Justice, and bid a fond farewell to an exceptional Department leader and friend. Over the last year, Rod has been well-served by his Principal Deputy, Ed O'Callaghan. Ed is a top-notch attorney whose intellect, competence, judgment, and experience are evident in every task he takes on. That is why I have asked him to serve as the Acting Deputy Attorney General until the Senate confirms Deputy Attorney General Rosenstein's successor, Jeffrey Rosen. I am confident that Ed will be an excellent Acting Deputy Attorney General during this interim period."

William Patrick Syring, 61, of Arlington, Virginia, was convicted today of threatening employees of the Arab American Institute (AAI), because of their race and national origin, threatening AAI employees because of their efforts to encourage Arab Americans to participate in political and civic life in the United States, and transmitting threats to AAI employees in interstate commerce. Syring was convicted on all 14 counts in the indictment.

“Threats aimed at individuals because of their race and national origin have no place in our society and violate federal civil rights laws,” said Assistant Attorney General Eric Dreiband. “The Department of Justice will continue to hold criminals accountable who commit such acts of hate so that all individuals in this country can engage in civic life and political discourse.”

Evidence presented at trial established that from 2012 to 2017, Syring sent over 700 emails to AAI employees, culminating in five death threats in 2017. According to court documents, Syring previously pleaded guilty in 2008 to sending threatening emails to AAI employees. Evidence presented at trial showed that Syring used nearly identical language that he admitted were threats in 2008 as he did in 2017.

According to testimony in court, AAI employees were frightened of Syring, because he had sent them death threats in the past and continued to do so over a decade later. Additionally, according to witness testimony, many AAI employees lived in fear that Syring would follow through his threats and physically harm them. They further testified to the toll it took on them personally and their families and loved ones.

Sentencing is set for Aug. 9. The maximum penalties for the convictions is 42 years of imprisonment.

The case was investigated by the FBI Washington Field Office and is being prosecuted by Civil Rights Division Senior Legal Counsel Mark Blumberg and Trial Attorney Nick Reddick.

The Department of Justice  announced today that it filed a lawsuit against Chancery Staffing Solutions LLC (Chancery Staffing), a temporary staffing agency headquartered in New York. Chancery Staffing is the successor to TransPerfect Staffing Solutions LLC (TransPerfect Staffing) and continues to do business as both TransPerfect Staffing Solutions and TransPerfect Legal Solutions. The lawsuit alleges that TransPerfect Staffing discriminated against non-U.S. citizens and dual U.S. citizens in violation of the Immigration and Nationality Act (INA), and that Chancery Staffing is liable for the discrimination as its successor. 

“Staffing agencies must be diligent in satisfying their obligation under the INA to avoid citizenship status discrimination against U.S. citizens and protected non-citizens, even when that discrimination is requested by a client,” said Assistant Attorney General Eric Dreiband of the Civil Rights Division. “The Department of Justice is committed to challenging such unlawful and discriminatory hiring practices.”

The lawsuit alleges that from at least April 4, 2017, to at least July 7, 2017, TransPerfect Staffing limited its recruitment and hiring of attorneys for a temporary document review project to U.S. citizens only. Additionally, the lawsuit alleges that from at least May 12, 2017, to July 7, 2017, TransPerfect Staffing further restricted its recruitment and hiring for positions under the project to exclude U.S. citizens who were also citizens of another country. Although it implemented these discriminatory policies at the request of a client, TransPerfect Staffing actively participated in the discriminatory hiring process and remained the employer of the document reviewers assigned to the project, according to the lawsuit. 

Under the INA, it is unlawful for employers to discriminate intentionally against U.S. citizens, U.S. nationals, recent lawful permanent residents, asylees and refugees in hiring unless required to comply with a law, regulation, executive order, Attorney General determination, or provision of a federal, state, or local government contract. Absent such a requirement, employers that limit their hiring to U.S. citizens may violate the INA’s anti-discrimination provision.               

The United States’ complaint seeks civil penalties, back pay on behalf of the workers, and other remedial relief to correct and prevent discrimination. The United States filed its suit in the Office of the Chief Administrative Hearing Officer, a specialized administrative court that Congress created to resolve such claims. 

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

More information on how employers can avoid unlawful citizenship status discrimination is available here. 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. Subscribe to GovDelivery to receive updates from IER.

Applicants or employees who believe they were subjected to discrimination based on their citizenship, immigration status, or national origin in hiring, firing, or recruitment or referral for a fee; or discrimination in the employment eligibility verification process (Form I-9 and E-Verify) based on their citizenship, immigration status, or national origin; or retaliation can file a charge or contact IER’s worker hotline for assistance.

An Austin, Texas, entrepreneur pleaded guilty today for fraudulently soliciting hundreds of thousands of dollars in political contributions through several scam-PACs that he founded and advertised as supporting candidates for the Office of the President of the United States during the 2016 election cycle. 

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and Special Agent in Charge Christopher Combs of the FBI’s San Antonio Division made the announcement.       

Kyle Gerald Prall, 40, of Austin, Texas, pleaded guilty to one count of mail fraud before U.S. Magistrate Judge Andrew W. Austin of the Western District of Texas.  A sentencing hearing has not yet been scheduled.

“Prall exploited the honest political engagement of countless citizens by representing that his organizations were supporting presidential candidates when in fact he was just stealing contributions,” said Assistant Attorney General Benczkowski.  “In addition to cheating people out of their money, fraud committed in connection with our elections corrodes public confidence in our democratic institutions.  The Department of Justice is committed to investigating and prosecuting these crimes.”

“Making donations to a political cause, campaign or candidate is an important expression of free speech and a right all Americans should enjoy,” said Special Agent in Charge Combs.  “By misappropriating the donations for his own personal use, the defendant not only violated the trust of his victims, he also deprived them of their fundamental right to free speech.  The FBI is committed to protecting this right, and holding individuals, like the defendant accountable. Before making donations citizens should be mindful of this unscrupulous fraud scheme and exercise due diligence in researching the legitimacy of an organization.”   

According to admissions made in connection with his plea, in 2015 and 2016, Prall created several political committees—including Feel Bern, HC4President and Trump Victory—which he advertised online to solicit contributions purportedly in support of presidential candidates in the 2016 election.  Prall advertised that the contributions would be used to support the candidates in various ways, including paying for transportation for voters to the polls; paying for training for volunteers to make phone calls and canvass neighborhoods to support the respective candidates; paying to help voters obtain appropriate identification documents and making contributions directly to one of the candidates and to other organizations supporting his campaign.  In reality, Prall did not intend to, and did not, use the contributions for these purposes and instead transferred much of the money to himself through sham LLC accounts and used the other funds to generate additional contributions to his fraudulent political committees.  Specifically, Prall admitted that of the $548,428 in contributions, he transferred $205,496 to himself through sham LLCs that he created for the purpose of moving the money, while contributing less than $5,100 to political causes.  Additionally, Prall used the political committees’ debit cards to pay for his personal travel and entertainment expenses, such as travel to Jacksonville, Florida and Belize; hotel stays in Miami Beach, Florida, and Austin, Texas; and to pay for food, hookah, alcohol and bottle service, “club dances performed by entertainers,” room service, minibar charges, a deep-tissue massage and a pet-cleaning fee.

As part of his plea, Prall agreed to pay restitution in the amount of $548,428—the total amount he raised—including the forfeiture of the $205,496.68 he transferred to himself through sham LLCs during the scheme. 

The FBI’s San Antonio Division is investigating the case.  Deputy Chief John D. Keller and Trial Attorney James C. Mann of the Criminal Division’s Public Integrity Section are prosecuting the case. 

On Friday, May 3, 2019, Attorney General William Barr met with Japanese Minister of Justice Takashi Yamashita at the Justice Department in Washington, DC.  The dialogue focused on the nations’ shared commitment to combatting cybercrime and transnational organized crime. The Attorney General and Minister also discussed other areas of law enforcement cooperation between the two countries. The Attorney General welcomed Japan’s recent accession to the United Nations Convention against Transnational Organized Crime (UNTOC).

Photo credit: U.S. Department of Justice

 

An Aliquippa, Pennsylvania, man was sentenced to 18 months in prison for tax evasion, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division.

According to evidence presented in open court, William Rains failed to timely file his individual income tax returns for tax years 1997, 1999, and 2003-2006. Rains also filed false returns for 2000 and 2001, reporting zero income when he in fact he had earned income in those years. The Internal Revenue Service (IRS) assessed over $200,000 in taxes against Rains for all of these years, as well as for tax year 2008.

From July 2005 through December 2016, Rains evaded the payment of his taxes and sought to thwart IRS collection efforts. He concealed his income and assets from the IRS by using multiple bank accounts, entities, a nominee, and a false IRS financial form. He also caused his wife to move money into accounts in her name and to purchase bank checks to prevent the IRS from collecting taxes he owed.

U.S. District Court Judge Donetta W. Ambrose, sitting in Pittsburgh, Pennsylvania, also ordered Rains to serve three years of supervised release and to pay $207,634 in restitution to the IRS.

Principal Deputy Assistant Attorney General Zuckerman thanked special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorneys Shawn Noud and Christopher O’Donnell of the Tax Division, who prosecuted the case.   

The Civil Division today announced the release of formal guidance to the Department of Justice’s False Claims Act litigators. The False Claims Act provides important remedies for fraud committed against the United States. The guidance announced today explains the manner in which the Department of Justice awards credit to defendants who cooperate with the Department during a False Claims Act investigation. The formal policy, included as of today in the Justice Manual Section 4-4.112, identifies the type of cooperation eligible for credit.

“The Department of Justice has taken important steps to incentivize companies to voluntarily disclose misconduct and cooperate with our investigations; enforcement of the False Claims Act is no exception,” Assistant Attorney General Jody Hunt said.  “False Claims Act defendants may merit a more favorable resolution by providing meaningful assistance to the Department of Justice – from voluntary disclosure, which is the most valuable form of cooperation, to various other efforts, including the sharing of information gleaned from an internal investigation and taking remedial steps through new or improved compliance programs.” 

Under the policy, cooperation credit in False Claims Act cases may be earned by voluntarily disclosing misconduct unknown to the government, cooperating in an ongoing investigation, or undertaking remedial measures in response to a violation. Even if the government already has initiated an investigation, for example, a company may receive credit for making a voluntary self-disclosure of other misconduct outside the scope of the government’s existing investigation that is unknown to the government. Similarly, a company may earn credit by preserving relevant documents and information beyond existing business practices or legal requirements, identifying individuals who are aware of relevant information or conduct, and facilitating review and evaluation of data or information that requires access to special or proprietary technologies.  

Under the policy, the Department of Justice will take into account corrective action that a company has taken in response to a False Claims Act violation. Such remedial measures may include undertaking a thorough analysis of the root cause of the misconduct, appropriately disciplining or replacing those responsible for the misconduct, accepting responsibility for the violation and implementing or improving compliance programs to prevent a recurrence.   

Most frequently, cooperation credit will take the form of a reduction in the damages multiplier and civil penalties. If appropriate, the Department may also notify a relevant agency about the company’s voluntary disclosure, cooperation, or remediation so that the agency can take those actions into account in deciding how to apply administrative remedies. And the Department may publicly acknowledge the company’s cooperation.   

For the full policy, click here.

A resident of Dania Beach, Florida, was sentenced to prison today for evading income tax and aiding and assisting the preparation of false tax returns, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division.

Christopher Wolf was sentenced to 24 months in prison by U.S. District Court Judge Raymond J. Dearie.  On October 4, 2018, following a trial in the U.S. District Court for the Eastern District of New York, a federal jury convicted Wolf of two counts of tax evasion and two counts of aiding and assisting the preparation of false tax returns.

According to court documents and evidence presented at trial, in 2010 and 2011, Christopher Wolf operated Rothchild & Associates LLC (“Rothchild”), in Brooklyn, New York. Rothchild was in the business of selling precious metals to investors over the telephone.  Although Wolf controlled all aspects of Rothchild’s operations, it was technically owned by a third party.  Wolf concealed the income he earned from Rothchild by instructing the third party owner to pay Wolf’s commissions to two shell corporations.

Wolf filed a false 2010 individual income tax return that did not report any of the commissions he earned selling precious metals.  For 2011, he did not file an individual tax return.  He also caused corporate income tax returns to be filed for the companies where he deposited his commissions, but included phony deductions on those returns to avoid paying the taxes he owed. Wolf’s conduct caused a tax loss of approximately $240,000 to the Internal Revenue Service (IRS).

In 2000, in an unrelated case, Wolf was convicted of securities fraud, money laundering, and conspiracy to commit wire fraud and was sentenced to prison for over ten years.

In addition to the term of imprisonment imposed, U.S. District Court Judge Dearie ordered Wolf to serve three years of supervised release and to pay $237,550 in restitution.

Acting Deputy Assistant Attorney General Goldberg thanked special agents of IRS-Criminal Investigation, who conducted the investigation, and Trial Attorneys Sean Green and Mark Kotila 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.

Two former executives were charged in an indictment unsealed today for their alleged participation in an insurance investment scheme that resulted in hundreds of millions of dollars in victim losses. 

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, Special Agent in Charge Troy A. Sowers of the FBI’s Knoxville Field Office and Special Agent in Charge Matthew D. Line of IRS Criminal Investigation’s (IRS-CI) Charlotte Field Office made the announcement. 

Andrew Scherr, 50, of Livingston, New Jersey, and Robert McGraw, 41, of Long Island City, New York, who were both executives with Southport Lane, L.P. (Southport), a New York private equity investment holding company specializing in managing investment portfolios for insurance companies, were each charged in an indictment filed in the Northern District of Texas with one count of conspiracy to commit crimes by or affecting persons engaged in the business of insurance, one count of conspiracy to commit wire fraud affecting a financial institution and five counts of wire fraud affecting a financial institution.  McGraw appeared today before U.S. Magistrate Judge Steven M. Gold of the Eastern District of New York. 

“According to the indictment unsealed today, Scherr and McGraw diverted hundreds of millions of dollars from insurance companies’ investment portfolios, leaving several companies unable to pay their policyholder claims,” said Assistant Attorney General Benczkowski.  “The Criminal Division is committed to holding accountable those who defraud investors, especially those who target companies that rely on those investments to live up to the promises made to their policyholders.”

“Disrupting this corrupt scheme demonstrates the FBI’s commitment to aggressively pursue those engaged in acts of financial fraud,” said Special Agent in Charge Troy A. Sowers.  “We commend our partner agencies essential to the investigation and prosecution of those who undermine the public’s trust.”

The indictment alleges that Scherr, McGraw and their co-conspirators defrauded insurance companies by causing them to exchange cash and other liquid, valuable assets for illiquid and fraudulently overvalued securities created by the defendants and their co-conspirators.  As alleged in the indictment, Scherr, McGraw and their co-conspirators perpetrated the scheme, in part, by acquiring insurance companies and acting as an investment advisor for insurance companies, thereby gaining access to the management of the investment portfolios of victim insurance companies.  Scherr, McGraw and their co-conspirators allegedly used Southport and affiliated entities to create fraudulently overvalued securities and replace assets held by victim insurance companies with these fraudulently overvalued and illiquid securities.  The indictment further alleges that as a result of the scheme, victim insurance companies have collectively suffered hundreds of millions of dollars in losses.      

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’s Knoxville Field Office and the IRS-CI’s Charlotte Field Office.  Deputy Chief Brian Kidd and Trial Attorneys Danny Nguyen and Caitlin Cottingham of the Criminal Division’s Fraud Section are prosecuting the case.  Trial Attorney Andrew Tyler assisted in the investigation of the case. 

The Criminal Division’s Money Laundering and Asset Recovery Section and the Securities and Exchange Commission also provided assistance in the investigation of this matter.

The Fraud Section plays a pivotal role in the Department of Justice’s fight against white collar crime around the country.

 

The Department of Justice today announced that payments totaling $2,966,000 were issued to over 2,100 individuals who experienced disability discrimination while traveling or attempting to travel on Greyhound. The payments were part of a broader settlement from 2016 resolving the Department’s complaint that Greyhound Lines Inc., the nation’s largest provider of intercity bus transportation, engaged in a nationwide pattern or practice of violating the Americans with Disabilities Act (ADA) by failing to provide full and equal transportation services to passengers with disabilities. The alleged violations included failing to maintain accessibility features on its bus fleet such as lifts and securement devices; failing to provide passengers with disabilities assistance boarding and exiting buses at rest stops; and failing to allow customers traveling in wheelchairs to complete their reservations online. 

“The Department of Justice is committed to eliminating disability-based discrimination in transportation services,” said Assistant Attorney General Eric Dreiband of the Civil Rights Division. “This settlement ensures equal travel opportunities for those with disabilities through holistic reform.”

The $2,966,000 amount is in addition to $300,000 paid by Greyhound in 2016 to specific individuals identified by the Department, bringing the total distributed to individuals to over $3,000,000. This sum stands in addition to a $75,000 civil penalty paid by Greyhound to the United States. The settlement also mandated a series of systemic reforms, including that Greyhound hire an ADA compliance manager; provide annual in-person ADA training to employees and contractors who interact with the public; provide technical training to all employees and contractors on the proper operation of the accessibility features of Greyhound’s fleet; and report every three months to the Department of Justice on its compliance efforts.  

To read the consent decree and complaint, please visit https://www.ada.gov/enforce_current.htm#grey. For more information about the ADA, call the Department’s toll-free ADA Information Line at 800-514-0301 (TDD 800-514-0383) or access the ADA website at www.ada.gov.

An Atlanta precious metals broker was sentenced to 21 months in prison today following his Dec. 12, 2018, conviction by a federal jury on three counts of failing to file income tax returns, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division. Hakim has been in custody since April 12, 2019. He was arrested and jailed after he failed to appear for his original sentencing date.

According to court documents and evidence presented at trial, Saleem Hakim was in the business of brokering the sale of precious metals to clients. As a precious metals broker, Hakim received funds from clients, converted a portion of the funds to precious metals, and kept the remainder for his personal use. For the years 2011 through 2013, Hakim retained in excess of $1 million. Despite receiving income in excess of the filing thresholds and knowing his obligation to make and file tax returns, Hakim did not file any income tax returns with the Internal Revenue Service (IRS).  Hakim is a former resident of Smyrna, Georgia, and Troy, Michigan.

In addition to the term of prison imposed, U.S. District Judge Michael L. Brown of the Northern District of Georgia ordered Hakim to serve one year of supervised release and to pay $639,006 in restitution to the IRS and $4,603.28 in costs of prosecution.

Principal Deputy Assistant Attorney General Zuckerman commended special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorneys Jeffrey Bender and Kathryn Sparks of the Tax Division, who prosecuted this case.

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

A resident of Ft. Lauderdale, Florida, and a resident of Boca Raton, Florida, each pleaded guilty today in the Eastern District of Michigan to failing to collect, truthfully account for, and pay over payroll taxes announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division.

According to court documents, Integrated HCS Practice Management LLC (Integrated), was a Southfield, Michigan, company that provided management services to healthcare providers. As the managing partner of Integrated, a partial owner of the business, and an individual who exercised control over the business’s finances, Edward Cespedes was responsible for Integrated’s payroll taxes. Payroll taxes include federal income, Social Security, and Medicare taxes withheld from the wages paid to employees of the business. Joseph DeSanto also had influence over Integrated’s expenditure of funds, and was responsible for the payroll taxes. Despite their responsibilities, Cespedes and DeSanto failed to cause Integrated to timely pay its payroll taxes to the Internal Revenue Service (IRS) for the third quarter of 2013, the fourth quarter of 2013, and the first quarter of 2014. 

Joseph DeSanto also pleaded guilty to one count of failure to file his personal tax return for 2013.

Sentencing is scheduled for Feb. 20, 2020. Both Cespedes and DeSanto face a maximum sentence of five years of imprisonment on the payroll tax charge, and DeSanto faces up to an additional one year of imprisonment on the charge related to his failure to file a tax return.

Acting Deputy Assistant Attorney General Goldberg commended special agents of the Internal Revenue Service’s Criminal Investigation Division and the Federal Bureau of Investigation, who conducted the investigation, and Tax Division Trial Attorneys Mark McDonald and William Guappone, who are prosecuting the case.

A federal court in North Carolina authorized the Internal Revenue Service (IRS) to serve John Doe summonses on Bank of America, Charles Schwab, and TD Bank in an order that was unsealed yesterday, the Justice Department announced. The John Doe summonses seek information about persons residing in Finland that have Bank of America, Charles Schwab, or TD Bank payment cards linked to bank accounts located outside of Finland. The summonses are referred to as “John Doe” summonses because the IRS does not know the identity of the persons being investigated.

“The Department of Justice and the IRS are committed to working with the United States’ international treaty partners to identify and stop individuals using hidden offshore accounts to evade tax laws,” said Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division. “The United States does not tolerate offshore tax evasion, nor does it sanction tax evasion committed through U.S. financial institutions.”

“Our continued success in combatting offshore tax noncompliance has been helped by the assistance we receive through the network of tax treaties around the globe,” said IRS Commissioner Charles Rettig. “Yesterday’s effort reflects that the U.S. will return this help by working under the law with tax administrators in other nations to help them in their fight against tax evasion and avoidance. A global economy should not be allowed to serve as a possible vehicle for tax evasion in any country.”

The United States petitioned the United States District Court for the Western District of North Carolina to authorize the summons at the request of the government of Finland under the tax treaty between Finland and the United States. That treaty allows the two countries to cooperate in exchanging information that is necessary for carrying out each country’s tax laws. The IRS summons seeks the identities of Finnish residents who have payment cards linked to bank accounts located outside of Finland so that the Finnish government can determine if those persons have complied with Finnish tax laws. Finland has advised the IRS that, in circumstances where the payment cards are used only at ATMs or in other transactions where authorization is by PIN code, and the cardholder need not identify himself or herself to the merchant, the cardholders cannot be identified from sources in Finland.

The filing does not allege that Bank of America, Charles Schwab, or TD Bank violated any U.S. or Finnish laws with respect to these accounts.

As described in the petition and supporting documents filed by the United States, the request is part of a foreign payment project being conducted by the Finnish Tax Administration (FTA), in which information on the use of payment cards issued by foreign financial institutions is used to identify non‑compliant Finnish taxpayers. Earlier FTA investigations of approximately 120 to 150 Finnish taxpayers who used foreign payment cards in a similar manner have yielded extremely high rates of tax non-compliance, as noted in the United States’ memo in support of the petition, which indicates that it is likely that the John Does sought by the summons are Finnish residents who are failing to report these foreign accounts and associated income.

The court order in this case authorizing this enforcement action is part of ongoing international efforts by the United States and its treaty partners to stop persons from using foreign financial accounts to evade taxes. Courts have previously approved John Doe summonses allowing the IRS to identify individuals using offshore accounts to evade their U.S. obligations, and have also approved John Doe summonses to be used to identify individuals using U.S. financial institutions or accounts to evade foreign tax obligations.

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

The owner of a Greenville, Ohio, glass company pleaded guilty today to failing to truthfully account for and pay over employment taxes, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division.

Gail Cooper, 64, of Greenville, was the sole owner of Greenville Architectural Glass LLC (GAG) during the years 2007 through 2015. GAG primarily installed glass in commercial and residential buildings for clients in Ohio. GAG paid wages to its employees during the years 2013 through 2015. As the person responsible for GAG’s finances, Cooper was required to withhold federal income taxes and Social Security and Medicare taxes from employees’ wages and pay those amounts to the Internal Revenue Service (IRS). Cooper was also required to file quarterly employment tax returns with the IRS. Although Cooper caused GAG to withhold taxes from employees’ wages, she neither paid those amounts over to the IRS, nor filed the required quarterly returns for the first quarter of 2013 through the second quarter of 2015. Cooper also failed to pay over to the IRS unemployment taxes. 

As part of her plea agreement, Cooper also admitted that she filed false individual income tax returns for the years 2008 – 2010 on which she understated GAG’s gross receipts and overstated its expenses.    

Cooper also admitted in plea documents that she willfully failed to file income tax returns for the years 2011 through 2014, which would have reported her income from GAG and other sources. Cooper paid a professional tax return preparer to complete returns for those years, but Cooper never filed them.

U.S. District Judge Thomas M. Rose set sentencing for Aug. 2. Cooper faces up to five years in prison and a $250,000 fine. Cooper admitted that her conduct caused a loss to the government of more than $500,000, and agreed to pay restitution to the IRS.

Principal Deputy Assistant Attorney General Zuckerman thanked special agents of IRS Criminal Investigation, who investigated the case, and Trial Attorneys Melissa S. Siskind and Thomas F. Koelbl of the Tax Division, who are prosecuting the case. Principal Deputy Assistant Attorney General Zuckerman also thanked the U.S. Attorney’s Office for the Southern District of Ohio for their assistance in this matter.

Additional information about the Tax Division and its enforcement efforts may be found on the division’s website at www.justice.gov/tax.

Nancy J. Gargula, the U.S. Trustee for Indiana and the Central and Southern Districts of Illinois (Region 10), has been designated by Attorney General William P. Barr also to serve for an interim period as the U.S. Trustee for Florida, Georgia, the Commonwealth of Puerto Rico and the U.S. Virgin Islands (Region 21) beginning today, the Executive Office for U.S. Trustees announced.  Ms. Gargula replaces Daniel M. McDermott, who has served as interim U.S. Trustee in the region since January 2018.  Under 28 U.S.C. § 585(b), the Attorney General may fill U.S. Trustee vacancies by designating an incumbent U.S. Trustee to serve in a second region. 

“As a 17-year veteran of the U.S. Trustee Program, Ms. Gargula is well positioned to assume responsibility for one of the Program’s largest regions,” said USTP Director Cliff White.  “Her knowledge and experience will serve the region well.”

The U.S. Trustee Program is the component of the Justice Department that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws.  The USTP has 21 regions and 90 field office locations.  Region 21 is headquartered in Atlanta, Georgia, with additional offices in Macon and Savannah, Georgia; Miami, Orlando, Tallahassee and Tampa, Florida; and San Juan, Puerto Rico. 

The Criminal Division announced today the release of a guidance document for white-collar prosecutors on the evaluation of corporate compliance programs.  The document, entitled “The Evaluation of Corporate Compliance Programs,” updates a prior version issued by the Division’s Fraud Section in February 2017.  It seeks to better harmonize the guidance with other Department guidance and standards while providing additional context to the multifactor analysis of a company’s compliance program.

“Effective compliance programs play a critical role in preventing misconduct, facilitating investigations, and informing fair resolutions,” Assistant Attorney General Brian A. Benczkowski said.  “Today’s guidance document is part of our broader efforts in training, hiring, and enforcement to help promote corporate behaviors that benefit the American public and ensure that prosecutors evaluate the effectiveness of compliance in a rigorous and transparent manner.”

The guidance document sets forth topics that the Criminal Division has frequently found relevant in evaluating a corporate compliance program, organizing them around three overarching questions that prosecutors ask in evaluating compliance programs:  First, is the program well-designed?  Second, is the program effectively implemented?  And, third, does the compliance program actually work in practice? 

To that end, Part I of the document discusses various hallmarks of a well-designed compliance program relating to risk assessment, company policies and procedures, training and communications, confidential reporting structure and investigation process, third-party management, and mergers and acquisitions.   Part II details features of effective implementation of a compliance program, including commitment by senior and middle management, autonomy and resources, and incentives and disciplinary measures.  Finally, Part III discusses metrics of whether a compliance program is in fact operating effectively, exploring a program’s capacity for continuous improvement, periodic testing, and review, investigation of misconduct, and analysis and remediation of underlying misconduct.

The document was compiled with the input of components across the Division, including attorneys from the Office of the Assistant Attorney General, Fraud Section, and the Money Laundering and Asset Recovery Section.  For the full guidance document, click here.

Leaders of the antitrust agencies of the United States this past week participated in bilateral meetings in Tokyo, Japan, and Seoul, Korea. Deputy Assistant Attorneys General Roger Alford and Richard Powers, together with Commissioner Christine S. Wilson of the U.S. Federal Trade Commission, participated in high level meetings with Chairman Kazuyuki Sugimoto and other senior officials from the Japan Fair Trade Commission (JFTC) on April 25 and senior officials from the Korea Fair Trade Commission (KFTC) on April 26. Commissioner Wilson met separately with officials from Japan’s Ministry of Economy, Trade, and Industry regarding technology and digital platforms.

The discussions covered a wide range of topics, including recent enforcement developments, antitrust policy, digital markets, and international cooperation, including the new Framework on Competition Agency Procedures (CAP) adopted by the International Competition Network (ICN) earlier this month. The purpose of the meetings was to reinforce ties of cooperation in light of the increasing internationalization of antitrust enforcement.

“These bilateral meetings are a testament to the depth and strength of our relationships with our global partners, and our joint interest in sound antitrust said Deputy Assistant Attorney General Roger Alford. “Given the importance of our economic ties with Japan and Korea and our shared interests in consumer welfare and robust competition, we are incredibly fortunate to have such close and productive relationships with both the JFTC and the KFTC.”

“Our meetings with the JFTC and KFTC reflect the continued importance of developing broad and deep relationship with antitrust enforcers around the world,” said Commissioner Christine Wilson. “We welcome the opportunity to have exchanges with our counterpart agencies in Japan and Korea on important issues regarding technology that are the subject of national and international debate.”

Deputy Assistant Attorneys General Alford and Powers and Commissioner Wilson also participated in roundtable briefings at the American Chambers of Commerce in Japan and in Korea. Deputy Assistant Attorneys General Alford and Powers also met separately with officials from Korea’s Ministry of Justice and the Supreme Prosecutor’s Office regarding cartel enforcement.

Attorney General William P. Barr today released the following statement on the publication of the Office of Personnel Management's Final Rule for Compensatory Time Off for Religious Observances:

"The federal government has been strengthened and enriched by the service of people of faith from the very beginning," Attorney General William P. Barr said. "American history has shown time and again that religious faith can promote good citizenship and the qualities that make for good government service. By offering more flexibility in employees’ work schedules, today's new rule treats Americans of faith with respect and recognizes that government can make legitimate accommodations while still serving the public. I applaud this effort to make the federal government a more tolerant and welcoming work environment and I am confident that it will yield positive results for years to come."

NOTE: The published Final Rule can be found here.

A Long Island, New York, business owner pleaded guilty today to tax evasion, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division.

According to documents filed with the court, Warren J. Krotz, 62, of Huntington, New York, owned and operated W. Krotz Enterprises Inc. (WKEI), a professional painting business that provided services throughout Long Island. Krotz admitted to evading both his individual and employment tax liabilities. From around 2010 through 2016, Krotz cashed approximately $6 million in checks at various check-cashing facilities. These checks were gross receipts of WKEI, but Krotz did not report the amounts on WKEI’s corporate income tax returns. He admitted to paying approximately $2 million in wages to employees in cash. As a result, Krotz did not withhold and pay over to the Internal Revenue Service (IRS) approximately $300,000 in employment taxes. 

Additionally, Krotz admitted to receiving approximately $3 million in income that he did not report on his personal tax returns. In total, Krotz admitted to causing a tax loss to the IRS of approximately one million dollars.

The Honorable Joseph F. Bianco scheduled sentencing for Sept. 25, 2019.  Krotz faces a statutory maximum sentence of five years in prison, as well as restitution and monetary penalties.

Principal Deputy Assistant Attorney General Zuckerman commended special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorneys Jessica Moran and Kathryn Sparks of the Tax Division, who are prosecuting this case.

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

A federal court in Miami, Florida, permanently barred Michael L. Meyer from organizing, selling, and making statements about the tax benefits of an allegedly abusive charitable giving tax scheme, the Justice Department announced today. The court’s injunction specifically prohibited Meyer from selling the Ultimate Tax Plan, sometimes referred to as a Charitable LLC or Charitable Limited Partnership. In addition, the court barred Meyer from preparing federal tax returns, performing appraisals for federal tax purposes, representing anyone other than himself before the IRS, furnishing tax advice about charitable contributions, and making statements about transactions having a significant purpose of tax avoidance.

According to the government’s amended complaint, Meyer organized, promoted, and operated an elaborate — and bogus — charitable giving tax scheme throughout the United States. Meyer allegedly told scheme participants they could claim significant tax benefits while retaining complete control over assets purportedly donated to charity.

According to the allegations in the government’s amended complaint, Meyer organized and sold a plan in which participants purportedly transferred property to a limited liability company (LLC) or partnership and purportedly donated their interest in the LLC or partnership to a charity. The United States further alleged that Meyer appraised the “donations,” prepared tax forms for participants to claim unwarranted deductions, and controlled the charities he used to perpetuate the scheme, including Indiana Endowment Fund Inc., Grace Heritage Corporation, and National Endowment Association Inc.

The government argued in its court filings that Meyer falsely advised participants that they could claim an immediate up-front tax deduction, grow assets tax-free, access assets through tax-free loans, and preserve wealth for themselves and their heirs. Because taxpayers retained control over their “donations,” however, all of the alleged tax benefits were unlawful, according to the United States’ court filings. In its amended complaint, the government alleged that Meyer’s scheme deprived the government of at least $35 million in tax revenue.

In addition to barring Meyer from activities described above, the Court also prohibited Meyer from advising, performing work for, receiving compensation from, or referring individuals to six other charities not referenced in the amended complaint: (1) Compassion Beyond Borders Inc.; (2) National Outreach Foundation Inc.; (3) Legacee Charities Inc.; (4) Triton Charitable Foundation; (5) Global Outreach Fund Inc., or (6) Family Office Foundation Inc.  The Court further ordered Meyer to dissolve National Endowment Association Inc.; Grace Heritage Corporation; Indiana Endowment Fund Inc.; as well as two other entities, Indiana Endowment Foundation Inc.; and Indiana Outreach Fund Inc. Meyer consented to entry of the injunction.

Principal Deputy Assistant Attorney General Richard E. Zuckerman, head of the Justice Department’s Tax Division, thanked Trial Attorneys Casey S. Smith, James F. Bresnahan II, and Harris J. Phillips of the Tax Division. He also thanked the many IRS attorneys and agents who participated in the investigation.

In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers and tax scheme promoters. 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 here. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.

Zurich Life Insurance Company Ltd (Zurich Life), headquartered in Zurich, Switzerland, and Zurich International Life Limited (Zurich International Life), headquartered in the Isle of Man (collectively Zurich) reached a resolution with the United States Department of Justice yesterday, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Department of Justice’s Tax Division.  As part of the agreement, Zurich will pay a penalty of $5,115,000 to the United States.

According to the terms of the non-prosecution agreement, Zurich agrees to cooperate in any related criminal or civil proceedings, to implement controls to stop misconduct involving undeclared U.S. accounts, and to pay a penalty in return for the Department’s agreement not to prosecute the insurance providers for tax-related criminal offenses.

“The Tax Division remains steadfast in its goal of ending the use of offshore banking and insurance products when used to commit tax evasion,” said Principal Deputy Assistant Attorney General Zuckerman. “This resolution with Zurich should serve as a strong message to those who use offshore bank accounts and insurance products to evade taxation that the Department of Justice is committed to stopping such fraud.”

Zurich Life was founded in 1922 and operates in Switzerland as an insurance carrier offering life insurance and investment products. As of 2016, Zurich Life had approximately $21.3 billion in assets under management and over 300,000 policies in force. Zurich International Life is based in the Isle of Man and operates as an insurance carrier offering life insurance and investment products. Zurich International Life focuses its business on the international expatriate market. As of 2016, Zurich International Life had approximately $10.6 billion in assets under management and approximately 300,000 policies in force. Zurich Life and Zurich International Life are indirectly owned subsidiaries of Zurich Insurance Group Ltd, a Swiss holding company headquartered in Zurich, Switzerland.

From Jan. 1, 2008, through June 30, 2014, Zurich issued or had certain insurance policies and accounts of U.S. taxpayer customers, who used their policies to evade U.S. taxes and reporting requirements. In particular, Zurich had approximately 420 U.S. related policies, 127 with Zurich Life and 293 with Zurich International Life, with an aggregate maximum value of approximately $102 million, for which the U.S. taxpayer customers did not provide evidence that they had declared their policies to U.S. tax authorities.

To qualify for favorable tax treatment under the U.S. tax code, insurance must meet certain minimal requirements. The policies offered by Zurich Life and Zurich International Life did not meet these requirements. The increase of the principal in these policies was therefore subject to taxation, and the policies were required to be disclosed to the Internal Revenue Service (IRS) on FinCEN Form 114 Foreign Bank Account Report, commonly referred to as an FBAR. In issuing or having undeclared U.S. related policies, Zurich knew or should have known that they were helping U.S. taxpayers conceal from the IRS ownership of undeclared assets, maintained as insurance policies or accounts.

Zurich International Life, in particular, sold insurance products to U.S. taxpayers that were “unit linked,” meaning the cash surrender value and death benefit amount were linked to the value of specified investments. With such policies, the U.S. taxpayer had a suite of specialized investment options, allowing them to access potentially higher returns by taking on the market risk associated with the policies. Some of these unit-linked policies offered a base death benefit that was nearly equivalent to the cost of the policy itself, and in some instances was fully funded by transfers from offshore bank accounts. Upon redemption, the U.S. taxpayer would receive the premium amount plus any investment earnings on the policy less a very small percentage for putative risk and fees.

Despite knowing that some of these policies, which had minimal-to-no risk mitigation function and specialized investment options, were held by U.S. taxpayers, Zurich International Life failed to act appropriately to ensure timely compliance by the policyholders with U.S. tax laws. In at least one instance, uncovered during the course of Zurich Life’s internal review, a former U.S. citizen, who pled guilty to a federal fraud offense after purchasing a Zurich International Life policy, used that insurance policy to hide substantial assets, despite owing approximately $900,000 in restitution to his victims.

Following the commencement of the Department’s Swiss Bank Program, the Zurich Group initiated a global review of the life insurance, savings and pension business sold by all of its non-U.S. operating companies to identify policies or accounts with U.S. indicia. This review prompted an extensive customer outreach to current and former customers with a possible nexus to the United States to confirm the customers’ status as U.S. taxpayers, assess their compliance with applicable U.S. tax and reporting rules, and encourage participation in an IRS voluntary disclosure program.

In July 2015, Zurich contacted the Department to inform it of the initial findings of the self-review. Prior to the self-reporting, Zurich was neither a subject nor a target of any investigation being conducted by the Tax Division. Since this self-disclosure, Zurich has conducted a thorough investigation and reported substantial findings to the Tax Division, including dozens of detailed summaries of account information and comprehensive reports for the U.S. related policies.

In addition to these efforts, the Companies have worked closely with non-U.S. regulators to ensure full disclosure to the Department. For instance, in 2016, Zurich Life applied to the Swiss Federal Department of Finance and received approval to waive Article 271 of the Swiss Criminal Code, which restricted the disclosures that Zurich Life could make to the Department, thereby facilitating Zurich Life’s production of certain information that would have otherwise been prohibited.

Principal Assistant Attorney General Zuckerman of the Justice Department’s Tax Division thanked Senior Litigation Counsel Nanette Davis and Trial Attorney Jack Morgan of the Tax Division for their substantial assistance. The Tax Division also thanks the Internal Revenue Service for its assistance.

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

A resident of Queens, New York, was sentenced today to 12 months and one day in prison for failing to collect and pay employment taxes, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division.

According to court documents, Kae Wook Lee was the sole owner and chief executive officer of Mona Lisa 7 Corporation, through which he operated a karaoke bar in the Flushing neighborhood of Queens. Between 2011 and 2013, Lee diverted some of his karaoke bar’s receipts to bank accounts held in the names of shell corporations he created. Lee then withdrew funds from those bank accounts to pay employees’ wages in cash without collecting, accounting for, or paying over employment taxes due to the Internal Revenue Service (IRS).  Lee concealed the cash payroll from his accountant and signed false tax returns that underreported employee wages and employment taxes owed.

In addition to the term of imprisonment imposed, the court ordered Lee to serve two years of supervised release and pay $612,500 in restitution to the IRS.

Principal Deputy Assistant Attorney General Zuckerman thanked special agents of IRS-Criminal Investigation, who conducted the investigation, and Tax Division Trial Attorneys Mark Kotila and Sean Green, who are prosecuting the case.

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

Two owners of an Arizona business were charged in an indictment unsealed today for overseeing a scheme to forge hundreds of thousands of counterfeit documents containing improperly obtained personal information, primarily relating to senior citizens, which they allegedly sold to their clients, who then allegedly provided this information to telemarketers.

Assistant Attorney General Brian Benczkowski of the Justice Department’s Criminal Division, Special Agent in Charge Jill Sanborn of the FBI’s Minneapolis Field Office, Special Agent in Charge Christopher Combs of the FBI’s San Antonio Field Office, Acting Special Agent in Charge Joseph Carrico of the FBI’s Phoenix Field Office and Special Agent in Charge Gary Loeffert of the FBI’s Buffalo Field Office made the announcement.

Anthony J. Pavone, 44, of Scottsdale, Arizona, and Joseph E. DiPrima, 49, of Penfield, New York, were charged in an indictment filed on April 23, 2019 in the District of Arizona with one count of conspiracy to commit wire fraud, one count of wire fraud, one count of conspiracy to commit identity theft, seven counts of identity theft, and seven counts of aggravated identity theft.

According to the indictment, Pavone and DiPrima operated a Phoenix-based business called Hybar Media (Hybar).  Hybar specialized in selling “sweepstakes leads,” which are documents listing the phone numbers and personal information of individuals who have responded to mass mailings notifying recipients that they may have won, or were likely to win, expensive prizes and large cash payouts. 

The indictment alleges that beginning in approximately 2013, Pavone and DiPrima acquired lists of names and contact information for thousands of people—primarily senior citizens—and used this information to create fake sweepstakes leads, which they then sold to their clients as authentic.  The indictment further alleges that Pavone and DiPrima directed a team of employees and associates to write the personal information of the victims onto the counterfeit sweepstakes forms, even though the victims had not agreed to this use, and even though many of the victims had never responded to a sweepstakes mailing.  According to the indictment, the counterfeit sweepstakes leads were then sold to Pavone and DiPrima’s clients.  Many of these clients then contacted the people named in the leads.  Other clients provided the leads to telemarketers, who used them to contact the people named therein.

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

The FBI is investigating this matter.  Trial Attorneys Timothy A. Duree and Philip Trout of the Criminal Division’s Fraud Section are prosecuting the case.

The United States District Court for the Southern District of Florida entered a permanent injunction against Guary Louima, Guy Telfort, and Tax Houses and Accounting Services Inc., barring them from preparing federal tax returns for others and owning or operating a tax preparation business, the Justice Department announced today. 

The court also ordered that Louima, Telfort and the business disgorge $150,000, representing the ill-gotten gains they received for the preparation of tax returns. The defendants agreed to entry of the injunction and disgorgement judgment against them.

In its complaint the government alleged that Louima and Telfort own and operate Tax Houses and Accounting Services Inc. in Lauderdale Lakes, Florida. The government alleged that the defendants prepared tax returns making false or fraudulent claims for the Earned Income Tax Credit by claiming bogus business losses for non-existent businesses, misrepresenting the filing status of their customers, and inflating the number of dependents claimed on their return. Defendants also allegedly prepared returns that improperly lowered their customers’ reported taxable income by falsely claiming deductions for the personal use of their vehicles.

Return preparer fraud is one of the IRS’ Dirty Dozen Tax Scams and taxpayers seeking a return preparer should remain vigilant. 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.

DES MOINES, Iowa – On Saturday, April 27, 2019, from 10 a.m. to 2 p.m., the Des Moines Resident Office of the Drug Enforcement Administration (DEA) and other participating law enforcement agencies will give the public its 17th opportunity in nine years to prevent pill abuse and theft by ridding their homes of potentially dangerous expired, unused, and unwanted prescription drugs. The DEA cannot accept liquids, needles or sharps – only pills or patches. The service is free and anonymous with no questions asked.

This Saturday, approximately 6,000 collection sites manned by nearly 5,000 partner law enforcement agencies will be open 10 a.m. to 2 p.m. local time. The public can find a nearby collection site at www.DEATakeBack.com or by calling 800-882-9539.

Last October Americans turned in 457 tons (914,236 pounds) of prescription drugs at almost 5,800 sites operated by the DEA and more than 4,800 of its state, local, and tribal law enforcement partners. Overall, in previous Take Back Day events, DEA has collected a total of nearly 11 million pounds of expired, unused and unwanted prescription medications.

Rates of prescription drug abuse in the U.S. are alarmingly high, as are the number of accidental poisonings and overdoses due to these drugs. The majority of prescription drug abusers say they get their abused prescription drugs free from family and friends, including from the home medicine cabinet.

A Detroit, Michigan, man was sentenced today to 30 months in prison after being found guilty at trial of 25 counts of preparing false federal income tax returns, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division. 

According to evidence presented at trial, Gary Hairston owned and operated Gary Y Hairston & Co PLLC, a tax return preparation business located in Inkster, Michigan. From 2010 through 2014, Hairston prepared and filed false tax returns with the Internal Revenue Service (IRS) on behalf of his clients, charging up to $925 per fraudulent return. Hairston falsified the returns in order to inflate his clients’ refunds or to obtain refunds to which they were not entitled.  In some cases, he would create false Schedule C businesses for clients to facilitate the scheme. In all, Hairston sought more than $175,000 in fraudulent refunds.

Manny Muriel, Special Agent in Charge of the Detroit’s IRS Criminal Investigation, stated, “As a tax preparer, especially a Certified Public Accountant, your clients look to you for expertise and guidance. It is your obligation to faithfully and diligently represent their best interest and today’s sentencing shows IRS-CI, in concert with the Department of Justice, is committed to aggressively pursuing unscrupulous tax professionals that prey on the public.”   

U.S. District Court Judge David M. Lawson, who imposed the sentence, also ordered Hairston to serve one year of supervised release and to pay $118,048 in restitution to the IRS. 

Principal Deputy Assistant Attorney General Zuckerman thanked special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorneys Carl F. Brooker, IV and Thomas F. Koelbl of the Tax Division, who prosecuted the case.

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

Attorney General William P. Barr announced today that he has appointed Regina "Reggie" Lombardo to be Acting Deputy Director of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), effective May 1, 2019.  Lombardo will replace Thomas Brandon, who will be retiring from federal service on April 30, 2019.

"Reggie Lombardo has helped run day-to-day operations at ATF for more than a year and she has proven herself to be an outstanding leader," Attorney General William Barr said. "Like her predecessor, Tom Brandon, she started as a special agent and has been entrusted with greater and greater responsibility over decades of faithful service. She is well qualified to continue ATF's successes of recent years, including helping the Department investigate and prosecute more firearms offenders than ever before. I want to thank Tom Brandon for his 30 years of service to ATF and 36 years of service to this country, and I thank Acting Deputy Director Lombardo for her willingness to accept this new role leading one of the most effective law enforcement agencies in the world."

Lombardo has served as the Associate Deputy Director and Chief Operating Officer for the agency since March 2018. In this capacity she has been responsible for the day-to-day operations of the agency charged with protecting the public from violent crime and enforcing laws and regulations related to firearms, explosives, arson, and alcohol and tobacco diversion.   

Lombardo has served as a special agent in the ATF since 1992 and has risen through the ranks as a career employee.  She has held numerous management positions at ATF, including Assistant Director of Human Resources and Professional Development, Deputy Assistant Director of Field Operations’ Central Region, Special Agent in Charge of the Tampa Field Division, Assistant Special Agent in Charge of the New York Field Division, and Assistant Country Attaché in Toronto, Canada.  She will be the first female to lead the agency in its history. 

An Indian national was sentenced today for his leadership role in a complex, transnational conspiracy to smuggle aliens from India to the Unites States for profit, which claimed at least one life and endangered many others.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and Special Agent in Charge Ivan Arvelo of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) in Puerto Rico made the announcement.

Yadvinder Singh Sandhu, 61, an Indian national, was sentenced to 60 months in prison followed by three years of supervised release.  On Jan. 18, 2019, Sandhu pleaded guilty to one count of conspiracy and 15 counts of smuggling aliens to the United States for profit before U.S. Magistrate Judge Silvia Carreño-Coll of the District of Puerto Rico.  District Judge Carmen C. Cerezo accepted the guilty plea and sentenced the defendant.  Sandhu was charged in an indictment returned by a federal grand jury in the District of Puerto Rico on March 15, 2017.  Sandhu has also used the names “Yadvinder Singh Bhamba,” “Bhupinder Kumar,” “Rajinder Singh,” “Robert Howard Scott” and “Atkins Lawson Howard.”

According to admissions in Sandhu’s plea agreement, since 2013, Sandhu had a leadership role in a human smuggling conspiracy operating out of the Dominican Republic, Haiti, Puerto Rico, India and elsewhere.  Sandhu admitted he personally assisted around 400 aliens to unlawfully enter the United States between 2013 and 2015 as part of the conspiracy.  He also oversaw and directed co-conspirators operating out of the Caribbean.

Sandhu and other members of the conspiracy made flight arrangements for aliens to travel from India through other countries – including Thailand, the United Arab Emirates, Argentina, Iran, Panama, Venezuela, Belize and Haiti – to the Dominican Republic. The Dominican Republic was used as a staging area, where aliens were housed before being transported to the United States.  The organization brought groups of aliens from the Dominican Republic to Puerto Rico or Florida by boat.  Once the aliens reached Puerto Rico or Florida, they were picked up by co-conspirators and taken to stash houses until flights could be arranged to California, New York, or elsewhere in the United States.  Sandhu and others arranged for fraudulent identifications for some aliens to use in the United States.

The boat trips organized by Sandhu and his co-conspirators to transport aliens from the Dominican Republic to the United States were perilous.  Boat captains used old, damaged, cracked, unlicensed, overcrowded and unsafe boats to make the journey.  In at least one instance, an alien died in a boat on his way to the United States.  

At times, the smugglers would take passports from the aliens during their journeys, physically assault them and threaten their families to collect money.  Aliens paid between $30,000 and $85,000 to be smuggled from India to the United States.  From at least 2013 to 2016, human smuggling was Sandhu’s primary source of income.

Members of the conspiracy, including Sandhu, would use false names or nicknames to communicate with the aliens and with each other.  Sandhu, whom fellow smugglers and aliens knew as “Ruby,” also instructed others to use false names or nicknames to avoid detection. Sandhu used fraudulent Indian, Dominican and Jamaican identifications for travel and financial transactions related to the conspiracy.

As part of the conspiracy, Sandhu directed associates to unlawfully smuggle 15 aliens to Puerto Rico in July 2016.  Sandhu personally met the 15 aliens in various countries along their journeys, including in Dubai, Thailand, Iran, and the Dominican Republic, and he communicated with them throughout their journeys, which began approximately in January 2016.  In some instances, Sandhu created and provided to authorities false employment documents on behalf of the aliens to obtain foreign visas.  Sandhu also instructed aliens traveling through foreign airports how to find, and in some instances, pay cash to, corrupt immigration officials, passport control officers, or airport employees in order to bypass regular immigration and passport control procedures.

After the aliens arrived in the Dominican Republic, Sandhu used an alias to arrange and pay for a hotel for them.  On July 25, 2016, Sandhu alerted co-conspirators in Puerto Rico to be ready to receive 15 aliens. On July 27, 2016, 15 Indian nationals were transported from the Dominican Republic to Puerto Rico in a 22-foot wooden vessel. The vessel was not marked or equipped with basic safety features, such as lights or navigational equipment.  The outside of the vessel was painted black, to make it difficult to see in the water at night. Per safety regulations, the size of the boat should have limited the number of occupants to eight people, but it carried 15 aliens, plus members of the conspiracy who captained the vessel.

The aliens were supposed to be met in Puerto Rico by another smuggler, but they were apprehended instead.  Sandhu contacted other members of the conspiracy to find out what happened to the aliens and paid a co-conspirator to locate the aliens and confirm they did not drown, so that the co-conspirators would not lose money.  Sandhu was arrested in the Dominican Republic in August 2017, and thereafter transferred to Puerto Rico.   

The investigation was conducted under the Extraterritorial Criminal Travel Strike Force (ECT) program, a joint partnership between the Justice Department’s Criminal Division and HSI. The ECT program focuses on human smuggling networks that may present particular national security or public safety risks, or present grave humanitarian concerns. ECT has dedicated investigative, intelligence and prosecutorial resources. ECT coordinates and receives assistance from other U.S. government agencies and foreign law enforcement authorities.

HSI Puerto Rico investigated this case.  The government of the Dominican Republic and the Transnational Crime Investigative Unit of the Dominican Republic National Police provided significant assistance and support during the investigation and have brought charges against other members of the smuggling network.

Trial Attorneys Ann Marie E. Ursini and Christian A. Levesque of the Criminal Division’s Human Rights and Special Prosecutions Section prosecuted the case, with the assistance of the Department of Justice’s Office of International Affairs and the U.S. Attorney’s Office for the District of Puerto Rico.

 

A Michigan home health agency owner was sentenced to 84 months in prison today for his role in an $8.3 million scheme to defraud Medicare.

Assistant Attorney General Brian A. Benczowski of the Justice Department’s Criminal Division, U.S. Attorney Matthew Schneider of the Eastern District of Michigan, Special Agent in Charge Timothy R. Slater of the FBI’s Detroit Field Office 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.

Zahir Shah, 49, of West Bloomfield, Michigan, was sentenced by U.S. District Judge Avern Cohn of the Eastern District of Michigan, who also ordered Shah to pay $ 8,339,790.28 in restitution.  In May 2018, Shah pleaded guilty to one count of conspiracy to commit health care fraud and wire fraud and one count of conspiracy to pay and receive health care kickbacks. 

As part of his guilty plea, Shah admitted that he submitted false certifications to enroll and stay enrolled as a Medicare provider.  Shah further admitted that he paid illegal kickbacks to recruiters in exchange for Medicare beneficiary referrals and billed Medicare for claims procured through these illegal kickbacks.  Additionally, according to evidence presented, Shah conspired with others to submit claims to Medicare for home health services that were medically unnecessary and not eligible for Medicare reimbursement.  The court ordered that Shah repay as restitution the total amount that his home health agencies received from the Medicare program from 2007 to 2017, which was over $8.3 million. 

The FBI and HHS-OIG investigated the case, which was brought as part of the Medicare Fraud Strike Force under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.  Trial Attorneys Rebecca Yuan and Howard Locker of the Fraud Section prosecuted the case.  Assistant U.S. Attorney Philip Ross of the Eastern District of Michigan handled the asset forfeiture proceedings. 

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.

WASHINGTON – The Department of Justice, the U.S. Environmental Protection Agency (EPA), and the state of Colorado today announced a settlement with Denver-based HighPoint Operating Corporation resolving alleged Clean Air Act violations.

The settlement resolves alleged claims that HighPoint violated requirements to reduce volatile organic compounds (VOCs) emissions from its oil and natural gas production operations in the Denver-Julesburg Basin. VOCs are a key component in the formation of ground-level ozone, a pollutant that irritates the lungs, exacerbates diseases such as asthma, and can increase susceptibility to respiratory illnesses, such as pneumonia and bronchitis.

“As part of the Department’s continued effort to safeguard and improve air quality, we remain committed to reducing the emissions of volatile organic compounds that contribute to high levels of ground-level ozone and so endanger the public health,” said Assistant Attorney General Jeffrey Bossert Clark. “This settlement reflects the progress that can be made when the federal government engages in cooperative endeavors with its state partners.”

“This settlement reflects EPA’s continued efforts with the Department of Justice, the State of Colorado and oil and gas producers to secure Clean Air Act compliance and reduce emissions that are contributing to high levels of ground-level ozone in communities across Colorado’s Front Range,” said EPA Acting Regional Administrator Deb Thomas.  

“This represents another step in Colorado’s ongoing efforts to protect public health and the environment by minimizing harmful emissions from the oil and gas industry,” said Jill Hunsaker Ryan, Executive Director of the Colorado Department of Public Health and Environment.       

As part of the settlement, HighPoint will spend an estimated $3 million to implement measures that will ensure the vapor control systems on its condensate storage tanks are adequately designed and sized and will improve its operation and maintenance practices, monitoring, and inspections. These improvements, including monthly inspections using infrared cameras to better detect and respond in real time to emissions, will significantly reduce VOC emissions. EPA and the state of Colorado estimate that HighPoint’s modifications of vapor control system design, improvements to operations and maintenance practices, and increased monitoring will reduce VOC emissions from HighPoint’s operations by approximately 350 tons per year.

HighPoint will also implement an environmental mitigation project to reduce VOC emissions in the Denver area. HighPoint will install and operate vapor balancing controls to minimize emissions associated with loading of condensate into tank trucks at ten HighPoint well pads. This project will reduce HighPoint’s VOC emissions from tank truck load-out by an estimated 50 tons per year.

HighPoint will pay the United States a $275,000 civil penalty, and will pay a civil penalty to Colorado and perform a State supplemental environmental project, with a combined value of $275,000. HighPoint will apply $220,000 of the State’s portion of the penalty to a supplemental environmental project.

This action arose when inspections of HighPoint operations conducted from 2014 to 2017 by EPA and Colorado found VOC emissions from HighPoint’s condensate storage tanks. Through these inspections and information requests, EPA and the State of Colorado identified alleged violations of the Colorado State Implementation Plan, Regulation Number 7, due to undersized vapor control systems and inadequate operations and maintenance practices.

This settlement covers 50 HighPoint tank systems in Colorado’s Denver-Julesburg Basin. The tank systems covered by the settlement are located in an ozone nonattainment area, which means the area does not meet the National Ambient Air Quality Standard set for ozone. By reducing the emissions of VOCs that lead to the formation of ground-level ozone, this settlement will contribute to the improvement of air quality in the Front Range.

The consent decree, lodged in the District Court of Colorado, is subject to a 30-day public comment period and final court approval. The consent decree will be available for viewing at https://www.justice.gov/enrd/consent-decrees.

The Department of Justice today released two complementary reports that focus on the mental health and safety of the nation’s federal, state, local and tribal police officers. The reports, Law Enforcement Mental Health and Wellness Act: Report to Congress and Law Enforcement Mental Health and Wellness Programs: Eleven Case Studies, were published by the Office of Community Oriented Policing Services (COPS Office) as required by the Law Enforcement Mental Health and Wellness Act (LEMHWA) of 2017. 

The LEMHWA passed both chambers unanimously and without amendment and was signed by the President shortly thereafter. These actions show that its purpose and intended effects are uncontroversial among policymakers – law enforcement agencies need and deserve support in their ongoing efforts to protect the mental health and well-being of their employees. Congress took the important step in improving the delivery of and access to mental health and wellness services that will help our nation’s more than 800,000 federal, state, local, and tribal law enforcement officers.  

"Serving as a law enforcement officer requires courage, strength, and dedication," Attorney General William P. Barr said. "The demands of this work, day in and day out, can take a toll on the health and well-being of our officers, but the Department of Justice is committed to doing our part to help. I want to thank the men and women of our COPS office for their hard work to support our officers every day, and specifically for these thoughtful and insightful reports, which detail both the challenges facing our officers and some specific ways we can give them the support that they deserve."

"A damaging national narrative has emerged in which law enforcement officers – whether federal, state, local, or tribal – are seen not as protectors of communities but as oppressors," said COPS Office Director Phil Keith. “In this environment, where an inherently stressful job is made more so by a constant undercurrent of distrust and negative public opinion, the risks to officer wellness are exacerbated. This report is an important measure and reflection in our ongoing commitment to protect those who protect us. "

Under the Law Enforcement Mental Health and Wellness Act, the COPS Office was required to submit reports to Congress that addressed:

(1) Recommendations to Congress on effectiveness of crisis lines for law enforcement officers, efficacy of annual mental health checks for law enforcement officers, expansion of peer mentoring programs, and ensuring privacy considerations for these types of programs;

(2) Mental health practices and services in the U.S. Departments of Defense (DoD) and Veterans Affairs (VA) that could be adopted by federal, state, local, or tribal law enforcement agencies; and

(3) Case studies of programs designed primarily to address officer psychological health and well-being.

The first report, Law Enforcement Mental Health and Wellness Act: Report to Congress, includes 22 recommendations to Congress ranging from supporting programs to embed mental health professionals in law enforcement agencies to supporting the development of model policies and implementation guidance for law enforcement agencies to make substantial efforts to reduce suicide.

The case studies report, Law Enforcement Mental Health and Wellness Programs: Eleven Case Studies, is designed to provide an overview of multiple successful and promising law enforcement mental health and wellness strategies with the joint aims of informing Congress, state and local government officials, and the law enforcement field. The report includes 11 case studies from a diverse group of sites across the United States.

The Department of Justice is pleased to respond to the LEMHWA as officer safety, health, and wellness is a longstanding priority of the agency. The reports released today address some of the most pressing issues currently facing our law enforcement community.

The COPS Office has a near 25-year history of supporting the efforts of state, local and tribal law enforcement, including the management of the National Blue Alert Network. The agency awards grants to hire community policing officers, develop and test innovative policing strategies, and provide training and technical assistance to community members, local government leaders, and all levels of law enforcement. Since 1994, the COPS Office has invested more than $14 billion to help advance community policing.

Following objections raised by the United States and others, the parties in a class action matter involving Lenny & Larry’s cookies filed an amended proposed settlement that would direct additional value toward consumer plaintiffs, the Department of Justice today announced. 

“Congress passed the Class Action Fairness Act to stop questionable settlements that benefit lawyers instead of injured consumers,” said Principal Deputy Associate Attorney General Jesse Panuccio. “As part of our efforts to protect consumers, the Department of Justice will continue to object to settlements that are not fair, reasonable, and adequate.”

“The Class Action Fairness Act is designed to help ensure that class action settlements do not unreasonably benefit attorneys or third parties at the expense of the consumers involved,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “The Department of Justice will continue to take action when we see unsuitable class action settlements.”

Plaintiffs in the case, Cowen et al. v. Lenny & Larry’s, Inc., alleged that labels for the defendant’s “The Complete Cookie” product included inaccurate nutritional information. Under the original proposed settlement reached between the parties and filed in October 2018, individual class members would have received pro rata shares of a $350,000 cash fund or up to $30 in free cookies. The defendant also agreed to distribute free cookies worth about $3 million to the general public through giveaways at certain health food stores. Based on the purported total value of the settlement, class counsel sought $1.1 million in attorney’s fees, which the defendant agreed not to oppose.

In a Statement of Interest filed Feb. 15, 2019, the United States argued that the court should reject the settlement because it directed most of its value toward non-class members and attorney’s fees rather than to consumer plaintiffs. The parties thereafter filed an amended proposed settlement on April 2, 2019. Under the amended settlement, individual class members would receive shares of a $889,000 cash fund, or up to $35 in free cookies. Class counsel now seek approximately $410,000 in attorney’s fees. The case is pending in U.S. District Court for the Northern District of Illinois, which must approve any final settlement.

The Class Action Fairness Act of 2005 provides the Attorney General and state officials an opportunity to review federal class action settlements before district courts grant final approval. The United States recently filed an amicus brief in another class action case pending before the Sixth Circuit Court of Appeals, Chapman et al. v. Tristar Products, Inc. The government argued that the Chapman settlement unfairly awarded millions of dollars to attorneys but provided consumers with little more than nearly worthless coupons.

Trial Attorney Kendrack Lewis of the Civil Division’s Consumer Protection Branch represents the United States in the matter. Additional information about the Consumer Protection Branch and its enforcement efforts may be found at www.justice.gov/civil/consumer-protection-branch.

On Friday, a federal court in Detroit, Michigan, found Dieasha Davis in civil contempt of a permanent injunction barring her from operating a tax return preparation business and preparing federal tax returns for others, the Justice Department announced. 

In the contempt order, Judge Denise Page Hood found that Davis continued to prepare federal income tax returns and profited from preparing tax returns in violation of the court’s injunction, which had been entered against her and the business on September 25, 2017. Davis and the business agreed to the 2017 civil injunction order.

In February, 2019, following an investigation of Davis’ activities, the United States presented to the district court what the court on Friday found was clear and convincing evidence that Davis had violated the injunction. The court entered an order requiring Davis to file a written response to show cause why she should not be held in civil contempt. Davis did not file any response.

Based on the evidence submitted by the United States, the court also found that tax returns Davis prepared in violation of the injunction contained false and fraudulent information after entry of the injunction.

In addition, the court ordered Davis to pay to the United States $24,671 for attorney fees and costs incurred in detecting Davis’ non-compliance and bringing her violations of the injunction to the court’s attention.

Return preparer fraud is one of the IRS’ Dirty Dozen Tax Scams and taxpayers seeking a return preparer should remain vigilant. 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.

The Department of Justice today announced that General Electric (GE) will pay a civil penalty of $1.5 billion under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) to resolve claims involving subprime residential mortgage loans originated by WMC Mortgage (WMC), a GE subsidiary. WMC, GE, and their affiliates allegedly misrepresented the quality of WMC’s loans and the extent of WMC’s internal quality and fraud controls in connection with the marketing and sale of residential mortgage-backed securities (RMBS). FIRREA authorizes the federal government to seek civil penalties for violations of various predicate criminal offenses, including wire and mail fraud where the violation affects a federally insured financial institution.

“The financial system counts on originators, which are in the best position to know the true condition of their mortgage loans, to make accurate and complete representations about their products. The failure to disclose material deficiencies in those loans contributed to the financial crisis,” said Assistant Attorney General Jody Hunt. “As today’s resolution demonstrates, the Department of Justice will continue to employ FIRREA as a powerful tool for protecting our financial markets against fraud.”

General Electric Capital Corporation (GECC), then the financial services unit of GE, acquired WMC, a subprime residential mortgage loan originator, in 2004. WMC originated more than $65 billion dollars in mortgage loans between 2005 and 2007. WMC sold the vast majority of its loans to investment banks, which, in turn, issued and sold RMBS backed by WMC loans to investors. The United States alleged that a majority of the mortgage loans WMC originated and sold for inclusion in RMBS in 2005-2007 did not comply with WMC’s representations about the loans, and that certain of WMC’s representations were reviewed by, approved by, or made with the knowledge of personnel from GE or GECC. Investors, including federally insured financial institutions, suffered billions of dollars in losses as a result of WMC’s fraudulent origination and sale of loans for inclusion in RMBS. 

In particular, the United States alleged that in 2005-2007, WMC attempted to increase its profits and meet profit goals by increasing originations. WMC loan analysts responsible for underwriting mortgage loans were encouraged to approve loans in order to meet volume targets, even where the loan applications did not meet the criteria outlined in WMC’s published underwriting guidelines, and received additional compensation based on the number of mortgages they approved. At the same time, there were significant deficiencies with respect to WMC’s quality control, which was viewed by some as an impediment to volume. In 2005, a WMC quality control manager described his department as a “toothless tiger” with inadequate resources and no authority to prevent the approval or sale of loans his department had determined were fraudulent or otherwise defective. By late third quarter 2006, managers responsible for quality control and risk management at WMC and GECC had expressed concerns that WMC’s quality and fraud controls were so lax that WMC received more mortgage applications containing fraud or other defects than its competitors. As a member of GE’s Corporate Audit Staff (CAS) involved in audits of WMC observed in April 2007, WMC “jacked up volume without controls.”

The United States alleged that the investment banks that purchased WMC’s loans declined to buy certain mortgage loans that WMC attempted to sell due to defects in the loan file or suspected fraud. When it declined, or “kicked out” a loan, the potential purchaser typically notified WMC of its reasons for rejecting the file, including the defects identified. WMC’s general practice was to re-offer certain kicked loans to a second potential purchaser for inclusion in RMBS without disclosing that the mortgage had previously been rejected or the reasons why the first potential purchaser concluded the mortgage had defects. 

The United States alleged that by late 2005 and early 2006, investment banks were kicking out more of WMC’s loans than ever, and investors in RMBS backed by WMC loans raised concerns about the quality of loans originated by WMC because WMC borrowers were failing to repay their loans at unexpectedly high rates. WMC also began receiving increased numbers of requests from investment banks to buy back, or repurchase, loans. In March 2006, WMC reviewed a representative sample of the 1,276 loans it had repurchased in 2005, and concluded that 78 percent of the loan files reviewed contained at least one piece of false information. The results of this review were shared with WMC’s senior executive team and discussed on multiple occasions with personnel from GECC.

The United States alleged that in fall 2006, GECC took control over the strategic direction of WMC. Even in the face of increasing repurchase demands, kick-outs, and concerns about WMC’s underwriting quality, WMC continued selling its loans and making false representations about their qualities and attributes. GECC became closely involved in WMC’s whole loan sales and provided WMC with input and direction on how to sell off WMC’s remaining loans. Beginning in 2007, GECC also assumed control over WMC’s ability to grant repurchase requests. 

The investigation of WMC, GE, and GECC and this settlement were handled by the Civil Division’s Commercial Litigation Branch, with assistance from the San Francisco Field Office of the Federal Bureau of Investigation. The claims resolved by this settlement are allegations only, and there has been no admission of liability. 

This week, the Federal Bureau of Prisons (BOP) conducted a pilot test of micro-jamming technology at the Broad River Correctional Institution in Columbia, S.C.  The test – the first collaboration of this kind in a state corrections facility – was conducted to determine if micro-jamming could prevent wireless communication by inmates using contraband cellphones in a housing unit.   This test follows two earlier tests at a federal corrections facility in Cumberland, Maryland.   

Contraband cellphones present an ongoing safety and correctional security concern for the public as well as for correctional facilities across the country.  Contraband cellphones have been used to run criminal enterprises, distribute child pornography, and facilitate the commission of violent crimes—all while inmates are incarcerated.  In South Carolina, officials attributed the deadly April 15, 2018 prison riot in part to contraband cellphones.  And on March 5, 2010, a South Carolina inmate ordered a hit on a 15-year corrections veteran from behind bars.  He was shot six times and severely wounded.

“While I served as United States Attorney of Maryland, my office prosecuted an inmate who used a smuggled cellphone to order the murder of an innocent witness,” Deputy Attorney General Rod Rosenstein said.  “Contraband cellphones in correctional facilities pose a grave danger.  We stand ready to help our state and local partners in their efforts to prevent inmates from using contraband cell phones in jails and prisons.” 

Assistant Attorney General Beth Williams added, “Offenders should not be able to continue to threaten the public from behind bars.  Because the majority of our country’s inmates are housed in state facilities, it is crucial that we work with our state and local partners to test and determine what solutions work best.”

Currently only federal agencies can obtain authorization to jam the public airwaves.  State and local prisons cannot.  This week’s test was a novel collaborative operation between BOP and the South Carolina Department of Corrections allowing the testing of micro-jamming technology at a state prison.  

The test was authorized by the National Telecommunications and Information Administration (NTIA) and coordinated with the Federal Communications Commission.  Two NTIA engineers attended the test and performed measurements of the micro-jamming equipment’s radio emissions to observe and document their characteristics.  After the test is complete, NTIA will analyze the data and prepare a report.  

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

Three men were found guilty by a federal jury of sex trafficking and conspiracy to commit sex trafficking. 

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney William M. McSwain of the Eastern District of Pennsylvania and Special Agent in Charge Michael Harpster of the FBI’s Philadelphia Field Office, made the announcement.           

The verdict was accepted by U.S. District Judge Nitza I. Quiñones Alejandro of the Eastern District of Pennsylvania.  Dkyle Jamal Bridges, 33, of Claymont, Delaware, and Kristian Jones, 25, and Anthony Jones, 35, both of Wilmington, Delaware, were each found guilty of conspiracy to engage in sex trafficking by force, fraud or coercion, and of minors, as well as sex trafficking three minors by force, fraud or coercion, on April 10 after a three-week jury trial.  Bridges was also convicted of sex trafficking two adults by force, fraud or coercion.

According to evidence presented at trial, from 2012 through September 2017, Bridges, Kristian Jones and Anthony Jones ran a prostitution enterprise in which adult and minor females were sex trafficked throughout the mid-Atlantic region, including Pennsylvania and Delaware.  Bridges frequently used violence and threats to cause the victims to engage in commercial sex acts.  Kristian and Anthony Jones helped Bridges run the enterprise by providing security and reserving hotel rooms.  The investigation began when a local police officer rescued two minors who had been advertised for prostitution on Backpage.com.  Additional victims were identified by local law enforcement after being advertised for prostitution on Backpage.com.    

The FBI investigated the case with assistance from the Tinicum Township Police Department; Newark, Delaware Police Department; Delaware State Police; Philadelphia Police Department; Delaware River & Bay Authority and Wilmington Police Department.  Trial Attorney Jessica L. Urban of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) and Assistant U.S. Attorneys Priya T. De Souza and Seth M. Schlessinger of the Eastern District of Pennsylvania prosecuted the case.

This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice.  Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.

Now that tax season is in full swing, the Department of Justice reminds taxpayers to choose tax preparers carefully.

The Justice Department’s Tax Division, in collaboration with U.S. Attorney’s Offices, takes legal action throughout the United States, including seeking court orders to shut down tax return preparers who prepared false tax returns, and criminally prosecuting fraudulent tax return preparers to punish dishonest tax return preparers for their fraudulent activities and to protect taxpayers and government funds.

“Most tax return preparers provide competent and professional advice,” said Principal Deputy Assistant Attorney General Richard E. Zuckerman. “For those tax return preparers who choose to engage in fraudulent tax return preparation the Justice Department is steadfast in its commitment to ending such tax fraud. Criminal prosecutions and civil injunction actions against dishonest tax return preparers should serve as a strong message to fraudulent tax return preparers that criminal and fraudulent conduct has serious and permanent consequences.”

During this tax season, examples of some of the criminal convictions obtained by the Tax Division include:

• On March 7, 2019, a Miami, Florida, Certified Public Accountant (CPA) was sentenced to 39 months in prison for tax evasion. Darryl Sharpton willfully evaded the payment of federal income taxes for the tax years 2004 through 2008 and 2010. He was ordered to pay $1,380,602 in restitution to the IRS.
• On March 20, 2019, a Charlotte, North Carolina, tax return preparer was sentenced to 24 months in prison for preparing income tax returns for clients that claimed false deductions and fictitious businesses in order to obtain the Earned Income Credit.  Shawanda Elmore prepared approximately 500 fraudulent tax returns.
• On March 4, 2019, a federal jury convicted a New York owner of a tax return preparation business for conspiring to commit aggravated identity theft and aiding and assisting in the preparation of false tax returns. Afolabi Ajelero used the identity of others to accomplish the scheme. His co-defendant, Hakeem Bamgbala, also has been convicted and awaits sentencing on wire fraud, aggravated identity theft, and aiding and assisting in the preparation of a false tax return charges.
• On Feb. 8, 2019, a Hattiesburg, Mississippi, CPA was convicted of conspiracy to defraud the United States, aiding in the preparation of false tax returns and filing false tax returns. Carl Nicholson was also found guilty of filing his own false personal income tax returns for 2012 through 2015. He faces sentencing on May 23, 2019.

Examples of some of this tax season’s civil injunctions obtained by the Tax Division include:

• On March 29, 2019, a federal court in Dallas, Texas, permanently enjoined Jhane Broadway, individually and doing business as Jeprofessionalz or MaxTaxPros, from preparing federal income tax returns for others. Broadway was required to mail or e-mail notice of the injunction order to all customers for whom she prepared a federal tax return or claim for refund for tax years 2015 through 2017.
• Also on March 29, 2019, a federal court in Beaumont, Texas, entered a permanent injunction against tax return preparer Sylvia Rodriguez, who is also known as Sylvia Ornelas, barring her from preparing federal tax returns for others and owning or operating a tax preparation business. The court found that Rodriguez engaged in fraudulent and deceptive conduct that substantially interfered with the administration of the tax laws.
• On March 27, 2019, a federal court in Miami, Florida, entered a permanent injunction barring Vilbrun Simon, Saintanise Agenord, Simon Accounting & Tax Services LLC, and Village Tax Multi Services from preparing federal income tax returns for others. The group is prohibited from operating, managing, or participating in any business, which prepares tax returns.

In the past decade, the Tax Division has obtained convictions and injunctions against hundreds of unscrupulous return preparers. Information about these cases is available on the Justice Department’s website. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.

The Justice Department reminds taxpayers that they could still be responsible for any unpaid taxes, penalties, and interest, resulting from errors made on their returns.

Tax 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 about selecting a return preparer and has launched a free directory of federal tax preparers.

The Department of Justice will hold a public workshop on May 2-3, 2019, to explore industry dynamics in media advertising and the implications for antitrust enforcement and policy, including merger enforcement. The workshop will cover the different types of television and online advertising, and it will highlight, among other developments in the industry, the role of online and mobile advertising networks. Panelists will discuss a range of topics, including how each type of advertising may fit into an advertising campaign, how inventory is priced, the economics of advertising, developments in advertising technologies, the effects from changes in consumer behavior, and the competitive dynamics of media advertising in general, in light of the rise of digital advertising. 

Assistant Attorney General Makan Delrahim for the Department of Justice’s Antitrust Division will open the workshop, which will bring together academics and high level executives from leading companies, including buyers and sellers of advertising inventory. The Division intends to explore the practical considerations that industry participants face and the competitive impact of technological developments such as digital and targeted advertising in media markets. The workshop will consist of a series of panels examining (1) television advertising; (2) internet and mobile advertising; (3) the competitive dynamics in media advertising; and (4) trends and predictions for advertising generally.

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 June 15, 2019, at ATR.AdvRegInfo@usdoj.gov. 

The workshop is free and open to the public and will take place at the Anne K. Bingaman Auditorium and Lecture Hall, Liberty Square Building, 450 5th St. N.W., Washington, D.C., from 1:30 p.m. to 5:30 p.m. EDT on Thursday, May 2, 2019, and 9:30 a.m. to 1:00 p.m. EDT on Friday, May 3, 2019. A recording of the workshop will be available on the Division’s website.  Registration information, an agenda, directions to the event, and a list of speakers will be available in the near future on the event web page. Attendees are encouraged, but not required, to register in advance for each day of the workshop at ATR.AdvRegInfo@usdoj.gov. Members of the press should also copy Jeremy Edwards in the Office of Public Affairs at Jeremy.M.Edwards@usdoj.gov on their registration email. 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 Jeremy Edwards at Jeremy.M.Edwards@usdoj.gov. Such requests should include a detailed description of the accommodations needed and a way to contact you if we require further information.

Marshall Holland, the owner of a Texas company that purchases computers to resell and recycle, 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, Holland conspired with others to rig bids at online public auctions of surplus government equipment conducted by the GSA.  Holland is charged with participating in the conspiracy from about February 2017 until as late as May 2018.  Holland is the first individual charged in this investigation and he has agreed to cooperate in the Department’s ongoing investigation.

“The Department and its law enforcement partners will not tolerate collusion that corrupts online markets and deprives taxpayers and the federal government of the benefits of competition,” said Assistant Attorney General Makan Delrahim of the Department of Justice’s Antitrust Division.  “We will work tirelessly to prosecute online bidders who cheat taxpayers for their own benefit.” 

The GSA operates GSA Auctions, which offers the general 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.

“Competition is essential to GSA Auctions,” said Inspector General Carol Ochoa for GSA Office of Inspector General.  “GSA OIG will continue to aggressively pursue those who scheme to tip the scales in their favor.”

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, or visit www.justice.gov/atr/report-violations or email the GSA Office of Inspector General at fraudnet@gsaig.gov

The Department of Justice announced that it filed a complaint today in federal court against the Warren County, North Carolina, Board of Education (Warren County), to protect rights guaranteed to an Army Reservist, Command Sergeant Major Dwayne Coffer (CSM Coffer), by the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA). The announcement was made by Assistant Attorney General Eric Dreiband of the Civil Rights Division and U.S. Attorney Robert J. Higdon, Jr. of the Eastern District of North Carolina.

CSM Coffer’s job as Dean of Students at Warren County Middle School was eliminated while he was on active duty. According to the lawsuit, Warren County violated USERRA by demoting him to Physical Education Teacher at Northside Elementary School instead of reemploying him in job that is comparable to Dean of Students.

“The freedoms we enjoy as Americans are dependent on the selfless duties performed by members of our Armed Forces,” said Assistant Attorney General Eric Dreiband of the Civil Rights Division. “When our Country calls servicemembers to duty, its laws, enforced by the Department of Justice, protect their civilian jobs.”

“The Uniformed Services Employment and Reemployment Rights Act protects the brave men and women who serve our Country, and the Department of Justice is committed to enforcing USERRA when it is violated,” said U.S. Attorney Higdon. “Members of the Army Reserve, like Sergeant Major Dwayne Coffer, are often called away from their civilian jobs in order to provide the security upon which our nation depends.  They should not have to fear losing their jobs when they answer that call.” 

The Complaint seeks to reinstate CSM Coffer into a proper reemployment position and recover CSM Coffer’s lost wages and other benefits and other remedies.  In 2012, the United States Department of Justice sued Warren County when it failed to renew the employment contract of CSM Coffer following a different period of military service.

USERRA protects the rights of uniformed servicemembers to retain their civilian employment following absences due to military service obligations, and provides that servicemembers shall not be discriminated against because of their military obligations. The Justice Department gives high priority to the enforcement of servicemembers’ rights under USERRA.  Additional information about USERRA can be found on the Justice Department’s websites at www.justice.gov/crt-military/employment-rights-userra and www.justice.gov/servicemembers as well as on the Department of Labor’s (DOL) website at www.dol.gov/vets/programs/userra.

This case stems from a referral by the U.S. Department of Labor, at CMS Coffer’s request, after an investigation by the DOL’s Veterans’ Employment and Training Service. The case is being handled by Deborah Birnbaum in the Employment Litigation Section of the Department of Justice’s Civil Rights Division and Assistant U.S. Attorney Mike James in the U.S. Attorney’s Office for the Eastern District of North Carolina.

The deadline for filing federal income tax returns is fast approaching and nationwide tax season is in full force.

During this hectic time of year, the Department of Justice’s Tax Division takes a moment to remind the public that year round, tax enforcement efforts are continually underway across the country. The Tax Division in collaboration with U.S. Attorney’s Offices and the Internal Revenue Service (IRS) investigates and prosecutes individuals and corporations across a wide spectrum of occupation and industry.

“Filing a tax return and paying taxes are serious acts and willfully filing false and fraudulent tax returns and deliberately evading paying taxes are criminal acts,” said Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division.  “During tax season and every season, the Tax Division is committed to achieving justice through the prosecution of those who choose to engage in tax crimes.”

Throughout the past year, federal prosecution of tax crime has included a range of income levels -- professionals, small business owners and wage earners -- and encompassed a broad spectrum of tax crimes from offshore fraudulent tax activity to employment tax fraud to identity theft. Tax enforcement efforts are ongoing. The Tax Division and its partners remain vigilant in the fight against tax crime.

Recent Tax Prosecutions of Individuals

• In April 2019, a Houston, Texas, man was sentenced to 360 months in prison for multiple conspiracy and tax crimes, including corporate tax evasion. The defendant engaged in the fraudulent sale of second-hand prescription drugs and tax crimes. The court imposed a criminal forfeiture money judgment of $20,326,464.17 and ordered $716,986 in restitution to the IRS.
• In April 2019, a District of Columbia woman was sentenced to 54 months in prison for conspiring to defraud the United States and commit theft of public money and aggravated identity theft. She engaged in a fraudulent tax refund scheme and was ordered to pay $1,806,876.66 in restitution to the IRS.
• In March 2019, a Salinas, California, woman was sentenced to 60 months in prison for conspiring to file false income tax returns and bank fraud. She was ordered to pay $1,641,610 in restitution to the IRS.
• In January 2019, a Union, South Carolina, mechanic was sentenced to 36 months in prison for wire fraud and filing a false income tax return. After creating a false invoice scheme, he embezzled money from his employer and failed to report the income on his tax returns. He was ordered to pay $1,941,377.32 in restitution.
• In November 2018, a Farmington, Michigan, trucking business owner was sentenced to 33 months in prison for wire fraud and willfully failing to file a tax return. The court ordered restitution of $2,919,265 to a third party victim and $142,069 to the IRS.
• In October 2018, a former IRS-Criminal Investigation special agent was sentenced to 51 months in prison for filing false tax returns, obstruction of justice, and stealing government money. A federal jury in the Eastern District of California convicted the defendant, who was also a CPA.

Recent Employment Tax Prosecutions

• In March 2019, a Raleigh, North Carolina, mental health executive was sentenced to 30 months in prison for failing to report and pay almost $1.7 million in employment taxes to the IRS.
• In November 2018, a Collinsville, Virginia, pharmacist was sentenced to 41 months in prison for failing to pay over more than $5 million in employment taxes to the IRS. The defendant spent the money owed to the United States on a Jeep Grand Cherokee, a jet ski, stock market investments and real property.
• In June 2018, a former Virginia Software Company CEO was sentenced to 21 months in prison for conspiring to defraud the government of more than $1.8 million in payroll taxes. Along with his co-conspirator, he also failed to remit the full amount of employee retirement contributions to the company’s retirement plan.

Recent Prosecutions Involving Offshore Banking

• In March 2019, one of the largest Israeli banks, Mizrahi-Tefahot Bank Ltd., and two of its subsidiaries, United Mizrahi Bank (Switzerland) Ltd. and Mizrahi Tefahot Trust Company Ltd., entered a deferred prosecution agreement (DPA) with the Department of Justice. Mizrahi-Tefahot Bank Ltd. paid $195 million to the United States as a direct result of its role in defrauding the United States, specifically the IRS, by conspiring with U.S. taxpayer-customers and enabling U.S. taxpayers to hide income and assets from the IRS.
• In October 2018, a Scottsdale, Arizona man, who managed a resort with family members in Pagosa Springs, Colorado, was sentenced to 18 months in prison for filing a false tax return underreporting his income and omitting $9.7 million in investment income from two offshore bank accounts in Liechtenstein

More information about the Tax Division’s enforcement efforts in these and other areas can be found on the division’s website.