District Not Recorded

Two Dallas doctors and three nurses were sentenced yesterday in an $11.3 million Medicare fraud scheme involving false and fraudulent claims for home health services.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Erin Nealy Cox of the Northern District of Texas, Special Agent in Charge C.J. Porter of the U.S. Department of Health and Human Services-Office of Inspector General’s (HHS-OIG) Dallas Region, Special Agent in Charge Eric Jackson of the FBI’s Dallas Field Office, and Director of Law Enforcement David Maxwell of the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU), made the announcement

Patience Okoroji, 60, of Dallas County, Texas, was sentenced by U.S. District Judge Reed O’Connor of the Northern District of Texas to serve 120 months in prison for her role in the fraudulent scheme as a part-owner of Timely Home Health Services Inc. (Timely) and a Licensed Vocational Nurse (LVN).  Kelly Robinett, M.D., 69, of Denton County, Texas, who was a former part-owner and supervising physician at Boomer House Calls (Boomer) of Frisco, Texas, was sentenced to serve 42 months in prison; Joy Ogwuegbu, 42, of Collin County, Texas, the former Director of Nursing at Timely, was sentenced to serve 42 months in prison and Kingsley Nwanguma, 48, of Dallas County, an LVN at Timely, was sentenced to serve 42 months in prison.  Angel Claudio, M.D., 61, of Hidalgo County was sentenced to serve six months in prison. 

On June 22, following a five-day trial before Judge O’Connor, Robinett and Nwanguma were each convicted of one count of conspiracy to commit health care fraud.  In addition, Robinett and Nwanguma were each convicted of three counts of health care fraud, and Ogwuegbu was convicted of four counts of health care fraud.  Claudio; Okoroji; Usani Ewah, 60, of Dallas County, a part-owner of Timely and a registered nurse (RN); and Shawn Chamberlain, 49, of Collin County, a part-owner of Boomer and a physician’s assistant, all pleaded guilty.  Chamberlain and Ewah are awaiting sentencing.

According to evidence presented at trial, from 2007 through 2015, Okoroji, Ewah, Nwanguma, Ogwuegbu, Claudio, Robinett, and Chamberlain engaged in a scheme to defraud Medicare by submitting and causing the submission of false and fraudulent claims to Medicare, through Timely, a home health agency, and Boomer, a physician house call company.  The evidence presented at trial showed that Robinett, a doctor of osteopathic medicine, certified Medicare beneficiaries—whom he had never seen and did not care to see—for medically unnecessary home health services that were often not provided.  The evidence further established that Ogwuegbu, a registered nurse, falsified nursing assessments and Nwanguma, a licensed vocational nurse, falsified nursing notes, to make it appear as if Medicare beneficiaries were qualified for and were provided skilled nursing services.   

Evidence at trial demonstrated that Timely billed Medicare for over $11.3 million for home health services purportedly provided to Timely’s patients, some of which was attributable to certifications Robinett signed.  Court documents also show that Robinett’s company, Boomer, billed Medicare over $1.6 million for medically unnecessary home health certifications and services and physician’s home visits. 

This case was investigated by the HHS-OIG, FBI, and MFCU.  Assistant Deputy Chief Adrienne Frazior and Trial Attorneys Aleza Remis and Christina Liu of the Criminal Division’s Fraud Section are prosecuting the case. 

The Fraud Section leads the Medicare Fraud Strike Force, which is part of a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.  Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in 12 cities across the country, has charged nearly 4,000 defendants who have collectively billed the Medicare program for more than $14 billion.

A health care CEO pleaded guilty today to a superseding indictment as part of an investigation into a $300 million health care fraud scheme that involved the distribution of over 6.6 million dosage units of controlled substances and the administration of medically unnecessary injections that resulted in patient harm. 

Attorney General Jeff Sessions, Assistant Attorney General Brian A. Benczkowski 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, 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 Region and Special Agent in Charge Manny Muriel of IRS Criminal Investigation (IRS-CI) Detroit made the announcement.

Mashiyat Rashid, 38, of West Bloomfield, Michigan, was the CEO of the Tri-County Wellness Group of medical providers in Michigan and Ohio, and pleaded guilty to one count of conspiracy to commit health care fraud and wire fraud, and one count of money laundering.  In connection with his plea agreement, Rashid agreed to the entry of a forfeiture money judgment in the amount of $51,396,917.70, as well as forfeiture to the United States of property traceable to proceeds of the health care fraud scheme, including over $11.5 million, commercial real estate, residential real estate, and a Detroit Pistons season ticket membership.

“The Department of Justice has made ending the opioid crisis a top priority and taken historic new steps to stop the spread of addiction,” said Attorney General Sessions.  “That includes prosecuting important cases like this one.  The defendant and physicians working for him allegedly flooded the streets with some 4.2 million unnecessary doses of drugs like oxycodone and required patients to undergo expensive and unnecessary back injections in exchange for pills.  And while people were suffering, this corporate executive lived in luxury funded by ill-gotten gains.  Today’s guilty plea helps us bring the defendant to justice and reduce the supply of illegal drugs flowing into our communities.  And so I want to thank our FBI agents, our partners with HHS and IRS Criminal Investigation and everyone else who helped investigate and prosecute this case. Opioid prescription abuse is clearly a cause of some of the addiction we are seeing today. Successful conclusions of important cases like this one will have a great impact. We are not through yet. There will be more cases like this. Ending opioid prescription abuse is achievable and we intend to end it.”

“Health Care Fraud diverts taxpayer dollars from Medicare and lines the pockets of dishonest health care providers,” said U.S. Attorney Schneider.  “This case is particularly troubling in that Rashid, through his clinics, made Michigan’s opioid crisis even worse by prescribing over six million dosages of medically unnecessary opioids to individuals who were already suffering from opioid addiction.”

“Health care fraud schemes such as these threaten the vital trust between a patient and his or her health care provider, undermine the integrity of our health care system, and cost all Americans billions of dollars,” said FBI Special Agent in Charge Slater.  “Americans already struggling with health care issues and rising premiums are further burdened with each dollar lost to fraud.  To those dishonest and unethical physicians and healthcare providers who prioritize profits over their pledge to provide honest services to those in need, the message should be clear: that the collective resources of local, state and federal law enforcement will expose these schemes and will bring you to justice.”

“Ensuring the appropriate prescribing and use of controlled substances is essential to protecting the health and safety of patients and the Medicare program,” said HHS-OIG Special Agent in Charge Pugh. “Health care professionals play a key role in combatting opioid misuse but some choose to exploit patients and commit criminal acts in order to pursue financial gain and when this happens the OIG and our law enforcement partners will be there to hold them accountable.”

“Hippocratic Oaths and Laws are in place for a reason and in this particular case, it’s about controlling medically unnecessary dosages and administered injections,” said IRS-CI Special Agent in Charge Muriel.  “Mashiyat Rashid and others allowed greed to drive their moral compass, contributing to the growing opioid epidemic our nation is facing.  IRS-CI and its law enforcement partners will painstakingly work, day in and day out, to catch these greedy healthcare providers in efforts to keep dangerous prescriptions off the streets of our communities.” 

In connection with his guilty plea, Rashid stated that he was the CEO of Tri-County Wellness Group, and owned, controlled and operated numerous pain clinics, laboratories and other providers in Michigan and Ohio.  As alleged in the superseding indictment, from 2008 until their arrest in 2017, Rashid and physicians working in Rashid’s clinics conspired to obtain patients by prescribing over 4.2 million dosage units of medically unnecessary controlled substances, including oxycodone, hydrocodone and oxymorphone, to Medicare beneficiaries, some of whom were addicted to narcotics.  Some of these opioids were allegedly resold on the street. 

As part of his plea, Rashid admitted that he conspired with physicians to require Medicare beneficiaries who wished to obtain controlled substances to submit to expensive, medically unnecessary, and painful injections.  Rashid paid physicians based on the number of injections that Medicare paid for, regardless of the medical necessity of the injections.  In turn, the physicians conducted these repetitive and unnecessary injections on patients in order to increase revenue for Rashid, themselves, and their co-conspirators.  Rashid stated that the beneficiaries included vulnerable patients, including those addicted to opioids, who were willing to submit to unnecessary and painful injections in order to obtain pills. 

When Medicare conducted a medical review of the injection claims, it determined that 100 percent of the claims were not eligible for Medicare reimbursement and summarily suspended the medical billing privileges of one of the pain clinics involved in the scheme.  In order to conceal the continued billing of these fraudulent claims to Medicare, the guilty plea states, Rashid and others created new shell companies that they enrolled in Medicare to keep billing the same fraudulent claims, often changing only the name of the company on the door to the medical practice and/or inventing new suite numbers to conceal the continuation of the fraudulent practices at the same location. 

Rashid also owned a diagnostic laboratory and caused physicians to order medically unnecessary urine drug testing from the laboratory.  When Medicare conducted a medical review of claims submitted by the laboratory, it determined that 95 percent of the claims were not eligible for Medicare reimbursement.  In order to conceal the continued billing of these fraudulent urine drug testing claims to Medicare, the guilty plea states, Rashid and others created a new corporate entity that they enrolled in Medicare so that physicians could keep ordering the same fraudulent urine drug testing claims through this new entity. 

In addition, Rashid stated in his guilty plea that he paid illegal health care kickbacks to obtain patients and solicited illegal kickbacks and bribes for physicians to refer Medicare beneficiaries to specific third-party home health agencies, laboratories and diagnostic providers even though those referrals were medically unnecessary. 

Further, Rashid pleaded guilty to committing money laundering in connection with a $6.6 million wire transfer on April 13, 2016.  The superseding indictment alleges that Rashid transferred the proceeds derived from the conspiracy to live an extravagant lifestyle and spend millions of dollars on luxury clothes from retailers like Hermes, rare Richard Mille watches, and exotic automobiles such as a Lamborghini and Rolls Royce Ghost; a mansion and other real estate in the Detroit, Michigan area; and to sit courtside or in the first row of NBA basketball games, including the NBA Finals. 

Rashid; Spilios Pappas, 61, of Monclova, Ohio; Joseph Betro, 57, of Novi, Michigan; Tariq Omar, 61, of West Bloomfield, Michigan; and Mohammed Zahoor, 51, also of Novi, were each charged in a superseding indictment with one count of conspiracy to commit health care fraud and wire fraud.  Pappas, Betro, Omar, and Zahoor were each additionally charged with one count of health care fraud.  All of the defendants were previously charged in an original indictment, along with Yasser Mozeb, 35, of Oakland County, Michigan and Abdul Haq, 72, of Ypsilanti, Michigan.  Mozeb and Haq have pleaded guilty, along with 12 other defendants, including seven other physicians.  The case is pending before U.S. District Judge Denise Page Hood of the Eastern District of Michigan.  Trial has been scheduled to begin on Nov. 27 before Judge Hood.  Rashid’s sentencing is set for April 11.

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

This case was investigated by the FBI, HHS-OIG and IRS-CI.  Trial Attorney Jacob Foster of the Criminal Division’s Fraud Section is prosecuting the case.  The financial investigation into Rashid’s assets was conducted by a partnership between the FBI, IRS, U.S. Marshals Service, Department of Justice’s Health Care Fraud Unit, and the U.S. Attorney’s Office’s Forfeiture and Financial Litigation Unit. The group conducted an extensive pre-indictment investigation and continued to support the prosecution through today’s guilty plea.  Assistant U.S. Attorney Shankar Ramamurthy and DOJ Trial Attorney Jacob Foster led the financial investigation. 

The Fraud Section leads the Medicare Fraud Strike Force, which is part of a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.  Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in 12 cities across the country, has charged nearly 4,000 defendants who have collectively billed the Medicare program for more than $14 billion. 

Attorney General Jeff Sessions today announced a series of measures to dismantle transnational criminal organizations.

“The day I was sworn in as Attorney General, President Trump sent me an executive order to dismantle transnational criminal organizations—the gangs and cartels who flood our streets with drugs and violence,” Attorney General Sessions said.  “We embrace that order and we carry it out every single day.  Today, to increase our effectiveness, I am putting in place new leadership to drive our transnational organized crime efforts and forming a Transnational Organized Crime Task Force of experienced prosecutors that will coordinate and optimize the Department’s efforts to take each of these groups off of our streets for good.”

The Attorney General has appointed Associate Deputy Attorney General Patrick Hovakimian to serve as the Department’s first Director of Counter Transnational Organized Crime.  Hovakimian has served in Department leadership since early 2017 and also as an AUSA in the Southern District of California, where he is co-lead counsel in a series of transnational public corruption and fraud cases.  In addition to his duties as federal prosecutor, earlier this year the President nominated and the U.S. Senate confirmed Hovakimian to serve as a Commissioner of the Foreign Claims Settlement Commission of the United States.

Attorney General Sessions has appointed Adam Cohen as the new Director of Organized Crime and Drug Enforcement Task Force (OCDETF).  Cohen is currently the Chief of the Criminal Division Special Operations Unit’s Office of Enforcement Operations and has served in the Criminal Division for 10 years.  He has also served as an Assistant United States Attorney (AUSA) for five years and as a state prosecutor in Florida for seven years.  He also led the National Gang Targeting Enforcement and Coordination Center for nearly three years and has served as a Deputy Chief of the Narcotics and Dangerous Drug Section.  He is a past recipient of the Assistant Attorney General’s Award for Reduction and Deterrence of Violent and Organized Crime, as well as the DEA Administrator’s Award for his work to counter narcotics trafficking.

On February 9, 2017, President Donald J. Trump issued Executive Order 13773, which directed the federal government to “ensure that Federal law enforcement agencies give a high priority and devote sufficient resources to efforts to identify, interdict, disrupt, and dismantle transnational criminal organizations[.]”

Following this Executive Order, Attorney General Sessions directed the FBI, DEA, OCDETF, and the Department’s Criminal Division to identify top transnational criminal groups that threaten the safety and prosperity of the United States and its allies.  As a result of that review, the Attorney General is designating the following criminal groups as top transnational organized crime threats:

•     MS-13

•     Cartel de Jalisco Nueva Generacion (CJNG)

•     Sinaloa Cartel

•     Clan del Golfo, and

•     Lebanese Hezbollah.

The Attorney General’s TOC Task Force will be led by the Deputy Attorney General and will be composed of experienced prosecutors.  It will be organized into one subcommittee for each of the target groups.

The subcommittee on MS-13 will be led by Assistant U.S. Attorney John Durham of the U.S. Attorney’s Office for the Eastern District of New York.  AUSA Durham has played a significant role in the FBI’s Long Island Task Force, which has arrested hundreds of MS-13 members.

The subcommittee on Cartel Jalisco Nueva Generacion will be led by Trial Attorney Brett Reynolds of the Narcotic and Dangerous Drug Section of the Department’s Criminal Division.  Reynolds has led or co-led several investigations into the Cartel that have led to indictments of some of its highest ranking members.

The subcommittee on the Sinaloa Cartel will be led by Assistant U.S. Attorney Matthew Sutton of the United States Attorney’s Office for the Southern District of California.  AUSA Sutton prosecuted several Sinaloa kingpins and led multiple international investigations targeting Sinaloa Cartel leaders, resulting in seizures of millions of dollars in drug proceeds and thousands of kilograms of illicit drugs.

The subcommittee on Clan del Golfo will be led by Assistant U.S. Attorney Robert Emery of the United States Attorney’s Office for the Southern District of Florida.  AUSA Emery has secured convictions against the top leadership of Clan del Golfo, including kingpin Henry de Jesus Lopez Londoño, who commanded over 1,000 armed men for the cartel.

The subcommittee on Lebanese Hezbollah will be led by Assistant U.S. Attorney Ilan Graff of the United States Attorney’s Office for the Southern District of New York.  AUSA Graff is overseeing the prosecution of two alleged members of Hezbollah’s External Security Organization, the first such operatives to be charged with terrorism offenses in the United States.

Attorney General Sessions has ordered each of these subcommittees to provide specific recommendations within 90 days on how to disrupt and dismantle TOC, whether through prosecution, diplomacy, or other lawful means.

This new Task Force builds upon work that Attorney General Sessions has already done to dismantle these groups.  On January 11, 2018, Attorney General Sessions established the Hezbollah Financing and Narcoterrorism Team (HFNT), a group of experienced international narcotics trafficking, terrorism, organized crime, and money laundering prosecutors.  HFNT prosecutors and investigators are tasked with investigating individuals and networks providing support to Hezbollah, and pursuing prosecutions in any appropriate cases.  The new subcommittee—which will be staffed and led by HFNT members—will aid the ongoing work of the HFNT.

On October 23, 2017, Attorney General Sessions formally designated MS-13 as a priority target for OCDETF.

Defendant forced victims struggling with opioid addictions to prostitute for his profit

Xaver M. Boston, 29, of Charlotte, North Carolina, was convicted yesterday by a federal jury of six counts of sex trafficking and one count of using an interstate facility to promote a prostitution enterprise. The verdict was announced by Acting Assistant Attorney General John Gore of the Justice Department’s Civil Rights Division, U.S. Attorney R. Andrew Murray of the Western District of North Carolina, and Special Agent in Charge John Strong of the FBI Charlotte, North Carolina, Field Division. U.S. District Judge Robert J. Conrad, Jr. presided over the trial.

Evidence presented during the three day trial, including the testimony of three of the four victims identified in the indictment by their initials, revealed that Boston, who served in the U.S. Army as a reserve military policeman, operated an extensive sex trafficking enterprise in the Charlotte area between 2012 and September 2017, except for a brief period when he was deployed overseas. Boston recruited the victims—young women and one teenager who were all struggling with drug addictions—by promising to provide them with a place to live and drugs to feed their addictions. He also falsely promised them a house, car, and other material possessions. Boston then advertised them on Backpage.com for prostitution and collected the proceeds for his own profit.

After recruiting the victims, Boston controlled their supply of highly addictive drugs such as heroin and hydrocodone pills. Without the drugs, the victims would experience excruciating physical and mental pain and withdrawal symptoms. In order to coerce the victims to prostitute, Boston withheld their drugs until after they completed commercial sex acts, and he withheld it as punishment if they failed to turn over all of the prostitution proceeds or otherwise violated his rules.      

Evidence presented at trial also showed that Boston used violence to control and coerce the victims on occasion. For example, he choked one victim on multiple occasions, and he punched and slapped others as well. Boston also used a pistol to strike one victim in the face, breaking her nose.    

“The defendant in this case preyed upon young vulnerable women, exploiting their drug addictions and forcing them to engage in prostitution for his own profit,” said Acting Assistant Attorney General Gore. “The Civil Rights Division will continue its vigorous efforts to work with our federal and state partners to hold human traffickers accountable and vindicate the rights of victims.”

“Boston is a predator who ran a criminal enterprise that violated the most basic standards of human decency,” said U.S. Attorney Murray. “The defendant preyed on and abused vulnerable young women with the intention of exploiting them for his financial gain, and used violence and drugs to exert his control. My office will continue to prosecute sex traffickers and work with our law enforcement partners to identify those who engage in this illegal, dehumanizing business.”

“Xaver Boston promised his victims a better life, instead he robbed them of their civil rights and freedom to make a profit, now he will pay the price. The FBI devotes a significant amount of resources to help sex trafficking victims recover from the trauma they suffer at the hands of ruthless people like Boston,” said John Strong, Special Agent in Charge of the FBI in North Carolina.

After deliberating for seven hours, the jury found the defendant guilty of seven out of nine counts contained in the indictment. Boston is currently in federal custody. Each sex trafficking charge carries a minimum sentence of 15 years in prison and a maximum sentence of life, mandatory restitution and a $250,000 fine. A sentencing date has not been set.

The case was investigated by the FBI Charlotte, North Carolina, Field Division with assistance from the Charlotte-Mecklenburg Police Department. The case is being prosecuted by Assistant U.S. Attorney Kimlani M. Ford of the Western District of North Carolina and Trial Attorney Matthew T. Grady of the Civil Rights Division’s Human Trafficking Prosecution Unit.

Three former commodities traders of a New York-based financial services firm (“Trading Firm A”) were charged yesterday for their alleged participation in an over $60 million commodities fraud and spoofing conspiracy that was perpetrated through the U.S. commodities markets.  Two of these traders have agreed to plead guilty for their respective roles in the criminal conspiracy.   

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Ryan K. Patrick of the Southern District of Texas and Special Agent in Charge Jeffrey S. Sallet of the FBI’s Chicago Field Office made the announcement.

Yuchun “Bruce” Mao, 39, a citizen of the People’s Republic of China, was indicted on one count of conspiracy to commit commodities fraud, two counts of commodities fraud and two counts of spoofing.  Kamaldeep Gandhi, 36, of Chicago, was charged by criminal information with two counts of conspiracy to engage in wire fraud, commodities fraud and spoofing.  Krishna Mohan, 33, of New York, New York, was charged by criminal information with one count of conspiracy to engage in wire fraud, commodities fraud, and spoofing. 

“As alleged in today’s charges, these individuals engaged in a sophisticated scheme to distort the futures market for their own advantage by placing large ‘spoofed’ trading orders that they never intended to execute,” said Assistant Attorney General Benczkowski.  “Investor trust is the cornerstone of our trading markets, and the Criminal Division will aggressively investigate and prosecute those who undermine that trust by engaging in spoofing or any other illegal conduct.”

“The Southern District of Texas aggressively prosecutes white collar crime,” said U.S. Attorney Patrick. “Home to the second most Fortune 500 companies in the nation, our Houston division is uniquely suited to prosecute white collar fraud in whatever form it comes, and we enjoy terrific relationships with law enforcement partners around the country and from around the world.”

“These charges demonstrate the FBI’s firm commitment to hold accountable those who seek to deceive and defraud the public,” said Special Agent in Charge Sallet.  “Such schemes cannot be allowed to threaten confidence in the free market, which represents one of many strengths of our great nation.  We will continue to work together to aggressively pursue anyone who undermines the integrity of our financial markets and disregards the rule of law.”

The indictment alleges that Mao was co-head of a trading team that traded commodities on behalf of Trading Firm A, working in Chicago and New York.  The indictment alleges that from in or around March 2012 through in or around March 2014, Mao and others conspired to mislead the markets for E-Mini S&P 500 and E‑Mini NASDAQ 100 futures contracts traded on the Chicago Mercantile Exchange (CME), and E-Mini Dow futures contracts traded on the Chicago Board of Trade (CBOT).  The indictment further alleges that Mao and his co-conspirators deceived market participants and manipulated markets by placing thousands of orders that they did not intend to execute, or “spoof orders,” in order to create the false and misleading appearance of increased supply or demand.  Market participants that traded futures contracts in these three markets while the spoof orders distorted market prices incurred market losses of over $60 million.  Mao and his co-conspirators are alleged to have placed these spoof orders in order to benefit themselves Trading Firm A.

Count one of the criminal information alleges that Gandhi conspired, with Mao and others, to commit the underlying offenses while employed at Trading Firm A.  Count two of the criminal information alleges that, from in or around May 2014 through in or around October 2014, Gandhi, while employed at a second Chicago-based trading firm (identified in the information as “Trading Firm B”), conspired with others to mislead the markets for E-Mini S&P 500 futures contracts traded on the CME by agreeing to place, and himself placing, spoof orders for E-Mini S&P 500 futures contracts in order to create the false and misleading appearance of increased supply or demand.  Gandhi has agreed to plead guilty to the charges in the criminal information.

The charges against Mohan arise from his participation in the conspiracy alleged above while employed at Trading Firm A.  Mohan has agreed to plead guilty to the charge in the criminal information.

The FBI’s Chicago Field Office is investigating the case.  Trial Attorneys Mark Cipolletti, Jeffery Le Riche and Matthew Sullivan of the Criminal Division’s Fraud Section, and Assistant U.S. Attorney John Lewis of the Southern District of Texas are prosecuting the case.  The CFTC’s Division of Enforcement provided substantial assistance in this case.

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

Individuals who believe that they may be a victim in these cases should visit the Fraud Section’s Victim Witness website for more information.

A Reisterstown, Maryland man was sentenced today to 300 months  in prison and ordered to pay $125,000 in restitution, to be followed by a lifetime of supervised release, for traveling from the United States to the Philippines and engaging in illicit sexual conduct with a minor and to producing child pornography with the intent to transport the child pornography to the United States.

 Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division; U.S. Attorney Robert K. Hur of the District of Maryland; Acting Special Agent in Charge Cardell T. Morant of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) Baltimore; Special Agent in Charge Gordon B. Johnson of the Federal Bureau of Investigation, Baltimore Field Office; Chief Terrence B. Sheridan of the Baltimore County Police Department and Baltimore County State’s Attorney Scott Shellenberger made the announcement.

“Martin Hall traveled across the globe for the express purpose of sexually abusing children and creating images of that abuse,” said Assistant Attorney General Benczkowski.  “This case serves as a stern warning to offenders - no matter how far you travel to abuse and exploit children, or how sophisticated your efforts to hide your identity, our prosecutors, agents, and local law enforcement will work together to hold you accountable and bring you to justice.”

“As this case demonstrates, children are cruelly and sexually abused to produce child pornography,” U.S. Attorney Robert K. Hur said. “Martin Hall traveled to the Philippines to abuse minors, filmed the abuse, and brought those images back to the U.S.  We prosecute these crimes without the children having to testify because we have photo and video evidence of the crimes.  This sentence, which includes restitution to the victims, sends a strong message that we will bring these criminals to justice to try to save even more children from becoming victims, and to help child victims recover.” 

“Time and again we see these egregious offenders believe that they may hide their crimes across international borders or in the depths of cyberspace. Time and again, our investigators disprove such a notion, find these offenders and bring them before our justice system to face the consequences,” said Acting Special Agent in Charge Morant. “While we cannot undo the harm and trauma Martin Hall has inflicted, I am pleased with today’s announcement knowing that the just burden of his crimes will weigh heavily on him.”

Martin Hall, 56, a former computer programmer, pleaded guilty on July 11, before U.S. District Court Judge Ellen L. Hollander of the District of Maryland to one count of traveling in foreign commerce from the United States to the Philippines between April 2016 and August 2016 to engage in illicit sexual conduct with a person under the age of 18 and to one count of producing child pornography with the intent to transport the child pornography to the United States between July 2016 and August 2016.  Judge Hollander sentenced Hall earlier today and remanded him to the custody of the U.S. Marshals Service.  

According to admissions made in connection with his plea, Hall travelled to the Philippines and other countries in Southeast Asia for the purpose of engaging in illicit sexual activity with minor females.  Hall’s conduct included engaging in sexual acts with minors, producing images and videos of the minors engaging in sexually explicit conduct, and transporting the images and videos back to Maryland.  Additionally, Hall used sophisticated computer programs to download and store thousands of images and videos of child pornography.

The investigation was conducted by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and the FBI.  This case is being prosecuted by Trial Attorney Kaylynn Shoop of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) and Assistant U.S. Attorney Paul Budlow of the District of Maryland.

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 http://www.justice.gov/psc.

Following an order from President Trump, Attorney General Jeff Sessions today announced that he is providing more resources for law enforcement in Chicago and filing a brief opposing a proposed consent decree on Chicago police.

“Public safety, security and order are the fundamental responsibility of the executive branches of our state, local and federal governments,” Attorney General Sessions said. “This constitutional duty rests primarily, for large cities, on their police departments. These departments are composed of some of our finest citizens who daily display courage, respect for law, judgment, and integrity.  It is these officers who stand between crime and security.  There is one government institution, and one alone, that has the ability to make Chicago safer—that is the Chicago Police Department.  Our goal should be to empower it to fulfill its duties, not to restrict its proper functioning or excessively demean the entire Department for the errors of a few.  Make no mistake: unjustified restrictions on proper policing and disrespect for our officers directly led to this tragic murder surge in Chicago.

“At a fundamental level, there is a misperception that police are the problem and that their failures, their lack of training, and their abuses create crime.  But the truth is the police are the solution to crime, and criminals are the problem.  The results of the ACLU settlement in November 2015, as revealed by Judge Cassel’s study, established this fact dramatically, conclusively, and most painfully for the City of Chicago.  When police are restrained from using lawfully established policies of community engagement, when arrests went down, and when their work and character were disrespected, crime surged.  There must never be another consent decree that continues the folly of the ACLU settlement.”

On October 8, 2018, President Trump directed Attorney General Sessions to work with local law enforcement to help Chicago police officers do their jobs and reduce violent crime.

Pursuant to the President’s order, Attorney General Sessions is sending five additional violent crime prosecutors to Chicago.  With these additional resources, United States Attorney for the Northern District of Illinois John Lausch is creating a Gun Crimes Prosecution Team that will focus on investigating and prosecuting gun cases from the most violent neighborhoods in Chicago.  Working with state and local law enforcement, this new unit will help ensure that Chicago’s most dangerous criminals are charged quickly after arrest and prosecuted, disrupting the cycle of violence in the neighborhoods most in need.

The Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) will assign five Violent Crime Coordinators (VCCs) to U.S Attorney Lausch’s Project Safe Neighborhoods team.  These experienced VCCs will join the existing ATF VCC in Chicago in the daily review of firearm arrests and seizures in the city to ensure the most violent firearm offenders are promptly and effectively prosecuted in federal court.

In June 2017, Attorney General Sessions created the Chicago Crime Gun Strike Force, a permanent team of 21 additional permanent ATF special agents, six intelligence research specialists, 12 task force officers from the Chicago Police Department, two task force officers from the Illinois State Police, and four ballistics specialists who are focused on the most violent offenders in the most violent areas.  Working with the Chicago Police Department, the Strike Force has enhanced substantially firearms enforcement in the City of Chicago. 

Since the Strike Force began operation, ATF firearm arrests in Chicago have increased by 24.6 percent; ATF firearm seizures/recoveries have increased by 45.8 percent, and CPD has increased firearm seizures by 11.3 percent.  As of September 2018, violent crime has been reduced in all four police districts where the Strike Force has been assigned, including a 49 percent decrease in homicides in the Seventh District and a 37 percent decrease in shootings in the Ninth District.

On October 9, Attorney General Sessions announced that the Department of Justice will file a statement of interest in the state of Illinois’ lawsuit against Chicago over its policing policies.  The statement of interest seeks to prevent the imposition of a consent decree on Chicago’s police officers.

After Chicago reached a settlement with the ACLU in 2015 and the settlement went into effect in January of 2016, the use of Terry stops in Chicago declined by 75 percent.  Chicago police made 24 percent fewer arrests in 2016 than they made in 2015, and about half as many arrests as they made in 2011.

In 2016, Chicago saw the biggest single-year increase in the murder rate in at least 60 years, with murders 68.5 percent above the previous 10-year average.  More people were killed in Chicago in 2016 than in any of the previous 20 years.   More people were murdered in Chicago in 2016 than in New York and Los Angeles combined—even though Chicago has one-fifth of the population of those two cities.  An estimated 22 percent of the nationwide increase in homicide in 2016 happened in Chicago alone.

Chicago’s agreement with the ACLU remains in effect.

In August 2017, the state of Illinois sued Chicago, alleging the use of excessive force and racially biased policing.  In September 2018, Illinois and Chicago submitted a proposed consent decree to the United States District Court for the Northern District of Illinois for approval.  The court has provided a public comment period on the proposed consent decree, which is set to close on October 12.

Today the Department has filed a statement of interest in this lawsuit, commenting that there is no need for a consent decree on the Chicago Police Department, let alone the consent decree the parties have proposed.

The Department’s Statement of Interest argues that the proposed consent decree would deprive local, democratically accountable officials of the flexibility they need to ensure the safety of the people of Chicago.  Specifically, the Statement of Interest explains that the proposed consent decree (1) is not narrowly tailored to remedy specific violations of federal law; (2) unfairly inhibits the Chicago Superintendent of Police—who is accountable to the elected Mayor—from exercising his duty to administer the Chicago Police Department; (3) turns over long-term budgetary control of the Chicago Police Department to the federal court and the proposed Monitor, and (4) uses vague or subjective terms to define key metrics for compliance.

The Statement of Interest “asks the court not to enter the Proposed Consent Decree but, rather, to allow state and local officials—and Chicago’s brave front-line police officers—to engage in flexible and localized efforts to advance the goal of safe, effective, and constitutional policing in Chicago.”

On March 31, 2017, Attorney General Sessions ordered a review of the Department’s existing or proposed consent decrees to ensure that they fully and effectively promote public and officer safety, uphold civil rights, and respect the honorable work of law enforcement officers.

A Manassas Park, Virginia man was sentenced today to 35 years in prison and a lifetime of supervised release for producing and distributing child pornography,  Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney G. Zachary Terwilliger of the Eastern District of Virginia, and Assistant Director in Charge Nancy McNamara of the FBI’s Washington Field Office announced.

Michael Gerald Moody, 44, a delivery driver for a frozen foods company, was sentenced by U.S. District Judge Liam O’Grady of the Eastern District of Virginia.

“Michael Moody sexually abused a child and used mobile devices and encrypted messaging applications to create and distribute images of that abuse over the internet,” said Assistant Attorney General Benczkowski.  “Thanks to the tremendous efforts of the prosecutors, agents, and local law enforcement who worked on this case, Moody will spend many years in prison and his victim has received some measure of justice for the trauma Moody so callously inflicted.”

“The facts underlying this case show that Moody is a predator who poses a singular danger to children,” said U.S. Attorney Terwilliger.  “I applaud the swift and dedicated work of the FBI and the Manassas Park Police Department, which was essential to ensuring that Moody will stay far away from any minors for a long time.  With the assistance of our state and local partners, our office will continue to zealously prosecute anyone who commits these horrible crimes against children in the Eastern District of Virginia.”

“Sexual predators are turning to different social media platforms and the internet to exploit innocent children,” said Assistant Director in Charge McNamara. “Today's sentencing should serve as a warning to those who try to hide their illegal activities behind technology. Criminals who think they are acting anonymously to advertise, distribute, possess and trade child pornography will be found and held accountable. Our children must be protected from these predators.”

According to court documents, between 2017 and February 2018, Moody used a child to engage in sexually explicit conduct and he captured numerous images of that conduct with his cellular phone.  In addition, Moody engaged in text chats with other individuals through the online messaging application Kik Messenger.  These chats principally focused on the exchange of child pornography and discussions of the sexual abuse of children.  In the course of these chats, Moody distributed child pornography—including images that he himself produced, as well as other images—to at least eight other individuals. 

The case was investigated by the FBI with the assistance of the Manassas Park Police Department.  Trial Attorney Kyle P. Reynolds of the Criminal Division’s Child Exploitation and Obscenity Section and Assistant U.S. Attorney Jay V. Prabhu of the Eastern District of Virginia prosecuted the case.

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

Evidence based forensic tool to help solve violent crime

The Department of Justice and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) today announced the deployment of  ballistic imaging equipment used by ATF’s National Integrated Ballistic Information Network (NIBIN) to 22 state and local law enforcement agencies.

"Under President Donald Trump, the Department of Justice is prosecuting more firearm offenders than ever before," Attorney General Sessions said. "Ballistics technology has given law enforcement an unprecedented ability to make connections between cases and track down dangerous criminals. Today this Department of Justice is once again investing in the 85 percent of law enforcement officers who serve at the state and local levels and we are equipping them with cutting edge technology that will lead to smarter, targeted prosecutions of the most dangerous people in their communities. I have no doubt that this equipment will help to reduce crime in America."

“Crime Gun Intelligence, including the timely use of the NIBIN network, is the cornerstone of ATF’s violent crime reduction strategy. By deploying equipment to these 22 law enforcement agencies, investigators will now receive investigative leads within 48 hours. They will have new opportunities to disrupt the shooting cycle and make our communities safer,” said ATF Deputy Director Thomas Brandon.

As the only crime gun ballistic network in the United States, NIBIN compares images of cartridge casings recovered at crime scenes and firearms recovered by law enforcement to connect shooting incidents and identify shooters. ATF’s broader Crime Gun Intelligence strategy involves multiple technologies to identify criminal shooters and uses NIBIN as a leads-generator in support of this comprehensive approach. The deployments of this NIBIN equipment will help fill gaps in the intelligence and investigative networks and allow for a more efficient processing of firearm related violent crime evidence.

There are 16 agencies receiving NIBIN equipment for the first time: 

1. Anchorage, AK PD                                
2. Aurora, IL PD                                           
3. Berks County, PA                      
4. Charleston, WV PD                                     
5. Cheney, WA State Patrol                             
6. Des Moines, IA PD                                         
7. Frederick County, MD Sheriff’s Office            
8. Ft. Myers, FL PD
9. Glendale, AZ PD           
10. Nassau County, NY Public Safety Center
11. Lexington, KY PD
12. Miami Gardens, FL PD
13. Orange County, NY Intelligence Center
14. Pensacola, FL Escambia Co Sheriff
15. Richmond, VA PD    
16. San Bernardino, CA PD                                      

Six agencies are receiving additional equipment to enhance their successful crime gun intelligence programs: 

1. Baton Rouge, LA State Crime Lab                                       
2. Cincinnati, OH PD                                     
3. Denver, CO PD 
4. Detroit, MI PD            
5. Jacksonville, FL PD
6. Philadelphia, PA PD                                  

ATF has 25 Crime Gun Intelligence Centers (CGIC) across the United States in which ATF collaborates with local police departments and federal, state, and local prosecutors. The CGICs utilize cutting-edge technology and dedicated investigative teams to disrupt shooters and identify their source of crime guns before they can commit further criminal acts.

To support local participation in the CGIC approach, the Department recently awarded $5 million under the Local Law Enforcement CGIC Integration Initiative to encourage local jurisdictions to use intelligence, technology, and community engagement to identify unlawfully used firearms and to prosecute those who commit violent crimes.  The Department also awarded more than $30 million to Project Safe Neighborhoods (PSN), the centerpiece of the Department’s crime reduction efforts. Through PSN, the Department is targeting the most violent criminals in the most violent areas by utilizing policing tools like CGICs.

NIBIN is helping cities solve crimes every day.  Examples of these NIBIN success stories include:

• In January 2017, an unknown suspect shot a victim at a gas station in Detroit, Michigan.  Police recovered cartridge casings and entered them into NIBIN. In April 2017, an unknown suspect fatally shot a limousine driver at a gas station. NIBIN linked the two scenes, and in so doing, provided investigators the intelligence they needed to identify the shooter and remove a murderer from the streets. The shooter was sentenced to life in prison.
• Detectives in New Albany, Indiana, investigated a homicide but had no suspect, one cartridge casing, and information that led them to believe the shooter may have fled to Louisville, Kentucky. A month later, the Louisville Police Department responded to an incident where several shots had been fired inside an apartment. The firearm recovered at that scene was linked by NIBIN to the murder in New Albany. As a result, the shooter was arrested, charged with the homicide, and sentenced to 17 years in prison. 
• In 2018, Cincinnati Police investigated a homicide and recovered cartridge casings from the scene, subsequently entering them into NIBIN. A month later, the Cincinnati Police stopped two suspects for driving a stolen car. During the stop, the police recovered two firearms from the car and entered them into NIBIN. NIBIN linked the guns to the murder, and after being prosecuted for the homicide, the two suspects were sentenced to 18 and 50 years in prison.  

More information on NIBIN and Crime Gun Intelligence can be found here: NIBIN Fact Sheet and CGIC Fact Sheet.

Attorney General Jeff Sessions welcomed the confirmation of Jeffrey Bossert Clark as the Assistant Attorney General of the Department of Justice’s Environment and Natural Resources Division (ENRD) today.

“Jeff Clark is one of the leading environmental litigators in the country, and has been counsel in many of the most significant environmental and natural resource cases of the past two decades, both here at the Department of Justice and in private practice,” said Attorney General Sessions. “Jeff has four years of experience as part of the Environment and Natural Resources Division leadership team, working on virtually every case that the division litigated in the courts of appeals and every environmental case argued before the Supreme Court.  He is ready to lead this Division — and it should not have taken us 16 months to get him confirmed.  And so today I want to congratulate Jeff and to thank my former colleagues in the Senate for confirming his nomination to this important role.”

ENRD is responsible for litigation in trial and appellate courts on behalf of the United States regarding the prevention and clean-up of pollution, challenges to federal programs and activities, the stewardship of public lands and natural resources, property acquisition to promote national security, wildlife protection, and Indian rights and claims.  

Prior to his appointment as Assistant Attorney General, Mr. Clark was a partner with the international law firm of Kirkland & Ellis LLP in its Washington, D.C. office.  During his time at the firm, he practiced in diverse areas of law, ranging from environmental to antitrust.  Mr. Clark has argued and won numerous cases in multiple U.S. Courts of Appeals.  He has deep experience in matters involving the Clean Air Act, the National Environmental Policy Act, the Energy Policy and Conservation Act of 1975, and the Energy Independence and Security Act of 2007. 

Before joining the firm, Mr. Clark served as a Deputy Assistant Attorney General within ENRD from 2001 to 2005.  In that role, he oversaw ENRD’s Appellate Section and the Indian Resources Section, where he reviewed, edited, and contributed to virtually every brief ENRD filed in the Courts of Appeals, including several cases of exceptional significance that he personally briefed and argued.  During his time in ENRD, Mr. Clark also worked on all environmental or natural resource cases argued in front of the Supreme Court. 

Mr. Clark received his bachelor’s degree in Economics and History from Harvard University and earned a master’s degree in Urban Affairs and Public Policy from the University of Delaware.  He obtained his law degree from the Georgetown University Law Center, where he was an editor for the Georgetown Law Journal.

Attorney General Jeff Sessions today welcomed the confirmation of Eric Dreiband as the Department of Justice’s Assistant Attorney General for the Civil Rights Division.

“Eric has distinguished himself as an outstanding lawyer and a committed public servant,” said Attorney General Jeff Sessions. “His previous experience in protecting the civil and constitutional rights of all individuals will enable him to effectively lead the Civil Rights Division.”

Mr. Dreiband’s background spans the public and private sector, and also the issues covered by the Civil Rights Division. He previously served as the General Counsel of the United States Equal Employment Opportunity Commission (EEOC) from 2003-2005. As General Counsel, he led litigation teams on a number of federal employment discrimination enforcement matters, including enforcement of the Civil Rights Act of 1964. Prior to his tenure at the EEOC, Mr. Dreiband served as Deputy Administrator of the Department of Labor’s Wage and Hour Division. In this capacity, he helped lead enforcement efforts for the federal government of the Fair Labor Standards Act, the Family and Medical Leave Act, among other laws.

Prior to his nomination by President Trump to serve as the Assistant Attorney General for the Civil Rights Division, Mr. Dreiband was a partner in the Washington, D.C. office of the law firm of Jones Day. Mr. Dreiband received his J.D., with honors, from Northwestern University Pritzker School of Law, his M.T.S. from Harvard Divinity School, and his A.B. from Princeton University.  

Washington, D.C. siblings pleaded guilty today for their April attack on a federal prosecutor and a murder victim’s daughter outside the Superior Court for the District of Columbia, announced Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division.

Maurice Hight, 28, pleaded guilty today to one count of felony assault on a federal official.  Tiera Hight, 21, pleaded guilty today to one count of misdemeanor assault on a federal official and one count of misdemeanor assault in violation of District of Columbia Code. According to admissions made in connection with their plea agreements, on April 5, 2018, Maurice and Tiera Hight were in a courtroom in the Superior Court for the District of Columbia waiting for a verdict against their brother, who was being tried for murder.  After the guilty verdict, Maurice and Tiera Hight exited the courthouse and waited outside.  Several minutes later, the murder victim’s daughter exited the courthouse, escorted by a federal prosecutor.  As they approached the street, Tiera Hight walked directly towards the pair and she and Maurice Hight began to circle them.  Tiera Hight then began to spit on the murder victim’s daughter and physically attacked her.  The federal prosecutor intervened, but Tiera Hight continued her attack.  Maurice Hight then joined the fight, forcibly grabbing the federal prosecutor, pulling her down and punching her in the right side of the face with a closed fist.  The federal prosecutor fell hard to the ground and sustained swelling and bruises to her face and arm.  Two deputy U.S. Marshals in the area placed Maurice Hight under arrest, and Maurice Hight proceeded to spit in the face of one of the deputy U.S. Marshals.  

“Our criminal justice system cannot tolerate violence against crime victims or those entrusted with enforcing our laws,” said Assistant Attorney General Benczkowski.  “Today’s guilty pleas reinforce the Department of Justice’s steadfast commitment to prosecuting anyone who engages in vindictive attacks against victims of crime or federal officials.”

The Hights will be sentenced on Dec. 18 before Senior U.S. District Judge Paul L. Friedman of the District of Columbia. 

The Criminal Investigations and Intelligence Unit for the U.S. Attorney’s Office for the District of Columbia investigated this case. Trial Attorneys Jennifer A. Clarke and Lauren Bell of the Criminal Division’s Public Integrity Section are prosecuting the case.

The Department of Justice announced today that it is requiring CVS Health Corporation (CVS) and Aetna Inc. (Aetna) to divest Aetna’s Medicare Part D prescription drug plan business for individuals in order to proceed with their $69 billion merger.  The proposed divestiture to WellCare Health Plans, Inc. (WellCare), an experienced health insurer focused on government-sponsored health plans, including Medicare Part D individual prescription drug plans, would fully resolve the Department’s competition concerns.

“Today’s settlement resolves competition concerns posed by this transaction and preserves competition in the sale of Medicare Part D prescription drug plans for individuals,” said Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division.  “The divestitures required here allow for the creation of an integrated pharmacy and health benefits company that has the potential to generate benefits by improving the quality and lowering the costs of the healthcare services that American consumers can obtain.”

The Department’s Antitrust Division, along with the offices of five state attorneys general, today filed a civil antitrust lawsuit in the U.S. District Court for the District of Columbia to enjoin the proposed transaction, along with a proposed settlement that, if approved by the court, would fully resolve the Department’s competitive concerns.  The participating state attorneys general offices represent California, Florida, Hawaii, Mississippi, and Washington.

CVS, the nation’s largest retail pharmacy chain, and Aetna, the nation’s third-largest health-insurance company, are significant competitors in the sale of Medicare Part D prescription drug plans to individuals, together serving 6.8 million members nationwide. 

According to the Department’s complaint, the combination of CVS, which markets its Medicare Part D individual prescription drug plans under the “SilverScript” brand, and Aetna would cause anticompetitive effects, including increased prices, inferior customer service, and decreased innovation in sixteen Medicare Part D regions covering twenty-two states.  The complaint alleges that the loss of competition between CVS and Aetna would result in lower-quality services and increased costs for consumers, the federal government, and ultimately, taxpayers.

Under the terms of the proposed settlement, Aetna must divest its individual prescription drug plan business to WellCare and allow WellCare the opportunity to hire key employees who currently operate the business.  Aetna must also assist WellCare in operating the business during the transition and in transferring the affected customers through a process regulated by the Centers for Medicare and Medicaid Services, an agency within the U.S. Department of Health and Human Services.

The settlement also includes, consistent with other settlements, several provisions designed to improve the effectiveness of the decree and the Division’s future ability to enforce it.  

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

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

As required by the Tunney Act, the proposed consent decree, along with the Department’s competitive impact statement, will be published in the Federal Register.  Any person may submit written comments concerning the proposed settlement within 60 days of its publication to Peter Mucchetti, Chief, Healthcare and Consumer Products Section, Antitrust Division, Department of Justice, 450 Fifth Street NW, Suite 4100, Washington, DC 20530.  At the conclusion of the 60-day comment period, the court may enter the final judgment upon a finding that it serves the public interest.

Remarks as Prepared for Delivery

Good Morning.  On behalf of the Attorney General of the United States, Jeff Sessions, I want to express appreciation to INTERPOL for inviting me here today, specifically the members of the Wildlife Crime Working Group and its chair, Grant Miller, and the members of the Environmental Crimes Enforcement Committee and its chair, Calum McDonald.  I also want to express appreciation to Her Majesty’s Government for hosting this week’s series of important meetings and events on the topic of wildlife trafficking.

It is my honor to serve as the Acting Assistant Attorney General of the Justice Department’s Environment and Natural Resources Division.  In this role, I am privileged to lead a talented team of more than 600 attorneys and staff at the U.S. Department of Justice. They work hard every day to enforce our nation’s environmental and conservation laws and to defend good governance and the rule of law across our nation.

I am delighted to open today’s session of INTERPOL’s 29th Wildlife Crime Working Group meeting, and to address you, the investigators, police, and prosecutors who work each day in your respective sovereign nations to uncover and punish criminals who illegally poach and traffic protected wildlife. You are the ones on the front lines in your nations who will be responsible for putting into action the commitments expressed at the London Conference this week.  Without your on-the-ground efforts each day, the goals and promises made by the delegates here this week would go unmet and unfulfilled. And those who seek to decimate protected wildlife for selfish and illegal gain would go undetected and unpunished.

The United States is committed to working across our government, and with multi-national entities such as INTERPOL, to focus our international investments to combat wildlife trafficking in the most strategic and effective way possible.

Within the first month of his presidency, President Trump directly engaged this fight when he issued an Executive Order recognizing wildlife trafficking as a dangerous form of transnational organized crime.  In that order, President Trump directed the U.S. Government to use all the tools at its disposal to disrupt and dismantle organized criminal organizations and the lawless networks they operate.

His Administration has responded to that call. We estimate that the United States government will fund more than $90 million in counter-wildlife trafficking programs and projects in the coming year, including our criminal investigatory and prosecution efforts. 

The U.S. Department of Justice is fully engaged in this effort.

Under the leadership of Attorney General Sessions, who will also be here this week to deliver the United States Official Statement to the London Conference on Wildlife Trafficking, the Department of Justice is prosecuting criminals engaged in wildlife poaching and trafficking, and continuing to seek stiff penalties for those convicted of wildlife trafficking and related offenses.

Each year, American law enforcement prosecutes thousands of poaching and other wildlife crimes, at both the federal and state levels.  Federal prosecutors in the Department of Justice work aggressively with investigative agents from the Fish and Wildlife Service, National Oceanic & Atmospheric Administration, the Department of Homeland Security, and others to pursue criminal cases to the fullest extent.    

Since the Trump Administration took office in January of 2017, our Division’s prosecutors have convicted more than 30 defendants for wildlife trafficking crimes, with another 25 charged during that period. During this same period, significant numbers of additional defendants have been charged and convicted in cases brought by U.S. Attorney Offices across our country, and many other cases are currently under investigation for possible prosecution.

Earlier this year, our Division’s prosecutors obtained a significant prison sentence for a New York defendant found guilty of smuggling parts taken from endangered African lions and tigers. In another case this year, a California resident was sentenced to more than two years in federal prison for smuggling horns taken from endangered African black rhinos.  And as part of a multi-year operation that included this case, at least 50 other defendants have been arrested, charged, convicted, and sentenced in recent years for smuggling ivory taken from African or Asian elephants, rhino horns, and other protected species.

Across our government, we will continue our efforts not just to seize illegal wildlife items and arrest couriers, but we will also work our way up the chain to disrupt organized criminal networks.  To meet this challenge, we are committed to improving our working relationships with those in other countries engaged in the same efforts.

We all recognize that our host nation this week, the United Kingdom, is a leader in this fight. In just the last two weeks, the U.K. arrested and will extradite to the U.S. an individual charged with trafficking in rhino horns.  This kind of international cooperation is essential to effectively prosecute traffickers and those in their networks, no matter where they are located. 

Likewise, where we are able under U.S. law, we will continue to pursue charges stemming from financial transactions connected to wildlife trafficking.  We support efforts to broaden all countries’ efforts to attack the financing of wildlife trafficking and deprive networks of the proceeds of their crimes.  As you know, criminals are in this business to profit, and the more effectively we pursue those profits, the more we can disrupt this illegal trade.  To that end, we have worked this year to improve intelligence gathering, as well as to improve the sharing and leveraging of that intelligence to better identify networks involved in these crimes.  These efforts are showing results.

As those here know, INTERPOL also plays a key role in these collaborative efforts, and the opportunities that working groups such as this one provide are key to those efforts. During my tenure at the Department of Justice, our prosecutors have continued to help advance INTERPOL’s environmental crimes efforts.  Our prosecutors serve in a leadership position on INTERPOL’s Environmental Compliance and Enforcement Committee, and in a leadership position in other environmental crimes working groups. To tackle challenges like the illegal wildlife trade, we need forums like this one for law enforcement officials to meet to discuss new strategies and practices, share experience and expertise, and build the bridges of cooperation that are vital in this international fight.

Let me conclude with this: the reasons for battling this illegality are clear and justified.

First, wildlife trafficking violates our nation’s laws, and the lawbreakers know it. The federal Lacey Act—on the books for almost 120 years —makes it a felony punishable by up to five years in prison to knowingly import, export, buy, sell, or even receive wildlife that a person knows was killed illegally, or taken in violation of federal or foreign law. Currently, the Lacey Act, though imperfect, is the strongest tool that federal prosecutors have to stop the flow of illegally poached wildlife into, out of, and around the United States.

Second, these crimes are more pervasive than many outside this room realize. The annual value of illegal wildlife trafficking ranks alongside the illicit trade in drugs, weapons, and humans. A recent U.S. Government Accountability Office report cites estimates for this illegal trade as high as $23 billion annually.

Third, we know that many of these crimes are intertwined with, and often funding, other forms of violent or organized crime. It is becoming increasingly clear that at least some of the proceeds of wildlife smuggling, especially wildlife taken illegally from Africa, are funding large criminal organizations and even terrorist groups. Wildlife trafficking not only threatens the continued viability of thousands of species worldwide, but the substantial illicit funds derived from this trafficking threaten global security, fuel corruption and lawlessness, and harm legitimate businesses. And we are not talking about small change here: just one kilogram of rhino horn can sell for as much as $70,000 in Asian markets. We cannot abide commerce like this, derived from the illegal slaughter of protected wildlife, to fund other criminality and lawlessness around the world.

Fourth, ending the senseless extermination of God’s majestic creatures is simply the right thing to do. We don’t want to just tell our children and grandchildren about the African elephant and the black rhino; we want our children and grandchildren to see and experience these creatures themselves.  As the Psalmist wrote, “How many are your works, Lord! In wisdom you made them all; the earth is full of your creatures.” (Psalm 104:24, NIV).  

Under Attorney General Sessions, the Justice Department’s prosecutors are fighting to make sure that those who scheme and plot to criminally profit from the exploitation of protected wildlife are brought to justice, as many defendants across our country are learning. 

We are grateful for your work on this vital mission as well. Thank you. 

A federal jury convicted a Houston-area hospital administrator on Friday for his role in a $16 million Medicare fraud scheme.  

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Ryan K. Patrick of the Southern District of Texas, Special Agent in Charge Perrye K. Turner of the FBI’s Houston Field Office, Special Agent in Charge C.J. Porter of the U.S. Department of Health and Human Services-Office of Inspector General’s (HHS-OIG) Dallas Region, Special Agent in Charge D. Richard Goss of IRS Criminal Investigation’s (IRS-CI) Houston Field Office, and Unit Division Chief Stormy Kelly of the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU) made the announcement.

Starsky D. Bomer, 45, of Harris County, Texas, was convicted of one count of conspiracy to pay and receive healthcare kickbacks, two counts of violating the Anti-Kickback Statute, and one count of conspiracy to commit health care fraud following a five-day trial.  Sentencing has been scheduled for Jan. 28, 2019 before U.S. District Judge Vanessa D. Gilmore of the Southern District of Texas, who presided over the trial. 

According to evidence presented at trial, from 2011 until February 2013, Bomer and others engaged in a scheme to defraud Medicare by submitting to Medicare, through Atrium Medical Center (Atrium) and Pristine Healthcare (Pristine), approximately $16 million in false and fraudulent claims for partial hospitalization program (PHP) services.  A PHP is a form of intensive outpatient treatment for severe mental illness. 

The evidence presented at trial showed that Bomer, the hospitals’ chief financial officer and chief operating officer, orchestrated a scheme by which he and others paid illegal bribes and kickbacks to group home owners and patient recruiters in exchange for sending Medicare patients to Atrium and Pristine’s PHPs.  Bomer disguised bribes and kickbacks as salary payments and transportations payments to group home owners in exchange for patient referrals, the evidence showed. In addition, evidence presented at trial showed that Bomer knew that most of the patients admitted to Atrium and Pristine’s PHPs did not qualify for and were never provided legitimate partial hospital services. 

Evidence at trial demonstrated that Bomer and his coconspirators billed Medicare over $16 million for psychiatric treatment purportedly provided to PHP patients at Atrium and Pristine’s PHPs. 

The case was investigated by the HHS-OIG, FBI, IRS-CI, OPM-OIG, and MFCU.   The case was prosecuted by Trial Attorneys Jason Knutson, Aleza Remis, and Gerald M. Moody Jr.  of the Criminal Division’s Fraud Section.         

The Fraud Section leads the Medicare Fraud Strike Force, which is part of a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.  Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in 12 cities across the country, has charged nearly 4,000 defendants who have collectively billed the Medicare program for more than $14 billion.

The owner of a Miami-area pharmacy pleaded guilty for his role in Medicare prescription fraud scheme involving approximately $8.4 million in fraudulent billings.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division; U.S. Attorney Ariana Fajardo Orshan for the Southern District of Florida; Special Agent in Charge Robert Lasky of the FBI’s Miami Field Office; Special Agent in Charge Shimon R. Richmond of the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG); Special Agent in Charge Brian Swain of the U.S. Secret Service (USSS), and Special Agent in Charge Adolphus P. Wright of the U.S. Drug Enforcement Administration (DEA) Miami Field Division made the announcement. 

Antonio Perez Jr., 48, of Miami Beach, Florida, pleaded guilty today before U.S. District Judge Federico A. Moreno to one count of conspiracy to commit health care fraud.

According to admissions made in connection with his guilty plea, Perez Jr. was the owner of A.R.A. Medical Services Inc., which did business under the name Valles Pharmacy Discount (Valles Pharmacy).  Perez Jr. pleaded guilty to agreeing to pay illegal health care kickbacks to Medicare beneficiaries in exchange for a promise from the beneficiaries to fill their prescriptions at Valles Pharmacy, and to allow Valles Pharmacy to submit claims to Medicare for prescription drugs that were not provided to the beneficiaries.  Perez Jr. also admitted that he submitted claims to Medicare for expensive prescription medications that Valles Pharmacy never purchased, and were never provided to Medicare beneficiaries.  According to admissions made in connection with Perez Jr.’s plea, during the course of the scheme, Valles Pharmacy Discount submitted over $32 million in claims to Medicare for prescription drugs, of which approximately $8.4 million was for medically unnessecary prescription drugs that Valles Pharmacy never purchased, and were never provided to Medicare beneficiaries.  Perez Jr. also agreed to forfeit a property located on Collins Avenue in Miami Beach, as well as several bank accounts used to carry out the fraud.

The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office of the Southern District of Florida.  The case was prosecuted by Trial Attorney Timothy P. Loper of the Criminal Division’s Fraud Section.

The Fraud Section leads the Medicare Fraud Strike Force, which is part of a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.  Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in 12 cities across the country, 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.

A Romanian national was returned to the United States Friday to face federal charges that accuse him of being the leader of an international cyber fraud ring that used malware to steal in excess of four million dollars after taking people’s passwords, personal identifying information, and bank account information.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Justin E. Herdman of the Northern District of Ohio, Peter Elliot of the U.S. Marshals Service, Stephen D. Anthony of the FBI and Chief Kevin Bielozer of the Westlake Police Department made the announcement.

Romeo Vasile Chita, 38, was charged in a four-count indictment unsealed in U.S. District Court in Cleveland, Ohio. The charges include racketeering, wire fraud conspiracy, conspiracy to launder money and conspiracy to traffic in counterfeit services.

Eight other defendants were named in the indictment unsealed today.  Two defendants—Daniel Mihai Radu, 39; and Manuel Tudor, 37, —have already been extradited from Romania and are awaiting trial in Cleveland. The other five defendants remain at large.

“Romeo Vasile Chita allegedly led a multinational criminal enterprise that stole sensitive personal data through deceptive phishing emails and organized fraudulent online auctions, causing millions of dollars in losses to innocent victims,” said Assistant Attorney General Benczkowski.  “The Criminal Division will continue to work with our law enforcement partners, both domestic and international, to aggressively disrupt and dismantle international cyber criminal organizations that victimize our citizens and businesses.”

“This defendant led an international operation that used fraudulent emails and the internet to scam hard-working people out of their savings,” said U.S. Attorney Herdman.  “It is gratifying that this defendant will be forced to answer the charges filed against him.”

According to the indictment, Chita was based in Romania and led a racketeering enterprise that operated in the United States, Romania, Canada, Croatia, Latvia, Hungary, Bosnia, China, Jordan, Malaysia and elsewhere. The goal of the enterprise was to generate money through various criminal acts, including wire fraud, trafficking in counterfeit services, and money laundering.  It began operating as early as 2007.

Among other things, Chita’s group sent “phishing” emails purporting to be from the Better Business Bureau, the IRS, U.S. Tax Court, the National Payroll Records Center, and others. When a victim clicked on a link in a fraudulent email, specialized malware incorporating a “keylogger” was installed onto the victims’ computers, allowing members of the criminal enterprise to capture sensitive and confidential information, including the victims’ bank account information.

The conspirators, including Chita, then transmitted the sensitive information to each other and others for the purpose of fraudulently withdrawing funds from the victims’ bank accounts. The stolen funds were then transferred to specific accounts in the United States, where the money was withdrawn and transferred to other members of the conspiracy. The conspirators used their own network of accounts and “money mules” to transfer hundreds of thousands of dollars at a time to conceal the origin of the money.

The defendants also are alleged to have engaged in an extensive campaign of online auction fraud, placing ads for non-existent cars and other expensive items on eBay, Craigslist, Autotrader.com, and other websites.  According to the indictment, victims were tricked into wiring thousands of dollars to money mules to purchase these vehicles.  The money mules then transferred and laundered the proceeds for the benefit of the enterprise.    

Chita managed and facilitated the various schemes, as well as directing other conspirators to launder fraudulently obtained money.

This case was investigated by the U.S. Marshals Service, the FBI, the Westlake Police Department and the U.S. Secret Service. The case is being prosecuted by Senior Counsel Brian L. Levine of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Duncan Brown of the Northern District of Ohio.  Valuable assistance is being provided by the Justice Department’s Office of International Affairs.  The Justice Department thanks the government of Romania for its assistance in this matter.

The prosecution of Chita is timely, as it occurs during National Cyber Security Awareness Month (NCSAM).  NCSAM – observed every October – was created as a collaborative effort between government and industry to ensure all Americans have the resources they need to stay safer and more secure online.  The Department of Justice encourages citizens to take advantage of cybersecurity tips and information provided by law enforcement to ensure their personal information is secured.

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

The Justice Department today announced that it has reached a settlement with Mar-Jac Poultry, Inc., a poultry processing company in Gainesville, Georgia. The settlement resolves a long-standing lawsuit filed by the Justice Department alleging that Mar-Jac Poultry violated the Immigration and Nationality Act (INA) by discriminating against work-authorized non-U.S. citizens when verifying their work authorization.  

The Department filed its complaint on July 14, 2011, after investigating a charge that a worker filed.  The complaint alleged that from at least July 1, 2009 to at least January 27, 2011, Mar-Jac Poultry routinely required work-authorized non-U.S. citizens to present a document issued by the Department of Homeland Security, such as a Permanent Resident Card or Employment Authorization Document, to prove their work authorization, but did not require specific documents from U.S. citizens.  On March 3, 2017, the court found that Mar-Jac was liable for a  pattern or practice of this type of discrimination against non-U.S. citizens Respondent hired between June 16, 2010 and February 9, 2011, leaving monetary and other remedies for future resolution.  All work-authorized individuals, whether U.S. citizens or non-U.S. citizens, have the right to choose which valid documentation to present to prove they are authorized to work. The INA’s antidiscrimination provision prohibits employers from subjecting employees to unnecessary documentary demands based on employees’ citizenship status or national origin. 

“Even an employer that hires many non-U.S. citizens can violate the INA if it treats employees differently based on citizenship status or national origin when verifying their identity and work authorization,” said Acting Assistant Attorney General John Gore of the Civil Rights Division. “This case demonstrates the Department’s commitment to ensuring that all employers implement the employment eligibility verification process in a non-discriminatory manner.”

Under the settlement agreement, Mar-Jac will pay a civil penalty of $190,000; pay $1020 to a refugee the company fired when he did not produce a DHS-issued document to reverify his work authority; pay up to $23,980 in back pay to compensate other affected employees and applicants; train its employees on the INA’s anti-discrimination provision; and be subject to departmental monitoring for two years.  

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

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

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

A former Erie County, New York Democratic party chair pleaded guilty today to conspiring to illegally cause a $25,000 campaign donation from a foreign source to a New York state official running for reelection.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and U.S. Attorney James P. Kennedy Jr. for the Western District of New York made the announcement.

G. Steven Pigeon, 58, of Buffalo, New York, pleaded guilty before U.S. District Judge Richard J. Arcara to an information charging him with conspiracy to cause a foreign donation in a state election in violation of federal law.  Sentencing is set for Jan. 25, 2019.     

As part of his plea, Pigeon admitted that while working as a political consultant and lobbyist in Buffalo, New York, he represented a foreign client, Company A.  At the time, the CEO of Company A was Person A, a Canadian citizen.  In early 2014, despite knowing that it was illegal to make a foreign donation to a state political campaign, Pigeon solicited Person A to make a $25,000 donation to the reelection campaign of a New York state elected official, Public Official A.  The campaign rejected the donation from Person A because Person A was not a citizen or permanent legal resident of the United States.  Pigeon and Person A then agreed to cause the donation from Person A to be made through Person B, a permanent legal resident of the United States and an employee of Company A.  On or about Feb. 24, 2014, as directed by Person A, Person B made a $25,000 donation to Public Official A’s campaign.  Pigeon and Person A knew that Person A would pay for, or reimburse, the donation.  As a result of the $25,000 donation, Pigeon and Person A were granted entry to a fundraising event for Public Official A in New York City on Feb. 26, 2014. 

“Steven Pigeon undermined the transparency and integrity of the electoral process by funneling foreign money into a campaign,” said Assistant Attorney General Benczkowski.  “The Criminal Division and our law enforcement partners are committed to protecting our electoral process and we will aggressively pursue those who seek to circumvent our campaign finance laws.”

“Transparency in political activity, including the disclosure of the sources of political contributions, is a necessary check on the power of money and a necessary ingredient for a healthy democracy,” said U.S. Attorney Kennedy.  “Schemes such as this, which introduce obfuscation and secrecy into the political process, threaten our very democracy by endeavoring to use anonymity as a means of eliminating accountability.”

The plea is the result of an investigation by the FBI Buffalo Field Office, under the direction of Special Agent in Charge Gary Loeffert; the New York State Attorney General’s Office, under the direction of Barbara Underwood; and the New York State Police, under the direction of  Major Edward Kennedy.  The case is being prosecuted by Deputy Chief John Keller of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Paul E. Bonanno of the Western District of New York.

A Scottsdale, Arizona man, who formerly resided in Pagosa Springs, Colorado, was sentenced today in the U.S. District Court for the District of Colorado to eighteen months in prison for filing a false tax return, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division. 

According to court documents, William Whittington, 68, filed a false 2010 individual income tax return, on which he underreported income received from his offshore accounts and through the payment of his personal expenses by an entity over which he exercised managerial control. From 2010 to 2012, Whittington directed that the Springs Resort & Spa, in Pagosa Springs, Colorado, a business managed by Whittington and family members at the time, pay over $1 million of his personal expenses. The total additional tax due for those three years, 2010 through 2012, based on Whittington’s failure to report the payment of the personal expenses as income is $364,994.00.

From 2003 to 2010, Whittington failed to report $9.7 million in investment income generated through two offshore bank accounts in Liechtenstein. Combined with the tax loss from the resort payment of his personal expenses, Whittington’s fraudulent conduct created a $1.8 million tax loss.

Whittington is a competitive racecar driver, whose team won the 1979 24 Hours of Le Mans. Whittington was previously sentenced to prison in 1987 for evading income tax and importing multiple tons of marijuana. See United States v. Whittington, 918 F.2d 149 (11th Cir. 1990).

In addition to the term of imprisonment imposed, U.S. District Court Judge Robert E. Blackburn ordered Whittington to serve one year of supervised release. Whittington paid approximately $1.8 million in restitution to the Internal Revenue Service as a condition of his plea agreement. 

Principal Deputy Assistant Attorney General Zuckerman commended special agents of IRS–Criminal Investigation, who conducted the investigation, and Tax Division Trial Attorneys Kathleen M. Barry, Lori A. Hendrickson, and Sarah A. Kiewlicz, who prosecuted the case.

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

A French national who was serving at times as an administrator and senior moderator on one of the largest dark web criminal marketplaces was sentenced to 20 years in prison today, after previously pleading guilty to conspiracy to possess with the intent to distribute controlled substances and conspiracy to launder money.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Ariana Fajardo Orshan for the Southern District of Florida, Special Agent in Charge Adolphus P. Wright of the U.S. Drug Enforcement Administration (DEA) Miami Field Office, Special Agent in Charge Robert F. Lasky of FBI Miami Field Office, and Special Agent in Charge Michael J. De Palma of IRS Criminal Investigation (IRS-CI), made the announcement. 

Gal Vallerius, aka “Oxymonster,” 36, pleaded guilty before U.S. District Court Judge Robert N. Scola Jr. in the Southern District of Florida on Aug. 28.  Judge Scola sentenced Vallerius to serve 240 months in prison.  Vallierius forfeited 99.98947177 bitcoin and 121.94805811 bitcoin cash.

According to the court record, including the agreed upon factual proffer, beginning in or around November 2013 a criminal online marketplace known as Dream Market began operating on the Tor “dark web” network.  Dream Market was designed to promote and facilitate the anonymous sale of illegal items.  In time, the Dream Market website became one of the largest dark web criminal marketplaces.  All of the items and services on Dream Market were offered for sale in exchange for Bitcoin and other peer-to-peer crypto-currencies. 

According to the agreed upon factual proffer, Vallerius first participated in the conspiracy by becoming a vendor on Dream Market.  As a vendor, he sold Oxycodone and Ritalin under the moniker “Oxymonster.”  Shortly thereafter, Dream Market employed the defendant who acted at times as an administrator and senior moderator.  In these positions, he played a role supporting the daily illicit transactions between buyers and vendors on Dream Market, such as trafficking in narcotics, and the laundering of illicit proceeds using virtual currencies, Dream Market’s tumblers and the dark web. 

This investigation and prosecution was carried out by members of the South Florida High Intensity Drug Trafficking Area (HIDTA) Task Force.  The South Florida HIDTA, established in 1990, is made up of federal, state and local law enforcement agencies that, cooperatively, target the region’s drug trafficking and money laundering organizations.  The South Florida HIDTA is funded by the Office of National Drug Control Policy which sponsors a variety of initiatives focused on combatting the nation’s illicit drug trafficking threats.

The prosecution is a result of the ongoing efforts by the Organized Crime Drug Enforcement Task Force (OCDETF), a partnership between federal, state, and local law enforcement agencies.  The OCDETF mission is to identify, investigate, and prosecute high-level members of drug trafficking enterprises, bringing together the combined expertise and unique abilities of federal, state, and local law enforcement.  

The investigation was conducted by DEA Miami Field Office and Paris Country Office, FBI Miami’s Cyber Task Force, IRS-CI Miami Field Office, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations Miami and Atlanta Field Offices, U.S. Customs and Border Protection’s Field Operations Atlanta, U.S. Postal Inspection Service’s Miami Field Office, the Department of Justice’s Office of International Affairs, Europol, Special Operations Division (SOD), Finnish National Police, Finnish International Judicial Administration of the Ministry of Justice, Dutch National Police, French Ministry of Justice and the Direction Interregionale de la Police Judiciaire as well as the U.S. Attorney’s Office for the Northern District of Georgia.  The case was prosecuted by Trial Attorney C. Alden Pelker of the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS) and Assistant U.S. Attorney Juan A. Gonzalez and former Assistant U.S. Attorney Frank R. Maderal of the Southern District of Florida.

Jaron N. Purham was convicted yesterday of first-degree murder for his role in the kidnapping, torture, and execution of gender-fluid high school student Kedarie Johnson, announced Acting Assistant Attorney General John Gore of the Justice Department’s Civil Rights Division and Des Moines County Attorney Amy K. Beavers. Purham’s co-defendant, Jorge Sanders-Galvez, was previously convicted of first-degree murder last year for his role in the killing, and his been sentenced to life imprisonment without the possibility of parole. The killing rocked the small town of Burlington, Iowa, where Kedarie was a popular and well-loved member of the community.

Last year, Attorney General Jeff Sessions and Acting Assistant Attorney General John Gore authorized a federal hate-crimes prosecutor from the Civil Rights Division, Christopher J. Perras, to be cross-designated as a Special Assistant County Attorney to assist with the prosecutions of both defendants in this case. Prosecuting hate crimes and bringing perpetrators of these egregious crimes to justice is a top priority for this Justice Department.

“I am proud of the collaboration and hard work conducted in this case to bring two men to justice for their abhorrent actions,” said Acting Assistant Attorney General John Gore. “The Justice Department will continue to work diligently to ensure that individuals are able to live free from acts of violence, no matter their gender identity, what they believe, or how they worship.”

“I am privileged to have fought for justice for Kedarie and those with alternate lifestyles,” said Des Moines County Attorney Amy K. Beavers. “Alongside my partners in the Iowa Attorney Generals Office Laura Roan and the U.S. Department of Justice Chris Perras with Sgt. Short and DCI Agent Matt George I am grateful that justice was served.”

The evidence at trial established that on the night of the murder, the defendants were pulling out of a grocery store parking lot when they noticed Kedarie Johnson walking down the street all by himself. Kedarie (who used male pronouns to refer to himself) sometimes dressed as a boy and went by his given name, and sometimes dressed as a girl and went by the name Kandiece. On the night of the murder, he was dressed in women’s clothing and presenting as female, and the defendants began to follow slowly behind him. Eventually, the defendants pulled up alongside Kedarie and flirted with him. They convinced Kedarie to get inside, and they drove him to a location where they often took young women to have sex with them. The physical evidence showed that, at the house, the defendants knocked Kedarie unconscious, stuffed a plastic bag down his throat, wrapped a makeshift gag around his mouth, and wrapped another plastic bag around his head. They then drove Kedarie to an alleyway. Forensic evidence established that at some point, Kedarie regained consciousness and began struggling violently to breathe. The defendants got out in the alleyway, threw Kedarie onto the ground, and shot him twice in the chest, one bullet embedding in his spine and the other piercing his heart. The defendants then doused Kedarie’s body in bleach to destroy any DNA evidence.

There were no eyewitnesses to the kidnapping or the murder, so Purham and Sanders-Galvez were convicted largely on the physical, electronic, and forensic evidence they left behind. Police found Kedarie’s backpack and sneakers at the defendants’ place, as well as a ripped bedsheet that matched fibers found on Kedarie’s body. When police located Purham, he was driving the car that had been seen on surveillance video following Kedarie shortly before his abduction and murder. When police searched the car, they found a .357 revolver, which a ballistics expert determined to be the murder weapon. Records from the Defendants’ cellphone and social media accounts established that Sanders-Galvez had purchased the murder weapon over Facebook a few months before the murder. Records also showed that the Defendants’ phones both went dead during the two-hour period in which they committed the crime; that the Defendants posted on Facebook, approximately one hour after the murder, that they were skipping town; and that the Defendants both searched the internet in the days following the murder for updates on the status of the homicide investigation.

The investigation was conducted by law enforcement officers from the Burlington (Iowa) Police Department and the Iowa Department of Criminal Investigation, with assistance from the FBI. Des Moines County Attorney Amy K. Beavers invited Iowa Assistant Attorney General Laura M. Roan, an experienced state murder prosecutor, and Trial Attorney Christopher J. Perras, a federal hate-crimes prosecutor from the Civil Rights Division of the Department of Justice, to assist with the prosecution.

Purham will be sentenced on Nov. 19. The mandatory sentence for first-degree murder in Iowa is life imprisonment without the possibility of parole.

WASHINGTON - An Alexandria, Virginia man pleaded guilty to one count of receipt of child pornography today in federal court in Alexandria, Virginia.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney G. Zachary Terwilliger for the Eastern District of Virginia, and Assistant Director in Charge Nancy McNamara of the FBI’s Washington Field Office, made the announcement today. 

Kerry Sipult, 51, pleaded guilty to one count of receipt of child pornography before Senior Judge Claude M. Hilton of the Eastern District of Virginia.  According to the Information to which Sipult pleaded guilty and to other facts he admitted to in his plea agreement, between Aug. 1, 2014 and Oct. 22, 2014, Sipult used a peer-to-peer program to download, and share, child pornography.  As part of the investigation, the FBI seized Sipult’s computer and other electronic storage devices and recovered over 4,000 child pornography images and/or videos.  Sipult was released from custody subject to electronic monitoring.  Sipult is scheduled for sentencing on Jan. 11.

The investigation was conducted by the Washington Field Office’s Child Exploitation and Human Trafficking Task Force, which is composed of FBI agents, deputy U.S. Marshals, detectives from Arlington County Police, Fairfax County Police, Loudoun County Sheriff’s Office, Prince William County Police, Fauquier County Sheriff’s Office, Leesburg Police Department, Alexandria City Police, Virginia State Police and agents of various federal Office of Inspector Generals.  Trial Attorney Ralph Paradiso of the Criminal Division’s Child Exploitation and Obscenity Section and Assistant U.S. Attorney Whitney Russell of the Eastern District of Virginia are prosecuting the case.

A federal court in Salt Lake City, Utah, ordered R. Gregory Shepard and Neldon Johnson and Utah companies RaPower-3 LLC, and International Automated Systems, Inc., to disgorge over $50 million in gross receipts from facilitating and promoting an abusive tax scheme involving false tax deductions and solar energy credits.

The court also barred defendants from promoting and marketing the scheme and ordered them to take steps to ensure that the public is not further harmed by their actions.

“We are gratified by the court’s decision, which mitigates the harm to the United States Treasury caused by defendants’ unlawful tax scheme,” said Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division.  “As the court’s decision recognizes, a business model that is based on false and fraudulent conduct cannot be allowed to retain its income.”  

Based upon evidence the government submitted to the court during a 12-day bench trial, the court found that the defendants engaged in a “massive fraud.” The court stated that the defendants “each knew, or had reason to know, that their statements about the tax benefits purportedly related to buying solar lenses were false or fraudulent.”

The court stated that “[b]ecause of the manner in which Defendants promoted the scheme, the court concludes that $50,025,480 in gross receipts from the solar energy scheme came from money that rightfully belonged to the U.S. Treasury.” The court found that the defendants “obstructed discovery about their gross receipts and other topics involving their finances.”

The court stated that the United States showed a “reasonable approximation” of the total gross receipts from lens sales. In addition, the court held that defendants would not be allowed any credit of operating expenses because such credits “are not consistent with principles of equitable disgorgement.”

According to the opinion, defendant Neldon Johnson claimed to have invented purported solar energy technology involving solar thermal lenses placed in arrays on towers. The court found that to “make money from this purported solar energy technology, Johnson decided to sell a component of the purported technology: the solar lenses.”

Under the proper circumstances, the Internal Revenue Code allows a taxpayer engaged in a trade or business certain tax deductions for expenses the taxpayer incurs while generating income. Likewise, if all of the requirements are met, the tax law allows an “energy credit” for certain “energy property.”

However, in this case, the court concluded that the defendants “knew, or had reason to know, that their customers were not in a trade or business of leasing out solar lenses and, therefore, that their customers were not allowed the depreciation deduction or solar energy tax credit.”

The opinion also concluded that the defendants made “gross valuation overstatements” when they sold lenses to customers. The court found that the defendants sold each lens for a total purported price of $3,500. The court stated that the evidence showed that the raw cost of each supposed “lens” was very low and found that “[d]efendants’ technology does not work, and is not likely to work to produce commercially viable electricity or solar process heat. Therefore, each ‘lens’ is just one component of an inoperable system. It is not a piece of sophisticated technology such that premium pricing is appropriate for it.”

The court also barred defendants from promoting and marketing the scheme. The court stated that the defendants sold lenses using a multi-level marketing approach, and encouraged distributors to “bring still more people in to the multi-level marketing system and build an extensive ‘downline.’” The court concluded that, in this case, “[t]he toxic combination of multi-level marketing and misleading information creates an urgent need [for] an injunction.” 

The injunction requires, among other things, that the defendants stop making statements that a person who buys a lens is in a trade or business with respect to that lens; may lawfully claim a depreciation deduction or any other business expense deduction related to a solar lens; and may lawfully claim a solar energy credit related to a lens.

Further, the court ordered that the defendants disclose, in their marketing materials for lenses that the court “has determined that the solar energy technology of RaPower-3 in place from 2005 to 2018 is without scientific validation or substance and ineligible for tax credits or depreciation by individual purchasers of lenses.”

Principal Deputy Assistant Attorney General Zuckerman thanked Trial Attorneys Erin Healy Gallagher, Erin R. Hines, and Christopher R. Moran who litigated the case. 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.

The Department of Justice today announced Matt M. Dummermuth as the head of the Office of Justice Programs. Mr. Dummermuth replaces Laura L. Rogers, who now serves as Director of the Department’s Office of Sex Offender Sentencing, Monitoring, Apprehending, Registering and Tracking.

As Principal Deputy Assistant Attorney General, Mr. Dummermuth leads the Justice Department’s principal funding, research, and statistical component, overseeing more than $5 billion in grants and other investments intended to support state, local and tribal criminal and juvenile justice activities and victim services.

Mr. Dummermuth served as United States Attorney for the Northern District of Iowa from 2007 to 2009. Under his leadership, the office successfully orchestrated the nation’s most successful criminal immigration worksite enforcement action. The action resulted in the convictions of more than 300 hundred illegal immigrants for various document fraud, aggravated identity theft and other immigration-related offenses, as well as the convictions of the company’s day-to-day CEO, CFO, controller, operations supervisors and entire human resources department.

His office prosecuted record numbers of child exploitation defendants and launched an Internet-predator warning program that reached more than 42,000 students in 150 middle schools. In addition, he created the first human trafficking task force in Iowa, bringing together law enforcement agencies and victim assistance organizations to combat trafficking operations and provide services to trafficking survivors. During his tenure, the office also convicted 26 defendants, including 19 doctors, for illegally distributing more than 30 million prescription pills using half a million phony prescriptions, and shared with local law enforcement more than $4 million of the $7 million seized from the two Internet pharmacy companies and other defendants involved in the illegal scheme.

Mr. Dummermuth served on the Terrorism and National Security Subcommittee and the Child Exploitation and Obscenity Working Group of the Attorney General’s Advisory Committee. He was also a member of the Executive Board of the Midwest High Intensity Drug Trafficking Area.

Mr. Dummermuth previously served in the Justice Department as Counsel and Special Assistant to the Assistant Attorney General for Civil Rights, and as a Special Assistant United States Attorney in the Eastern District of Virginia. Prior to joining OJP, he was in private practice in Iowa where he focused primarily on civil litigation involving constitutional, governmental, agricultural and business matters.

He graduated from Harvard Law School, where he was editor-in-chief of the Harvard Journal of Law & Public Policy, and clerked for the Honorable Judge David R. Hansen of the U.S. Court of Appeals for the Eighth Circuit. Matt grew up on a crop and livestock farm in Iowa and graduated with a degree in agricultural engineering from Iowa State University.

WASHINGTON – A Marshfield, Wisconsin man was sentenced today to 50 years in prison for producing child pornography involving an infant and toddler during the summer of 2017.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Scott C. Blader for the Western District of Wisconsin and Special Agent in Charge R. Justin Tolomeo of the FBI’s Milwaukee Field Office, made the announcement.

Mark E. Bartz, 48, was sentenced by U.S. District Judge William M. Conley of the U.S. District Court for the Western District of Wisconsin.  Bartz pleaded guilty on July 3, to two counts of producing child pornography.  In addition to his prison sentence, he was sentenced to 25 years of supervised release.

According to court documents, Bartz produced child pornography involving a toddler and infant, including visual depictions of himself engaging in sexually explicit conduct with the infant.  Bartz was also the administrator of online chat groups devoted to the trading of child pornography and posted the sexually explicit images he produced to those groups.  He also engaged in sexually explicit conduct with other minors over the course of decades.

FBI Milwaukee investigated the case with substantial assistance from the FBI’s Violent Crimes Against Children (VCAC) Section.  Trial Attorney Jessica L. Urban of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) and Assistant U.S. Attorney Elizabeth Altman of the Western District of Wisconsin prosecuted the case.

This investigation was a 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.

A grand jury in the Western District of Pennsylvania has indicted seven defendants, all officers in the Russian Main Intelligence Directorate (GRU), a military intelligence agency of the General Staff of the Armed Forces of the Russian Federation, for computer hacking, wire fraud, aggravated identity theft, and money laundering. 

According to the indictment, beginning in or around December 2014 and continuing until at least May 2018, the conspiracy conducted persistent and sophisticated computer intrusions affecting U.S. persons, corporate entities, international organizations, and their respective employees located around the world, based on their strategic interest to the Russian government.   

Among the goals of the conspiracy was to publicize stolen information as part of an influence and disinformation campaign designed to undermine, retaliate against, and otherwise delegitimize the efforts of international anti-doping organizations and officials who had publicly exposed a Russian state-sponsored athlete doping program and to damage the reputations of athletes around the world by falsely claiming that such athletes were using banned or performance-enhancing drugs.

The charges were announced at a press conference by Assistant Attorney General for National Security John C. Demers, United States Attorney for the Western District of Pennsylvania Scott W. Brady, FBI Deputy Assistant Director for Cyber Division, Eric Welling, and Director General Mark Flynn for the Royal Canadian Mounted Police.

"State-sponsored hacking and disinformation campaigns pose serious threats to our security and to our open society, but the Department of Justice is defending against them," Attorney General Jeff Sessions said. "Today we are indicting seven GRU officers for multiple felonies each, including the use of hacking to spread the personal information of hundreds of anti-doping officials and athletes as part of an effort to distract from Russia’s state-sponsored doping program. The defendants in this case allegedly targeted multiple Americans and American entities for hacking, from our national anti-doping agency to the Westinghouse Electric Company near Pittsburgh. We are determined to achieve justice in these cases and we will continue to protect the American people from hackers and disinformation."

“The investigation leading to the indictments announced today is the FBI at its best,” said FBI Director Christopher Wray. “The actions of these seven hackers, all working as officials for the Russian government, were criminal, retaliatory, and damaging to innocent victims and the United States’ economy, as well as to world organizations. Their actions extended beyond borders, but so did the FBI’s investigation. We worked closely with our international partners to identify the actors and disrupt their criminal campaign - and today, we are sending this message: The FBI will not permit any government, group, or individual to threaten our people, our country, or our partners. We will work tirelessly to find them, stop them, and bring them to justice.”

“We want the hundreds of victims of these Russian hackers to know that we will do everything we can to hold these criminals accountable for their crimes,” said U.S. Attorney Brady.  State actors who target U.S. citizens and companies are no different than any other common criminal:  they will be investigated and prosecuted to the fullest extent of the law.”

The defendants, all Russian nationals and residents, are Aleksei Sergeyevich Morenets, 41, Evgenii Mikhaylovich, Serebriakov, 37, Ivan Sergeyevich Yermakov, 32, Artem Andreyevich Malyshev, 30, and Dmitriy Sergeyevich Badin, 27, who were each assigned to Military Unit 26165, and Oleg Mikhaylovich Sotnikov, 46, and Alexey Valerevich Minin, 46, who were also GRU officers. 

The indictment alleges that defendants Yermakov, Malyshev, Badin, and unidentified conspirators, often using fictitious personas and proxy servers, researched victims, sent spearphishing emails, and compiled, used, and monitored malware command and control servers. 

When the conspirators’ remote hacking efforts failed to capture log-in credentials, or if the accounts that were successfully compromised did not have the necessary access privileges for the sought-after information, teams of GRU technical intelligence officers, including Morenets, Serebriakov, Sotnikov, and Minin, traveled to locations around the world where targets were physically located.  Using specialized equipment, and with the remote support of conspirators in Russia, including Yermakov, these close access teams hacked computer networks used by victim organizations or their personnel through Wi-Fi connections, including hotel Wi-Fi networks.  After a successful hacking operation, the close access team transferred such access to conspirators in Russia for exploitation.

Among other instances, the indictment alleges that following a series of high-profile independent investigations starting in 2015, which publicly exposed Russia’s systematic state-sponsored subversion of the drug testing processes prior to, during, and subsequent to the 2014 Sochi Winter Olympics (according to one report, known as the “McLaren Report”), the conspirators began targeting systems used by international anti-doping organizations and officials.  After compromising those systems, the defendants stole credentials, medical records, and other data, including information regarding therapeutic use exemptions (TUEs), which allow athletes to use otherwise prohibited substances.

Using social media accounts and other infrastructure acquired and maintained by GRU Unit 74455 in Russia, the conspiracy thereafter publicly released selected items of stolen information, in many cases in a manner that did not accurately reflect their original form, under the false auspices of a hacktivist group calling itself the “Fancy Bears’ Hack Team.”  As part of its influence and disinformation efforts, the Fancy Bears’ Hack Team engaged in a concerted effort to draw media attention to the leaks through a proactive outreach campaign.  The conspirators exchanged e-mails and private messages with approximately 186 reporters in an apparent attempt to amplify the exposure and effect of their message. 

Each defendant is charged with one count of conspiracy to commit computer fraud and abuse, which carries a maximum sentence of five years in prison, one count each of conspiracy to commit wire fraud and conspiracy to commit money laundering, both of which carry a maximum sentence of 20 years.  Defendants Morenets, Serebriakov, Yermakov, Malyshev, and Badin are each also charged with two counts of aggravated identity theft, which carries a consecutive sentence of two years in prison.  Defendant Yermakov is also charged with five counts of wire fraud, which carries a maximum sentence of 20 years.

Defendants Yermakov, Malyshev, and Badin are also charged defendants in federal indictment number CR 18-215 in the District of Columbia, and accused of conspiring to gain unauthorized access into the computers of U.S. persons and entities involved in the 2016 U.S. presidential election, steal documents from those computers, and stage releases of the stolen documents to interfere with the 2016 U.S. presidential election.

According to the indictment: Context of the Hacking and Related Influence and Disinformation Efforts

In July 2016, the World Anti-Doping Agency’s (WADA) Independent Person Report (the “First McLaren Report”) was released, describing Russia’s systematic state-sponsored subversion of the drug testing process prior to, during, and subsequent to the 2014 Sochi Winter Olympics.  This investigation had the support of advocates for clean sports, including the United States Anti-Doping Agency (USADA), the Canadian Centre for Ethics in Sport (CCES, Canada’s anti-doping agency). Eventually, in some instances only after arbitration rulings by the International Court of Arbitration for Sport (TAS/CAS), approximately 111 Russian athletes were excluded from the 2016 Summer Olympic Games, in Rio de Janeiro, Brazil, by a number of international athletics federations, including track-and-field’s International Association of Athletics Federations (IAAF).  The International Paralympic Committee (IPC) further imposed a blanket ban of Russian athletes from the 2016 Paralympic Games, which were also held in Rio.

Intrusion Activities in Rio de Janeiro, Brazil

Days after the release of the First McLaren Report and the International Olympic Committee’s and IPC’s subsequent decisions regarding the exclusion of  Russian athletes, the conspirators prepared to hack into the networks of WADA, the United States Anti-Doping Agency (USADA), and TAS/CAS.   The conspirators, including specifically defendants Yermakov and Malyshev, procured spoofed domains (which mimicked legitimate WADA and TAS/CAS domains) and other infrastructure, probed such entities’ networks, and spearphished WADA and USADA employees.  Although Yermakov and Malyshev are both alleged to have prepared to send spearphishing e-mails to TAS/CAS, the indictment does not allege that organization was compromised.

Likely as a result of the conspirators’ failure to capture necessary log-in credentials, or because those victim accounts that were successfully compromised did not have the necessary access privileges for the sought-after information, defendants Morenets and Serebriakov, in at least one instance with the remote support of Yermakov, deployed to Rio to conduct hacking operations targeting and maintaining persistent access to Wi-Fi networks used by anti-doping officials.  As a result of these efforts, in August 2016, the conspirators captured that IOC official’s credentials and thereafter used them, and another set of credentials belonging to the same official to gain unauthorized access to an account in WADA’s ADAMS database and medical and anti-doping related information contained therein. (The broader ADAMS database was not compromised in the intrusion.) 

Also in 2016, a senior USADA anti-doping official traveled to Rio de Janeiro for the Olympics and Paralympic games.  While there, the USADA official used Wi-Fi at the hotel and other Wi-Fi access points in Rio to remotely access USADA’s computer systems and conduct official business.  While the USADA official was in Rio, conspirators successfully compromised the credentials for his or her USADA email account, which included summaries of athlete test results and prescribed medications.

Intrusion Activities in Lausanne, Switzerland

In mid-September 2016, WADA hosted an anti-doping conference in Lausanne, Switzerland.  On September 18, 2016, defendants Morenets and Serebriakov traveled to Lausanne with equipment used in close access Wi-Fi compromises.  On or about September 19, 2016, Morenets and Serebriakov compromised the Wi-Fi network of a hotel hosting the conference and leveraged that access to compromise the laptop and credentials of a senior CCES official staying at the hotel. Other conspirators thereafter used the stolen credentials to compromise CCES’s networks in Canada, using a tool used to extract hashed passwords, the metadata of which indicated it was compiled by Badin.

Intrusion Targeting Anti-Doping Officials at Sporting Federations

In December 2016 and January 2017, conspirators successfully compromised the networks of IAAF and the Fédération Internationale de Football Association (“FIFA”) and targeted computers and accounts used by each organization’s top anti-doping official.  Among the data stolen from such officials were keylogs, file directories, anti-doping policies and strategies, lab results, medical reports, contracts with doctors and medical testing labs, information about medical testing procedures, and TUEs.

Related GRU Influence and Disinformation Operations

On September 12, 2016, shortly after the compromise of the IOC official’s ADAMS credentials, but before the compromise of USADA’s and CCES’s networks, conspirators claiming to be the hacktivist group Fancy Bears’ Hack Team used online accounts and other infrastructure procured and managed by Unit 74455, as well as the website fancybears.net, to publicly release TUEs, other medical information, and emails stolen from anti-doping officials at WADA, USADA, CCES, IAAF, FIFA, and approximately 35 other anti-doping agencies or sporting organizations.  In some instances, the WADA documents were modified from their original form.  Ultimately, the Fancy Bears’ Hack Team released stolen information that included private or medical information of approximately 250 athletes from almost 30 countries.

The conspirators’ release of the stolen information was, in some instances, accompanied by posts and other communications that parroted or supported themes that the Russian government had used in its official narrative regarding the anti-doping agencies’ investigative findings.  From 2016 through 2018, the conspirators engaged in a proactive outreach campaign, using Twitter and e-mail to communicate with approximately 186 reporters about the stolen information.  After articles were published, conspirators used the Fancy Bears’ Hack Team social media accounts to draw attention to the articles in an attempt to amplify the exposure and effect of their message.

Other Targets of the Conspiracy

The conspiracy is also alleged to have targeted other entities in the Western District of Pennsylvania and abroad that were of interest to the Russian government.  For example, as early as November 20, 2014, Yermakov performed reconnaissance of Westinghouse Electric Company’s (WEC) networks and personnel.  In the following months, Yermakov and conspirators created a fake WEC domain and sent spearphishing emails to WEC employees’ work and personal email accounts, which were designed to harvest the employees’ log-in credentials.

More recently, in April 2018, Morenets, Serebriakov, Sotnikov, and Minin, all using diplomatic passports, traveled to The Hague in the Netherlands in furtherance of another close access operation targeting the Organisation for the Prohibition of Chemical Weapons (OPCW) computer networks through Wi-Fi connections.  All four GRU officers intended to travel thereafter to Spiez, Switzerland, to target the Spiez Swiss Chemical Laboratory, an accredited laboratory of the OPCW which was analyzing military chemical agents, including the chemical agent that the United Kingdom authorities connected to the poisoning of a former GRU officer in that country.  However, Morenets, Serebriakov, Sotnikov, and Minin were disrupted during their OPCW hacking operation by the Militaire Inlichtingen- en Veiligheidsdienst (MIVD), the Dutch defense intelligence service.  As part of this disruption, Morenet’s and Serebriakov’s abandoned the Wi-Fi compromise equipment, which they had placed in the trunk of a rental car parked adjacent to the OPCW property.  Data obtained from at least one item of this equipment confirmed its operational use at multiple locations around the world, including connections to the Wi-Fi network of the CCES official’s hotel in Switzerland (the dates the conspirators conducted the Wi-Fi compromise of the senior CCES official’s laptop at the same hotel), and at another hotel in Kuala Lumpur, Malaysia in December 2017.
 

***

In connection with the unsealing of the indictment, and in an effort to limit further exposure of the private lives of victim athletes, the FBI seized the fancybears.net and fancybears.org domains pursuant to court orders issued on October 3, 2018, in the Western District of Pennsylvania.

The charges contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.  Moreover, the maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentence of a defendant will be determined by the assigned judge.

The FBI, led by the Pittsburgh and Philadelphia Field Offices, conducted the investigation that resulted in charges announced today.  The FBI’s investigation was assisted by a parallel, independent Royal Canadian Mounted Police investigation. This case is being prosecuted by the U.S. Attorney’s Office for the Western District of Pennsylvania and the National Security Division’s Counterintelligence and Export Control Section.  The Criminal Division’s Office of International Affairs provided assistance throughout this investigation, as did the MIVD, the Government of the Netherlands, Switzerland’s Office of the Attorney General, the U.K.’s National Security and Intelligence Agencies, and many of the FBI’s Legal Attachés and other foreign authorities around the world.


Note: More information can be found at https://www.justice.gov/opa/documents-and-resources-october-4-2018-press-conference

WASHINGTON – A Houston, Texas-area patient recruiter was sentenced to 108 months in prison today for her role in a $3.6 million Medicare fraud scheme involving fraudulent claims for home health services.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Ryan K. Patrick of the Southern District of Texas, Special Agent in Charge Perrye K. Turner of the FBI’s Houston Field Office, Special Agent in Charge C.J. Porter of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Dallas Region and the Texas Attorney General’s Medicaid Fraud Unit (MFCU) made the announcement.

Mercy O. Ainabe, 52, of Houston, was sentenced by U.S. District Judge Sim Lake of the Southern District of Texas, who presided over the trial.   After a three-day trial in May 2018, Ainabe was convicted of one count of conspiracy to commit health care fraud, five counts of health care fraud and one count of conspiracy to pay health care kickbacks. 

According to evidence presented at trial, Ainabe, a long-time patient recruiter in the Houston area, controlled a substantial population of Medicare patients whose personal information she sold to home health care companies in exchange for kickbacks.  The evidence at trial showed that Ainabe and her co-conspirators used a home health care company called Texas Tender Care to submit claims to Medicare for home health services that were not medically necessary and/or were not provided.  Ainabe paid beneficiaries, doctors, physical therapy companies and others for the paperwork, Medicare beneficiary information and services needed to facilitate the fraud.  To cover up the fraud, Ainabe tried to make it look as though she was being paid an hourly wage as a legitimate marketing representative, the evidence showed. 

The case was investigated by the FBI, HHS-OIG and MFCU, and 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 Southern District of Texas. The case is being prosecuted by Trial Attorneys Drew Pennebaker and Elizabeth Young of the Fraud Section.

The Fraud Section leads the Medicare Fraud Strike Force, which is part of a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.  The Criminal Division’s Fraud Section leads the Medicare Fraud Strike Force.  Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in 12 cities across the country, has charged nearly 4,000 defendants who have collectively billed the Medicare program for more than $14 billion.

A federal jury sitting in Brooklyn, New York, convicted a former Brooklyn resident today of tax evasion and aiding and assisting in the preparation of false tax returns, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division.

According to court documents and evidence presented at trial, in 2010 and 2011, Christopher Wolf operated Rothchild & Associates LLC, in Brooklyn, New York. Rothchild was in the business of selling precious metals to investors over the telephone.  Wolf earned commissions from Rothchild, but took steps to conceal this income by directing that it be paid to shell corporations he created.  Wolf then caused the filing of false individual and corporate income tax returns that underreported his commission income and claimed phony expense deductions.  Wolf’s fraudulent conduct resulted in a tax loss of approximately $240,000.

Wolf faces a statutory maximum sentence of five years in prison for tax evasion and three years in prison for aiding and assisting the preparation or presentation of a false tax return.  Wolf also faces a three-year period of supervised release, restitution and monetary penalties.

Principal Deputy Assistant Attorney General Zuckerman 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.

Remarks as Prepared for Delivery

Thank you, to the Cybersecurity Coalition and the Cyber Threat Alliance, for the invitation to speak at CyberNext DC. 

When I was preparing my remarks, I noticed that the theme of the conference is “Privacy, Partnerships, Protection.” That’s a helpful framework for my remarks today, because I want to talk about all three of those. 

Protection

I will start with protection, which is at the core of law enforcement’s mission. Investigating crimes, building cases, and holding individuals, entities, and even nations, accountable, is a large part of how the Justice Department protects the public and contributes to cybersecurity. 

It is fairly straightforward why: criminal prosecution is a means of reinforcing the difference between right and wrong, between acceptable state behavior, on the one hand, and that which violates accepted norms of conduct on the Internet. 

And imposing consequences, whether through imprisonment, fines or sanctions, or other tools, is a way of deterring malicious conduct, by raising its costs (personal, reputational, financial, and otherwise). As the First Pillar of the Administration’s recent National Cyber Strategy puts it, “Law enforcement actions to combat criminal cyber activity serve as an instrument of national power by, among other things, deterring those activities.”

The last year has seen significant prosecutions of foreign hackers, including those acting on behalf of foreign governments, for computer intrusions and attacks. It is worth recounting some of them, for what they show about the Department’s priorities and the lengths we will go in doing our part to enforce the law and protect the public.

Boyusec

In October 2017, the Department announced charges against three Chinese nationals and residents who worked for a purported Internet security firm known as Guangzhou Bo Yu Information Technology Company Limited (a/k/a “Boyusec”). 

The defendants are accused of computer hacking and trade secret theft between December 2015 and March 2016. Among other things, the indictment alleges they stole a prominent economist’s e-mail messages and trade secrets related to global navigation technology that “had no military application,” but was marketed to construction, land survey, and agricultural sectors. 

Now, the Indictment does not allege action by the Chinese state. But what made the defendants’ alleged trade secret theft notable (besides the fact that they worked for a firm that marketed its cybersecurity services), was that it continued after China committed in September 2015 (1) not to steal trade secrets or confidential business information “with the intent of providing competitive advantages” to its own companies, and (2) to cooperate with requests to investigate cybercrimes emanating from its territory, which this did. 

The September 2015 commitment ushered in broad, public acceptance of a norm against computer espionage for economic benefit (soon accepted by all of the other members of the G-20). And it was incumbent on the U.S. government to hold China to the commitments it made.

As we previously revealed, the Boyusec indictment was returned under seal, while we sought China’s assistance in investigating and putting a stop to Boyusec’s activities.  When we received “no meaningful response” to those requests, there was no longer a basis to keep the charges sealed, and we made them public.

Thereafter, the U.S. Trade Representative cited the Boyusec indictment in its March 2018 study of China’s trade practices under Section 301 of the Trade Act of 1974, which concluded that a combination of China’s practices are unreasonable, including its outbound investment policies and sponsorship of unauthorized computer intrusions. 

In this way, you can draw a direct line from the DOJ’s indictment of China’s military officers in 2014, through China’s commitments in 2015, to our monitoring for compliance with those commitments, and this Administration’s response to China’s economic aggression, which includes state-sponsored theft of intellectual property.

Mabna Institute

In March of 2018, the Department announced charges against nine Iranian nationals associated with the Mabna Institute in Iran for a massive coordinated hacking campaign that targeted intellectual property and other research at more than 300 colleges and universities around the world.

The very purpose of the Mabna Institute, according to the indictment, was to assist Iranian universities and scientific and research organizations obtain access to scientific resources outside Iran. It contracted with the Iranian government (including the Islamic Revolutionary Guard Corps.) as well as private organizations, and it sold some of the stolen data on websites marketed to Iranian customers.

The indictment alleges the campaign was executed in three phases:

• First, the defendants researched which university professors were doing work of interest to the Iranians. The defendants targeted data across all fields of research and academic disciplines, including science and technology, engineering, medicine, and the social sciences.
• Next, they e-mailed the authors, feigning interest in their work, and tricking them into clicking on malicious links, and stealing their credentials.
• Finally, they used those credentials to steal academic journals, theses, dissertations, and books they would not otherwise have access to. 

Over the course of four years, the Mabna Institute and these nine individuals are accused of stealing more than 31 terabytes of academic data, intellectual property, and communications.  That amounts to 7.75 trillion sheets of paper. (And that’s printing double-sided.) U.S. universities had collectively spent $3.4 billion to have access to that intellectual property. 

The charges themselves virtually guarantee the defendants cannot leave Iran without arrest. And on the day they were announced, the Department of the Treasury, leveraging our investigation, sanctioned the Mabna Institute and the defendants “for engaging in malicious cyber-enabled activities related to the significant misappropriation of economic resources or personal identifiers for private financial gain,” under a provision of Executive Order 13694 (2015).

DPRK

In September, the Department unsealed a massive complaint, outlining some of the government’s proof behind its prior, higher-level attribution that North Korea launched a destructive malware attack against Sony Pictures Entertainment in 2014, stole $81 million from the Bank of Bangladesh in 2016 (and attempted to steal at least $1 billion from other banks), and created the malware used in the WannaCry 2.0 global ransomware attack last year. 

The complaint lays out more than 170 pages of evidence that a single conspiracy, backed by the North Korean government, was responsible for those crimes among others, and it identifies one of the men who was a member of that conspiracy.

As the complaint makes clear, however, the U.S. government was not alone in this investigation.  The complaint cites to security researchers whose expertise and dogged pursuit of the threat was critical to the allegations of the complaint. Our investigative efforts not only validate theirs, they yield specific information that expanded the security community’s understanding of the Lazarus Group (a popular name for the intrusion set) and how best to protect against it.

USADA, et al.

Finally, this brings me to this morning’s announcement of an indictment in Pittsburgh (where the first public national security cyber case was unsealed in 2014).  

A grand jury there has indicted seven Russian GRU officers with an international hacking conspiracy targeting international anti-doping organizations, among others. 

Among the conspiracy’s goals: to publicize stolen information as part of an influence and disinformation campaign designed to undermine, retaliate against, and otherwise delegitimize those organizations, which had publicly exposed Russia’s state-sponsored athlete doping program; and to damage the reputations of athletes around the world by falsely claiming that such athletes were using banned or performance-enhancing drugs. 

The indictment also alleges how, when the efforts to obtain remote access failed to achieve their objectives, the GRU sent several of the defendants to locations where their targets were physically located. Then, using specialized equipment, those close access teams hacked the WiFi networks used by the victim organizations or their personnel (like hotel networks where they were staying).

There are some who question this approach, of criminally investigating and charging hackers sponsored by foreign states, often because we have not yet arrested the defendants I have described above. 

It is probably easy to forget that, until relatively recently, such charges were unheard of, because for a long time, we viewed the problem of foreign state-sponsored hacking through the lens of intelligence collection alone, without regard to disruption and deterrence (which are our objectives in confronting terrorism, espionage, and other challenging national security threats). 

But imagine a world in which there are no criminal charges, no detailed, formal allegation of wrongdoing (which the government is prepared to stand behind in court). The private sector would be left alone to accuse the guilty, without recourse.  What message does that send to a foreign hacker? 

Certainly not the same message we have sent to Karim Baratov, the 23-year-old hacker who worked with FSB officers to hack into e-mail accounts around the world, who was recently sentenced to five years’ imprisonment after being arrested in Canada and waiving extradition.  Or to Ardit Firizi, the Kosovar who was arrested in Malaysia, pled guilty here, and was sentenced to 20 years in prison, for giving ISIS PII for 1,300 military and government personnel, which he stole from the network of a U.S. retailer. Or to countless other hackers arrested on purely criminal charges, who thought they were safe from the consequences for their actions, because they operated under regimes that ignored (if not sponsored) their crimes.

And even in the cases above (where we have yet to apprehend a defendant), the charges were never the end of the story: whether it is trade remedies, sanctions, contributions to network defense, or diplomatic efforts to rally likeminded nations to confront an adversary together, all of those charges served a greater purpose.

Privacy

So often, privacy is spoken about as if it is a value opposed to law enforcement. But each of the cases I described vindicates the right to privacy, whether it is the right of a company to control who has access to its trade secrets, or of professors to prevent their hard-earned research from being stolen, preempted, and plagiarized; the expectation of privacy we have in our e-mail communications or our medical records.

Privacy isn’t dead, but it is under attack, and much of what we are doing through law enforcement honors the privacy of innocent persons, by investigating those who would breach it. As the Sony case as well as the GRU cases illustrate, data breaches are not just trees that fall in forests when no one else is around; their consequences are often painfully visible to their victims (and the rest of the world).

But leaving aside these examples of DOXing, I want to shift gears for a moment, to talk about the Department of Justice’s changing approach to personal privacy, and why the privacy of your personal information can be a matter of national security.

This portion of my remarks comes from a different vantage point, from my experience with the Committee on Foreign Investment in the United States (or CFIUS), where I represent the Department.

Now CFIUS, for those of you who are not familiar, is a committee of federal departments that reviews foreign acquisitions of U.S. businesses for national security risk. When it finds risks that cannot be mitigated, it recommends actions to the President, who has the authority to prohibit a transaction.

CFIUS does not review the vast majority of foreign investments in the United States. Even among those transactions we do review, we usually conclude that there are no unresolved national security concern.

A classic example of the risk CFIUS examines arises when the target of an acquisition is in close proximity to a DOD facility. But an increasing focus of DOJ’s work on the committee relates to data security, to the potential national security consequences of personal information ending up in the wrong hands. The kind of information I am talking about is collected every day, from thousands or even millions of consumers. Transaction information, PII, health information, even smartphone habits.

Now you might ask why the security of that kind of consumer data would be relevant to CFIUS, whose mission is to protect national security. And ten years ago, or so, such information did not seem like it would be. But a few things have changed.

First, the volume and variety of data has increased exponentially. Information that was not previously stored in a digital form now is. And the rate at which data are being created, the velocity of data growth, is increasing.

Consider the increasing connectedness of physical devices and sensors, often referred to as the Internet of Things. Everything from medical devices, such as pacemakers, to fitness trackers, to the control systems that deliver water and power to our businesses and homes. One estimate predicts the number of Internet-connected devices will reach more than 20 billion by 2020.  These Internet-connected devices have increased the volume, variety, and velocity of information. 

Take cars, for example. Not long ago, a car was essentially a mechanical device, an engine with seats that moved you from point A to point B. Whatever limited electronic components it had were self-contained.

Today’s cars, by contrast, contain communication devices, sensors, GPS navigation, and other computers with a variety of functions. They allow drivers to check fuel levels and tire pressure on their cell phones, track a stolen vehicle over the Internet, call for help from the car in an emergency, and access the same entertainment they’re used to enjoying in their home.

Another example: the universe of health information is rapidly expanding.  More people are taking advantage of DNA testing to learn about their health, longevity, paternity, and ancestry.  According to one 2017 report, the market for testing has become an $830 million industry. Meanwhile, our smartphones and watches are accruing ever more precise information about our health and habits.

New forms and pools of data merely add to what has been collected for years, and it remains possible for a determined adversary to steal it, given enough time and resources.

A second insight we have developed is that information that seems unimportant, or purely personal, or irrelevant, can, in fact, be used to threaten national security.

In January, a 20-year-old Australian student discovered that open source maps of where Fitbit and other fitness device users frequently go could be used to identify military facilities in remote areas.  As the Washington Post put it, “In war zones and deserts in countries such as Iraq and Syria, the heat map becomes almost entirely dark — except for scattered pinpricks of activity. Zooming in on those areas brings into focus the locations and outlines of known U.S. military bases, as well as other unknown and potentially sensitive sites — presumably because American soldiers and other personnel are using fitness trackers as they move around.”

Some data might be valuable, in and of themselves, like a military secret or the admin password to an industrial control system. But other data are valuable because they are part of what a hacker or other malicious actor needs to achieve their objective, to get to their target. 

The information a modern car collects provides insight into the users’ network of contacts, entertainment preferences, driving habits, and locations visited on a regular basis.

In the aggregate, this information provides commercial and cultural insights that might have monetary or other use. But this information about the “pattern of life” of a company’s CEO or government official could also be used to target that individual.

By themselves, the music you favor, your children’s birthdates, your anniversary, and the addresses you’ve lived at—these are not national security secrets.

But with that information, a criminal hacker could answer password reset questions or use a password cracker to obtain control of your accounts. And even if it is a personal (as opposed to a professional) account, and I might not care about the last photo you posted from your vacation, masquerading as you online makes it that much easier to trick the people who know you into clicking on a link or otherwise compromising their network security.

Our third insight is this: the fact that most people in a data set might not be targets themselves (in fact, that only a few might be) provides little comfort. Anyone on any form of social media has learned that we are more connected than it seems. In 2016, Facebook reported that its American users were separated by fewer than 3.5 degrees of separation on average. Extrapolating what that means offline, anyone’s information can be useful more for what it tells us about her brother, the CISO at a major bank, or her aunt in the intelligence community.

Our concerns are exacerbated by the fact that traditional methods of de-identification of data (such as anonymization or encryption of content) may be defeated, by, for example, sensor and geolocation data, or by cross-referencing sanitized data sets against others. 

Researchers from two studies several years ago reported that, with a sufficient pool of data, they could distinguish a unique user of a cellphone, or a credit card, based on just four geolocations or transactions, respectively, with at least 90 percent accuracy. I cannot vouch for the methodology of those studies, but they give me pause when I think about the potential that nefarious actors could have access to large pools of such data without legal process. 

What does this mean for companies, and the way they should think about their data?

First, and most important, they should not assume that hackers are not interested in the data or that it cannot be used to threaten national security.

Second, cybersecurity policies and practices need to keep pace as businesses grow and deploy new technologies, such as biometric identification or artificial intelligence.

Third, joint ventures or other arrangements with foreign parties may provide network access or other elements of control over data. Businesses should consider the ways an aggressive foreign intelligence service could exploit that data, in light of other data it might have from other sources.

Fourth, and finally, report computer intrusions, because the breach you think is merely a private matter, may in fact be a matter of national security.

Partnerships

This brings me to the final theme, partnerships. The cases we bring require true partnerships, between law enforcement and the victims who cooperate with us; between us and the intelligence community and other components of the government; and, increasingly, between our government and the governments of likeminded nations, whether in gathering and sharing information, validating our conclusions, extraditing defendants, or imposing other consequences. 

But as much as I believe in the value of criminal prosecutions, we have always known that we will not prosecute our way to cybersecurity. The partnership that may be most critical to our future is among the professionals in and out of government who share common goals. Which is why one of the National Security Division’s greatest successes this year did not result in a criminal charge.

In May, agents of the FBI were tracking a virulent botnet infecting home and office routers around the world, attributed to the same group responsible for today’s indictment, known to some as “Fancy Bear.” 

The botnet was growing at an alarming rate by that point, and private sector researchers studying it told us they felt an increasing urgency to publish what they knew, so that affected router manufacturers, ISPs, and others could take steps to protect the public before it was too late. 

There was no easy technical solution to this pernicious malware. Its second stage (which could steal information and even brick the device) could be cleared from memory with a simple restart, but if a router were infected, complete mitigation could be virtually impossible, short of replacement, because the first stage of malware (the actors’ toe-hold in the system) would just call out for instructions to reinfect. 

With no time to waste, in little more than a week (including late nights and a weekend), agents and prosecutors devised the best mitigation plan they could under the circumstances.

In a coordinated action,

• one company would shut down the accounts that would be the primary means of reinfection, if the second stage of the malware were purged;
• the FBI obtained an order, allowing it to seize control of a domain that was the secondary means reinfection, and allowing it to record the IP addresses of routers that attempted to reinfect;
• finally, by partnering with the non-profit Shadowserver Foundation, FBI ensured that IPs of infected devices would be shared with those who could best assist their remediation, including foreign CERTs and ISPs. 

Researchers drew attention to the botnet at the same time that the FBI executed the orders and blasted out a public service advisory to restart your router, purging the second stage of malware and causing the first stage to call out for instructions, now to the FBI’s server, so that help could be alerted. These efforts were our best effort to identify and remediate the infection worldwide in the time available, before Fancy Bear actors learned of the vulnerabilities in the C2 infrastructure through the research firm’s imminent announcement.

Last week, Cisco Talos, the research firm I mentioned, published a follow-up to its original report. It found that the VPNFilter malware possessed even greater capabilities than previously identified, in the form of third-stage malware modules that provide additional capabilities to map networks, exploit systems connected to infected devices, and obfuscate or encrypt malicious traffic.

But Cisco Talos also reported, based on information from partners as well as its own analysis, that “it appears that VPNFilter has been entirely neutralized since” the effort I described earlier by a coalition of international partners (which included the Cyber Threat Alliance). So far, they said, there have been no signs of the actors attempting to reconnect with the devices that remain infected with the pernicious first stage of the malware. Not bad, for the first (but I promise you, not the last) effort to mitigate a botnet tied to nation-state actors.

Once, there was no one. Attribution was whispered in classified channels alone. We spoke, haltingly at first, of cyber threats “emanating from Asia.” Then the U.S. led the way, calling out the malicious behavior of specific foreign states, first in speeches, then by indictment.

Today, we are joined by three other nations in attributing specific conduct to Russia.

I cannot tell you where our commitment to partnership will take us next. But I can tell you, based on this, that there is reason for hope, and to continue working together to maintain an “open, interoperable, reliable, and secure Internet.”

WASHINGTON –Attorney General Jeff Sessions today issued the following statement in support of the Administration’s release of a National Counterterrorism Strategy:

“The first duty of any government is to keep its citizens safe,” Attorney General Jeff Sessions said. “The terrorist threat to this nation remains serious, but under President Donald Trump, the Department of Justice has done its part to protect the American people.  Every day, our officers are working around the clock and around the world to identify, disrupt, and investigate terrorists and their enablers. This past Christmas we successfully thwarted an alleged planned attack on San Francisco. Today, the Trump administration takes an historic next step by releasing its National Counterterrorism Strategy.  I applaud President Trump’s leadership on this issue as well as the principles laid out in the Strategy, and the American people can be assured that it will help this administration keep them safe.”

Chairman Lee, Ranking Member Klobuchar, and distinguished members of the Subcommittee, it is an honor for me to appear before you today on behalf of the Antitrust Division of the Department of Justice.  I want to thank especially Chairman Lee and Ranking Member Klobuchar for your support of my efforts and those of the Department this past year.  I am humbled by your support of my nomination, and am grateful for your public support of our work at the Antitrust Division to fairly and effectively enforce the antitrust laws.  I appreciate the important role this Committee plays in our constitutional system of checks and balances.  I view my position as the Assistant Attorney General for Antitrust as that of a protector of the rights of all American consumers to the fruits of vigorous competition.  Free market competition is a bedrock principle of the American economy, and protecting, preserving and promoting competition through the enforcement of our antitrust laws is a vital function of our government.  I, and all employees of the Antitrust Division, are dedicated to carrying out that mission to the very best of our abilities. 

The Antitrust Division has been extraordinarily busy in our daily efforts to protect consumers, workers, and entrepreneurs through sound and vigorous antitrust enforcement and competition advocacy throughout the government.  My testimony today will review our extensive efforts in criminal and civil enforcement and many of our recent new initiatives to promote competition.

The following are some highlights of the Division’s recent accomplishments and initiatives.

COMPETITION ADVOCACY AND OTHER NEW INITIATIVES: 

• Engaged in advocacy regarding antitrust law and intellectual property in the context of standards setting organizations (SSOs):  Advocated views on the analysis of antitrust law and intellectual property in the context of the adoption and implementation of SSO-developed standards, so as to maximize innovation incentives.   
• Improved consent decree process, including a renewed emphasis on structural relief when possible, and the incorporation of standard provisions in all settlements to make consent decrees more enforceable and less regulatory.   
• Announced Office of Decree Enforcement within the Division to better enforce the terms of consent decrees entered into with parties to a merger.
• Strengthened Amicus Program in the Division, and have filed amicus briefs and statements of interest as part of our competition policy and advocacy work.

• Hosted a series of three roundtable discussions this past spring on competition and deregulation.  The discussions focused on exemptions and immunities from the antitrust laws, consent decrees, and the consumer cost of anticompetitive regulations.  A report on these roundtables is in the process of being published.  Planning for additional roundtables and workshops is underway as part of the Division’s competition and advocacy work. 
• Promoted competition in the real estate industry by co-hosting a public workshop with the FTC in June to examine recent developments in residential real estate brokerage competition. 
• Established James F. Rill Fellowship Program at the Division, and the inaugural fellow is currently being selected.
• Established Jackson-Nash Address Series to recognize the contributions of former Supreme Court Justice Robert H. Jackson and Nobel Laureate economist John Nash, and to honor the speaker, recognizing and celebrating the role of economics in the mission of the Division. 

CIVIL HIGHLIGHTS: 

• Protected and Restored Competition in a Number of Key Industries Impacting American Consumers and obtained significant civil settlements.  A few of the markets impacted by the Division’s efforts include crop protection chemicals and seed treatments (one of the largest ever merger divestitures), radio stations, nationwide telecommunication fibers, and entertainment. 
• Litigated matters in industries ranging from nuclear waste management and hospitals to aviation fuel products. 
• Litigated first vertical merger case to judgment in 40 years in United States v. AT&T/DirecTV and Time Warner—what some in the press have dubbed the “antitrust trial of the century”—which continues on appeal. 
• Launched Judgment Termination Initiative involving a comprehensive review of nearly 1,300 legacy judgments and filing motions in courts across the country to terminate ones that no longer serve to protect competition.
• Opened review of Paramount Consent Decrees, which have regulated how certain movie studios distribute films to movie theatres since the Supreme Court’s decision in United States v. Paramount, 334 U.S. 131 (1948).
• Modernizing merger review process, with recent announcement of series of improvements to enhance and speed up the merger review process.

CRIMINAL HIGHLIGHTS:

• Investigated and prosecuted criminal antitrust violations across many sectors of the economy, with over $3.243 billion in criminal fines imposed in FYs 2016-17. In fiscal year 2017, investigated and prosecuted individual cases that resulted, in the highest number of individuals sentenced to prison terms since 2012.  (30 individuals were sentenced to prison terms in FY 2017.) 
• Devoted substantial resources to individual prosecutions and sentencings. 
  • Over FYs 2016-17, 52 defendants in Antitrust Division cases have been sentenced to prison terms, totaling 15,110 days of incarceration.
  • Many of the Division’s individual convictions were the result of investigations into anticompetitive conduct at public real estate foreclosure auctions.  This conduct was widespread and harmed homeowners and others. 
• Trial due to start on October 9 in a price-fixing case against three traders from major banks, who are charged with manipulating the foreign currency exchange spot market for U.S. dollars and Euros.  This follows corporate pleas in 2015.
• A record-setting number of criminal cases (nine) went to trial in FY 2017—the highest number in the last two decades. 
• Actively engaged in outreach and training for agents at offices of inspectors general at numerous federal agencies.  Such engagement and training arms these agents with the ability to detect and report antitrust crimes.  In many instances these agencies also join our investigative efforts.  
• Implemented no-poach initiative, investigating and prosecuting “no-poach” and wage-fixing agreements.
• Updated Leniency Program information designed to increase transparency and self-reporting of cartel behavior.
• Held a public roundtable discussion on “the role that corporate antitrust compliance programs play in preventing and detecting antitrust violations and ways to further promote corporate antitrust compliance.”
• Hosted event on the 25th anniversary of the Division’s Leniency Program

INTERNATIONAL HIGHLIGHTS:

• Established Antitrust Division International Working Group, with representation from each section within the Division, with the goal of learning about new and ongoing international issues and discussing best practices.
• Increased International Engagement
  • Advanced a core set of procedural norms through the Multilateral Framework on Procedures in Competition Law Investigation and Enforcement (or “MFP”), working in partnership with leading antitrust agencies around the world.
  • Led the Department’s NAFTA negotiation team and continue to serve as the Departmental point on trade coordination issues.
  • Promoted effective enforcement of antitrust and competition laws across the globe, visiting or hosting agencies in the following jurisdictions to discuss enforcement:  Argentina, Australia, Brazil, Canada, China, the European Union, Germany, Hong Kong, India, Korea, Mexico, and the United Kingdom. 
  • Coordinated 21 technical assistance programs in FY 2018 to such diverse jurisdictions as Australia, El Salvador, Guatemala, Georgia, Honduras, Hungary, Hong Kong, India, Ireland, Korea, Mexico, the Philippines, Ukraine, and Vietnam.  All but three of these programs were financed from outside sources (e.g., USAID, OECD, or the local competition authority) and many of them were coordinated with the FTC.
  • Engagement in the Division’s Visiting International Enforcers’ Program (VIEP), a two-week intensive exchange program for senior agency personnel designed to deepen institutional and personal ties with our foreign counterparts.

Criminal Enforcement

The Division investigated and prosecuted antitrust violations across many sectors of the economy, with over $3.243 billion in criminal fines imposed in FYs 2016-17.  In the most recent fiscal year, the Division investigated and prosecuted individual cases that resulted in the highest number of individuals sentenced to prison terms since 2012.  The Division also has made efforts to increase self-reporting of cartel behavior through its clarification of its amnesty program.

Criminal enforcement has long been a vital tool to protect competition and consumers.  The Sherman Act has been a criminal statute ever since it was signed into law in 1890.  Antitrust violations such as price-fixing, bid-rigging, and market allocation unambiguously disrupt the integrity of the competitive process, harm consumers, and reduce faith in the free market system.  Such harmful agreements among competitors are subject to a rule of per se illegality, and individuals who engage in such conduct appropriately face criminal accountability along with the corporations they serve.  At the Division, we focus our criminal enforcement efforts on holding culpable corporations and individuals accountable, including high-level executives.

In an important example, the Division brought charges against and obtained guilty pleas from executives of a generic pharmaceutical company for price fixing, bid rigging, and customer allocation for an antibiotic and a drug used to treat diabetes.  (E.g., Plea Agreement, U.S. v. Glazer, 2:16-cr-00506 (E.D. Pa. Jan. 9, 2017), /media/876731/dl?inline.)  It is particularly galling that, when healthcare prices in the United States are already high, certain corporations and executives engaged in anticompetitive activities at the expense of individuals who depend on critical medications.   

In another area that has a profound impact on American consumers, the Division actively prosecuted bid rigging and fraud relating to real estate foreclosure auctions.  To date, 138 individuals and 3 companies have been charged as a result of the Division’s investigations of bid rigging and fraud relating to real estate foreclosure auctions in California, Alabama, North Carolina, Georgia, and Mississippi.  (E.g., Press Release, U.S. Dep’t of Justice, Seventh Mississippi Real Estate Investor Pleads Guilty to Conspiring to Rig Bids At Public Foreclosure Auctions (July 19, 2018), https://www.justice.gov/opa/pr/seventh-mississippi-real-estate-investor-pleads-guilty-conspiring-rig-bids-public-foreclosure.)  On an individual basis, each of these cases is relatively small, but on an aggregate basis, these cases are important to the economy, particularly because the convicted investors subverted competition and lined their pockets by illegal bid rigging and fraud while diverting money from the homeowners and mortgage holders entitled to any proceeds.

The Division has many open criminal investigations.  The Division is trying more criminal cases than ever before and obtaining more prison sentences for individuals than in recent years.  Corporate leaders and business executives who consider deviating from the rules of our free enterprise system should take notice. 

Moreover, the American public should know that the Antitrust Division is looking out for their salaries, as well.  We have put employers on notice that agreements between employers that eliminate competition for hiring employees in the form of no-hire or non-solicitation agreements (often referred to as “no-poach” agreements) are per se violations of the Sherman Act when they are not ancillary to legitimate collaborations.  In October 2016, the Division reminded the business community that no-poach and wage-fixing agreements can be prosecuted as criminal violations when they are not reasonably necessary to a separate, legitimate transaction or collaboration between employers.  As a matter of prosecutorial discretion, the Division will pursue no-poach agreements terminated before October 2016 through civil actions.  Defendants should anticipate potential criminal enforcement actions for any such naked no-poach agreements we uncover that post-date our October 2016 guidance, although we reserve discretion as appropriate in making our ultimate determinations. 

The Division will continue to be diligent in detecting and deterring collusion that harms American consumers, and we will remain focused on crucial industries that affect Americans deeply, such as real estate, food, financial services, and health care, just to name a few.

Civil Enforcement

Our merger review program is perhaps the best known of the Division’s many functions, as key mergers generate not only extensive media interest but also typically touch the everyday lives of the American public.  Protecting American consumers and businesses from anticompetitive mergers is an essential element of the Division’s mission. 

The Division has been confronting huge mergers that cover large swaths of the U.S. economy that touch nearly every consumer, including telecommunications and entertainment (AT&T/Time Warner), agriculture (Bayer/Monsanto, Dow/Dupont), and health care (CVS/Aetna), among many others.  We invest large portions of our limited resources to evaluate these massive transactions to ensure that consumers remain protected and competition is preserved.  As a result, we have been extraordinarily busy in our merger review program. 

One prominent example of our efforts on behalf of the American consumer is our review and challenge of AT&T’s $108 billion acquisition of Time Warner, one of the largest transactions in U.S. history.  After the matter did not settle, we litigated in the district court for the District of Columbia the first vertical merger case that went to judgment in 40 years.  We have appealed the district court’s decision and are proceeding before the Court of Appeals for the District of Columbia Circuit on an expedited review schedule.  (Proof Brief of Appellant United States of America, U.S. v. AT&T Inc., No. 18-5214 (D.C. Cir. Aug. 6, 2018), /media/973241/dl?inline.)

AT&T/Time Warner is only one of the mega-mergers we have focused on in the past year.  In May, in response to Bayer’s proposed $66 billion acquisition of Monsanto, we secured a $9 billion divestiture to protect consumers.  (Competitive Impact Statement, U.S. v. Bayer AG & Monsanto Co., No. 1:18- cv-01241 (D.D.C. May 29, 2018), /media/954026/dl?inline.)  Bayer and Monsanto were two of the largest agricultural companies in the world, and they competed to provide farmers with a broad range of seed and crop protection products.  After a thorough investigation, we concluded that the proposed merger would have likely resulted in higher prices, lower quality, and fewer choices to farmers, and ultimately American consumers, across a wide array of seed and crop protection products.  The merger also threatened to stifle the innovation in agricultural technologies that has produced significant benefits to American farmers and consumers.

We were able to negotiate appropriate solutions to those competitive problems, including divestitures to BASF, a global chemical company with a multi-billion-dollar crop protection business.  Through these divestitures, we achieved a robust structural solution that preserves competition from horizontal and vertical concerns raised by the merger.  The settlement also addressed incentives to compete through innovation by requiring divestitures of certain intellectual property and research capabilities.  These innovation-focused divestitures include “pipeline” R&D projects and Bayer’s nascent “digital agriculture” business.  The settlement also reflected important efforts to strengthen the enforceability and effectiveness of our consent decrees.           

In another large agricultural matter, the Division obtained important divestitures associated with Dow’s acquisition of DuPont.  (Competitive Impact Statement, U.S. & Plaintiff States v. Dow Chemical Co. & E.I. Du Pont de Nemours & Co., No. 1:17-cv-01176 (D.D.C. June 15, 2017), /media/900176/dl?inline.)  The Division’s structural remedies were focused on preserving viable, ongoing businesses that preserve needed competition in the agricultural sector.              

For the foreseeable future, the Division’s merger enforcement activities will continue ahead at full steam.  We continue to vigorously enforce the laws and review pending transactions in order to preserve robust competition for the millions of Americans who rely on private health insurance products.

I would note that these efforts, especially when we pursue litigation against very large mergers, which often involve threats to competition in multiple markets, are resource intensive.  Not only do they require substantial devotion of personnel, but they also require increasingly large outlays for experts and document review.   

Thanks to the hard work and dedication of the Antitrust Division staff, we have often been able to resolve large and significant transactions within six months, as illustrated in the recent Disney/Fox and Cigna/Express Scripts investigations.  Nonetheless, doing all we can to modernize and speed up the process of merger review is a worthy goal.  To that end, I recently announced a series of changes in how we approach the merger review process at the Division.  As part of this improved process, we will post a model voluntary request letter and a model timing agreement on our website.  Going forward, we will also make some changes to what we generally agree to in timing agreements.  We will generally seek to collect documents from fewer custodians and to take fewer depositions.  Provided the parties agree to faster and earlier productions, make certain commitments on privilege, and agree to longer post-complaint discovery (if necessary), we will shorten the time from the parties certifying compliance to the Division making a decision to 60 days or less, with the proviso that the responsible deputy can extend that time period if he or she deems it necessary.  With respect to Civil Investigative Demand enforcement, we will bring enforcement actions if necessary to ensure timely and complete compliance.  We are also withdrawing the 2011 Policy Guide to Merger Remedies.  The 2004 Policy Guide to Merger Remedies will be in effect until we release an updated policy.  (Makan Delrahim, Assistant Att’y Gen., Antitrust Div., U.S. Dep’t of Justice, It Takes Two: Modernizing the Merger Review Process, Remarks as Prepared for the 2018 Global Antitrust Enforcement Symposium (Sept. 25, 2018), /media/977416/dl?inline.)

In addition to our merger review program, the Division also expends substantial resources investigating and, when appropriate, challenging non-merger conduct that may have the unlawful effect of depriving consumers of the fruits of robust competition.  Some of these conduct issues are straightforward applications of antitrust principles.  For example, the Division has successfully challenged unlawful agreements among South Central Michigan hospitals to not market their services to customers in each other’s territories.  In February, following almost three years of litigation, the Division entered into a resolution of its litigation with the last of these hospitals: Henry Ford Allegiance Health (“Allegiance”), which operates a 475-bed hospital in Jackson County, Michigan.  (Competitive Impact Statement, U.S. & Mich. v. W.A. Foote Mem’l Hosp. D/B/A Allegiance Health, No. 5:15-cv-12311 (E.D. Mich. Feb. 27, 2018), /media/941606/dl?inline.)   

Some conduct issues are complex and require close study for when and how they affect competition and how they should be analyzed under the antitrust laws.  For example, I have given speeches focusing on how policies adopted by a standards setting organization (SSO) should ensure that a diversity of views are represented, that patent holders have adequate incentives to innovate and create new technologies, and that licensees have appropriate incentives to implement those technologies.  (E.g., Makan Delrahim, Assistant Att’y Gen., Antitrust Div., U.S. Dep’t of Justice, The “New Madison” Approach to Antitrust and Intellectual Property Law (Mar. 16, 2018), https://www.justice.gov/opa/speech/assistant-attorney-general-makan-delrahim-delivers-keynote-address-university.)  Because SSOs can promote innovation but also provide opportunities for competitors to harm competition, it is critical to examine closely the proper role of antitrust law and take enforcement or advocacy efforts that appropriately maximize incentives for innovation.

Along with our specific enforcement actions, the Division continues to pursue policy initiatives to strengthen our civil enforcement program.  One such initiative is to streamline and improve the Division’s use of consent decrees and other remedies, guided by the view that antitrust enforcement is law enforcement, not regulation.  (See Makan Delrahim, Assistant Att’y Gen., Antitrust Div., U.S. Dep’t of Justice, Remarks at the Antitrust Division's Second Roundtable on Competition and Deregulation (Apr. 26, 2018), https://www.justice.gov/opa/speech/assistant-attorney-general-makan-delrahim-delivers-remarks-antitrust-divisions-second.)  The Division will favor structural relief such as divestitures that rely on free market competitive processes to remedy competitive concerns with a merger rather than behavioral relief that regulates conduct.  Doing so places risks of failure on the merging parties and relies on ongoing mechanisms to enforce settlement terms. 

A crucial aspect of a consent decree is the ability to enforce it to ensure that the remedy that was necessary to preserve competition is fully implemented.  In that regard, we have implemented a number of changes in the Division’s practices to strengthen our ability to ensure decree compliance.  First, we are now incorporating a set of provisions as standard improvements in our consent decrees that will make decrees more enforceable.  Under these provisions, negotiated with the settling parties, the Division may establish a violation of a consent decree by a preponderance of the evidence (rather than the more exacting clear and convincing evidence standard), thereby using the same standard in a decree violation lawsuit that applies to proving liability in a civil antitrust case in the first instance.

Another of the new provisions permits the government to apply for an extension of a decree’s term if the court finds a violation of the decree.  An additional new term requires defendants to reimburse the taxpayers for attorneys’ fees, expert fees, and costs incurred in connection with any consent decree enforcement effort.  After a certain number of years, typically five, another new provision gives the Division the ability to terminate a decree upon notice to the court and defendants if it concludes in its discretion the decree is no longer necessary to protect competition.  We are also establishing a new Office of Decree Enforcement in the Division to dedicate Division personnel to ensuring proactive enforcement of consent decrees. 

Last, but not least, we are in the midst of a robust effort to review nearly 1,300 so-called “legacy” judgments, some of which date back about a century.  Our review considers changes in industry conditions, changes in economics, and changes in law to determine whether these decrees are necessary to protect competition and consumers.  Some of them may be affirmatively harmful to competition.  We have begun the process of filing motions in federal district courts to terminate decrees that are no longer needed to protect competition.  In August, the D.C. District Court granted our first motion to terminate 19 such judgments.  (Order Terminating Final Judgments, U.S. v. American Amusement Ticket Manufacturers Association, 1:18-mc-00091-BAH (D.D.C Aug. 15, 2018), /media/1183021/dl?inline.) This ongoing effort will continue to identify and eliminate unnecessary restrictions on individuals and businesses who remain subject to legacy decrees so that we may better focus the Division’s resources and attention on protecting competition.

As part of this effort, we also announced our review of the Paramount Consent Decrees, which for over seventy years have regulated how certain movie studios distribute films to movie theatres.  The public is invited to comment on the Paramount Consent Decrees until the comment period closes tomorrow, October 4.  (Press Release, U.S. Dep’t of Justice, Department of Justice Opens Review of Paramount Consent Decrees (Aug. 2, 2018), https://www.justice.gov/opa/pr/department-justice-opens-review-paramount-consent-decrees.) 

Policy and Program Initiatives

Apart from our direct enforcement efforts, the Division has implemented a wide range of initiatives designed to advance competition both nationally and internationally.  These efforts do not always draw the same interest as our enforcement cases, but can be just as essential, if not more so, to our efforts to protect American consumers and businesses.  I will discuss briefly a few of them.

International: Multilateral Framework on Procedures

Today, companies must regularly navigate the antitrust and competition enforcement authorities that now exist across the globe.  To promote competition and due process, the United States regularly reaches out to our international counterparts in efforts to harmonize practices around those that best promote competition and to help ensure that competition laws around the world are enforced efficiently, effectively, and fairly.  In June, the United States, in partnership with leading antitrust agencies around the world, advanced an effort to better align with one another on a core set of procedural norms through the Multilateral Framework on Procedures in Competition Law Investigation and Enforcement (or “MFP”).  (See Makan Delrahim, Assistant Att’y Gen., Antitrust Div., U.S. Dep’t of Justice, Remarks on Global Antitrust Enforcement at the Council on Foreign Relations (June 1, 2018), https://www.justice.gov/opa/speech/assistant-attorney-general-makan-delrahim-delivers-remarks-global-antitrust-enforcement.)  We are working closely with our international colleagues to achieve consensus on, and publicly commit to, fundamental procedural protections necessary to ensure due process such as non-discrimination, transparency, timely resolution, confidentiality, conflicts of interest, proper notice, opportunity to defend, access to counsel, and judicial review. 

Given the complex array of antitrust issues we address with our sister competition agencies across the globe, we are also improving the way we tackle these issues internally.  For example, we established formal internal working groups that incorporate staff from all sections in the Division.  These working groups meet regularly, sometimes with input from outside speakers.  The goal is to learn about new and ongoing international issues, share ideas, discuss best practices, forge consensus, and identify the people and resources that can help address these challenges.

Appellate: Amicus Initiative

The Division has recently expanded our amicus program to increase our participation in private litigation not only in the Supreme Court, but at the district and appellate courts as well.  In that way, we can more proactively and more effectively promote appropriate use of antitrust and competition principles across the judiciary.  So far, in 2018, the Division has filed five statements of interest at the district court and five amicus briefs in an appeals court in cases where the United States is not a party, as compared to just two amicus briefs in 2017.         

Thought Leadership

Through workshops and roundtables, the Division provides a forum for industry participants, academics, consumer advocates, and other interested parties to discuss important developments in particular business sectors, the appropriate scope of various legal doctrines, or recent advancements in our understanding of relevant economic principles.

On three dates this spring, the Division held a series of public roundtable discussions to explore the relationship between competition and regulation and its implications for antitrust enforcement.  (Public Roundtable Discussion Series on Regulation & Antitrust Law, Antitrust Div., U.S. Dep’t of Justice, https://www.justice.gov/atr/CompReg (last updated June 25, 2018).)  Specific issues included exemptions and immunities from the antitrust laws, the most effective and appropriate scope for consent decrees, and the consumer costs of anticompetitive regulations.  Our speakers spanned a diverse range of policy perspectives and stakeholder viewpoints.  These were fruitful discussions that are already shaping our actions at the Division, such as recent improvements to the Division’s consent decree practices.

Moreover, in April, the Division hosted a public Roundtable on Criminal Antitrust Compliance to engage with inside and outside corporate counsel, foreign antitrust enforcers, international organization representatives, and other interested stakeholders on the topic of criminal antitrust compliance.  (Public Roundtable on Criminal Antitrust Compliance, Antitrust Div., U.S. Dep’t of Justice, https://www.justice.gov/atr/public-roundtable-antitrust-criminal-compliance (last updated Sept. 10, 2018).)  More than 100 participants attended and discussed the role that antitrust compliance programs play in preventing and detecting criminal antitrust violations, and ways to further promote corporate antitrust compliance.

In June, the Division also held a joint workshop with the FTC on competition in residential real estate brokerage markets.  (Public Workshop: What’s New in Residential Real Estate Brokerage Competition, Antitrust Div., U.S. Dep’t of Justice, https://www.justice.gov/atr/events/public-workshop-competition-real-estate (last updated June 25, 2018).)  The workshop drew a diverse array of industry participants, thought leaders, and stakeholders.  This is a sector that has merited recent competition advocacy from the Division to state officials, and the diverse viewpoints from the workshop will inform the Division’s advocacy and enforcement efforts going forward.  We continue to closely monitor industry developments and the state of competition.

In addition to workshops and roundtables, the Division has also established the Jackson-Nash Addresses, a new lecture series to inspire and educate Division staff and the public about cutting-edge issues and developments in the field.  (Press Release, U.S. Dep’t of Justice, Antitrust Division Establishes the “Jackson-Nash Address” and Announces Professor Alvin Roth as Inaugural Speaker (Feb. 8, 2018), https://www.justice.gov/opa/pr/antitrust-division-establishes-jackson-nash-address-and-announces-professor-alvin-roth.)  Through extraordinary, distinguished guest speakers, we recognize and celebrate the role of economics in advancing the objectives of the antitrust laws and the mission of the Division.  In so doing, the series will honor the weighty contributions to the field of antitrust from former Supreme Court Justice Robert H. Jackson and Nobel laureate economist John Nash.  We were proud to have our inaugural address feature Alvin Roth, also a Nobel Prize winning economist, who is lauded for his important contributions to game theory and market design that shaped the way medical students are matched with residency programs and patients are matched with kidney donors.  Our second address featured George Akerloff, another Nobel Prize winning economist, who is lauded for his important contributions to markets characterized by asymmetric information, such as markets for lemons, and John Q. Barrett, a professor of law at St. John’s University who is writing a biography on Justice Jackson.

Looking to the Future

It is indeed an exciting time to be at the Antitrust Division as we work to achieve important results for American consumers.  One of the not-so-secret secrets to our success is our talented and devoted staff.  It is critical that the Division continues to attract and retain bright, talented, and passionate individuals—whether they be attorneys, economists, paralegals, or support staff.

One way we will draw talent is through the recently established James F. Rill Fellowship Program.  (The James F. Rill Fellowship, Antitrust Div., U.S. Dep’t of Justice, https://www.justice.gov/oarm/james-f-rill-fellowship (last updated Aug. 13, 2018).)  The Fellowship is designed to provide elite candidates of the Honors Program with a special opportunity to participate in antitrust enforcement actions and in the development and implementation of antitrust policy.  I feel fortunate that through this fellowship I can honor one of the greats in the antitrust field, a man whose contributions span public service and private practice, administrations of all stripes, and the field of competition law not just domestically but across the globe.  I hope that the fellowship will draw future great contributors to the field of antitrust.  I look forward to working with this Committee on finding further means to ensure the Antitrust Division has the resources and talent it needs to protect and promote competition.

Conclusion

I have been the AAG of the Antitrust Division for one year and one week now, and it has been an exhilarating experience.  I am honored to have the support of this Committee, and to be working with the dedicated women and men of the Antitrust Division to protect American consumers.  We have done much, but much more remains to be done.  I look forward to the coming challenges, knowing the importance of our work.

Mr. Chairman, thank you for the opportunity to speak here today.  I look forward to further discussion of these issues.

A Massachusetts man was sentenced today to 210 months in prison for conducting an extensive cyberstalking campaign against his former housemate, her family members, co-workers, friends, and others, including hacking into her online accounts, posting fraudulent sexual solicitations in their names, sending unsolicited images of child pornography, and making over 120 hoax bomb threats.  

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Andrew E. Lelling for the District of Massachusetts, Special Agent in Charge Harold H. Shaw of the FBI Boston Field Office and Waltham Police Chief Keith MacPherson made the announcement today.

Ryan S. Lin, 25, formerly of Newton, Massachusetts, was sentenced today by U.S. District Judge William G. Young of the District of Massachusetts, who also ordered him to serve five years of supervised release following his prison sentence.  Lin pleaded guilty in April 2018 to seven counts of cyberstalking, five counts of distribution of child pornography, nine counts of making hoax bomb threats, three counts of computer fraud and abuse and one count of aggravated identity theft.  Lin was arrested in October 2017 and has been held in custody since.   As part of Lin’s plea agreement, Lin agreed to be sentenced to a minimum of seven years and a maximum of 17 ½ years in prison.  

According to admissions made in connection with his plea and evidence presented at sentencing, from about May 2016 through Oct. 5, 2017, Lin engaged in an extensive cyberstalking campaign against a 25-year-old female victim. Lin, the victim’s former housemate, hacked into the victim’s online accounts and devices and stole the victim’s private photographs, personally identifiable information, and private diary entries, which contained highly sensitive details about her medical, psychological and sexual history, and distributed the victim’s material to hundreds of people associated with her.

Lin also created and posted fraudulent online profiles in the victim’s name and solicited rape fantasies, including “gang bang” and other sexual activities, which in turn caused men to show up at the victim’s home. Lin engaged in a number of other activities targeting the female victim, including relentless anonymous text messaging and additional hoaxes, from shortly after he met her until October 2017.    

In addition to his former housemate, Lin engaged in cyberstalking activity aimed at six additional individuals. Some were associated with the former housemate, and others were entirely unrelated. The additional victims include two female victims who were also Lin’s housemates in Newton at the time of his arrest. On multiple occasions, Lin sent sexually explicit images of prepubescent children on an unsolicited basis to the primary victim’s mother, the victim’s co-worker and housemate, a friend of the victim who resided in New Jersey, and two of Lin’s former classmates in New York.

In addition to the cyberstalking activity, Lin falsely and repeatedly reported to law enforcement that there were bombs at the primary victim’s Waltham, Massachusetts residence. Lin also created a false social media profile in the name of the primary victim’s housemate in Waltham and posted that he was going to “shoot up” a school in Waltham, stating that there would be “blood and corpses everywhere.”  These threats expanded beyond Waltham and became part of an extensive and prolonged pattern of threats to local schools, private homes, businesses, and other institutions in the broader community.  Ultimately, Lin pleaded guilty to having made over 100 bomb threats, including 24 in a single day. 

The investigation was conducted by the FBI’s Boston Field Office and the Waltham Police Department.  The Middlesex County District Attorney’s Office and Watertown, Newton and Wellesley Police Departments assisted in the investigation. Senior Trial Attorney Mona Sedky of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Amy Harman Burkart, Chief of Lelling’s Cybercrime Unit, prosecuted the case. 

Nippon Chemi-Con was sentenced to pay a $60 million criminal fine for its role in a conspiracy to fix prices for electrolytic capacitors sold to customers in the United States and elsewhere, the Department of Justice announced today.  The $60 million fine is the largest fine imposed in the Justice Department’s investigation into collusion in the capacitors industry.  In addition to the $60 million criminal fine, Nippon Chemi-Con was also sentenced to a five-year term of probation during which the company must implement an effective compliance program and submit annual written reports on its compliance efforts.

"Today’s sentence affirms the Antitrust Division’s commitment to holding companies, whether foreign or domestic, accountable for conspiring to cheat American consumers,” said Assistant Attorney General Makan Delrahim of the Department of Justice’s Antitrust Division.  “In addition to the significant fine, the five-year probation period promotes deterrence and will help to protect the public.”

In May 2018, Nippon Chemi-Con pleaded guilty to conspiring with others to suppress and eliminate competition for electrolytic capacitors from at least as early as November 2001 to January 2014.  Nippon Chemi-Con was charged by indictment filed in October 2017 in the U.S. District Court for the Northern District of California.  The indictment charged Nippon Chemi-Con with carrying out the conspiracy by agreeing with co-conspirators to fix prices of electrolytic capacitors during meetings and other communications.  Capacitors were then sold in accordance with these agreements.  As part of the conspiracy, Nippon Chemi-Con and its co-conspirators took steps to conceal the conspiracy, including the use of code names and providing misleading justifications for prices and bids submitted to customers in order to cover up their collusive conduct. 

In total, eight companies and ten individuals have been charged for their participation in this conspiracy.  All eight companies have pleaded guilty and have been sentenced to criminal fines collectively totaling over $150 million.  Of the ten individuals charged, two have pleaded guilty, and eight remain under indictment, including four Nippon Chemi-Con executives: Takuro Isawa, Takeshi Matsuzaka, Yasutoshi Ohno, and Kaname Takahashi.

Electrolytic capacitors store and regulate electrical current in a variety of electronic products, including computers, televisions, car engine and airbag systems, home appliances, and office equipment.

This case results from ongoing federal antitrust investigations being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco Field Office into price fixing, bid rigging and other anticompetitive conduct in the capacitor industry.  Anyone with information related to the focus of this investigation should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258, visit https://www.justice.gov/atr/report-violations, or call the FBI tip line at 415-553-7400.

Attorney General Sessions today commemorated the reinvigoration of Project Safe Neighborhoods (PSN), the centerpiece of the Department of Justice’s violent crime reduction efforts.  In support of the Department’s PSN programs throughout the country, the Attorney General also announced awards of almost $28 million in grant funding to combat violent crime through PSN and another $3 million for training and technical assistance to develop and implement violent crime reduction strategies and enhance services and resources for victims of violent crime. Over the past year, the Department has partnered with all levels of law enforcement, local organizations, and members of the community to reduce violent crime and make American neighborhoods safer.

“Project Safe Neighborhoods is a proven program with demonstrated results,” Attorney General Jeff Sessions said. “We know that the most effective strategy to reduce violent crime is based on sound policing policies that have proven effective over many years, which includes being targeted and responsive to community needs. I have empowered our United States Attorneys to focus enforcement efforts against the most violent criminals in their districts, and directed that they work together with federal, state, local, and tribal law enforcement and community partners to develop tailored solutions to the unique violent crime problems they face.  Each United States Attorney has prioritized the PSN program, and I am confident that it will continue to reduce crime, save lives, and restore safety to our communities.”  

PSN is an evidence-based program proven to be effective at reducing violent crime. Through PSN, a broad spectrum of stakeholders work together to identify the most pressing violent crime problems in the community and develop comprehensive solutions to address them. As part of this strategy, PSN focuses enforcement efforts on the most violent offenders and partners with locally based prevention and reentry programs for lasting reductions in crime.

Through the enhanced PSN, the Department is targeting the most violent criminals in the most violent areas, utilizing policing tools that did not exist even a few years ago. Tools like crime gun intelligence centers (CGIC), which combine intelligence from gunshot detection systems, ballistics, gun tracing, and good old-fashioned police work, help to develop real-time leads on the “traffickers and trigger pullers” who are fueling the violence in their communities. By using modern technologies and cutting-edge police work, the Justice Department is deploying resources strategically to provide the greatest return on our community-based anti-violence efforts. 

United States Attorneys across the country are using powerful federal laws against the criminals driving the violent crime in their communities. In fiscal year 2018, the Department brought cases against more violent criminals than ever before—increasing by approximately 15 percent than the Department’s previous record set just last year. Additionally, in 2018 the Department set another record by charging approximately 20 percent more criminals with federal firearms offenses than it had in 2017, which is the most in the Department’s history. 

The Department has already started to observe positive signs of progress. The FBI’s official crime data for 2017 reflects that, after two consecutive, historic increases in violent crime, in the first year of the Trump Administration the nationwide violent crime rate began to decline. The nationwide violent crime rate decreased by approximately one percent in 2017, while the nationwide homicide rate decreased by nearly one and a half percent. The preliminary information for 2018 shows that the Department’s efforts are continuing to pay off. Public data from 60 major cities show that violent crime decreased by nearly five percent in those cities in the first six months of 2018 compared to the same period one year earlier. 

The grants announced today build on Attorney General Sessions’ commitment to reducing violent crime in America, as directed by President Trump’s February 2017 Executive Order. The Department has distributed additional resources and built up strong partnerships with local law enforcement in communities plagued by violent crime. Since the announcement of the reinvigoration of the PSN program in October 2017, the Department of Justice has increased the number of federal prosecutors focused on violent crime by over 300, directed its resources to improving cooperation between federal and local law enforcement agencies, restored local control of police agencies by reining in excessive use of consent decrees, reformed civil asset forfeiture and restored asset-sharing with state and local law enforcement, and helped fund over 800 hundred officers in police departments across America.

A Honduran man was sentenced in federal court today to 46 months in prison for his role in a conspiracy to launder into the United States more than $1.3 million in foreign bribe payments and public funds from the Republic of Honduras, Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and Deputy Director and Acting Director Ronald D. Vitiello of U.S. Immigration and Customs Enforcement (ICE) announced.

On June 27, Carlos Zelaya, 47, a citizen of Honduras who was residing in the New Orleans area, pleaded guilty to one count of conspiracy to commit money laundering before U.S. District Judge Martin L.C. Feldman of the Eastern District of Louisiana, who imposed today’s sentence and ordered Zelaya to serve three years of supervised release following his prison sentence.  The defendant consented to the forfeiture of his interest in over one million dollars in real estate obtained through the scheme as part of his plea.

According to admissions made as part of the plea agreement, Carlos Zelaya conspired with his brother, the former Executive Director of the Honduran Institute of Social Security, and others to launder over $1.3 million in bribe payments.  These bribes were paid by two Honduran businessmen for the benefit of the Executive Director.  The funds were then laundered into the New Orleans area through international wire transfers and used to purchase real estate, including a commercial property.  Carlos Zelaya collected and spent the rental income derived from the properties, even after a federal judge ordered him to preserve the funds pending resolution of a federal civil forfeiture suit.  During the course of the civil case, he also made false statements to the U.S. government in written discovery responses and to a federal judge in the Eastern District of Louisiana while testifying under oath.  As part of the conspiracy, Carlos Zelaya also used his brother’s high-ranking official position to profit from lucrative Honduran government contracts and then laundered the misappropriated funds into the New Orleans area.

The investigation was conducted by ICE Homeland Security Investigations New Orleans and Miami.  The case is being prosecuted by Trial Attorneys Stephen A. Gibbons, Marybeth Grunstra, and Michael B. Redmann of the Criminal Division’s Money Laundering and Asset Recovery Section with assistance from the U.S. Attorney’s Office for the Eastern District of Louisiana.  Valuable assistance was provided by the Justice Department’s Office of International Affairs.

This case was brought under the Department of Justice’s Kleptocracy Asset Recovery Initiative by a team of prosecutors in the Criminal Division’s Money Laundering and Asset Recovery Section.  These prosecutors partner with federal law enforcement agencies to prosecute those who engage in and facilitate foreign official corruption which has effects on the U.S. financial system, to forfeit assets purchased with the proceeds of that corruption, and, where appropriate, to repatriate the recovered funds for the benefit of the people of the country harmed by such abuse of public office.  Individuals with information about possible proceeds of foreign corruption located in, or laundered through, the United States should contact federal law enforcement or send an email to kleptocracy@usdoj.gov.

A federal grand jury unsealed an indictment today charging Michael Brandon Smirnoff, 25, a former officer at the Tallassee Police Department in Tallassee, Alabama, with federal civil rights and obstruction offenses. Smirnoff is charged with two counts of deprivation of rights under color of law, in violation of Title 18, United States Code, Section 242, and one count of obstruction of justice, in violation of Title 18, United States Code, Section 1519.

The indictment alleges that Smirnoff twice used unlawful force on arrestees and submitted a false report to cover up one of the incidents. In the first incident, on March 29, 2016, Smirnoff slammed a handcuffed man to the ground, then used unreasonable force while placing him into a police vehicle. In a second incident on July 5, 2015, Smirnoff tased a man who had already been placed in handcuffs and was not physically resisting. As a result of these unjustified uses of force, both victims sustained bodily injuries. The indictment further charges that Smirnoff obstructed justice by submitting a false report about the second incident.

If convicted, Smirnoff faces a maximum sentence of 10 years in prison for the deprivation of rights charges and 20 years in prison for the obstruction charge, three years of supervised release, and a fine of up to $250,000.

An indictment is a formal accusation of criminal conduct, not evidence of guilt.  The defendant is presumed innocent unless and until proven guilty.

This case was investigated by the FBI, and is being prosecuted by Assistant U.S. Attorney Denise Simpson of the Middle District of Alabama and Civil Rights Division Trial Attorney Michael J. Songer.

The Department of Justice today announced more than $70 million in grant funding to bolster school security, educate and train students and faculty, and support law enforcement officers and first responders who arrive on the scene of a school violence incident. These grants are in addition to the funding to the National Association of School Resource Officers (NASRO), announced by Attorney General Sessions last week, to expand and update their curriculum to better support training programs. These grants combined will better protect students, teachers, faculty, and first responders across the United States. Additionally, the Department is awarding more than $64 million to state agencies to improve the completeness, quality, and accessibility of the nation’s criminal record systems, which will help law enforcement and increase the effectiveness of background checks.

"President Trump and his administration will ensure the safety of every American school," Attorney General Jeff Sessions said. "Earlier this year he signed into law the STOP School Violence Act, which provides grant funding to develop anonymous school threat reporting systems, to implement school building security measures, and to train students, school personnel, and law enforcement on how to prevent school violence. Today I am announcing $70 million in these grants to hundreds of cities and states across America. These grants will go a long way toward giving young people and their families both safety and peace of mind."

The Office of Justice Program’s (OJP) Bureau of Justice Assistance (BJA) and the Office of Community Oriented Policing Services (COPS Office) together are making more than 220 awards to jurisdictions across the country to help make schools more secure. The awards, granted through three funding streams, will provide new technology for reporting systems and other threat deterrent measures and create school safety training and education programs for school administrators, staff, students, and first responders. This includes the support for existing crisis intervention teams and the creation of new ones.

• BJA’s STOP School Violence Threat Assessment and Technology Reporting Program will provide 68 awards valued at more than $19 million. This funding supports training to create and operate threat assessment and crisis intervention teams and to develop technology for local or regional anonymous reporting systems. This technology may be in the form of a mobile phone application, hotline, or website.
• The STOP School Violence Prevention and Mental Health Training Program, also managed by BJA, will provide training and education on preventing violence and effectively responding to related mental health crises. This program will fund 85 awards at nearly $28 million.
• The COPS Office School Violence Prevention Program (SVPP) will provide nearly $25 million to 91 jurisdictions for school safety measures including coordination with law enforcement, training for law enforcement to prevent student violence against others and self, target hardening measures, and technology for expedited notification of law enforcement during an emergency.

The grants are authorized by the STOP School Violence Act, which are intended to improve school security by helping students and teachers reduce exposure to risks, prevent acts of violence, and quickly recognize and respond to violent attacks.

The Department also announced that it has awarded more than $64 million to state agencies to improve the completeness, quality, and accessibility of the nation’s criminal record systems. These grants are administered by the Bureau of Justice Statistics, part of OJP. Approximately $43 million in funding will be administered through the National Criminal History Improvement Program (NCHIP), and nearly $21 million will be awarded under the National Instant Criminal Background Check System (NICS) Act Record Improvement Program.  These grant programs help states automate and upgrade records accessed by the firearms background check system.  This year, at the direction of the Attorney General, the Department prioritized funding for projects that improve accessibility of criminal history records, domestic violence convictions, and information on persons who are prohibited from possessing firearms for mental-health related reasons.

The Department is also investing over $1 million in research to better understand the factors behind mass shooting incidents. The grant awards, made by the Department’s National Institute of Justice (NIJ), part of OJP, support scientific investigations that will examine factors that contribute to mass violence, identify any patterns in mass shootings, analyze psychological and social life histories of mass shooters and community-level predictors of mass violence, and will examine firearm purchasing patterns of known mass shooters in order to create a risk prediction tool.  

For addition information on today’s grant announcements, visit www.bja.gov or www.cops.usdoj.gov.

The Department of Justice today announced Corey Amundson as the head of the Office of Professional Responsibility (OPR). Corey Amundson has replaced Robin Ashton, who left the position after almost a decade of service in the Office of Professional Responsibility.

As the head of the OPR, Mr. Amundson will lead a component of the U.S. Department of Justice that investigates misconduct allegations against Department attorneys, immigration judges, and law enforcement agents.  He is the fourth permanent head since the office was founded. 

Mr. Amundson previously served as Acting United States Attorney for the Middle District of Louisiana and Acting Executive Director of the National Center for Disaster Fraud, an agency within the Criminal Division of the U.S. Department of Justice.  He also advised multiple administrations as a member of the Attorney General’s Advisory Committee, Criminal Chiefs Working Group, and enforced standards of conduct as a supervisor for more than a decade, including as First Assistant United States Attorney, Criminal Chief, Senior Deputy Criminal Chief, and Deputy Criminal Chief. 

Mr. Amundson also served as lead counsel in more than 150 federal criminal matters at the district and appellate levels and has extensive courtroom experience successfully navigating complex prosecutions and trials, many involving misconduct by government officials and attorneys.  He is the recipient of awards and commendations from the U.S. Attorney General, the Director of the Executive Office for United States Attorneys, the Director of the Federal Bureau of Investigation, the head of Criminal Investigations for the Internal Revenue Service, and the Inspectors General for the Departments of Health and Human Services, Homeland Security, and Treasury (Tax Administration). 

Mr. Amundson frequently lectures at the National Advocacy Center and the Federal Law Enforcement Training Center and has served as an Adjunct Professor at the Louisiana State University Law Center teaching its corporate and white-collar crime course.  Prior to joining the Department, Mr. Amundson practiced in the private sector handling white-collar criminal matters, internal investigations, and complex civil litigation. Mr. Amundson received his J.D. from Emory University and his B.A. in political science and criminal justice from Indiana University.       

WASHINGTON – On the first day of National Substance Abuse Prevention Month, the Department of Justice announced it is awarding almost $320 million to combat the opioid crisis in America. The unprecedented funding will directly help those most impacted by the deadliest drug crisis in American history, including crime victims, children, families, and first responders.

"President Trump has made ending the opioid crisis a priority for this administration, and under his leadership, the Department of Justice has taken historic action," said Attorney General Jeff Sessions. "Today we are announcing our next steps: investing $320 million into all three parts of the President’s comprehensive plan to end the epidemic: prevention, treatment, and enforcement. We are attacking this crisis from every angle—and we will not let up until we bring it to an end."

In 2017, more than 72,000 Americans lost their lives to drug overdoses, an increase from the 64,000 overdose deaths in 2016, according to the Centers for Disease Control and Prevention. The majority of these deaths can be attributed to opioids, including illicit fentanyl and its analogues. October marks two important anti-drug events: Red Ribbon Week and National Prescription Drug Takeback Day. Red Ribbon Week takes place every year between October 23-31 and encourages students, parents, schools, and communities to promote drug-free lifestyles. The Drug Enforcement Administration’s (DEA) National Prescription Drug Take Back Day on October 27 aims to provide an opportunity for Americans to prevent overdose deaths and drug addictions before they start. DOJ expanded on DEA's Drug Takeback Days and collected more than 2.7 million pounds of expired or unused prescription drugs since April 2017. 

The Attorney General has been resolute in the fight against the drug crisis in America. The Department assigned more than 300 federal prosecutors to U.S. Attorneys’ offices and hired more than 400 DEA task force officers, announced the formation of Operation Synthetic Opioid Surge, a new program to reduce the supply of deadly synthetic opioids in high impact areas, and created a new data analytics program called the Opioid Fraud and Abuse Detection Unit to assist 12 prosecutors sent to drug “hot spot districts.” In addition, the Department charged more than 3,000 defendants with trafficking in heroin, fentanyl, or prescription drugs in FY 2017, announced the first-ever indictments of Chinese nationals for fentanyl trafficking, and scheduled variants of fentanyl to prevent illicit drug labs from circumventing the law. In addition, DOJ executed the largest ever health care fraud enforcement action charging more than 600 defendants and proposed rules consistent with President Trump's "Safe Prescribing Plan," requiring a reduction of ten percent in 2019 in manufacturing quotas. The Department dismantled AlphaBay, the largest criminal marketplace on the Internet and has already generated prosecutions in the fight against online drug trafficking through the Joint Criminal Opioid Darknet Enforcement Team (J-CODE). 

The approximately $320 million awarded by the Department’s Office of Justice Programs (OJP) will be distributed in order to maximize effectiveness over the country. A breakdown of the grant funding can be found here.

• Innovative Prosecution Solutions for Combating Violent Crime and Opioid Abuse ($2.8 Million)
  • Help prosecutors develop strategies to address violent crime caused by illegal opioid distribution and abuse
• Comprehensive Opioid Abuse Site-based Program ($162 Million)
  • Help jurisdictions plan and implement programs aimed at reducing opioid abuse and mitigating its impact on crime victims, including training and technical assistance
• Justice and Mental Health Collaboration Program ($5.9 Million)
  • Address the treatment needs of people using opioids under the Justice and Mental Health Collaboration Program
• Helping Children and Youth Impacted by Opioids ($46.6 Million)
  • Help children and youth impacted by the opioid crisis, including training and technical assistance
• Drug Courts ($81.2 Million)
  • Assist adult, juvenile, and family drug courts and veterans treatment courts, including training and technical assistance
• Paul Coverdell Forensic Science Improvement Grant Program ($17 Million)
  • Address the dramatic increase in deaths and the backlogs of seized drugs as a result of the opioid crisis
• Opioid-Related Research for Criminal Justice Purposes ($4.1 Million)
  • Development of new tools to enforce the law, ensure public safety, prevent and control crime, and ensure fair and impartial administration of justice

OJP provides federal leadership in developing the nation’s capacity to prevent and control crime, administer justice, and assist victims. OJP has six bureaus and offices: the Bureau of Justice Assistance; the Bureau of Justice Statistics; the National Institute of Justice; the Office of Juvenile Justice and Delinquency Prevention; the Office for Victims of Crime; and the Office of Sex Offender Sentencing, Monitoring, Apprehending, Registering and Tracking. More information about OJP and its components can be found at: www.ojp.gov.

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On the first day of National Substance Abuse Prevention Month, the Department of Justice announced it is awarding almost $320 million to combat the opioid crisis in America. The unprecedented funding will directly help those most impacted by the deadliest drug crisis in American history, including crime victims, children, families, and first responders.

"President Trump has made ending the opioid crisis a priority for this administration, and under his leadership, the Department of Justice has taken historic action," said Attorney General Jeff Sessions. "Today we are announcing our next steps: investing $320 million into all three parts of the President’s comprehensive plan to end the epidemic: prevention, treatment, and enforcement. We are attacking this crisis from every angle—and we will not let up until we bring it to an end."

In 2017, more than 72,000 Americans lost their lives to drug overdoses, an increase from the 64,000 overdose deaths in 2016, according to the Centers for Disease Control and Prevention. The majority of these deaths can be attributed to opioids, including illicit fentanyl and its analogues. October marks two important anti-drug events: Red Ribbon Week and National Prescription Drug Takeback Day. Red Ribbon Week takes place every year between October 23-31 and encourages students, parents, schools, and communities to promote drug-free lifestyles. The Drug Enforcement Administration’s (DEA) National Prescription Drug Take Back Day on October 27 aims to provide an opportunity for Americans to prevent overdose deaths and drug addictions before they start. DOJ expanded on DEA's Drug Takeback Days and collected more than 2.7 million pounds of expired or unused prescription drugs since April 2017. 

The Attorney General has been resolute in the fight against the drug crisis in America. The Department assigned more than 300 federal prosecutors to U.S. Attorneys’ offices and hired more than 400 DEA task force officers, announced the formation of Operation Synthetic Opioid Surge, a new program to reduce the supply of deadly synthetic opioids in high impact areas, and created a new data analytics program called the Opioid Fraud and Abuse Detection Unit to assist 12 prosecutors sent to drug “hot spot districts.” In addition, the Department charged more than 3,000 defendants with trafficking in heroin, fentanyl, or prescription drugs in FY 2017, announced the first-ever indictments of Chinese nationals for fentanyl trafficking, and scheduled variants of fentanyl to prevent illicit drug labs from circumventing the law. In addition, DOJ executed the largest ever health care fraud enforcement action charging more than 600 defendants and proposed rules consistent with President Trump's "Safe Prescribing Plan," requiring a reduction of ten percent in 2019 in manufacturing quotas. The Department dismantled AlphaBay, the largest criminal marketplace on the Internet and has already generated prosecutions in the fight against online drug trafficking through the Joint Criminal Opioid Darknet Enforcement Team (J-CODE). 

The approximately $320 million awarded by the Department’s Office of Justice Programs (OJP) will be distributed in order to maximize effectiveness over the country. A breakdown of the grant funding can be found here.

• Innovative Prosecution Solutions for Combating Violent Crime and Opioid Abuse ($2.8 Million)
  • Help prosecutors develop strategies to address violent crime caused by illegal opioid distribution and abuse
• Comprehensive Opioid Abuse Site-based Program ($162 Million)
  • Help jurisdictions plan and implement programs aimed at reducing opioid abuse and mitigating its impact on crime victims, including training and technical assistance
• Justice and Mental Health Collaboration Program ($5.9 Million)
  • Address the treatment needs of people using opioids under the Justice and Mental Health Collaboration Program
• Helping Children and Youth Impacted by Opioids ($46.6 Million)
  • Help children and youth impacted by the opioid crisis, including training and technical assistance
• Drug Courts ($81.2 Million)
  • Assist adult, juvenile, and family drug courts and veterans treatment courts, including training and technical assistance
• Paul Coverdell Forensic Science Improvement Grant Program ($17 Million)
  • Address the dramatic increase in deaths and the backlogs of seized drugs as a result of the opioid crisis
• Opioid-Related Research for Criminal Justice Purposes ($4.1 Million)
  • Development of new tools to enforce the law, ensure public safety, prevent and control crime, and ensure fair and impartial administration of justice

OJP provides federal leadership in developing the nation’s capacity to prevent and control crime, administer justice, and assist victims. OJP has six bureaus and offices: the Bureau of Justice Assistance; the Bureau of Justice Statistics; the National Institute of Justice; the Office of Juvenile Justice and Delinquency Prevention; the Office for Victims of Crime; and the Office of Sex Offender Sentencing, Monitoring, Apprehending, Registering and Tracking. More information about OJP and its components can be found at: www.ojp.gov.

The Department of Justice announced today that it will require United Technologies Corporation (UTC) to divest two businesses critical to the safe operation of aircraft to proceed with its acquisition of Rockwell Collins.  First, UTC will divest Rockwell Collins’s pneumatic ice protection systems business.  Pneumatic ice protection systems remove ice from the wing of an aircraft by means of an inflatable rubber de-icing boot.  Second, UTC will divest Rockwell Collins’s trimmable horizontal stabilizer actuators (THSAs) business.  THSAs ensure that an aircraft maintains altitude during flight by adjusting the angle of the horizontal tail surface. 

“Today’s remedy ensures that customers continue to benefit from competition in the supply of these two aircraft components that are critical to safety,” said Assistant Attorney General Makan Delrahim of the Antitrust Division.  “The remedy allows the divestiture buyers to compete vigorously to provide high quality systems and service to customers.”

The Department’s Antitrust Division today filed a civil antitrust lawsuit today in the U.S. District Court for the District of Columbia to enjoin the proposed acquisition, along with a proposed settlement that, if approved by the court, would resolve the competitive concerns alleged in the lawsuit.

The Department said that, without the divestitures, the proposed acquisition would lessen competition substantially in the market for ice protection systems, by combining two of the world’s three suppliers of pneumatic ice protection systems, and in the market for THSAs, by combining two of the world’s leading producers of THSAs. 

Under the terms of the proposed settlement, UTC must divest Rockwell Collins’s ice protection systems business to an acquirer approved by the United States.  UTC also must divest Rockwell Collins’s THSA business to Safran S.A., an established aerospace supplier, or an alternate acquirer approved by the United States. 

The Antitrust Division, the European Commission, and the Competition Bureau of Canada cooperated closely throughout the course of their respective investigations.

UTC is incorporated in Delaware and has its headquarters in Farmington, Connecticut.  UTC produces a wide range of products for the aerospace industry and other industries.  In 2017, UTC had revenues of approximately $59.8 billion.

Rockwell Collins is incorporated in Delaware and is headquartered in Cedar Rapids, Iowa.  Rockwell Collins is a major provider of aerospace and defense electronics systems.  In 2017, Rockwell Collins had revenues of approximately $6.8 billion.

As required by the Tunney Act, the proposed settlement, along with a competitive impact statement, will be published in the Federal Register.  Any person may submit written comments concerning the proposed settlement during a 60-day comment period to Maribeth Petrizzi, Chief, Defense, Industrials, and Aerospace Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 8700, Washington, D.C. 20530.  At the conclusion of the 60-day comment period, the U.S. District Court for the District of Columbia may enter the final judgment upon finding it is in the public interest.

The Justice Department today filed a lawsuit against the state of California alleging that Senate Bill 822, an Internet regulation bill signed into law earlier today by Governor Jerry Brown, unlawfully imposes burdens on the Federal Government’s deregulatory approach to the Internet, announced Attorney General Jeff Sessions, Acting Associate Attorney General Jesse Panuccio, Assistant Attorney General Joseph H. Hunt for the Justice Department’s Civil Division, and Federal Communications Commission (FCC) Chairman Ajit Pai.

In 1996, a bipartisan Congress decided that the Internet should remain “unfettered by Federal or State regulation.”  Since 2002, the FCC has accordingly classified broadband Internet access as an “information service” that is exempt from public-utility regulations. The FCC briefly departed from this classification in a 2015 Order, which imposed restrictions on the freedom of the Internet. In 2018, the FCC returned to its prior light-touch framework, ensuring that Internet access services are free and guided by a uniform set of federal rules, rather than by a patchwork of state and local regulations. The United States concluded that California, through Senate Bill 822, is attempting to subvert the Federal Government’s deregulatory approach by imposing burdensome state regulations on the free Internet, which is unlawful and anti-consumer.  

In filing the complaint, Attorney General Jeff Sessions issued the following statement:

“Under the Constitution, states do not regulate interstate commerce—the federal government does. Once again the California legislature has enacted an extreme and illegal state law attempting to frustrate federal policy. The Justice Department should not have to spend valuable time and resources to file this suit today, but we have a duty to defend the prerogatives of the federal government and protect our Constitutional order.  We will do so with vigor. We are confident that we will prevail in this case—because the facts are on our side.”

FCC Chairman Ajit Pai issued the following statement:

“I’m pleased the Department of Justice has filed this suit.  The Internet is inherently an interstate information service.  As such, only the federal government can set policy in this area.  And the U.S. Court of Appeals for the Eighth Circuit recently reaffirmed that state regulation of information services is preempted by federal law. 

“Not only is California’s Internet regulation law illegal, it also hurts consumers.  The law prohibits many free-data plans, which allow consumers to stream video, music, and the like exempt from any data limits.  They have proven enormously popular in the marketplace, especially among lower-income Americans.  But notwithstanding the consumer benefits, this state law bans them. 

“The Internet is free and open today, and it will continue to be under the light-touch protections of the FCC’s Restoring Internet Freedom Order.  I look forward to working with my colleagues and the Department of Justice to ensure the Internet remains ‘unfettered by Federal or State regulation,’ as federal law requires, and the domain of engineers, entrepreneurs, and technologists, not lawyers and bureaucrats.”

The Justice Department’s Criminal Division hosted a cybersecurity roundtable discussion yesterday on the challenges in handling data breach investigations.  Assistant Attorney General Brian A. Benczkowski of the Criminal Division delivered opening remarks and served as moderator for the event.  Deputy Attorney General Rod J. Rosenstein, Assistant Attorney General John C. Demers of the Department’s National Security Division and officials from the FBI, U.S. Secret Service, the White House’s National Security Council and U.S. Department of Homeland Security also delivered remarks at the event.  The audience included many of the nation’s leading private-sector practitioners in the field of data breach response and representatives from premier cybersecurity and incident response firms in the country.

The Criminal Division held its inaugural cybersecurity roundtable in 2015, shortly after the creation of the Cybersecurity Unit within the Computer Crime and Intellectual Property Section (CCIPS).  The goal of the first roundtable was to spur a conversation within the legal community about how the government can work more effectively with companies, firms, and organizations to prosecute and prevent data breaches.  Three years later, the Department continues to exchange ideas with and look to the private sector’s expertise and insight about how to improve cooperation between law enforcement agencies and data breach victims.

In February of this year, Attorney General Jeff Sessions established a Cyber-Digital Task Force, which published its first report in July.  The report provides a comprehensive assessment of the cyber-enabled threats confronting the nation, and catalogs ways in which the Justice Department combats those threats, including by partnering with the private sector.

“Public-private partnerships addressing cybercrime play a critical role in our efforts to hold criminals accountable for data breaches,” said Deputy Attorney General Rosenstein.  “We depend on the private sector to help us maintain the rule of law in cyberspace at every stage of our work. That includes working together to obtain critical evidence for investigations and trials, and collaborating on developing the legal authorities needed to protect our 21st century economy.  Today’s discussion aims to share best practices, common challenges, and emerging threats, and identify how the Department of Justice and our law enforcement partners can help private industry to protect Americans from harm while safeguarding privacy.  Through roundtables like this and the continuing collaboration they fuel, we will meet emerging threats, protect America’s technological innovations, and preserve public safety and security.”

“The Criminal Division has long been recognized for its innovative and aggressive pursuit of the most sophisticated cybercriminals,” said Assistant Attorney General Benczkowski.  “Active engagement with the private sector through events like the Cybersecurity Industry Roundtable is essential to our effectiveness as prosecutors because it allows us to draw upon a broad range of experience to get better at what we do.  The Criminal Division’s commitment to fighting cybercrime is unwavering, and we look forward to continued close cooperation in that fight with our counterparts in the private sector.” 

The Criminal Division created the Cybersecurity Unit within CCIPS in December 2014 to help channel CCIPS’s expertise and experience combatting cybercrime into the prevention of cybercrime.  The Unit’s contributions during its brief existence have included issuing groundbreaking guidance to help organizations create vulnerability disclosure programs to improve detection of cyber vulnerabilities.  The Unit’s outreach to the private sector has included participation by members of CCIPS in well over 100 cybersecurity events since 2015, such as RSA, Black Hat, DEFCON, and International CES, which has helped the Unit build relationships with and gather input from incident responders, potential victims, and key information security experts.  This input has been put to good use.  The Criminal Division released a document at the first roundtable providing guidance to help organizations prepare for a cyber incident, called “Best Practices for Victim Response and Reporting Cyber Incidents.”

As part of Thursday’s event, the Cybersecurity Unit released a new document providing even more comprehensive guidance that reflects input the Unit received during its outreach efforts.  The revised guidance addresses new issues like working with incident response firms, cloud computing, ransomware, and information sharing.  It is an example of the type of assistance that the Cybersecurity Unit was designed to provide—to help elevate cybersecurity efforts and build better channels of communication between law enforcement and industry. 

Held September 25-26, the International Law Enforcement IP Crime Conference sought to shape effective enforcement strategies in fighting international property violations. INTERPOL Washington—the U.S. National Central Bureau—was represented by the Assistant Director for Transnational Crime, Paul Layman.

The conference participants used operational case studies, best practices, and industry perspectives to address key IP issues related to artificial intelligence, crypto currencies, organized crime, money laundering, and free trade zones. The United States estimates the costs of intellectual property theft to the U.S. economy to be as high as $600 billion per year. These thefts damage American companies and threaten national security.

“The IPR conference provides INTERPOL Washington an opportunity to collaborate with our law enforcement counterparts across the globe to address international cooperation in enhancing international property protection, said Layman. “Sharing best practices in this crucial area of transnational crime will enable us to better support our U.S. law enforcement partners as they fight intellectual property crimes.”

Co-organized by the Dubai Police, the UAE Ministry of Interior and INTERPOL, in partnership with UL (Underwriters Laboratories), the International AntiCounterfeiting Coalition and the Emirates IP Association (EIPA), this gathering marked the first time the conference was held in the Middle East.

A component of the U.S. Department of Justice, INTERPOL Washington is co-managed by the U.S. Department of Homeland Security. As the designated representative to INTERPOL on behalf of the Attorney General, INTERPOL Washington serves as the national point of contact for all INTERPOL matters, coordinating international investigative efforts among member countries and the more than 18,000 local, state, federal, and tribal law enforcement agencies in the United States.

The Executive Office for Immigration Review (EOIR) announces the investiture of 46 immigration judges, including two assistant chief immigration judges, marking for the second month in a row the largest class in the agency’s history.

“At this point in history your work is vitally important.  The case backlog has reached more than 760,000. Great effort is surely needed,” said Attorney General Jeff Sessions at today’s investiture. “This situation is unacceptable. It cannot continue. Our nation’s chief executive supports you and all who strive to make our immigration system work.”

Attorney General Jeff Sessions appointed these new judges after a thorough application process and welcomed them during a ceremony held Sept. 28, 2018. Chief Immigration Judge MaryBeth Keller presided over the investiture held at the Department of Justice’s Great Hall in Washington, D.C.

“EOIR continues to make great progress in hiring the immigration judges needed to reduce a backlog of more than 760,000 pending immigration court cases,” said James McHenry, Director of EOIR. “Alongside our efforts to improve immigration judge productivity and modernize our information technology systems, growing our immigration judge corps remains a top agency priority.”

In 2017, Attorney General Sessions announced a “streamlined hiring plan” promoting the use of clear deadlines and efficient hiring processes, resulting in a reduction of 74 percent in the time it takes to onboard immigration judges since then. Since the end of January 2017, 128 immigration judges have been sworn in. EOIR anticipates two additional hiring classes this fall which will make for over 100 immigration judges hired during 2018.

“EOIR now has 395 immigration judges, an increase of 30 percent since January 2017,” said McHenry. “While we are pleased to welcome this historic class of judges, we are not done and expect additional hiring before the end of this year.”

The names of each new judge along with their assigned courts and biographical information is found in a notice issued by EOIR here.

Bridget Lambert, 21, pleaded guilty on Thursday, Sept. 27 in the Eastern District of Louisiana to one count of a forced labor conspiracy for conspiring with members of her family to obtain forced labor from D.P., a woman with cognitive disabilities. 

At the plea hearing, Lambert admitted that, between Aug. 13, 2015, and June 30, 2016, in Amite, Louisiana, she conspired with other members of her family to obtain D.P.’s uncompensated household labor and services by a number of means, including by force and threat of force.  Lambert admitted that, as part of the conspiracy, she and the other conspirators forced D.P. to live in a locked shed in the backyard and to perform housework and yard work in exchange for food and water.  The defendant admitted that the conspirators subjected D.P. to routine physical abuse, threats, and verbal and psychological abuse designed to ensure her continued compliance with the family’s orders.  The defendant further admitted that, on one occasion, she advanced the conspiracy by striking D.P. in the head with a wooden board, causing D.P. to bleed from her head, and on another occasion advanced the conspiracy by holding D.P.’s arm in place so that a fellow conspirator could punish D.P. by burning her with a cigarette lighter.

“Lambert conspired to brutally coerce a vulnerable victim with disabilities to work long hours in despicable conditions and no monetary compensation,” said Acting Assistant Attorney General John Gore. “The Department of Justice continues to combat human trafficking by forced labor and today’s guilty plea reflects our commitment to seeking justice for victims.”

“Human trafficking is modern day slavery and the U.S. Attorney’s Office is committed to seeking justice on behalf of all victims including vulnerable individuals such as D.P.,” said U.S. Attorney Peter G. Strasser of the Eastern District of Louisiana. “We will continue to partner with federal, state and local law enforcement to hold these human traffickers accountable for their crimes.”

“FBI New Orleans strives every day to protect the civil rights of all, however we make a concerted effort to defend those who cannot defend themselves,” said Special Agent in Charge Eric J. Rommal for the FBI New Orleans Field Office.  “In this case the offender’s actions are inexcusable.”

Lambert will be sentenced on Dec. 20, and faces a maximum sentence of five years in prison.

This case was investigated by the FBI’s Field Office in New Orleans, Louisiana, the Tangipahoa Parish Sheriff’s Office and the Tangipahoa District Attorney’s Office.  The case is being prosecuted by Trial Attorneys Risa Berkower and Nicholas Reddick of the Justice Department’s Civil Rights Division, Assistant United States Attorney Julia Evans, of the U.S. Attorney’s Office for the Eastern District of Louisiana, and by the Tangipahoa Parish District Attorney’s Office.

Remarks as Prepared for Delivery

Chairman Gianforte, Ranking Member Plaskett, and Members of the Subcommittee, thank you for the opportunity to discuss this important topic.  I also would like to recognize and thank Chairman Gowdy and/or Ranking Member Cummings.

I have the great privilege to serve as a Deputy Assistant Attorney General in the Environment and Natural Resources Division in the Department of Justice.  The Division has broad responsibilities:  enforcing the nation’s civil and criminal pollution control laws; representing the United States in matters concerning the stewardship of the nation’s environment and natural resources, wildlife, and public lands; and litigating cases concerning the resources and rights of Indian tribes and their members. 

I personally supervise a stellar team of lawyers and other staff responsible for defending rulemakings and policies arising under a broad range of pollution control statutes and for acquiring property on behalf of the federal government.    

The Division routinely handles attorney’s fee claims.  Congress has authorized private-party litigation against federal agencies and has generally established two avenues by which opposing parties may seek the payment of attorney’s fees through taxpayer dollars in our cases. 

First, the citizen suit and judicial review provisions in most environmental protection and some natural resources laws expressly provide for recovery of attorney’s fees against the United States. 

Second, attorney’s fees may be payable under the Equal Access to Justice Act (known as “EAJA”) when not available under these statutes. 

Under the leadership of Attorney General Sessions, ENRD is strongly committed to the rule of law and takes seriously the solemn obligation to protect taxpayer dollars.  We closely scrutinize all demands for attorney’s fees to ensure that they are lawful, justified, and reasonable. 

The Division does not, however, and cannot, challenge the payment of attorney’s fees in all cases.  Some fee applications may be substantially justified and reasonable.  But where it is appropriate to contest a claim of fees, my written statement chronicles some of our recent efforts in controlling their costs.   

I would like to highlight five recurrent challenges the Division faces in handling attorney’s fee claims.  Each is discussed in more detail in my written statement. 

In some areas, it seems fee litigation and recoveries may have moved beyond Congress’s original intentions for providing reasonable access to the courts, without encouraging excessive litigation and enriching lawyers.  Federal courts also are not consistent in their standards for awarding fees across the country. 

(1) First, ineffective limits on hourly fee rates.  Because most attorney-fee provisions do not contain a maximum hourly rate, we frequently see lawyers seek taxpayer-funded fee payments with exorbitant hourly rates.  While EAJA does contain a presumptive cap on attorney’s fee payments of $125 per hour (plus inflation adjustment), it is subject to enhancement based on special factors. 

In our experience, courts routinely award EAJA fees at more than $500 per hour to as high as $700 per hour.

(2) Second, no case cap.  Most statutes under which ENRD litigates do not contain a maximum amount of fees the United States will subsidize on a matter.  The Division has paid a number of multi-million dollar attorney fee awards in the past ten years.

(3) Third, low eligibility requirements.  Under EAJA, large tax-exempt organizations with net worth exceeding $200 million can be eligible for—and have received—taxpayer-funded fees.  And there are no qualification requirements at all under the environmental protection and natural resource statutes noted in my written statement.   

As the D.C. Circuit has recognized, “Congress did not intend to subsidize the purchase of legal services by large entities easily able to afford legal services.”  Yet many organizations are funded by outside contributions, and don’t require taxpayer subsidies.

(4) Fourth, fees on fees.  Because parties can recover attorney’s fees for seeking payment of attorney’s fees, there is incentive for parties to claim exorbitant fees and then litigate the issue.  In deciding whether to challenge a claim for attorney’s fees, the Division must weigh the cost and risk of the prospect of “fees on fees” if it is not entirely successful opposing.

(5) Fifth, inconsistent burden of proof.  The United States is frequently successful defending litigation.  However, courts have inconsistently interpreted the facially-neutral language of attorney’s fee provisions to more-readily permit attorney’s fee payments to prevailing plaintiffs than the United States.

Addressing these challenges would enhance the consistency, predictability, transparency, and efficiency of fee awards under the environmental statutes.

I would be happy to answer your questions concerning these challenges.  

Antitrust agency heads from the United States and the European Union met today at the Department of Justice in Washington D.C., to discuss current competition policy issues and increased cooperation in enforcement and policy matters.

The meeting included Assistant Attorney General Makan Delrahim of the U.S Department of Justice’s Antitrust Division, Chairman Joseph Simons of the U.S. Federal Trade Commission, and Commissioner Margrethe Vestager of the European Commission.

The discussions covered a wide range of topics, including digital markets, the proposed Multilateral Framework on Procedures, two-sided markets and platforms, data protection rules and cooperation, vertical mergers, and merger cooperation issues.

“Robust cooperation, convergence around sound economic principles, and leadership regarding the use of fair procedures in enforcement are key international priorities for the Antitrust Division,” said Assistant Attorney General Makan Delrahim.  “We are always pleased to meet with our counterparts from Brussels, and to have an opportunity to discuss these important issues.  Our working relationship with the European Commission’s DG Competition is essential to ensuring competitive markets in the increasingly interconnected global economy.”

“Our high-level engagement with our European colleagues enables us to deepen mutual understanding of our enforcement policies, facilitating greater convergence and efficiency in the review of trans-Atlantic transactions and conduct,” said Chairman Simons.  “Our discussions also contribute to the FTC’s consideration of our approaches to key competition issues that we are evaluating through our current hearings on Competition and Consumer Protection in the 21st Century.”

The U.S. and EU competition agencies have met regularly at the most senior level to promote cooperation and convergence and enhance their close relationship enshrined in the 1991 U.S.-EU agreement on the application of their competition laws.

The Department of Justice today announced a settlement with Northwest Trustee Services Inc. (Northwest) of Bellevue, Washington, to resolve a lawsuit alleging that the foreclosure services company violated the Servicemembers Civil Relief Act (SCRA). The complaint, filed in November 2017, alleges that Northwest foreclosed on homes owned by servicemembers without obtaining the required court orders. Under the terms of the settlement, servicemembers who had their homes illegally foreclosed on may each receive compensation of up to $125,000, with a total payout to servicemembers of up to $750,000. Northwest ceased operations in December 2017 and is now being liquidated in state court receivership proceedings. This is the Department’s first SCRA lawsuit against a foreclosure trustee company.

The SCRA protects the rights of servicemembers in military service by suspending or modifying certain civil obligations. The law prohibits foreclosing on the home of a servicemember during military service and one year thereafter without a court order if the mortgage originated prior to the servicemember’s period of military service.

“The Civil Rights Division will never waver in our commitment to vindicating the rights of those who devote themselves to the service of our country,” said Acting Assistant Attorney General John Gore of the Civil Rights Division. “We hope this case sends a strong message to foreclosure trustee companies and others that all foreclosures must comply with the Servicemembers Civil Relief Act.”

“Those who serve in our military deserve zealous representation of their rights,” said U.S. Attorney Annette L. Hayes.  “We are working to ensure that servicemembers whose homes were illegally foreclosed on by Northwest Trustee receive up to $125,000 in compensation. Northwest Trustee may have shuttered its foreclosure business, but that does not end its obligation to do right by servicemembers.” 

The Department of Justice launched an investigation into Northwest’s practices after United States Marine Corps veteran Jacob McGreevey of Vancouver, Washington submitted a complaint to the Department’s Servicemembers and Veterans Initiative in May 2016. Northwest had foreclosed on Mr. McGreevey’s home in August 2010, less than two months after he was released from active duty in Operation Iraqi Freedom. McGreevey sued both PHH Mortgage (his mortgage servicer) and Northwest in 2016, but a U.S. District Court Judge accepted PHH and Northwest’s argument that McGreevy had waited too long to file his complaint and dismissed the case. The Department’s investigation revealed that, in addition to McGreevey, Northwest had unlawfully foreclosed on other SCRA-protected servicemembers since 2010.

Before entering into receivership, Northwest described itself as a full-service trustee company providing foreclosure services to mortgage lenders in the Western United States.  On March 28, Northwest was placed into a General Receivership under Washington State law.  The company no longer provides foreclosure services.  If it were to reenter the business of providing foreclosure services, the settlement requires the company to implement Department-approved policies, procedures, and training to prevent further SCRA violations.

This case was jointly handled by the Civil Rights Division of the Department of Justice and the United States Attorney’s Office for the Western District of Washington.

The Department’s enforcement of the SCRA is conducted by the Civil Rights Division’s Housing and Civil Enforcement Section, often in partnership with local United States Attorney’s Offices. Since 2011, the Department has obtained over $468 million in monetary relief for servicemembers through its enforcement of the SCRA. The SCRA provides protections for servicemembers in areas such as evictions, rental agreements, security deposits, prepaid rent, civil judicial proceedings, installment contracts, credit card interest rates, mortgage interest rates, mortgage foreclosures, automobile leases, life insurance, health insurance and income tax payments. For more information about the department’s SCRA enforcement, please visit www.servicemembers.gov.

Servicemembers and their dependents who believe that their rights under the SCRA have been violated should contact the nearest Armed Forces Legal Assistance Program Office. Office locations may be found at http://legalassistance.law.af.mil/content/locator.php.