District Not Recorded

An Ashland, Virginia, man was sentenced to prison today in the U.S. District Court for the Eastern District of Virginia for failing to collect, account for and pay over employment taxes to the Internal Revenue Service (IRS), announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Dana J. Boente of the Eastern District of Virginia.

Michael Manning, 52, was sentenced to serve 18 months in prison, followed by two years of supervised release.  Manning pleaded guilty on Feb. 23, to failing to collect, account for and pay over employment taxes for his masonry contractor construction companies.  Manning was ordered to pay restitution to the IRS in the amount of $677,350.39.

“Mr. Manning chose to withhold employment tax from his employees, and use those funds for his personal benefit, inflicting substantial harm on the U.S. Treasury and gaining a competitive advantage over his law-abiding competitors,” said Acting Assistant Attorney General Ciraolo.  “The Tax Division has made it clear that employers like Mr. Manning, who willfully fail to collect, account for, and pay over employment taxes to the IRS, are engaged in criminal conduct and will be held accountable.  Today’s sentence reflects this priority and the seriousness of such crimes.”

“Investigating employment tax crimes remains one of IRS Criminal Investigation’s (IRS-CI) highest priorities and today’s sentencing of Michael Manning reflects the serious nature of that crime,” said Chief Richard Weber of IRS-CI.  “Failure to collect, account for and pay employment taxes is a crime and it hurts not only federal, state, and local governments, but also employees. We expect all taxpayers to follow the law—whether you are a business owner or an individual—we all must play by the same rules.”

According to court documents, Manning was the President of Manning Construction and Manning-Carhen Construction.  Manning controlled the businesses’ finances and was responsible for collecting, accounting and paying over employment taxes for both businesses.  For the third and fourth quarters of 2014, Manning willfully failed to comply with his legal obligation to pay over more than $700,000 in employment taxes to the IRS.  In addition to failing to pay over the withheld taxes, Manning instructed his bookkeeper to create false financial statements for submission to financial institutions in order to comply with existing loan covenants, to encourage banks to lend new funds to the company, or to enable the renewal of existing loans.  Manning and his bookkeeper openly referred to these false accounting entries as “Bernie entries,” in reference to the accounting techniques of Bernie Madoff and “ghost entries,” when reallocating negative financial results within the companies’ QuickBooks files so that these negative results would not be discovered by third parties.  Moreover, Manning used these same accounting techniques to conceal his use of over $500,000 in corporate funds for various personal expenses, including paying off a lien on his lake property.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Boente commended special agents of IRS-CI, who investigated the case and Trial Attorney Melanie Smith of the Tax Division and Assistant U.S. Attorney Thomas Garnett of the Eastern District of Virginia, who are prosecuting the case. 

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

The Justice Department reached a settlement agreement today with Villa Rancho Bernardo Care Center (VRB), a skilled nursing facility in San Diego.  The agreement resolves the department’s investigation of VRB for discrimination against work-authorized non-U.S. citizens in violation of the Immigration and Nationality Act (INA).

The department’s investigation found that VRB discriminated against lawful permanent residents by requiring them to produce specific documents to prove their work authorization, while permitting U.S. citizens to show any valid work authorization documentation they chose.  Specifically, during the interview and hiring processes, including in certain online job postings, VRB requested that lawful permanent residents produce a permanent resident card (often known as a “green card”).  Lawful permanent residents are not required to show employers their permanent resident cards to work; like all workers, they can present their choice of valid documentation from the Department of Homeland Security’s lists of acceptable documents to establish their identity and work authorization.  For example, lawful permanent residents can establish their work authorization by presenting a state or federal identification document and an unrestricted Social Security card.

Under the settlement agreement, VRB will pay $24,000 in civil penalties to the United States, undergo department-provided training on the anti-discrimination provision of the INA and be subject to monitoring requirements.

“The Civil Rights Division is committed to ensuring that individuals who are authorized to work in the United States do not face unlawful, discriminatory barriers,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department's Civil Rights Division.  “It is essential that employers review their employment eligibility verification practices to make sure they are in compliance with the law.”

The Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) is responsible for enforcing the anti-discrimination provision of the INA.  The statute prohibits, among other things, citizenship, immigration status and national origin discrimination in hiring, firing or recruitment or referral for a fee; unfair documentary practices in employment eligibility verification; retaliation; and intimidation.

To learn more about the protections against employment discrimination under immigration laws, call OSC’s worker hotline at 1-800-255-7688 (1-800-237-2515, TTY for hearing impaired); call OSC’s employer hotline at 1-800-255-8155 (1-800-237-2515, TTY for hearing impaired); sign up for a free webinar at www.justice.gov/crt/about/osc/webinars.php; email osccrt@usdoj.gov; or visit OSC’s website at www.justice.gov/crt/about/osc.

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

 

WASHINGTON, D.C. – El Departamento de Justicia llegó hoy a un acuerdo con Villa Rancho Bernardo Care Center (VRB, por sus siglas en inglés), un centro de ancianos y rehabilitación en San Diego.  El acuerdo resuelve la investigación de VRB liderada por el Departamento de Justicia en cuanto a su discriminación contra individuos que no son ciudadanos de los EE. UU. pero que sí cuentan con autorización para trabajar, lo cual representa una vulneración de la ley de Inmigración y Nacionalidad (INA, por sus siglas en inglés).

La investigación del departamento encontró que VRB había discriminado a residentes permanentes legales al requerir que presentaran documentos específicos para demostrar su autorización para trabajar, mientras que permitía a ciudadanos estadounidenses que presentaran cualquier documento válido de autorización para trabajar que quisieran.  En concreto, durante los procesos de entrevista y contratación, incluyendo en ciertos anuncios de trabajo virtuales, VRB exigió a residentes permanentes legales que presentaran una tarjeta de residencia permanente (a la que se suele llamar “tarjeta verde”).  Los residentes permanentes legales no están obligados a enseñar sus tarjetas de residencia permanentes a empleadores para poder trabajar. Como todo trabajador, pueden presentar los documentos válidos de su libre elección de las listas de documentos aceptables del Departamento de Seguridad Nacional para establecer su identidad y autorización para trabajar.  Por ejemplo, los residentes permanentes legales pueden establecer su autorización para trabajar al presentar un documento de identificación estatal o federal y una tarjeta de seguro social sin restricciones.

En virtud del acuerdo de resolución, VRB pagará $24,000 en sanciones civiles a los Estados Unidos, participará en la capacitación sobre la disposición antidiscriminatoria de la INA brindada por el departamento y se someterá a los requisitos de supervisión.

“La División de Derechos Civiles se compromete a asegurar que los individuos con autorización para trabajar en los Estados Unidos no se enfrenten a barreras ilícitas o discriminatorias,” declaró la Secretaria de Justicia Auxiliar Adjunta Principal, Vanita Gupta, Directora de la División de Derechos Civiles.  “Es esencial que los empleadores revisen sus prácticas de verificación de la elegibilidad para trabajar para asegurarse de que éstas cumplan con la Ley.”

La Oficina del Consejero Especial para Prácticas Injustas en el Empleo Relacionadas con la Inmigración (OSC, por sus siglas en inglés) es responsable de aplicar la disposición antidiscriminatoria de la INA.  Entre otras cosas, esta ley prohíbe la discriminación por motivos de estatus de ciudadanía, estatus migratorio y nacionalidad de origen en los procesos de contratación, despido o reclutamiento o recomendación por comisión; la discriminación en el proceso de verificación de la elegibilidad de empleo; las represalias y la intimidación.

Para más información sobre protecciones contra la discriminación en el empleo en virtud de las leyes migratorias federales, llame a la línea directa de la OSC para trabajadores al 1‑800‑255‑7688 (1‑800-237-2515, TTY para personas con discapacidades auditivas); llame a la línea directa de la OSC para empleadores al 1-800-255-8155 (1-800-237-2515, TTY para personas con discapacidades auditivas); matricúlese para un seminario virtual gratuito en www.justice.gov/crt/about/osc/webinars.php; mande un correo electrónico a osccrt@usdoj.gov o visite la página web de la OSC en www.justice.gov/crt/about/osc.

Los aspirantes o empleados que creen haber sido víctimas de: requisitos documentales diferentes por motivos de su estatus de ciudadanía, estatus migratorio o nacionalidad de origen; o discriminación por motivos de su estatus de ciudadanía, estatus migratorio o nacionalidad de origen en los procesos de contratación, despido o reclutamiento o recomendación por comisión deben comunicarse con la línea directa de la OSC para trabajadores para pedir ayuda.

The Department of Justice announced today that Deloitte Consulting LLP (Deloitte) has agreed to pay $11.38 million to resolve allegations under the False Claims Act that it submitted false claims under a General Services Administration (GSA) contract.  Deloitte is a nationwide consulting company headquartered in New York City.

“Contractors are expected to deal fairly with federal agencies when receiving taxpayer funds,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “As this settlement demonstrates, we will take action against those who knowingly fail to live up to the terms of their government contracts.”   

In 2000, GSA awarded Deloitte a contract for the provision of information technology services.  The contract required Deloitte to reduce the prices it charged the government if it offered lower prices to specific commercial customers during the course of the contract.  This settlement resolves allegations that between 2006 and 2012, Deloitte failed to comply with the price reductions clause in its contract, resulting in government customers paying more for Deloitte’s services than comparable commercial customers. 

“American taxpayers deserve fair deals and prices from GSA contractors,” said GSA Inspector General Carol Fortine Ochoa.  “I appreciate the hard work and dedication that led to this significant recovery.”

This case was handled by the Civil Division’s Commercial Litigation Branch and the GSA Office of Inspector General.

The claims resolved by the settlement are allegations only; there has been no determination of liability.

Minh Quang Pham, aka Amin, 33, was sentenced to 40 years in prison today in the Southern District of New York for terrorism charges based on Pham’s efforts in support of al Qaeda in the Arabian Peninsula (AQAP), a designated foreign terrorist organization.  On Jan. 8, 2016, Pham pleaded guilty to one count of providing material support to AQAP, one count of conspiring to receive military training from AQAP and one count of possessing and using a machine gun in furtherance of crimes of violence.

The sentence was announced by Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Preet Bharara of the Southern District of New York and Assistant Director in Charge Paul M. Abbate of the FBI’s Washington Field Office.

“This sentence holds Minh Quang Pham accountable for his terrorist activities, including providing material support to al Qaeda in the Arabian Peninsula and receiving explosives training from Anwar al-Aulaqi in Yemen for the purpose of committing an attack in the United Kingdom,” said Assistant Attorney General Carlin.  “Counterterrorism is the National Security Division’s highest priority, and we will continue to bring justice to those who seek to aid designated foreign terrorist organizations in their efforts to commit violent attacks against the United States and our allies.”

“Minh Quang Pham committed himself to the violent mission of al Qaeda in the Arabian Peninsula, a terrorist organization that has claimed responsibility for deadly attacks around the world, including the 2015 Charlie Hebdo attack in Paris,” said U.S. Attorney Bharara.  “Pham went to Yemen to receive military training from AQAP and contributed to Inspire magazine, a recruitment tool and ‘how-to’ guide for would-be terrorists around the world.  This prosecution and today’s sentencing show that terrorists and those who support them will continue to be brought to justice in American courts, thanks to the continuing resolve of the Department of Justice, this Office and our global law enforcement partners.”

"Minh Pham traveled to Yemen, where he received military-style training from al Qaeda in the Arabian Peninsula, including learning to build explosive devices, with the intent to commit harm against the United States and our allies," said Assistant Director in Charge Abbate.  "Pham also contributed to terrorist propaganda in order to promote acts of violence and hate across the globe.  This sentence sends a strong message that the FBI and our law enforcement partners can and will track down dangerous terrorists anywhere in the world and return them to face justice for their crimes.”

According to the indictment, extradition materials, court filings and statements made at related court proceedings, including today’s sentencing:

In December 2010, after informing others that he planned to travel to Ireland, Pham traveled from London, where he resided, to Yemen, the principal base of operations for AQAP.  Pham traveled to Yemen in order to join AQAP, to wage jihad on behalf of AQAP and to martyr himself for AQAP’s cause.  After arriving in Yemen, he swore an oath of loyalty to AQAP in the presence of an AQAP commander.

While in Yemen in 2010 and 2011, Pham provided assistance to and received training from Anwar al-Aulaqi, a U.S.-born senior leader of AQAP.  Al-Aulaqi advised Pham to return to the United Kingdom for the purpose of finding and making contact with individuals who, like Pham, wanted to travel to Yemen to join AQAP.  Al-Aulaqi also provided Pham with money, as well as a telephone number and e-mail address that Pham was to use to contact al-Aulaqi upon his return to the United Kingdom.  In addition, Pham exchanged his laptop computer with al-Aulaqi, who provided him with a new “clean” laptop to take with him when he returned to the United Kingdom so that the authorities would not find anything if they searched his computer.

In or about June 2011, prior to his departure from Yemen, Pham approached al-Aulaqi about conducting a suicide attack whereby he would “sacrifice” himself on behalf of AQAP.  Al-Aulaqi personally taught Pham how to create a lethal explosive device using household chemicals and directed Pham to detonate such an explosive device at the arrivals area of London’s Heathrow International Airport following Pham’s return to the United Kingdom in 2011.  Al-Aulaqi instructed Pham to carry an explosive in a concealed backpack and target the area where flights arrived from the United States or Israel.

During his time in Yemen, Pham also assisted with the preparation and dissemination of AQAP’s propaganda magazine, Inspire.  Pham worked directly with now-deceased U.S. citizen Samir Khan, who was a prominent member of AQAP responsible for editing and publishing Inspire.  Pham, who has college degrees in both graphic design and animation, received training in the various types of software used for Inspire and worked closely with Khan, contributing to the magazine in numerous ways.  Pham used graphic design software to edit videos and photos that would be used as propaganda in Inspire; recorded television programs that Khan might find useful to the magazine; and offered his camera to be used for the taking of numerous photos used for Inspire.  Pham also posed in photographs that accompanied Inspire articles and provided instructions to its followers.  Among those were a series of photographs accompanying an article with instructions on disassembling and cleaning a Kalashnikov assault rifle.  In another photograph, accompanying an article entitled, “Why Did I Choose Al Qaeda,” which was written by al-Aulaqi, Pham and three other men were shown wielding automatic Kalashnikov assault rifles.  In addition, AQAP trained Pham in the use of a Kalashnikov assault rifle and provided him such a rifle, which he used in furtherance of his activities on behalf of AQAP in Yemen. 

On July 27, 2011, Pham returned to the United Kingdom.  Upon his arrival at London’s Heathrow International Airport, U.K. authorities detained Pham, searched him and recovered various materials from him, including various electronic media that contained computer files forensically identical to those possessed by a cooperating witness who had previously reported sharing electronic documents with Pham while they were in Yemen with AQAP.  In addition, Pham was found to be in possession of a live round of .762 caliber armor-piercing ammunition, which is consistent with ammunition that is used in a Kalashnikov assault rifle.

Pham was arrested in the United Kingdom on June 29, 2012, and extradited to the United States in February 2015.

In addition to the 40 year prison sentence, U.S. District Judge Alison J. Nathan of the Southern District of New York also imposed a life term of supervised release and a $300 special assessment.  On Jan. 8, 2016, Judge Nathan issued an order that Pham be removed from the United States to the United Kingdom upon completion of his sentence.

Assistant Attorney General Carlin joined U.S. Attorney Bharara in praising the extraordinary investigative work of the FBI’s Washington Field Office.  They also expressed their gratitude to the New York Joint Terrorism Task Force for the critical role it played in the investigation and prosecution.  Assistant Attorney General Carlin and U.S. Attorney Bharara also thanked the Department of Justice’s Office of International Affairs for their significant assistance, as well as the Metropolitan Police Service/SO 15 Counter Terrorism Command at New Scotland Yard and the Crown Prosecution Service for their cooperation in the investigation and prosecution.

This case is being prosecuted by Assistant U.S. Attorneys Anna M. Skotko, Sean S. Buckley, Shane T. Stansbury and Ian McGinley of the Southern District of New York, with assistance from Trial Attorney Rebecca Magnone of the National Security Division’s Counterterrorism Section.

          In commemoration of the month of May as Asian American and Pacific Islander Heritage Month, our office participated in the 12th Festival of Pacific Arts (FestPac) as Guam hosted 28 Island Nations and Territories from across the Pacific in what is called the “Olympics of Pacific Arts” and the largest cultural event to take place in Guam's history, from May 22 – June 4, 2016. The theme for FestPac 2016 was “Håfa Iyo-ta, Håfa Guinahå-ta, Håfa Ta Påtte, Dinanña’ Sunidu Siha Giya Pasifiku,” which translates to “What we own, what we have, what we share – United Voices of the Pacific.”

 

          Our office extended a warm Hafa Adai welcome and presented Certificates of Appreciation to the Delegations of the Pacific Island Nations and Territories at the Hagatna Paseo de Susana Park. First Lady and Honorary Chairwoman of the 12th Festival of Pacific Arts, Christine Calvo, was present with representatives from the Delegations. Our staff was invited to celebrate Asian American and Pacific Islander Heritage Month by also wearing traditional cultural attire or island wear to the presentation, and participating in the FestPac events after the presentation. The FestPac events included traditional performances, arts and crafts displays and demonstrations, and music and story-telling.

 

          According to various publications, "The Festival of the Pacific Arts is held every four years since 1972, and brings together artists and cultural practitioners from around the Pacific region for two weeks of festivity. It is recognized as a major regional cultural event, and is the largest gathering in which Pacific peoples unite to enhance their respect and appreciation of one another.

 

          The idea of a Festival of Pacific Arts was conceived by the Conference of the South Pacific Commission (now the Secretariat of the Pacific Community (SPC) in an attempt to combat the erosion of traditional customary practices. Since 1972, delegations from 27 Pacific Island Nations and Territories have come together to share and exchange their cultures at each Pacific Arts Festival. A delegation of 2,500 performers, artists and cultural practitioners were expected, in addition to thousands of visitors from Asia and festival followers who see to it they are part of the festival every four years.”

 

          The 28 Pacific Island Nations and Territories that participated in FestPac were: American Samoa, Australia, Cook Islands, the Federated States of Micronesia (Yap, Chuuk, Pohnpei and Kosrae), Fiji Islands, French Polynesia, Guam (2016 Host), Hawaii, Kiribati, Marshall Islands, Nauru, New Caledonia, New Zealand, Norfolk Island, Niue, Northern Mariana Islands, Palau, Papua New Guinea, Pitcairn Islands, Rapa Nui, Republic of China (Taiwan), Samoa, Solomon Islands, Tokelau, Tonga, Tuvalu, Vanuatu, and Wallis and Futuna.

 

          FestPac officially started with the launching of proas from several island nations, including Guam. The seafaring group from Guam paddled just offshore to welcome visiting seafarers who traveled from their islands by proas.

 

          The grand opening of the Guam Museum also coincided with the opening of FestPac.

 

 

Attached are photos taken at the presentation of Certificates of Appreciation to the Delegations participating at FestPac on Guam and other photos taken of some of the visiting Pacific Island Nations and Territories, participating in traditional performances, arts and crafts displays and demonstrations, and music and story-telling.

 

U.S. Attorney Alicia Limtiaco and USAO Staff with First Lady of Guam Christine Calvo and FestPac Delegation representatives at USAO Presentation of Certificates of Appreciation The official opening of FestPac began with the launching and sailing of proas from several island nations U.S. Attorney Alicia Limtiaco and USAO Staff visiting with Guam Museum Director Clifford Guzman and staff in front of the newly opened Guam Museum Samoa Delegation Yap Delegation New Zealand Delegation Rapa Nui Delegation Marshall Islands Delegation Northern Mariana Islands Delegation Guam Delegation

 

The U.S. Department of Justice’s Office of Prosecutorial Development, Assistance and Training (OPDAT) and Mexico’s Office of the Attorney General (PGR) sponsored a Trinational Forum yesterday and today in Mexico City, bringing together Amber Alert Coordinators from Mexico, the United States and Canada.  The forum aimed to create mechanisms for the international coordination of Amber Alerts in order to better respond to potential cross-border cases of missing children. 

Opening the forum, Mexican Attorney General Arely Gomez highlighted the importance of international cooperation in the identification of missing children, noting that the Amber Alert program “breaks the barriers of communication, time and distance,” and highlighted that the “neutralization and disruption of criminal groups and their operations cannot depend on limits created by borders or national identities.”

The importance of the Amber Alert system also was recognized by U.S. Attorney General Loretta E. Lynch in her remarks yesterday at the annual National Missing Children’s Day Ceremony in Washington, D.C., where she noted the Trinational Event in Mexico City and said, “and our commitment to rescuing missing children does not stop at the border.  I am proud to say that our Department of Justice has collaborated with the Attorney General of Mexico on the development of Mexico’s AMBER Alert System, which has already resulted in the rescue of hundreds of Mexican children.”

OPDAT Senior Resident Legal Advisor Ray Gattinella told Amber Alert coordinators in Mexico City, “we currently have 75 open abduction cases from the United States to Mexico and 183 open cases from Mexico to the United States.  So it makes sense that our countries would continue the collaboration on Amber Alert we started four years ago and begin coordinating on potential cross-border and interstate missing children cases.”

OPDAT assisted PGR in the creation and implementation of Amber Alert Mexico based on the U.S. program in May 2012.  Since that time, Amber Alert has led to the rescue of over 350 children in Mexico.  The program has also become a central piece of OPDAT’s programming in Mexico under the Merida Initiative.  The United States immensely values the cooperation and collaboration from both Mexico and Canada in this critical area.  

A federal jury sitting in Portland, Oregon found three family members who ran two strip clubs in the Portland area guilty of conspiracy to defraud the United States and charges relating to the filing of false tax returns after a six day trial, Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Billy J. Williams of the District of Oregon announced.

David G. Kiraz, his father George D. Kiraz, and David’s brother Daniel Kiraz, ran two Portland-area strip clubs – Cabaret Lounge I at 503 W Burnside Street and Cabaret Lounge II at 17544 SE Stark Street – and engaged in a scheme to defraud the United States by filing false federal income tax returns with the Internal Revenue Service (IRS), according to the evidence presented at trial. In addition to finding the three guilty of conspiracy to defraud the United States, the jury found David Kiraz guilty of three counts of filing false tax returns, George Kiraz guilty of three counts of aiding and assisting in the preparation and filing of false tax returns, and Daniel Kiraz guilty of one count of aiding and assisting in the preparation and filing of false tax returns.

“The Kirazes engaged in a long-running conspiracy to defraud the U.S. Treasury and today, a jury held them accountable for their crimes,” said Acting Assistant Attorney General Ciraolo.  “The department is committed to investigating and prosecuting individuals and entities who violate our nation’s tax laws and will seek incarceration, fines and restitution to send a clear message to other potential offenders.”

The evidence at trial showed that from 2007 through mid-2011, the strip clubs collected cash through both cover charges from customers and stage fees from dancers.  In addition to stage fees, the dancers were routinely required to pay fines for various etiquette infractions. The defendants maintained a set of books at the Cabaret clubs which recorded the sales, lottery and ATM fees but not the stage and door fees. The defendants maintained a second set of books, which tracked all of the cash receipts including the stage and door fees, at the home of David Kiraz. A video played in court showed a 2010 meeting between George Kiraz and an undercover IRS agent posing as a prospective buyer of the strip clubs.  The IRS undercover agent was given a copy of the Kirazes’ second set of books, including the stage and door fees, at that meeting.

Further evidence presented to the jury proved that the business activity of the strip clubs was reported each year on the individual income tax return of David Kiraz.  The defendants gave their tax return preparers the false financial records maintained at the strip clubs, intentionally causing the return preparers to create tax returns for David Kiraz that did not report substantial amounts of cash obtained through cover charges, stage fees and fines.  Their actions resulted in underreporting of taxable income of more than $1.5 million and caused a tax loss of more than $500,000 for tax years 2007 through 2010.

The date for the sentencing hearing before U.S. District Judge Robert E. Jones for the District of Oregon in Portland has not yet been set.  Each defendant faces a statutory maximum sentence of five years in prison on the charge of conspiracy to defraud the United States and three years in prison on the charges of filing false tax returns or aiding and assisting in the preparation and filing of false tax returns.  They also face supervised release and a maximum fine of $250,000 on each count.

This case was investigated by special agents with IRS-Criminal Investigations and prosecuted by Trial Attorney Leslie Goemaat of the Justice Department’s Tax Division and Assistant U.S. Attorneys Seth Uram and Quinn P. Harrington for the District of Oregon.

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

The Justice Department announced today that Carson City, Nevada, rental property owners Betty Brinson and Hughston Brinson have agreed to pay $36,000 to resolve allegations that they discriminated against families with children in violation of the Fair Housing Act (FHA). 

The lawsuit alleged that the Brinsons discriminated against families with children by placing a series of advertisements for a single-family rental home in the local newspaper that indicated a preference for adult tenants and refusing to rent the home to a family with three children because they did not want children living at the property.  The complaint also alleged that Betty Brinson placed discriminatory advertisements for another property she owns – a 36-unit apartment complex in Carson City – that indicated a preference for adult tenants.  The lawsuit arose as a result of a complaint filed with the Department of Housing and Urban Development (HUD) by the family, who alleged that they were refused the opportunity to rent the single-family home.

Under the proposed consent order, which still must be approved by the U.S. District Court for the District of Nevada, the defendants will pay $14,000 to the HUD complainants, $10,000 into a victim fund to compensate other aggrieved families and $12,000 to the United States as a civil penalty.  In addition, the proposed consent decree prohibits the defendants from discriminating in the future against families with children and requires the defendants to receive training on the requirements of the FHA and provide periodic reports to the department.

“Families should not face discrimination because of the presence of children when looking for a home,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division.  “The Justice Department will continue to vigorously enforce the Fair Housing Act and its protections for families as they navigate the housing market.”

“A family’s search for housing that fits their needs shouldn’t be limited by discriminatory practices that violate the Fair Housing Act,” said Gustavo Velasquez, Assistant Secretary for HUD’s Fair Housing and Equal Opportunity Office.  “Today’s settlement is a victory for families with children and reaffirms HUD and the Justice Department’s commitment to ensuring that the owners or rental properties understand their obligations under the law and take steps to meet that obligation.”

Anyone who believes that they or individuals they know may have been discriminated against by the Brinsons based on their familial status should contact the Civil Rights Division’s Housing and Civil Enforcement Section at 1-800-896-7743, mailbox number 991, or by sending an email to fairhousing@usdoj.gov.

Fighting illegal housing discrimination is a top priority of the Department of Justice.  The FHA prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability.  More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt/. 

Brinson Consent Order

A Virginia Beach, Virginia, man pleaded guilty for his role in issuing dozens of fraudulent motor vehicle titles, the Department of Justice announced today.

Steven Bazemore, 33, of Virginia Beach, a former employee of the Norfolk Commissioner of Revenue, pleaded guilty on May 26, in U.S. District Court in Norfolk, Virginia, to one count of conspiracy to commit securities fraud.  The Norfolk Commissioner of Revenue’s office is a contractor of the Department of Motor Vehicles to conduct select DMV services included titling.  Bazemore faces a statutory maximum sentence of five years in prison at his sentencing on Aug. 31.

“This defendant abused his public position to assist a large odometer tampering scheme by issuing fraudulent vehicle titles,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “We will continue to prosecute individuals who commit and assist others in committing odometer fraud.”

Bazemore admitted that, while employed as a clerk at a DMV Select facility in Norfolk, he knowingly created at least 76 Virginia motor vehicle titles with false, low mileage readings for a co-conspirator who was a licensed salvage dealer.  Bazemore issued titles with any false, low mileage reading requested by his co-conspirator, even when the reading was inconsistent with a higher mileage reading on a prior title or in the DMV computer system.  Bazemore’s co-conspirator then used the fraudulent titles to sell many of the vehicles for inflated prices.

In exchange for issuing the fraudulent titles, Bazemore received cash payments from his co-conspirator.  Bazemore also took steps to hide the odometer fraud scheme.  In many instances, Bazemore returned the documents used to procure the fraudulent titles to his co-conspirator rather than retaining the documents in the DMV file system. 

This case was investigated by special agents of the Virginia DMV and the National Highway Traffic Safety Administration Office of Odometer Fraud Investigation (NHTSA).  NHTSA estimates that odometer fraud in the United States results in consumer losses of more than $1 billion annually and has established a special hotline to handle odometer fraud complaints.  Individuals having information relating to odometer tampering should call (800) 424-9393 or (202) 366-4761.

This case is being prosecuted by Trial Attorneys John W. Burke and Jacqueline Blaesi-Freed of the Civil Division’s Consumer Protection Branch with assistance from Assistant U.S. Attorney Alan Salsbury of the U.S. Attorney’s Office for the Eastern District of Virginia.

More information on odometer fraud is available on the NHTSA’s website and tips on detecting and avoiding odometer fraud are available at this page.  For more information about the Consumer Protection Branch and its enforcement efforts, visit its website at http://www.justice.gov/civil/consumer-protection-branch.

The Department of Justice and the Federal Trade Commission (FTC) signed an antitrust cooperation agreement today with Peru’s National Institute for the Defense of Competition and the Protection of Intellectual Property (INDECOPI).  The agreement will promote increased cooperation and communication among the competition agencies in both countries.  The agreement was signed in Washington, D.C., by Principal Deputy Assistant Attorney General Renata Hesse, head of the Justice Department’s Antitrust Division, Chairwoman Edith Ramirez of the FTC, and Chairman Hebert Tassano of INDECOPI, and went into effect upon signature.

“Markets in the United States and Peru, and throughout the Americas, are increasingly linked,” said Principal Deputy Assistant Attorney General Hesse.  “In this environment, international cooperation on antitrust enforcement is vital to protecting our economies against threats to competition.  We have longstanding ties to competition enforcers in Peru, and this agreement strengthens the tools we have to work together to provide our businesses and consumers with the benefits of open and competitive markets.”

“We have been partners with INDECOPI since its inception and are delighted to further enhance our already strong relationship through this agreement,” Chairwoman Ramirez said.  “This agreement embodies the commitment to cooperation that has existed between the U.S. agencies and INDECOPI, and will facilitate cooperation to protect the competitive marketplaces that benefit consumers in both of our countries as well as in this hemisphere.”                       

Highlights of the new agreement include the following:

• mutual acknowledgment of the importance of antitrust cooperation, including potential coordination when pursuing enforcement activities on related matters;
• an agreement to consider the important interests of the other country’s competition authority throughout all phases of their enforcement activities;
• establishment of a framework for communication, consultation and technical assistance among the agencies; and
• a commitment to maintain the confidentiality of any information provided by the other agency.

The U.S. antitrust agencies and INDECOPI have developed a strong working relationship since INDECOPI’s inception in 1993, exchanging views on antitrust policy and, as appropriate, cooperating on investigations.  Today’s agreement will further enhance these relations.

The agreement with INDECOPI is the U.S. antitrust agencies’ fifth antitrust cooperation arrangement in Latin America, following those reached with Brazil (1999), Mexico (2000), Chile (2011), and Colombia (2014).

A federal grand jury sitting in Charleston, West Virginia returned an indictment on May 25, charging two West Virginia business owners with federal employment tax violations, Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and Acting U.S. Attorney Carol A. Casto for the Southern District of West Virginia announced today. 

The indictment charges Michael Taylor and Jeanette Taylor, a married couple who reside in Wayne, West Virginia, with one count of conspiracy to defraud the United States by impeding the Internal Revenue Service (IRS) in the collection of employment taxes withheld from the wages of the employees of their businesses, Taylor Contracting/Taylor Ready-Mix LLC and Bluegrass Aggregates LLC, which were in the business of transporting steel and the sale of gravel and concrete.  The couple is also charged with one count of willfully failing to truthfully account for and pay over employment tax withheld for their employees at Taylor Contracting/Taylor Ready-Mix LLC.

According to the indictment, both Michael Taylor and Jeanette Taylor had the responsibility to collect, truthfully account for and pay over to the IRS federal income, social security and Medicare taxes withheld from the wages of their employees.  From the quarter ending Sept. 30, 2007, through the quarter ending Dec. 31, 2009, the Taylors withheld approximately $1,002,392 in payroll taxes from employees’ paychecks at Taylor Contracting/Taylor Ready-Mix LLC and during the 2010 calendar year, they withheld approximately $161,218 in payroll taxes from employees’ paychecks at Bluegrass Aggregates LLC.  However, the Taylors failed to fully pay over these taxes to the IRS and instead used the money to make expenditures for their personal benefit, such as making payments towards their personal credit cards and a horse farm.

If convicted, the Taylors face a statutory maximum sentence of five years in prison and a maximum fine of $250,000 for each count.  They also face a term of supervised release and an order of restitution.

An indictment merely alleges that crimes have been committed.  The defendants are presumed innocent until proven guilty beyond a reasonable doubt.

Acting Assistant Attorney General Ciraolo and Acting U.S. Attorney Casto commended special agents of IRS-Criminal Investigation, who investigated the case and Trial Attorneys Mara Strier and Alexander Effendi of the Tax Division, who are prosecuting this case.

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

The United States has intervened in a lawsuit against Prime Healthcare Services Inc. (Prime); the company’s founder and chief executive officer, Dr. Prem Reddy; and 14 Prime hospitals in California that alleges Emergency Departments at Prime facilities improperly admitted patients to the hospitals and submitted false claims to Medicare, the Justice Department announced today.

The lawsuit alleges that Dr. Reddy directed the corporate practice of pressuring Prime’s Emergency Department physicians and hospital administrators to raise inpatient admission rates, regardless of whether it was medically necessary to admit the patients.  The lawsuit alleges that Prime’s corporate officers, at Reddy’s direction, exerted immense pressure on doctors in the Emergency Departments to admit patients who could have been placed in observation, treated as outpatients or discharged.  As a result of these medically unnecessary admissions from the Emergency Departments, Prime hospitals allegedly submitted false claims to federal health care programs, such as Medicare.

“The Department of Justice is committed to ensuring that health care providers do not inappropriately seek to profit at the expense of federal health care programs,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “Schemes such as this one can contribute significantly to the rising cost of health care delivery and create needless patient risk.”

“Fraudulent billing practices, such as those alleged in this civil lawsuit, harm taxpayers who fund health care programs, such as Medicare,” said U.S. Attorney Eileen M. Decker for the Central District of California.  “The Justice Department works collaboratively with law enforcement agencies, regulators and, in some cases, private citizens to ensure the integrity of a system that provides healthcare to millions of Americans.”

“Charging for medically unnecessary services, as alleged in this case, raises costs in government health programs and remorselessly passes that bill along to taxpayers,” said Special Agent in Charge Christian J. Schrank of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG).  “Our investigation into the allegations in this case, along with our law enforcement partners, led to the government’s decision to intervene.”

The lawsuit, United States ex rel. Berntsen v. Prime Healthcare Services, et al., CV11-8214-PJW (MG), was filed in the U.S. District Court in Los Angeles by relator Karin Bernsten, who worked at one of the Prime hospitals where the allegedly improper inpatient admissions allegedly took place.  The lawsuit was filed under the qui tam provisions of the False Claims Act, which permit private parties to sue on behalf of the United States when they believe that a party has submitted false claims for government funds, and to receive a share of any recovery.  The False Claims Act permits the government to intervene in such a lawsuit, as it has done in a portion of this case.

The government’s intervention in this matter illustrates its emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $29 billion through False Claims Act cases, with more than $17.5 billion of that amount recovered in cases involving fraud against federal health care programs.

These matters were investigated by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Central District of California, HHS-OIG  and the FBI.

The claims asserted against Prime and Dr. Reddy are allegations only, and there has been no determination of liability.

A DeSoto, Texas, resident was indicted on 29 counts of aiding and assisting in the preparation of false income tax returns and three counts of willfully failing to file income tax returns, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney John R. Parker of the Northern District of Texas.

According to court documents, Vicki Louise Walker, was a tax preparer doing business under the name Vicki Walker Tax Services LLC in Dallas, Texas.  Walker is alleged to have prepared numerous tax returns for tax years 2010 through 2013 on which she reported false items, including false filing status, false business expenses, false capital losses and false charitable donations.  It is further alleged that Walker willfully failed to file her own tax returns with the Internal Revenue Service (IRS) for tax years 2011 through 2013.

If convicted, Walker faces a statutory maximum sentence of three years in prison for each count of aiding and assisting in the preparation of false tax returns and a statutory maximum sentence of one year in prison for each count of failing to file her own tax returns.  She also faces monetary penalties and restitution.

An indictment merely alleges that crimes have been committed and the defendant is presumed innocent until proved guilty beyond a reasonable doubt. 

Acting Assistant Attorney General Ciraolo and U.S. Attorney Parker commended special agents of IRS-Criminal Investigation, who investigated the case and Trial Attorney Robert J. Boudreau of the Tax Division and Assistant U.S. Attorney Christopher Stokes of the Northern District of Texas, who are prosecuting this case.

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

 

 

On May 24, 2016, INTERPOL Washington Director Geoffrey S. Shank held a media briefing where correspondents from the national news networks received information regarding INTERPOL Washington. The correspondents were given the opportunity to field questions regarding INTERPOL and INTERPOL Washington, and the event concluded with the correspondents receiving a tour of the INTERPOL Operations and Command Center.

To hear the interview conducted by NPR with Director Shank, please click here

A federal grand jury sitting in Kansas City, Missouri, returned an indictment Monday, which was unsealed this morning, against a former professional basketball player and representative for the National Basketball Players Association (NBPA), charging him with corruptly interfering with the internal revenue laws, conspiracy to commit wire fraud, obstruction of justice and aggravated identity theft, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Tammy Dickinson of the Western District of Missouri.  

The indictment alleges that Kermit Alan Washington, 64, used a charity he founded and operated, Project Contact Africa (PCA), to defraud donors, eBay and PayPal and the Internal Revenue Service (IRS).  In order to induce individuals, including former professional athletes, to make donations to PCA, Washington falsely represented that 100 percent of the donations would go to Africa.  However, Washington diverted charitable donations from PCA to buy gifts and pay personal expenses, including rent, vacations, jewelry and entertainment.

“Individuals who use charitable organizations to defraud donors and evade tax obligations inflict substantial harm on every U.S. taxpayer and cause untold damage to well-intentioned charitable endeavors,” said Acting Assistant Attorney General Ciraolo.  “The Department is committed to identifying those engaged in such criminal conduct and holding them accountable.”

“The federal indictment alleges this former NBA player used his celebrity status to exploit the good intentions of those who donated to a charity he founded, called Project Contact Africa,” said U.S. Attorney Dickinson. “According to the indictment, Washington profited by diverting hundreds of thousands of dollars in donations that was supposed to benefit a clinic in Africa for needy families and children, but instead bankrolled his own personal spending.” 

It is alleged that Washington referred professional athletes to Ron Mix, a former professional football player and an attorney licensed in the state of California, whose practice focused on the filing of workers’ compensation claims on behalf of former professional athletes.  In exchange for the referrals, Mix made payments to PCA and claimed those amounts as charitable deductions on his personal tax returns.  Upon receipt of these payments, Washington diverted the funds for his own personal benefit.  Washington filed false individual income tax returns for 2010 through 2013, failing to report the funds he diverted from PCA and false Forms 990-EZ on behalf of PCA.  Washington also falsified PCA’s corporate minutes to obstruct the investigation and used the identity of another individual to perpetrate this scheme.

It is further alleged that Washington conspired with others to defraud eBay and PayPal, customers and donors of PCA by allowing the co-conspirators to use PCA’s name, tax-exempt status and IRS Employee Identification Number (EIN) with eBay and PayPal so the co-conspirators could avoid substantial listing and registration fees incurred in operating online, for-profit businesses.  Moreover, customers who made purchases falsely believed that 100 percent of the proceeds from the co-conspirators’ online eBay sales benefited PCA.  In exchange for allowing the co-conspirators to use PCA’s tax-exempt status, Washington received payments from the co-conspirators. 

Washington was arrested yesterday in Los Angeles and had his initial appearance in U.S. District Court in the Central District of California. Washington was ordered to surrender his passport and released on bond and must wear a location monitoring device. Washington’s next court date is tentatively scheduled on June 16 before U.S. Magistrate Judge John T. Maughmer in the Western District of Missouri.

If convicted, Washington faces a statutory maximum sentence of three years in prison on the charge of corrupt interference with the internal revenue laws, 20 years in prison on the charge of conspiring to commit wire fraud, 20 years in prison on the charge of obstruction and a mandatory sentence of two years in prison for the charge of aggravated identity theft, which will be in addition to any other term of imprisonment he receives.  He also faces supervised release, a maximum fine of $250,000 on each count and restitution.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Dickinson commended special agents of IRS-Criminal Investigation, Immigration and Customs Enforcement’s Homeland Security Investigations, who investigated the case and Assistant U.S.  Attorneys Patrick Daly and Curt Bohling of the Western District of Missouri, and Trial Attorney Ryan Raybould of the Tax Division, who are prosecuting the case.

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

United States Attorney Randolph J. Seiler announced that three Rosebud, South Dakota men, one Rosebud, South Dakota woman, and one Mission, South Dakota woman have been indicted by a federal grand jury for Third Degree Burglary.

Jonathan Anthony Jones, a/k/a DJ Jones, age 36; Robert Pomani, age 24; Seryl Leroy Pomani, Jr., a/k/a Leroy Pomani, age 28; Alicia Good Shield, age 30; and Michelle Iron Cloud, age 30 were all indicted for Third Degree Burglary.  They all appeared before United States Magistrate Judge Mark A. Moreno and pled not guilty to the Indictment.

The maximum penalty upon conviction is up to five years in custody and/or a $250,000 fine, three years of supervised release, and $100 to the Federal Crime Victims Fund.  Restitution may also be ordered.

It is alleged that on January 23, 2016, Jones, Robert Pomani, Leroy Pomani, Good Shield and Iron Cloud unlawfully entered the DaVita Dialysis Center with the intent to commit larceny and aided and abetted each other in doing so.

The charge is merely an accusation and all individuals are presumed innocent until and unless proven guilty. 

The investigation is being conducted by the Rosebud Sioux Tribe Law Enforcement Services.  Assistant U.S. Attorney Kirk W. Albertson is prosecuting the case.   

Iron Cloud, Leroy Pomani, Robert Pomani and Jones were  remanded to the custody of the U.S. Marshals Service pending trial.  Good Shield was released on bond.  A trial date has not been set.

A Delaware man was sentenced today to 180 months in prison for receipt of child pornography, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Charles M. Oberly III of the District of Delaware.

Eric Aldrich, 25, of Milford, Delaware, previously pleaded guilty to one count of receipt of child pornography.  U.S. District Judge Leonard P. Stark of the District of Delaware presided over today’s sentencing.

At sentencing, the court found that Aldrich has a prior conviction in Delaware for dealing in child pornography and as part of his federal offense, he possessed over 600 images of child pornography, including material involving prepubescent minors and sadistic or masochistic conduct.

U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and the Delaware Internet Crimes Against Children Task Force investigated this case.  Trial Attorney Leslie Williams Fisher of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) and Assistant U.S. Attorney Edmond Falgowski of the District of Delaware prosecuted this case.

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

Attorney General Loretta E. Lynch today released the following statement regarding the United States v. Dylann Roof:

“Following the department’s rigorous review process to thoroughly consider all relevant factual and legal issues, I have determined that the Justice Department will seek the death penalty.  The nature of the alleged crime and the resulting harm compelled this decision.”

A San Diego, California, workers’ compensation attorney pleaded guilty today in the Western District of Missouri to one count of filing a false tax return, Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Tammy Dickinson of the Western District of Missouri announced.

According to court documents, Ron Mix, 78, entered into an arrangement where he received professional athlete referrals from a non-attorney so Mix and his law firm, the Law Offices of Ron Mix, could file workers’ compensation claims in California on the former athletes’ behalf.  After receiving these referrals, Mix agreed to make donations to Project Contact Africa (PCA), as directed by the non-attorney.  Mix admitted that between 2010 and 2013, he made approximately $155,000 in donations to PCA and that these payments represented illegal referral payments that he falsely claimed on his personal income tax return as charitable deductions.

U.S. District Court Judge Greg Kays for the Western District of Missouri has not yet scheduled Mix’s sentencing.  Mix faces a statutory maximum sentence of three years in prison and a maximum fine of $250,000. 

Acting Assistant Attorney General Ciraolo and U.S. Attorney Dickinson commended special agents of Internal Revenue Service-Criminal Investigation and Homeland Security Investigations, who investigated the case and Assistant U.S.  Attorneys Patrick Daly and Curt Bohling of the Western District of Missouri and Trial Attorney Ryan Raybould of the Tax Division, who are prosecuting the case.

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

Conspired with Others to Prepare and File at Least 224 False Income Tax Returns

An Oregon woman pleaded guilty today to one count of conspiracy to defraud the government with respect to claims, one count of wire fraud and one count of aggravated identity theft for running a federal income tax refund fraud scheme, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division, U.S. Attorney Billy J. Williams of the District of Oregon and Special Agent in Charge Teri Alexander of the Internal Revenue Service – Criminal Investigation (IRS-CI).

Danyelle Calcagno, 41, admitted to filing at least 224 false federal income tax returns that fraudulently claimed a total of $1,220,246 in tax refunds, generally between $3,500 and $7,000 per return.  Calcagno filed the fraudulent tax returns using Internet access at Portland-area hotels to disguise the source of filing.  Calcagno filed the false tax returns using the names and social security numbers of other individuals obtained directly and through recruiters, including Latisha L. Simmons, 36, of Phoenix, Arizona.      

Calcagno directed the IRS to deposit the income tax refunds into bank accounts and onto stored value debit cards that she could access and control in order to divide the proceeds of the fraud and make it more difficult for law enforcement to identify Calcagno as the filer of the false tax returns.  Calcagno received at least $25,000 in fraudulently obtained income tax refunds into her own bank accounts.

Calcagno faces a statutory maximum sentence of 10 years in prison on the conspiracy charge, 20 years in prison on the wire fraud charge and a mandatory term of two years in prison on the aggravated identity theft charge, which will be in addition to any other term of imprisonment she receives.  Calcagno also faces financial penalties and a term of supervised release.  As part of her plea agreement, Calcagno agreed to pay restitution to the IRS in the amount of $742,754.

In October 2015, Simmons was sentenced to 39 months in prison after pleading guilty to one count of wire fraud, one count of false claims against the government and one count of aggravated identity theft.  According to her plea agreement, Simmons filed more than 50 false tax returns with the IRS that fraudulently claimed more than $400,000 in refunds.

Acting Assistant Attorney General Ciraolo, U.S. Attorney Williams and Special Agent in Charge Alexander thanked special agents of IRS-CI, who investigated this case and Trial Attorney Leslie A. Goemaat of the Tax Division and Assistant U.S. Attorney Quinn P. Harrington of the District of Oregon, who are prosecuting the case.

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

The heads of the antitrust agencies of the United States, Canada and Mexico met today in Toronto to discuss their ongoing work to ensure effective antitrust enforcement cooperation in our increasingly interconnected markets.

The meetings were held among Principal Deputy Assistant Attorney General Renata Hesse of the Department of Justice’s Antitrust Division, Chairwoman Edith Ramirez of the Federal Trade Commission, Canadian Commissioner of Competition John Pecman and President Alejandra Palacios Prieto of the Mexican Federal Economic Competition Commission.

The discussions covered a wide range of topics, including recent developments, effective agency litigation, disruptive innovation, cooperation between agencies and technical assistance.

“We are very fortunate to have such strong relationships with our partners in Canada and Mexico,” said Principal Deputy Assistant Attorney General Hesse.  “In this increasingly globalized economy, close cooperation with our North American colleagues is important to protecting the competitiveness of our markets.  These meetings are a useful part of our ongoing enforcement collaboration, and they provide a great opportunity to discuss our shared competition policy challenges.”

“The antitrust relationship among the United States, Canada and Mexico is one of the most advanced in the world,” said Chairwoman Ramirez.  “We work together on cross-border cases to ensure effective and compatible enforcement and on policy matters to promote convergence toward best practices.  Our meeting enables us to strengthen our cooperation to enhance competition and benefit our consumers.”

The meetings build on the foundations laid by the 1995 antitrust cooperation agreement between the United States and Canada, the 1999 agreement between the United States and Mexico and the 2001 agreement between Canada and Mexico.  The agreements commit the antitrust agencies to cooperate and coordinate with each other to make their antitrust policies and enforcement as consistent and effective as possible.

The four agency heads also spoke at an enforcers’ roundtable at the spring conference of the Canadian Bar Association’s Competition Law Section, which included exchanges among the four agency heads on international cooperation, disruptive innovation and merger remedies.

The United States has filed a complaint in the U.S. District Court for the District of Columbia against Guild Mortgage Company (Guild) under the False Claims Act for improperly originating and underwriting mortgages insured by the Federal Housing Administration (FHA), the Justice Department announced today.  Guild is a mortgage lender headquartered in San Diego, California. 

“This case is another example of the  Justice Department’s continued efforts to ensure that lenders that participate in the FHA mortgage insurance program act in good faith and conduct appropriate due diligence when committing the United States to insure home loans,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “To protect the housing market and the FHA fund, we will continue to hold responsible lenders that knowingly violate the rules.”

Guild participated in the FHA insurance program as a direct endorsement (DE) lender.  As a DE lender, Guild had the authority to originate, underwrite and certify mortgages for FHA insurance.  If a DE lender such as Guild approves a mortgage loan for FHA insurance and the loan later defaults, the U.S. Department of Housing and Urban Development (HUD), FHA’s parent agency, is responsible for the losses resulting from the defaulted loan.  Under the DE lender program, neither the FHA nor HUD reviews the underwriting of a loan before it is endorsed for FHA insurance.  HUD therefore relies on DE lenders to follow program rules designed to ensure that they are properly underwriting and certifying mortgages for FHA insurance and DE lenders must certify that every loan endorsed for FHA insurance is underwritten according to the applicable FHA standards.

The government’s complaint alleges that, from January 2006 through December 2011, Guild knowingly submitted, or caused the submission of, claims for hundreds of improperly underwritten FHA-insured loans.  The complaint further alleges that Guild grew its FHA lending business by ignoring FHA rules and falsely certifying compliance with underwriting requirements in order to reap the profits from FHA-insured mortgages.  For example, Guild allegedly allowed underwriters to waive compliance with FHA requirements when underwriting a loan.  Additionally, Guild used unqualified junior-underwriters who did not have a DE certification to waive mandatory conditions on higher risk loans where HUD required underwriting only by highly trained DE underwriters.

The government’s complaint further alleges that Guild’s senior management focused on growth and profits and ignored quality.  From 2006 to 2012, Guild conducted at least 125 branch audits in which almost 40 percent resulted in either a qualified rating or unsatisfactory rating.  A qualified rating was defined as having a “significant number of findings, and/or findings noted that have more serious impact or risk to Guild,” or “Knowledge of procedures and controls; however, they appear to be inefficient.”  An unsatisfactory rating was defined as one where “serious concerns were noted: lack of knowledge, procedures, and/or controls in branch.”  The complaint alleges that, through Guild’s quality control reviews, significant defects were found in over 20 percent of the FHA loans reviewed between 2006 and 2011 and over half the loans had either significant or moderate defects.  Significant defects included fraud, misrepresentation and other serious findings while moderate defects included not following guidelines.  However, Guild did not calculate or distribute any error rate during the relevant time period, thus management was not presented with these findings.  Additionally, for many of the quarters from 2006 through 2009, Guild did not even distribute any of the quality control findings to management.  As a result, Guild management often did not review or remediate findings from quality control audits during these years.  In the quarters where Guild management actually did review quality control findings, it did so almost a year after the loans closed and failed to timely remediate any identified problems.  In 2013, when Guild finally began addressing the quality of its FHA underwriting, Guild’s head of quality control pointed out the ineffectiveness of its past efforts at addressing loan quality:  “I’m not optimistic about training reminders and individual follow-ups being all that effective.”

The government’s complaint alleges that as a result of Guild’s knowingly deficient mortgage underwriting practices, HUD has already paid tens of millions of dollars of insurance claims on loans improperly underwritten by Guild, and that there are many additional loans improperly underwritten by Guild that are currently in default and could result in further insurance claims on HUD.  For example, the government’s complaint identifies a mortgage loan that was improperly underwritten in violation of HUD requirements, causing the borrower to default and HUD to pay the loss on the loan.  Specifically, Guild failed to verify the borrower’s prior rental payments, overstated the borrower’s income, failed to develop a credit history for the borrower who had no credit score, exceeded FHA’s qualifying debt to income ratio without determining whether certain compensating factors were present, and failed to identify the source of a large deposit made to the borrower’s account.  The underwriter at Guild improperly waived multiple conditions and allowed an unauthorized junior underwriter to do the same for other conditions.  In sworn testimony, the Guild underwriter admitted the loan failed to comply with FHA underwriting requirements.

“The Federal Housing Administration’s insurance program is meant to encourage lenders to expand opportunity for homeownership by providing financing to prospective buyers who otherwise might not be able to enter the housing market,” said U.S. Attorney Channing D. Phillips for the District of Columbia.  “To ensure that prospective homebuyers realize the dream of long term homeownership, the program has strict rules and is not a license for lenders to carelessly subject federal dollars to risk. This lawsuit is designed to help the FHA – and American taxpayers -- recoup tens of millions of dollars in losses attributable to a lender accused of improperly underwriting FHA-insured mortgages and committing the government’s guarantee to mortgages that failed to comply with program rules.”

“The decision to intervene in this matter should serve as a reminder of the priority given to pursuing lenders that violate HUD program rules in order to hold them accountable and the value of private citizen participation, including whistleblowers, in pursuing lenders that violate the rules,” said HUD Inspector General David A. Montoya.

“FHA relies on the honesty and integrity of those lenders participating in our program,” said HUD’s General Counsel Helen R. Kanovsky.  “The action we take today should send a clear message that we will not tolerate the abuse of our programs or of the families who should benefit from them.”

The lawsuit was brought under the qui tam, or whistleblower, provisions of the False Claims Act by a former employee of Guild.  Under the act, a private party may bring suit on behalf of the United States and share in any recovery.  The government may intervene in the case, as it has done here.  The False Claims Act allows the government to recover treble damages and penalties from those who violate it.

The investigation of this matter was a coordinated effort among HUD, its Office of Inspector General, and the U.S. Attorney’s Office for the District of Columbia and the Civil Division’s Commercial Litigation Branch.

The action is captioned United States ex rel. Dougherty v. Guild Mortgage Company (D.D.C.).  The claims asserted in the complaint are allegations only and there has been no determination of liability.  

The Justice Department reached a settlement agreement today with the Philadelphia Freedom Valley YMCA – Rocky Run Branch to resolve allegations that it violated the Americans with Disabilities Act (ADA) by denying a child the opportunity to participate in after-school and summer camp programs because of her type 1 diabetes.

Title III of the ADA prohibits discrimination on the basis of disability by public accommodations, including private camps and childcare programs.  Under the ADA, such entities must make reasonable modifications to their policies, practices or procedures when necessary to provide equal access to a child with a disability, unless a modification would fundamentally alter the nature of the goods and services.  When a parent and a child’s physician determine that it is appropriate for a trained layperson to assist a child with diabetes care, a camp or childcare program must provide this as a reasonable modification under the ADA, unless doing so would fundamentally alter the program.

The Philadelphia Freedom Valley YMCA – Rocky Run Branch refused to perform diabetes related tasks, including administering glucagon in the event of a low blood glucose level emergency and supervising the child to self-administer insulin.  YMCA also limited the child’s participation in the after-school program by allowing her to attend only until 4:00 p.m., even though the program ran until 6:00 p.m.  Finally, YMCA asked the child’s parents to supply an aide to monitor the child in the summer day camp program.

“After-school and camp programs enable children to learn and socialize with their friends, and enable parents to ensure that their children are well-cared for, and YMCAs are one of the key providers parents turn to for that care,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division.  “Such providers may not exclude children with disabilities, and the Department of Justice will continue to aggressively fight all forms of discrimination that deny children with disabilities the protections and opportunities they deserve.”

Under the terms of the agreement, the YMCA will:

• adopt a non-discrimination policy;

• develop a sample diabetes medical management plan;

• remove unnecessary inquiries from its application materials that tend to screen out individuals with disabilities;

• train its staff on the ADA and diabetes management;

• provide information for parents on how to request modifications for children with disabilities;

•designate an ADA compliance officer who will monitor compliance with the agreement and review requests for reasonable modifications, among other duties; and

• report annually to the United States on its compliance. 

ADA enforcement is a top priority of the Justice Department’s Civil Rights Division.  Those interested in finding out more about this settlement or the obligations of camps and child care programs under the ADA may call the Justice Department’s toll-free ADA information line at 800-514-0301 or 800-514-0383 (TDD), or access its ADA website at www.ada.gov.  ADA complaints may be filed online at http://www.ada.gov/complaint/.

Philadelphia Freedom Valley YMCA – Rocky Run Branch 

Attorney General Loretta E. Lynch announced today the appointments of Peter F. Neronha, U.S. Attorney for the District of Rhode Island, and John Huber, U.S. Attorney for the District of Utah, to the Attorney General’s Advisory Committee (AGAC), effective immediately.

“The Attorney General’s Advisory Committee plays a crucial role in shaping the Justice Department’s approach to fighting crime, countering national security threats and securing equal justice under the law and I am pleased to welcome two new members to its ranks,” said Attorney General Lynch.  “U.S. Attorneys John Huber and Peter Neronha have spent their careers tackling some of the most high-profile and difficult challenges we face, from political corruption and terrorism to gun violence and organized crime.  I have come to know them both as outstanding law enforcement officers and devoted public servants and I look forward to drawing upon their insight and expertise in the months to come as we continue our work to create a stronger, safer, and more equal nation for all Americans.” 

U.S. Attorney Neronha will fill the seat vacated by former U.S. Attorney for the Northern District of Ohio, Steven Dettelbach, who resigned on Feb. 5.

U.S. Attorney Huber will fill the seat vacated by former U.S. Attorney for the District of Kansas, Barry Grissom, who resigned on April 15.

U.S. Attorney Neronha was nominated by President Barack Obama on July 31, 2009, and confirmed by the U.S. Senate on Sept. 15, 2009, as the U.S. Attorney for the District of Rhode Island.  In 2002, U.S. Attorney Neronha joined the U.S. Attorney’s Office for the District of Rhode Island.  As an Assistant U.S. Attorney, he  prosecuted criminal cases involving political corruption, white collar crime, drug and firearm offenses.  When he joined the U.S. Attorney’s Office, he was named coordinator of the District’s Project Safe Neighborhoods, a Department of Justice initiative against gun crimes.  Prior to being named U.S. Attorney, he was Chief of the District’s Organized Crime Strike Force.  U.S. Attorney Neronha previously served on the AGAC during 2009-2011.

U.S. Attorney Huber was nominated by President Barack Obama on Feb. 4, 2015, and confirmed by the U.S. Senate on June 10, 2015, as U.S. Attorney for Utah.  Prior to confirmation as the U.S. Attorney, U.S. Attorney Huber prosecuted a number of high profile federal cases and coordinated task forces that focused on violent crime and counter-terrorism.  He also served as chief of the National Security Section in the U.S. Attorney’s Office before being asked to serve as the Executive Assistant U.S. Attorney, a member of the office’s executive management team.

The AGAC was created in 1973 to serve as the voice of the U.S. Attorneys and to advise the attorney general on policy, management and operational issues impacting the offices of the U.S. Attorneys.

Agencies Submit Joint Statement Regarding Proposed Legislation Addressing the Authority of Optometrists to Utilize and Prescribe Medications for Treatment and Diagnosis in Puerto Rico

The Department of Justice’s Antitrust Division and the staff of the Federal Trade Commission (FTC) have issued a joint statement encouraging the Puerto Rican legislature to consider expanding the services that optometrists can provide.  The statement describes the potential benefits to patients of enhanced competition among vision care providers, including greater access to timely and cost competitive care.  It recommends that the legislature only maintain restrictions on optometrists to utilize and prescribe medications for treatment and diagnosis that are necessary to ensure patient health and safety.   

The joint statement is in response to a request from Puerto Rico Representative Jose L. Báez Rivera, Chair of the Public Safety Committee in the Puerto Rico House of Representatives. The request asked for views on the possible competitive effects of Puerto Rico Senate Bill 991 (SB 991), which would expand the scope of practice for optometrists in Puerto Rico and permit them to use and prescribe medications to diagnose and treat diseases of the eye.

“According to the Centers for Disease Control and Prevention, Puerto Rico has the highest percentage of adults in the United States and its territories with blindness or severe difficulty seeing,” said Principal Deputy Assistant Attorney General Renata Hesse, head of the Justice Department’s Antitrust Division.  “As our statement explains, increasing competition among eye care providers in Puerto Rico by allowing optometrists to perform more eye care services can help expand access to cost effective and timely care.  Whenever it is consistent with patient safety, competition should play a key role in controlling health care costs.” 

The agencies’ comments are limited to SB 991’s effect on the authority of optometrists to use and prescribe medications and its competitive effects.  SB 991 would provide optometrists in Puerto Rico – like optometrists in all states, the District of Columbia, and other U.S. territories – with the authority to prescribe at least some medications for the diagnosis and treatment of eye diseases.  Providing optometrists a pharmacological role in the care they provide, with conditions the legislature finds appropriate to ensure patient safety, has the potential to bring the benefits of competition to Puerto Rican health care consumers. 

Comments on S.B. 8991 - Optometry Letter

The Contaminated Syringes That Infected Patients Were the Subject of a Recall

Drug and medical device company B. Braun Medical Inc. (B. Braun) has agreed to pay $4.8 million in penalties and forfeiture and up to an additional $3 million in restitution to resolve its criminal liability for selling contaminated B. Braun pre-filled saline flush syringes in 2007, the Department of Justice announced today. 

The B. Braun saline syringes had a B. Braun label but were manufactured by another company.  Today’s resolution includes a non-prosecution agreement that requires B. Braun to implement additional practices designed to increase its oversight of its product suppliers to prevent future sales of contaminated products.  B. Braun, a medical device manufacturer, has global headquarters in Melsungen, Germany, and corporate headquarters in Bethlehem, Pennsylvania, with primary manufacturing facilities in Allentown, Pennsylvania, and Irvine, California.

“The Federal Food, Drug and Cosmetic Act (FDCA) prohibits companies from selling contaminated products, even when the company did not make the product itself,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “Companies must take reasonable steps to ensure that their suppliers are making quality products that help rather than harm patients.  Today’s settlement shows that the government will continue to hold companies accountable for failing to fulfill this critically important responsibility.”

“Patients were infected by adulterated syringes distributed by B. Braun,” said Acting U.S. Attorney John Stuart Bruce for the Eastern District of North Carolina.  “This agreement helps to provide justice for the victims and to deter such future conduct by distributors of medical devices.”

According to the agreed upon statement of facts that accompany the non-prosecution agreement, in March 2006, B. Braun started buying B. Braun saline syringes from AM2PAT, Inc. (AM2PAT), which manufactured the syringes at a small facility in North Carolina.  The saline solution in pre-filled saline flush syringes must be sterile because it can enter a patient’s bloodstream when the syringes are used to flush out or clean medical devices that provide access to a patient’s veins, such as central lines, ports and short peripheral catheters.

As noted in the statement of facts, B. Braun was aware of manufacturing problems at AM2PAT, even before it began purchasing syringes from AM2PAT.  In separate audits, both the U.S. Food and Drug Administration (FDA) and B. Braun had found that AM2PAT was having problems complying with current good manufacturing practices.  Although AM2PAT addressed some of these initial problems, additional problems persisted.  In the spring of 2007, AM2PAT notified B. Braun that AM2PAT intended to move to a new manufacturing facility and change the company that would sterilize the B. Braun saline syringes through a new radiation sterilization process.  Sterilization, a vital step in the manufacture of these syringes, can be complex.  Before B. Braun’s quality department approved either of these changes, B. Braun began selling B. Braun saline syringes made at AM2PAT’s new facility and sterilized by the new sterilization company.  B. Braun later approved both of these changes even though B. Braun had already received complaints about the syringes changing colors and information from AM2PAT that it was making changes to its radiation process to avoid “overcooking” the syringes.  B. Braun approved AM2PAT’s facility move without ever seeing AM2PAT’s operations at its new facility or confirming AM2PAT’s representations that it had properly validated its clean room and equipment after the move.

Less than two months after B. Braun started selling syringes that AM2PAT made at its new facility with the new sterilization company, B. Braun recalled all of them because the radiation sterilization process caused dangerous white particles to develop in the saline inside the syringes. 

After the recall, AM2PAT told B. Braun that it gave B. Braun incorrect information about its new radiation sterilization process.  It also sent B. Braun information showing that AM2PAT moved manufacturing equipment to its new facility without validating that the equipment worked as expected after the move.  As explained in the statement of facts, even with this new information, B. Braun resumed buying B. Braun saline syringes from AM2PAT without going to AM2PAT’s new facility.

Less than a month after B. Braun resumed buying syringes from AM2PAT, AM2PAT manufactured B. Braun saline syringes contaminated with Serratia marcescens bacteria.  S. marcescens can cause blood infections.  These contaminated syringes infected patients in California, Texas, New York and Nebraska.  The syringes were recalled.

In the government’s non-prosecution agreement with B. Braun, B. Braun admits that it distributed B. Braun-labeled syringes that were adulterated under the FDCA.  Under the terms of the agreement, B. Braun will increase oversight of its product suppliers by conducting on-site audits of companies that design and make finished products that bear the B. Braun name on the label or logo and testing such products for sterility, identity and purity, as appropriate, on a periodic basis.  B. Braun will also be monitored by an independent compliance auditor during the term of the agreement.  The auditor will assess B. Braun’s implementation and maintenance of the enhanced compliance measures through on-site audits of B. Braun.  B. Braun’s chief executive officer and board of directors will also review and certify B. Braun’s compliance efforts on an annual basis.

“Americans expect and deserve medical devices that are safe, effective, and that meet appropriate standards for quality,” said Director George M. Karavetsos of FDA’s Office of Criminal Investigations.  “Today’s announcement should serve as a reminder of the FDA’s continued focus on companies that put profits ahead of the public health.”

Today’s settlement with B. Braun follows the earlier, related prosecution in the Eastern District of North Carolina of AM2PAT and three individuals who worked at AM2PAT.  In 2008, Ravindra Kumar Sharma, AM2PAT’s quality control director and Aniruddha Patel, AM2PAT’s plant manager, both pleaded guilty to criminal informations charging conspiracy to commit a number of federal offenses including felony violations of the FDCA.  Both were sentenced in 2009 to 54 months in prison.  AM2PAT and its former president, Dushyant Patel, were indicted on similar charges in 2009.  Patel fled the country and is currently on FDA’s Office of Criminal Investigations’ “Most Wanted” list.

Principal Deputy Assistant Attorney General Mizer and Acting U.S. Attorney Bruce commended the efforts of the FDA’s Office of Criminal Investigations and its Special Agent Paul Pierce for their work on this matter.  The matter was also handled by Assistant U.S. Attorney Evan Rikhye of the U.S. Attorney’s Office for the Eastern District of North Carolina and Senior Litigation Counsel Allan Gordus and Trial Attorney Shannon Pedersen of the Department’s Consumer Protection Branch.

For more information about the Consumer Protection Branch, visit its website at http://www.justice.gov/civil/consumer-protection-branch.

For more information about the U.S. Attorney’s Office for the Eastern District of North Carolina, visit its website at https://www.justice.gov/usao-ednc.

Defendants Received $16 Million in Refunds After Filing Bogus Tax Returns

Two brothers were sentenced to prison today in the U.S. District Court for the District of Maryland after pleading guilty in January for perpetrating a scheme in which they filed 46 fraudulent income tax returns seeking refunds in excess of $224 million, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division, U.S. Attorney Rod J. Rosenstein of the District of Maryland and Special Agent in Charge Thomas Jankowski of the Internal Revenue Service-Criminal Investigation (IRS-CI), Washington, D.C. Field Office.

Sean Aude Gallman, 39, of Upper Marlboro, Maryland, was sentenced to serve 132 months in prison, followed by three years of supervised release.  His brother Eric Maurice Gallman, 42, of Huntersville, North Carolina, was sentenced to serve 48 months in prison, followed by three years of supervised release.  The Gallmans pleaded guilty on Jan. 19 to conspiracy to commit mail and wire fraud, mail fraud and conspiracy to commit money laundering.  Sean Gallman also pleaded guilty to aggravated identity theft and money laundering charges.  Sean and Eric Gallman were each ordered to pay restitution to the IRS in the amount of $16,512,492.

 “The Gallman brothers engaged in a willful and deliberate scheme to steal from the U.S. Treasury and in turn, U.S. taxpayers,” said Acting Assistant Attorney General Ciraolo. “The Department will continue to aggressively investigate and prosecute individuals and entities engaged in this criminal conduct, and will seek substantial prison terms, fines and full restitution to hold defendants accountable and send a strong message to potential offenders.”

“These two criminals filed bogus tax returns claiming ‘refunds’ that were not owed, and stole over $16 million from the IRS,” said U.S. Attorney Rosenstein.  “Federal agents and prosecutors have a duty to pursue perpetrators of such fraud schemes and try to recover money stolen from the U.S. Treasury.”

“Using the U.S. Treasury as a personal piggy bank to obtain millions of dollars in fraudulent refunds, the Gallmans not only showed their blatant disregard of the law, but also for the American taxpayer,” said Special Agent in Charge Jankowski.  “Today’s sentencings emphasize that such greed based criminal behavior comes with a cost.”

According to evidence presented by the government, the Gallmans established trusts and business entities and used mailboxes at numerous private commercial postal carrier stores in Maryland and North Carolina as the addresses for the trusts and business entities.  The defendants, acting as trustees and agents, mailed fraudulent tax returns to the IRS in the names of the trusts and businesses requesting refunds.

For example, in January 2013, Sean Gallman mailed to the IRS a fraudulent 2012 tax return in the name of the Gallman Charitable Trust, requesting a refund of $8,218,930.  Also around this time, the defendants mailed to the IRS a fraudulent 2012 tax return in the name of LEA Group Holdings Trust, requesting a refund of $8,293,562.  The defendants knew that the trusts were not entitled to the tax refunds.  After receiving refund checks in these amounts, on Feb. 15 and March 11, 2013, the defendants deposited the funds into bank accounts they controlled.  To hide their receipt of these refunds, the defendants used cashier’s checks and other financial instruments to transfer a portion of the money to third parties and other bank accounts.

Altogether, the Gallman brothers filed a total of approximately 46 fraudulent tax returns seeking refunds totaling $224,676,998, for which the IRS paid two refunds totaling $16,512,492.

In addition to the prison terms, U.S. District Judge Paul W. Grimm of the District of Maryland ordered the Gallmans to forfeit the amount of the refunds paid by the IRS, including $11,529,954 seized from numerous bank accounts; foreign currency and gold and silver coins seized from a residence in Upper Marlboro; nine residential properties located in Upper Marlboro and Laurel, Maryland, North Carolina and South Carolina; and two Mercedes-Benz vehicles and a Hyundai vehicle.     

Acting Assistant Attorney General Ciraolo, U.S. Attorney Rosenstein and Special Agent in Charge Jankowski thanked special agents of IRS-CI, who investigated the case and Assistant U.S. Attorney Thomas P. Windom of the District of Maryland and Trial Attorney Erin Pulice of the Tax Division, who prosecuted the case.

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

The Justice Department announced today that a federal grand jury in Las Vegas returned a five-count indictment charging Clark County School District Police Officer James Lescinsky, 45, with unlawfully assaulting two people at the Jeffrey Behavior School on May 21, 2015, and then attempting to cover it up.

Lescinsky allegedly violated the right of the school staff member, identified only as T.R., not to be deprived of liberty without due process of law and the right of the student, identified only as A.N., to be free from unreasonable seizure.  The indictment alleges that Lescinsky unlawfully assaulted T.R. by striking her with a dangerous weapon, his police-issued baton, which caused bodily injury.  Lescinsky also allegedly unlawfully assaulted A.N. by striking her with the baton and slamming her into a hallway wall and floor at the school.

Lescinsky is also charged with witness tampering for making false representations to a supervisor and with falsifying official reports.  After the incident, Lescinsky informed his supervisor that the assault occurred because T.R. and A.N. were wrestling, when he knew that to be false.  He similarly falsified an official incident report and use of force report.

The maximum sentence for deprivation of rights under color of law is 10 years in prison.  The maximum sentence for witness tampering and false reporting is 20 years in prison.  An indictment is merely an accusation, and the defendant is presumed innocent unless proven guilty.

This case is being investigated by the FBI’s Las Vegas Division.  It is being prosecuted by Trial Attorneys Adam Harris and Dana Mulhauser of the Civil Rights Division’s Criminal Section.    

Lescinsky Indictment

Ruling Comes Nearly 60 Years After the Supreme Court’s Decision in Brown v. Board of Education

Late Friday, following a five-decade-long legal battle to desegregate schools in Cleveland, Mississippi, the U.S. District Court for the Northern District of Mississippi ordered the Cleveland School District to consolidate its secondary schools.  The court rejected as unconstitutional two alternatives proposed by the school district, agreeing with the Justice Department that the only way to achieve desegregation is by consolidating Cleveland’s high schools and middle schools. 

“Six decades after the Supreme Court in Brown v. Board of Education declared that ‘separate but equal has no place’ in public schools, this decision serves as a reminder to districts that delaying desegregation obligations is both unacceptable and unconstitutional,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division.  “This victory creates new opportunities for the children of Cleveland to learn, play and thrive together.  The court’s ruling will result in the immediate and effective desegregation of the district’s middle school and high school program for the first time in the district’s more than century-long history.”

In the 96-page opinion, the court made clear that the school district operated an inadequate dual system and failed to achieve the greatest degree of desegregation possible given the circumstances.  The court concluded the opinion by noting that “the delay in desegregation has deprived generations of students of the constitutionally-guaranteed right of an integrated education.  Although no court order can right these wrongs, it is the duty of the[d]istrict to ensure that not one more student suffers under this burden.”

Under the Justice Department’s plan approved by the court – which was developed in consultation with experts in school desegregation, school facilities, school financing and parent and community engagement – the district will consolidate the virtually all-black D.M. Smith Middle School with the historically white Margaret Green Junior High School.  The district will also consolidate the virtually all-black East Side High School with the historically white Cleveland High School.  Further, the district will review its existing educational programs and identify new programs for the consolidated schools, address staffing considerations and perform necessary maintenance and upgrades to facilities.

The ruling follows years of collaborative work with the local community and private plaintiffs in this case.  Community members – from parents and faith leaders, to former teachers and coaches – testified in court in 2012 and 2015.  They described the stigma long associated with the district’s black schools and the sense among black children in the community that white children attended better schools.  During last May’s hearing, they testified that consolidation was the only way to bridge the divide and expressed a willingness to take the steps, however difficult, to secure equal educational opportunities for their children and grandchildren.  Parents of all racial backgrounds testified that they want their children to learn in a diverse environment to prepare them to encounter the world today.

The approved plan commits the district to a path of full engagement with students, parents, educators and community stakeholders in implementing consolidation.  Cleveland is a small Mississippi-Delta city of 12,000 residents, divided by railroad tracks that separate east from west as well as black from white.  As one community member testified, “[w]e can break down this wall of racism that divides us and keeps us separated, and we could create a new culture in our school system that’s going to unite us and unite our whole city.”  The Justice Department shares the sentiments of the court that “the[d]istrict’s commitment to the education of its children will no doubt ensure that the gem that is Cleveland, along with its surrounding areas, only shine brighter as the shadows of segregation recede.”

The Civil Rights Division works to enforce desegregation orders in school districts formerly segregated by law, which have not yet fulfilled their legal obligation to eliminate segregation “root and branch.”  The division continues to prioritize enforcement of court orders addressing segregation in our nation’s schools to ensure that all children can access the building blocks of educational success.

Additional information about the Civil Rights Division of the Justice Department is available on its website at www.justice.gov/crt.

Northern District of Mississippi Opinion and Order in Cleveland Case

Corning International Kabushiki Kaisha (Corning International K.K.) has agreed to plead guilty and pay a $66.5 million criminal fine for conspiring to fix prices, rig bids and allocate the market for ceramic substrates sold in the United States and elsewhere, and used in catalytic converters supplied to automobile manufacturers in the United States and elsewhere, the Justice Department announced today. 

According to the felony charge filed today in U.S. District Court for the Eastern District of Michigan, Corning International K.K., based in Tokyo, conspired to fix prices, rig bids and allocate the market for ceramic substrates, from at least as early as July 1999 until on or about July 2011.  The products were installed in automotive emissions control systems and supplied to automobile manufacturers including Ford Motor Company, General Motors LLC, Honda Motor Company Ltd., and certain of their subsidiaries, affiliates, and suppliers in the United States and elsewhere.  Corning International K.K. agreed to cooperate in the department’s ongoing investigation.  The plea agreement will be subject to court approval. 

“Corning International K.K. – and Nobuhiko Niwa, its former executive, who was indicted last week – spent more than a decade colluding on sales of an important component of emissions systems for use in cars made and sold in the United States and elsewhere,” said Deputy Assistant Attorney General Brent Snyder of the Justice Department’s Antitrust Division.  “But they have now been held accountable for the competitive harm they caused.”

“Corning International K.K.'s conspiracy to rig bids and fix prices brought the company increased revenues at a cost to auto manufacturers, suppliers, and ultimately, consumers,” said Special Agent in Charge David P. Gelios of the FBI’s Detroit Division.  “Attempts to thwart the free market system are damaging to our economy, and thereby its consumers, and will be actively investigated and prosecuted.”

Including Corning International K.K., 40 companies have been charged in connection with this investigation and have agreed to pay more than $2.7 billion in criminal fines.  In addition, 59 individuals have been charged, including a former executive of Corning International K.K.  On May 11, 2016, a federal grand jury in the Eastern District of Michigan returned an indictment against Nobuhiko Niwa, a Japanese national, for his role in the conspiracy.  Niwa was charged with participating in the conspiracy from at least as early as July 1999 until on or about July 2011.

This charge results from an ongoing investigation conducted by the Antitrust Division’s Washington Criminal I Section and the FBI’s Detroit Division with the assistance of the FBI Headquarters’ International Corruption Unit.  Anyone with information on price fixing, bid rigging and other anticompetitive conduct related to the automotive parts industry should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258, visit http://www.justice.gov/atr/contact/newcase.html or call the FBI’s Detroit Field Office at 313-965-2323.

The U.S. Departments of Justice and Education released joint guidance today to help provide educators the information they need to ensure that all students, including transgender students, can attend school in an environment free from discrimination based on sex.

Recently, questions have arisen from school districts, colleges and universities, and others about transgender students and how to best ensure these students, and non-transgender students, can all enjoy a safe and discrimination-free environment.

Under Title IX of the Education Amendments of 1972, schools receiving federal money may not discriminate based on a student’s sex, including a student’s transgender status.  The guidance makes clear that both federal agencies treat a student’s gender identity as the student’s sex for purposes of enforcing Title IX.

“There is no room in our schools for discrimination of any kind, including discrimination against transgender students on the basis of their sex,” said Attorney General Loretta E. Lynch.  “This guidance gives administrators, teachers and parents the tools they need to protect transgender students from peer harassment and to identify and address unjust school policies.  I look forward to continuing our work with the Department of Education – and with schools across the country – to create classroom environments that are safe, nurturing, and inclusive for all of our young people.”

“No student should ever have to go through the experience of feeling unwelcome at school or on a college campus,” said U.S. Secretary of Education John B. King Jr.  “This guidance further clarifies what we’ve said repeatedly – that gender identity is protected under Title IX.  Educators want to do the right thing for students, and many have reached out to us for guidance on how to follow the law.  We must ensure that our young people know that whoever they are or wherever they come from, they have the opportunity to get a great education in an environment free from discrimination, harassment and violence.”

“Every child deserves to attend school in a safe, supportive environment that allows them to thrive and grow.  And we know that teachers and administrators care deeply about all of their students and want them to succeed in school and life,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division.  “Our guidance sends a clear message to transgender students across the country: here in America, you are safe, you are protected and you belong – just as you are.  We look forward to working with school officials to make the promise of equal opportunity a reality for all of our children.”

“Our federal civil rights law guarantees all students, including transgender students, the opportunity to participate equally in school programs and activities without sex discrimination as a core civil right,” said Department of Education Assistant Secretary for Civil Rights Catherine E. Lhamon.  “This guidance answers questions schools have been asking, with a goal to ensure that all students are treated equally consistent with their gender identity.  We look forward to continuing to work with schools and school communities to satisfy Congress’ promise of equality for all.”

The guidance explains that when students or their parents, as appropriate, notify a school that a student is transgender, the school must treat the student consistent with the student’s gender identity.  A school may not require transgender students to have a medical diagnosis, undergo any medical treatment, or produce a birth certificate or other identification document before treating them consistent with their gender identity.

The guidance also explains schools’ obligations to:

• Respond promptly and effectively to sex-based harassment of all students, including harassment based on a student’s actual or perceived gender identity, transgender status or gender transition;
• Treat students consistent with their gender identity even if their school records or identification documents indicate a different sex;
• Allow students to participate in sex-segregated activities and access sex-segregated facilities consistent with their gender identity; and
• Protect students’ privacy related to their transgender status under Title IX and the Family Educational Rights and Privacy Act.

At the same time, the guidance makes clear that schools can provide additional privacy options to any student for any reason.  The guidance does not require any student to use shared bathrooms or changing spaces, when, for example, there are other appropriate options available; and schools can also take steps to increase privacy within shared facilities.

In addition to the departments’ joint Title IX guidance, the Department of Education’s Office of Elementary and Secondary Education also released Examples of Policies and Emerging Practices for Supporting Transgender Students, a compilation of policies and practices that schools across the country are already using to support transgender students.  The document shares some common questions on topics such as school records, privacy and terminology, and then explains how some state and school district policies have answered these questions, which may be useful for other states and school districts that are considering these issues.  In this document, the Department of Education does not endorse any particular policy, but offers examples from actual policies to help educators develop policies and practices for their own schools.

Many parents, schools and districts have raised questions about this area of civil rights law.  Together, these documents will help navigate what may be a new terrain for some.

The Department of Justice’s Civil Rights Division, created in 1957 by the enactment of the Civil Rights Act of 1957, works to uphold the civil and constitutional rights of all Americans, particularly some of the most vulnerable members of our society.  The division enforces federal statutes prohibiting discrimination on the basis of race, color, sex, disability, religion, familial status and national origin.  Additional information about the Civil Rights Division of the Justice Department is available here.

The mission of the Department of Education’s Office for Civil Rights (OCR) is to ensure equal access to education and promote educational excellence throughout the nation through the vigorous enforcement of civil rights.  OCR is responsible for enforcing federal civil rights laws that prohibit discrimination by educational institutions on the basis of race, color, national origin, disability, sex and age, as well as the Boy Scouts of America Equal Access Act of 2001.  Additional information about OCR is available here.

The mission of the Department of Education’s Office of Elementary and Secondary Education (OESE) is to promote academic excellence, enhance educational opportunities and equity for all of America's children and families and to improve the quality of teaching and learning by providing leadership, technical assistance and financial support.  Additional information about OESE is available here.

Dear Colleague Letter on Transgender Students

Examples of Policies and Emerging Practices for Supporting Transgender Students

Michael Mancil Brown was found guilty late yesterday by a federal jury sitting in Nashville for engaging in an extortion and wire fraud scheme involving former Presidential candidate Mitt Romney’s tax returns, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, First Assistant United States Attorney Jack Smith of the U.S. Attorney’s Office for the Middle District of Tennessee and Special Agent in Charge Todd Hudson of the U.S. Secret Service’s Nashville Field Office.

Brown, 37, of Franklin, Tennessee, was convicted of six counts of wire fraud and six counts of using facilities of interstate commerce to commit extortion.

According to testimony at trial, evidence recovered from a computer seized from the home of Brown in 2012 implicated Brown in a scheme to defraud Romney, the accounting firm of PricewaterhouseCoopers LLP and others by falsely claiming that he had gained access to the PricewaterhouseCoopers internal computer network and had stolen tax documents for Romney and his wife, Ann D. Romney, for tax years prior to 2010.

Brown was found guilty of participating in the scheme in which a letter delivered in August 2012 to the offices of PricewaterhouseCoopers in Franklin demanded that $1 million worth of the digital currency Bitcoin be deposited to a specific Bitcoin account to prevent the release of the purportedly stolen Romney tax returns.  The letter also invited interested parties who wanted the allegedly stolen Romney tax documents to be released to contribute $1 million to another Bitcoin account.

As part of that scheme, similar letters were delivered to the offices of the Democratic and Republican parties in Franklin and caused similar statements to be posted to Pastebin.com.

A sentencing hearing will be scheduled for a date likely in August.  The defendant faces up to twenty years in prison on the charges of wire fraud, up to five years in prison on the charges of extortion, fines of up to $250,000, and orders of restitution to victims.

This case was investigated by the U.S. Secret Service’s Nashville Field Office with assistance from the FBI’s Nashville Division. The case is being prosecuted by U.S. Department of Justice Senior Counsel Anthony V. Teelucksingh and Assistant U.S. Attorney Byron Jones of the Middle District of Tennessee. 

A West Bridgewater, Massachusetts, man pleaded guilty today to one count of filing a false individual income tax return, Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division announced.  

According to court documents, Keith Eaton, 51, did not file federal individual income tax returns with the Internal Revenue Service (IRS) for the years 1998 through 2003.  In 2004, the IRS assessed Eaton more than $280,000 in taxes, interest and penalties for the years 1998 through 2001.

From November 2004 to April 2008, Eaton was employed at a heating and air conditioning company in Brockton, Massachusetts.  Each year, the company provided Eaton with Forms 1099 reflecting his compensation.  Despite receiving these Forms 1099 reporting significant earnings, Eaton did not file timely individual income tax returns with the IRS for years 2004 through 2008.  In November and December 2009, Eaton filed Forms 1040 for himself for the years 2000 through 2008 in which he falsely reported receiving no income for any of those years.   

In or about November 2008, Eaton began operating Eaton Mechanical LLC, a heating and air conditioning business.  In an attempt to thwart the IRS’s effort to collect his back taxes, Eaton caused checks from the business bank account to be made payable to himself and then cashed the checks.  Eaton used the cash to pay his personal expenses, including his mortgage.  Finally, despite having sufficient income from the operation of his business to require him to file income tax returns, Eaton failed to file individual income tax returns for the years 2009 through 2012.

U.S. District Court Judge William Young for the District of Massachusetts scheduled Eaton’s sentencing for Sept. 14.  Eaton faces a statutory maximum sentence of three years in prison and a maximum fine of $250,000.  Under the terms of the plea agreement, Eaton is required to pay restitution for his unpaid tax liabilities for the years 1998 through 2012.    

Acting Assistant Attorney General Ciraolo commended the special agents of IRS-Criminal Investigation who investigated the case and Trial Attorneys Brittney Campbell and Kenneth Vert of the Tax Division, who are prosecuting the case.

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

M&T Bank Corp. (M&T Bank) has agreed to pay the United States $64 million to resolve allegations that it violated the False Claims Act by knowingly originating and underwriting mortgage loans insured by the U.S. Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA) that did not meet applicable requirements, the Justice Department announced today.  M&T Bank is headquartered in Buffalo, New York.

“Mortgage lenders that fail to follow FHA program rules put taxpayer funds at risk and increase the chances of borrowers losing their homes,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “We will continue to hold lenders accountable for knowingly submitting ineligible loans for FHA insurance.”

“M&T Bank bypassed its responsibility to originate and underwrite mortgages in accordance with the standards required by the FHA,” said First Assistant U.S. Attorney James P. Kennedy Jr. for the Western District of New York.  “This case demonstrates that when a financial institution takes such a detour, we will work to ensure that it does not bypass the consequences of that conduct.”

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

The settlement announced today resolves allegations that M&T Bank failed to comply with certain FHA origination, underwriting and quality control requirements.  As part of the settlement, M&T Bank admitted to the following facts: Between Jan. 1, 2006, and Dec. 31, 2011, it certified for FHA insurance mortgage loans that did not meet HUD underwriting requirements and did not adhere to FHA’s quality control requirements.  Prior to 2010, M&T Bank failed to review all Early Payment Default (EPD) loans, which are loans that become 60 days past due within the first six months of repayment.  Between 2006 and 2011, M&T also failed to review an adequate sample of FHA loans, as required by HUD.    

Additionally, M&T created a quality control process that allowed it to produce preliminary major error rates that were significantly lower (sometimes below one percent) than what the rate would have been if M&T had calculated its preliminary major error rate by dividing the number of loans with preliminary major errors by the number of loans reviewed to determine what percent of loans contained a preliminary major error.

M&T Bank also failed to adhere to HUD’s self-reporting requirements.  While M&T Bank identified numerous FHA insured loans with “major errors” between 2006 and 2011, M&T Bank did not report a single loan to HUD until 2008, and thereafter self-reported only seven loans to HUD.  As a result of M&T’s conduct and omissions, HUD insured hundreds of loans approved by M&T that were not eligible for FHA mortgage insurance under the Direct Endorsement program and that HUD would not otherwise have insured.  HUD subsequently incurred substantial losses when it paid insurance claims on those loans.

* * *

“This recovery on behalf of the Federal Housing Administration should serve as a reminder of the potential consequences of not following HUD program rules and the value of private citizen assistance, including whistleblowers, in pursuing lenders that violate the rules,” said Inspector General David A. Montoya of the Department of Housing and Urban Development.

“It is critically important that FHA-approved lenders comply with HUD’s underwriting standards and originate mortgages that borrowers can sustain,” said HUD General Counsel Helen Kanovsky.  “We are pleased M&T Bank worked with the Department of Justice and HUD to arrive at an agreeable settlement that protects FHA’s insurance fund.”

The allegations resolved by this settlement arose from a whistleblower lawsuit filed under the False Claims Act by a former employee of M&T Bank, Keisha Kelschenbach.  Under the False Claims Act, private citizens can sue on behalf of the government and share in any recovery.  The share to be awarded in this case has not yet been determined. 

The settlement was the result of a joint investigation conducted by HUD, HUD’s Office of Inspector General, the Civil Division and the U.S. Attorney’s Office for the Western District of New York.

The lawsuit is captioned U.S. ex rel. Kelschenbach v. M&T Bank Corp, 13-CV-0280(S) (W.D.N.Y.).

The Justice Department announced today that it has reached an agreement with NetJets Services Inc. (NetJets), a business that provides private aviation services based out of Columbus, Ohio.  The agreement resolves allegations that NetJets violated the anti-discrimination provision of the Immigration and Nationality Act (INA) by discriminating against work-authorized immigrants.

The Justice Department’s investigation found that NetJets improperly required newly hired, work-authorized non-U.S. citizens to present specific documents to prove their employment eligibility that they did not require of similarly-situated U.S. citizens.  The investigation further found that existing employees who were legal permanent residents were subjected to unnecessary post-employment reverification of their employment eligibility because of their immigration status and that employees who had become naturalized U.S. citizens after they were hired were required to present more and different documents than necessary to establish their citizenship status.  The INA’s anti-discrimination provision prohibits employers from discriminating based on citizenship, immigration status, or national origin when verifying an employee’s employment authorization.

Under the settlement agreement, NetJets must pay a $41,480 civil penalty, train its human resources staff on the anti-discrimination provision of the INA and be subject to monitoring by the Justice Department for a period of two years.

“It is the responsibility of each employer to ensure that its human resources staff understand and implement proper hiring practices to avoid violating anti-discrimination laws,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division.  “The Civil Rights Division commends NetJets for its cooperation during the investigation and its commitment to implement remedial measures.”

The Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) is responsible for enforcing the anti-discrimination provision of the INA.  The statute prohibits, among other things, citizenship, immigration status and national origin discrimination in hiring, firing or recruitment or referral for a fee; unfair documentary practices in employment eligibility verification; retaliation; and intimidation.  The case was handled by Trial Attorney Pablo A. Godoy of the Civil Rights Division’s OSC.

For more information about protections against employment discrimination under immigration laws, call OSC’s worker hotline at 1-800-255-7688 (1-800-237-2515, TTY for hearing impaired); call OSC’s employer hotline at 1-800-255-8155 (1-800-237-2515, TTY for hearing impaired); sign up for a free webinar at www.justice.gov/crt/about/osc/webinars.php; email osccrt@usdoj.gov; or visit OSC’s website at www.justice.gov/crt/about/osc.

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

NetJets Settlement Agreement

El Departamento de Justicia anunció hoy que ha llegado a un acuerdo con NetJets Services Inc. (NetJets), una empresa con sede en Columbus, Ohio, que brinda servicios privados de aviación.  El acuerdo resuelve las alegaciones de que NetJets había vulnerado la disposición antidiscriminatoria de la ley de Inmigración y Nacionalidad (INA, por sus siglas en inglés) al discriminar a inmigrantes con autorización para trabajar.

La investigación del Departamento de Justicia encontró que NetJets requirió, de forma ilícita, que todo empleado nuevo que no fuera ciudadano de los EE. UU. presentase documentos específicos para demostrar su elegibilidad para trabajar, pero no solicitaron lo mismo de individuos que estaban en una posición igual y que sí eran ciudadanos de los EE. UU.  Más aún, la investigación encontró que empleados actuales eran son residentes permanentes legales fueron sometidos a una reverificación innecesaria de su elegibilidad para trabajar tras ser contratados, por motivos de su estatus migratorio y que empleados que se habían convertido en ciudadanos estadounidenses naturalizados tras ser contratados tuvieron que presentar documentos diferentes y adicionales a los que se necesitan para establecer su estatus de ciudadanía. La disposición antidiscriminatoria de la INA prohíbe que los empleadores discriminen por motivos de estatus de ciudadanía, estatus migratorio o nacionalidad de origen al verificar la autorización para trabajar del empleado.

En virtud del acuerdo de resolución, NetJets deberá pagar 41.480 $ en sanciones civiles, capacitar a su personal de recursos humanos en cuanto a la disposición antidiscriminatoria de la INA y someterse a la supervisión del Departamento de Justicia durante un período de dos años.

“Es la responsabilidad de cada empleador asegurar que su personal de recursos humanos entienda e implemente las prácticas de contratación correctas para evitar que se vulneren las leyes antidiscriminatorias,” declaró la Secretaria de Justicia Auxiliar Adjunta Principal, Vanita Gupta, Directora de la División de Derechos Civiles del Departamento de Justicia.  “La División de Derechos Civiles aplaude a NetJets por su colaboración durante la investigación y su compromiso con la implementación de medidas correctivas.”

La Oficina del Consejero Especial para Prácticas Injustas en el Empleo Relacionadas a Inmigración (OSC, por sus siglas en inglés) es responsable de aplicar la disposición antidiscriminatoria de la INA.  Entre otras cosas, esta ley prohíbe la discriminación por motivos de estatus de ciudadanía o nacionalidad de origen en los procesos de contratación, despido o reclutamiento o recomendación por comisión las prácticas documentales injustas; las represalias y la intimidación.  El caso lo gestionó el Abogado Litigante Pablo A. Godoy de la OSC de la División de Derechos Civiles.

Para más información sobre protecciones contra la discriminación en el empleo en virtud de las leyes migratorias federales, llame a la línea directa de la OSC para trabajadores al 1‑800‑255-7688 (1‑800-237-2515, TTY para personas con discapacidades auditivas); llame a la línea directa de la OSC para empleadores al 1-800-255-8155 (1-800-237-2515, TTY para personas con discapacidades auditivas); matricúlese para un seminario en línea gratuito en www.justice.gov/crt/about/osc/webinars.php; mande un correo electrónico a osccrt@usdoj.gov o visite la página web de la OSC en www.justice.gov/crt/about/osc.

Los aspirantes o empleados que creen haber sido víctimas de requisitos documentales diferentes por motivos de su estatus de ciudadanía, estatus migratorio o nacionalidad de origen; o discriminación por motivos de su estatus de ciudadanía, estatus migratorio o nacionalidad de origen en los procesos de contratación, despido o reclutamiento o recomendación deben comunicarse con la línea directa de la OSC para trabajadores referenciada para pedir ayuda.

Netjets Settlement Agreement

The U.S. District Court for the Eastern District of Michigan entered a permanent injunction against Scotty’s Incorporated (Scotty’s), of Detroit, Michigan, and its co-owner and manager, Sandra J. Jackson, to prevent the distribution of adulterated ready-to-eat sandwiches, the Department of Justice announced today.

The department filed a complaint on Nov. 21, 2014, at the request of the U.S. Food and Drug Administration (FDA).  According to the complaint, Scotty’s, which does business as Bruce Enterprises and Bruce’s Fresh Products, prepares and distributes ready-to-eat (RTE) sandwiches, including RTE tuna salad sandwiches.  According to the complaint, the company’s sandwiches have been prepared, packed or held under insanitary conditions and the company failed to follow the Hazard Analysis and Critical Control Point (HACCP) regulations for their tuna processing.  The complaint alleged that the company’s RTE sandwiches are primarily sold to local police departments and retail customers, such as convenience stores and gas stations, in Michigan and Ohio. 

The permanent injunction followed a March 28, decision by the district court that Scotty’s had violated the Federal Food, Drug and Cosmetic Act (FDCA), including a finding that the company’s sandwiches were adulterated. 

“The American public needs to have the confidence that food in the marketplace is safe to eat,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Department of Justice’s Civil Division.  “Insanitary conditions at food processing facilities can pose well-known risks to consumers, but those risks can be effectively mitigated if companies preparing food take proper precautions.”

The district court’s March 28 decision concluded that FDA documented multiple violations of current good manufacturing practices at the company, including:  mold-covered ceiling tiles in the walk-in cooler where defendants stored sandwiches; employees touching non-food contact surfaces, including those near the trash, before handling food products without washing their hands; and placing plastic bakery racks holding bread buns directly on the floor and in an alley near the trash and then moving the racks to a production table without being cleaned. 

The district court also found that defendants did not have a HACCP plan in place.  Federal regulations require processors of fish and fishery products, such as the company here, to conduct or have conducted for it a hazard analysis to determine whether there are food safety hazards that are reasonably likely to occur for each kind of fish and fishery product processed and to identify the preventive measures that the processor can take to control these hazards.  Whenever such an analysis reveals one or more food safety hazards that are likely to occur, a processor is required to have and implement a written HACCP plan. 

Under the permanent injunction, defendants cannot receive, prepare, process, pack, hold and distribute RTE sandwiches until they take a number of remedial steps.  These steps include, among other things, submitting a written sanitation program covering all of their operations to ensure that they comply with the FDCA.  Defendants must also submit a written HACCP plan for each type of seafood received, prepared, packed, held, or distributed by them for which food safety hazards are identified.  In addition, defendants must submit employee training programs on all foodborne hazards, including the sanitation control program and a plan to destroy all finished and in-process RTE sandwiches in their custody, control or possession.  Defendants must also wait until FDA notifies them that the defendants appear to be in compliance with specific remedial actions set forth above, the FDCA and its implementing regulations.

The government is represented by Trial Attorney Ann Entwistle, of the Civil Division’s Consumer Protection Branch, with the assistance of Associate Chief Counsel Jennifer Kang, of the U.S. Department of Health and Human Services’ Office of General Counsel-Food and Drug Division and Assistant U.S. Attorney Peter Caplan of the Eastern District of Michigan.

Additional information about the Consumer Protection Branch and its enforcement efforts may be found at http://www.justice.gov/civil/consumer-protection-branch. For more information about the U.S. Attorney’s Office for the Eastern District of Michigan, visit its website at https://www.justice.gov/usao-edmi.

ASCAP to Pay $1.75 Million and Reform its Licensing Practices

The Department of Justice announced today that the American Society of Composers, Authors and Publishers (ASCAP) has agreed to pay $1.75 million and reform certain practices to settle allegations that ASCAP violated a court-ordered consent decree designed to prevent anticompetitive effects arising from its collective licensing of music performance rights.  Despite provisions in that court order prohibiting ASCAP from interfering with its members’ ability to directly license their songs, ASCAP entered into approximately 150 contracts with songwriter and publisher members that made ASCAP the exclusive licensor of their performance rights.  As part of the settlement, ASCAP has also promised not to enter into further exclusive contracts and agreed to reform its licensing practices to remove music publishers from overseeing ASCAP’s licensing.

The Department of Justice’s Antitrust Division today filed a petition in the U.S. District Court for the Southern District of New York to have ASCAP held in civil contempt for violating the consent decree.  At the same time, the department filed a proposed settlement agreement and order that, if approved by the court, would resolve the department’s concerns.

“By blocking members’ ability to license their songs themselves, ASCAP undermined a critical protection of competition contained in the consent decree,” said Principal Deputy Assistant Attorney General Renata B. Hesse, head of the Justice Department’s Antitrust Division.  “The Supreme Court said that ASCAP’s consent decree is supposed to provide music users with a ‘real choice’ in how they can access the millions of songs in ASCAP’s repertory – through ASCAP’s blanket license or through direct negotiations with individual songwriters and publishers.  Today’s settlement restores that choice and thereby promotes competition among the songwriters, the publishers and ASCAP.  This settlement also sends an important message to ASCAP and others subject to antitrust consent decrees that they must abide by the terms of the decrees or face significant consequences.” 

ASCAP is a performing rights organization that licenses public performance rights in compositions held by its hundreds of thousands of songwriter and publisher members.  Since 1941, when the United States originally brought a civil antitrust lawsuit against ASCAP for price fixing, ASCAP has been subject to a consent decree, amended twice since then, that imposes a number of restrictions on ASCAP designed to prevent its anticompetitive exercise of market power.  Among its restrictions, the consent decree prohibits ASCAP from entering into exclusive contracts with songwriters or music publishers or otherwise impeding direct licensing so that music users retain the ability to seek licenses directly from songwriters or music publishers. 

The department’s investigation into ASCAP’s decree violation also revealed the existence of a conflict in the interests of the music publishers that serve on ASCAP’s board of directors.  Those publisher board members are customers of ASCAP when ASCAP licenses their performance rights and competitors of ASCAP when they seek to license their rights directly.  To ensure that this conflict does not prevent ASCAP and its publisher board members from competing with each other in licensing, ASCAP has agreed in the proposed settlement to cease publisher board members’ involvement in ASCAP’s licensing activities. 

The proposed settlement also requires ASCAP to adopt an improved compliance program in order to minimize the likelihood of future consent decree violations.

ASCAP Declaration

ASCAP Declaration Exhibit A

ASCAP Declaration Exhibit B

ASCAP Memorandum

ASCAP Proposed Order

ASCAP Petition

A former certified public accountant in Georgia was sentenced to seven months in prison today after pleading guilty in February to one count of filing a false tax return, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney John A. Horn for the Northern District of Georgia.

According to court documents and information presented in court, Thomas D. Ziff was a licensed certified public accountant.  From approximately January 2006 through December 2010, Ziff operated a tax return preparation and accounting business.  During that time, Ziff was the trustee of a trust that was associated with the last will and testament of another individual.  As the trustee of the trust, Ziff opened a bank account in the name of the trust at Wachovia Bank over which he had sole signatory authority.  While serving as trustee of the trust, Ziff embezzled and caused to be transferred approximately $300,000 from the trust bank account to other bank accounts that he controlled and used the funds for his personal use.  Ziff failed to report the embezzled funds as income on his federal income tax returns for the years 2008, 2009 and 2010.

In addition to the prison term, U.S. District Judge Steve C. Jones of the Northern District of Georgia ordered Ziff to serve one year of supervised release and pay restitution to the Internal Revenue Service (IRS) in the amount of $47,539.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Horn commended special agents of IRS-Criminal Investigation, who investigated the case and Trial Attorney Christopher J. Maietta of the Tax Division and Assistant U.S. Attorney Steven D. Grimberg of the Northern District of Georgia, who prosecuted the case.

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

A federal grand jury sitting in Macon, Georgia, returned two indictments today against residents of Columbus, Georgia, charging crimes related to several stolen identity tax refund fraud schemes, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and Acting U.S. Attorney G.F. Peterman, III, for the Middle District of Georgia.

Tonya Alexander is charged with one count of conspiracy to commit theft of public money and ten counts of theft of public money.  The indictment alleges that, between June 2012 and December 2013, Alexander worked as a bank teller at SunTrust Bank in Columbus.  Alexander was allegedly approached by several co-conspirators who wanted her to cash fraudulently obtained tax refund checks in exchange for a fee.  The income tax refunds were generated by tax returns filed using stolen identities.  It is further alleged that Alexander recruited another bank teller to assist her in cashing the fraudulent tax refund checks.  In total, Alexander and her co-conspirators are alleged to have cashed over 500 tax refund checks that fraudulently claimed over $1 million in tax refunds.    

George Rowell is charged with one count of conspiracy to commit theft of public money, seven counts of theft of public money and two counts of passing forged U.S. Treasury checks.  The indictment alleges that between January 2013 and December 2013, Rowell owned and operated Big O’s Package Store located in Columbus.  Rowell offered check cashing services at his store.  Rowell was allegedly approached by several co-conspirators who wanted him to cash fraudulently obtained tax refund checks in exchange for a fee.  The tax refunds were generated by tax returns filed using stolen identities.  Rowell allegedly charged his co-conspirators 10 percent of the check’s face value and permitted at least one co-conspirator to forge the endorsement on the checks in his presence.  In total, Rowell and his co-conspirators are alleged to have cashed over 250 tax refund checks worth more than $600,000.

If convicted, Alexander and Rowell each face a statutory maximum sentence of five years in prison for the conspiracy counts and 10 years in prison for each count of theft of public money.  Rowell also faces a statutory maximum sentence of 10 years in prison for each count of passing a forged U.S. Treasury check.  Both defendants also face monetary penalties, supervised release and restitution. 

An indictment merely alleges that crimes have been committed.  The defendants are presumed innocent until proven guilty beyond a reasonable doubt.

Acting Assistant Attorney General Ciraolo and Acting U.S. Attorney Peterman commended special agents of Internal Revenue Service-Criminal Investigation and the U.S. Secret Service, who investigated the cases and Trial Attorney Michael C. Boteler of the Tax Division and Assistant U.S. Attorney Crawford L. Seals of the Middle District of Georgia, who are prosecuting the cases. 

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

A federal court in Chicago has ordered that Mauricio Consalter, a doctor, ensure that his business timely file payroll tax returns and pay payroll taxes, the Department of Justice announced today. 

U.S. District Court Judge John Robert Blakey for the Northern District of Illinois entered a permanent injunction requiring Medici Health Care Providers SC and Consalter to timely file payroll tax returns and pay any payroll taxes that accrue.  Additionally, Consalter must notify the Internal Revenue Service (IRS) if he starts to operate a new business in the next five years.  The defendants agreed to entry of the injunction, but did not admit the factual allegations in the civil complaint.

According to the United States’ complaint, Medici Health Care Providers SC has repeatedly failed to timely file payroll tax returns or pay payroll taxes.  The permanent injunction entered by the court requires the defendants to stay current on their federal employment tax obligations.

Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division thanked the revenue officer in IRS Field Collection for investigating and preparing the civil case.

Additional information about the Tax Division and its efforts to combat unpaid employment taxes may be found on the division’s Employment Tax Enforcement webpage.

A federal grand jury in the District of Nevada returned a superseding indictment on May 10 charging a Las Vegas woman with two counts of filing false tax returns with the Internal Revenue Service (IRS) and one count of corruptly endeavoring to impair and impede the due administration of the internal revenue laws, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Daniel Bogden of the District of Nevada.

According to the superseding indictment, from at least 2005 through at least 2009, Judith Woodward, then known as Judith Atwell, was the 99 percent owner and joint operator of a dry cleaning business, Canyon Gate Cleaners, in Las Vegas, Nevada, which she held in the name of a partnership called Canyon Enterprises LLC.  Woodward is alleged to have underreported the gross receipts of Canyon Gate Cleaners on the partnership’s 2005 through 2009 tax returns.  She is also alleged to have underreported her personal income on her 2005 through 2009 individual income tax returns.

According to the superseding indictment, between at least 2005 and 2009, Woodward concealed the true gross receipts of the business by depositing hundreds of thousands of dollars of cash receipts into personal bank accounts she controlled or by not depositing the cash receipts into any bank account.  The superseding indictment alleges that Woodward fraudulently withheld information regarding the business’s gross receipts and her personal income from the individual who prepared the business’s partnership tax returns and her individual income tax returns for the years 2005 through 2009.  Woodward is alleged to have used tens of thousands of dollars of unreported cash business receipts for personal expenditures, including the purchase of luxury vehicles.  Woodward is also alleged to have made false and misleading statements to special agents of IRS-Criminal Investigation (IRS-CI) during an interview in June 2010.   

If convicted, Atwell faces a statutory maximum sentence of three years in prison and a $250,000 fine on each count of the superseding indictment.  She also faces supervised release and restitution.

An indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Bogden thanked special agents of IRS-CI, who are investigating the case and Trial Attorneys Christopher S. Strauss and Eric C. Schmale of the Tax Division, who are prosecuting the case.

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

A federal grand jury sitting in New Orleans, Louisiana, returned an indictment on May 6, which was unsealed today, against a LaPlace, Louisiana, woman charging her with 37 counts of aiding and assisting in the preparation of false tax returns, eight counts of contempt of court, one count of bank fraud and one count of forgery of a judge’s signature, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Department of Justice’s Tax Division and U.S. Attorney Kenneth Allen Polite Jr. of the Eastern District of Louisiana.

According to the indictment, Shawanda Nevers aka Shawanda Hawkins and Shawanda Bryant, operated a tax return preparation business under several names and at various locations in the LaPlace area.  It is alleged that between 2011 and 2016, Nevers filed 37 false tax returns for clients that claimed a variety of fraudulent losses and deductions, including false Schedule C businesses and false unreimbursed employee expenses.  In September 2014, a federal judge permanently enjoined Nevers from preparing federal tax returns.  Nevers is charged with contempt of court for violating that injunction by preparing eight federal income tax returns in 2015 and 2016.

Nevers also is charged with forging the signature of a federal bankruptcy judge on a false document purporting to be an order reinstating a bankruptcy petition and with bank fraud for submitting a fraudulent claim for losses supposedly caused by the BP Deepwater Horizon oil spill in 2010.

If convicted, Nevers faces a statutory maximum sentence of three years in prison for each count of aiding and assisting in the preparation of false tax returns, 30 years in prison for the bank fraud charge and five years in prison for the charge of forging the signature of a federal judge.  There is no statutory maximum sentence for the contempt of court charges.  She also faces substantial monetary penalties, supervised release and restitution.

An indictment merely alleges that crimes have been committed.  Defendants are presumed innocent until proven guilty beyond a reasonable doubt.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Polite commended special agents of Internal Revenue Service-Criminal Investigation, who investigated the case and Assistant U. S. Attorneys Hayden Brockett and Mimi Nguyen of the Eastern District of Louisiana, and Trial Attorney Grace Albinson of the Tax Division, who are prosecuting this case.

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

A federal grand jury in the U.S. District Court for the Eastern District of Michigan returned an indictment against Nobuhiko Niwa, a former automotive parts executive, for his alleged participation in a conspiracy to fix prices, rig bids and allocate the market for ceramic substrates sold in the United States and elsewhere, and used in catalytic converters supplied to automobile manufacturers in the United States and elsewhere, announced the Justice Department today.

The one-count indictment, filed today in Detroit, charges Niwa, a Japanese national, with conspiring to fix prices, rig bids and allocate the market for ceramic substrates used in automotive emissions control systems to reduce pollution.  Automotive emissions control systems containing affected substrates were supplied to automobile manufacturers including General Motors, Ford, Chrysler and Honda, and certain of their subsidiaries, affiliates and suppliers in the U.S. and elsewhere. 

“Those who corrupt the competitive process must be held accountable,” said Deputy Assistant Attorney General Brent Snyder of the Justice Department’s Antitrust Division.  “Today’s indictment reaffirms our commitment to vigorously prosecute corporate executives who scheme to harm their customers, such as those in the U.S. auto industry.” 

“Mr. Niwa’s role in rigging bids and fixing prices to increase revenues subverted the free market structure of our economy,” said Special Agent in Charge David P. Gelios of the FBI’s Detroit Division.  “The scheme came at a cost to auto manufacturers, suppliers, and ultimately, consumers.  Criminal acts that negatively impact consumers and damage our economy will be actively investigated and prosecuted.”

Niwa is charged with participating in the conspiracy from July 1999 to July 2011, when he served as Director and Senior Director of the mobile emissions division of a Japanese subsidiary of a Fortune 500 company based in Corning, New York.  The U.S. company manufactures substrates in the United States and sells those products in the United States and elsewhere.  Its Japanese subsidiary, which employed Niwa, markets and manages sales of substrates manufactured in the United States.  Some of the affected substrates were installed in catalytic converters for vehicles sold to U.S. consumers.

Today’s charge is the result of an ongoing federal antitrust investigation into price fixing, bid rigging, and other anticompetitive conduct in the automotive parts industry, which is being conducted by the Antitrust Division’s criminal enforcement sections and the FBI.  Including Niwa, a total of 59 individuals and 39 companies have been charged and have agreed to pay more than $2.6 billion in criminal fines. 

This indictment was brought by the Antitrust Division’s Washington Criminal I Section and the FBI’s Detroit Division with the assistance of the FBI’s International Corruption Unit.  Anyone with information on price fixing, bid rigging and other anticompetitive conduct related to the automotive parts industry should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258, visit http://www.justice.gov/atr/contact/newcase.html or call the FBI’s Detroit Field Office at 313-965-2323.

Niwa Indictment

Return Preparer Allegedly Claimed Fraudulent Credits and Deductions

A federal court has ordered West Palm Beach-area tax return preparer Paul Jean not to prepare federal tax returns for anyone except himself, the Justice Department announced today.  The order was entered after Jean failed to respond to the United States’ civil complaint.

According to the complaint, Jean has operated under the business names Whiz Tax and Rejoice Tax Services.  The complaint alleges he has prepared returns that claim fabricated or inflated tax credits including claiming improper earned income tax credits, education credits, or fuel credits.  In addition, Jean allegedly prepared returns that report false or inflated deductions on Schedule A (Itemized Deductions), such as deductions for mortgage interest paid or charitable contributions, or on Schedule C (Profit or Loss From Business), such as expenditures for supplies or office expenses.

The Internal Revenue Service (IRS) estimates that Jean, directly or indirectly, has prepared and filed more than 3,000 tax returns since 2012, according to the complaint, and that the harm Jean’s conduct has inflicted on the U.S. Treasury may be in the millions of dollars.        

Return preparer fraud is one of the IRS’s Dirty Dozen Tax Scams for 2016.  The IRS has some tips on their website for choosing a tax preparer and has launched a free directory of federal tax preparers.  In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers.  Information about these cases is available on the Justice Department’s website.  An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page.  If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.

A southern California man pleaded guilty today to making excessive campaign contributions and making campaign contributions in the name of another.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Acting U.S. Attorney Phillip A. Talbert of the Eastern District of California made the announcement.

Babulal Bera, 83, of La Palma, California, pleaded guilty in Sacramento before U.S. District Judge Troy L. Nunley in the Eastern District of California.  He is scheduled to be sentenced by Judge Nunley on Aug. 4.

In connection with his pleas, Bera admitted that, in 2010 and 2012, he made the maximum allowable individual contributions to his son’s congressional campaigns in California’s District 3 (2010) and District 7 (2012).  He further admitted that he solicited friends, family members and acquaintances to make contributions, which he then reimbursed with his own funds to make campaign contributions in excess of the contribution limits established by federal law.  The government has identified over 130 improper campaign contributions involving approximately 90 contributors in the two elections.  To date, the government has identified over $220,000 in reimbursed contributions relating to the 2010 campaign and over $40,000 in reimbursed contributions relating to the 2012 campaign.

This case was investigated by the FBI.  Trial Attorney Richard Evans of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorneys John Vincent and Philip Ferrari are prosecuting the case.

 

A Pennsylvania State Senator and a Pennsylvania Democratic Party Official were charged in a federal indictment for their involvement in a bribery and fraud scheme related to the 2011 election for Democratic Ward Leader for Philadelphia’s Eighth Ward. 

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division made the announcement. 

Lawrence “Larry” Farnese, 47, and Ellen Chapman, 62, both of Philadelphia, were charged with conspiracy, mail fraud, wire fraud, and violations of the Travel Act.  According to the indictment, at the time of the alleged illegal conduct, Farnese was a Pennsylvania State Senator and a candidate for Democratic Ward Leader of the Eighth Ward and Chapman was a member of the Eighth Ward Democratic Committee.

The indictment alleges that from May to December 2011, Farnese and Chapman devised a bribe scheme in which Farnese paid $6,000 to a college study-abroad program for Chapman’s daughter in exchange for Chapman’s agreement to use her position with the Eighth Ward Democratic Committee to support Farnese in the upcoming ward leader election.  According to the indictment, Chapman had originally intended to support a different candidate in the ward leader election.  The indictment also alleges that Farnese made the $6,000 payment using campaign funds and disguised the true purpose of the payment by falsely listing it as a “donation” on the campaign’s finance report. 

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

This case was investigated by the FBI and is being prosecuted by Trial Attorneys Jonathan Kravis and Peter Halpern of the Criminal Division’s Public Integrity Section.  

A Kentucky man pleaded guilty in the U.S. District Court for the Eastern District of Kentucky today to one count of conspiracy to defraud the United States with respect to claims, one count of wire fraud and one count of aggravated identity theft, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Kerry B. Harvey of the Eastern District of Kentucky. 

Brian Hamilton admitted that during the years 2011 and 2012 he conspired with others, including his brother, Billy Ray Hamilton, Patsy Carnes and Diana Hill to file false tax returns from the Bailey Switch Pawn Shop in Knox County, Kentucky.  According to the plea agreement, the Hamiltons prepared and electronically filed with the Internal Revenue Service (IRS) at least 31 tax returns that contained false and fraudulent information regarding wages, self-employment income, expenses, filing statuses and dependents.  The Hamiltons did not list their names as return preparers on these tax returns.  In some cases, the Hamiltons filed false tax returns without the knowledge or permission of the taxpayers named on the returns.  To aid in the preparing and filing of false tax returns, Hill obtained personal identifying information and Carnes was responsible for keeping files of that information and providing it to the Hamiltons.

He faces a statutory maximum sentence of 10 years in prison for the conspiracy charge and 20 years in prison for the wire fraud charge.  He also faces a mandatory two year prison term for the aggravated identity theft charge, which will be in addition to any other term of imprisonment he receives.  Hamilton also faces financial penalties, supervised release and restitution. 

In January, Carnes and Hill each pleaded guilty to one count of conspiracy to defraud the United States with respect to claims.  On April 20, Billy Ray Hamilton, pleaded guilty to conspiracy to defraud the United States, wire fraud and aggravated identity theft for his role in the scheme.  He is scheduled to be sentenced on Aug. 2. 

Acting Assistant Attorney General Ciraolo and U.S. Attorney Harvey commended special agents of IRS – Criminal Investigation, who investigated the case and Assistant U.S. Attorney Neeraj Gupta of the Eastern District of Kentucky and Trial Attorney Abigail Burger Chingos of the Tax Division, who prosecuted the case.

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

A federal court has barred a Nashville-area tax return preparer from preparing returns for others, the Justice Department announced today.  The court’s injunction forbids LaVergne, Tennessee, resident Michelle Cole Theus, aka Michelle Cole, and Cole Tax Services from preparing federal tax returns or operating a return-preparation business.  It also requires Theus to turn over a complete list of her customers to the government.  Theus agreed to entry of the injunction without admitting or denying the factual allegations in the United States’ civil complaint.

According to the United States’ civil complaint in the case, Theus initially prepared accurate returns for her customers, then fraudulently increased the returns’ claimed refund—for example, by adding fictitious dependents or false education credits.  Theus then caused the fraudulently inflated portion of the refund, or sometimes the entire refund, to be deposited to her own bank account, the complaint alleges.  The Internal Revenue Service (IRS) estimates that Theus has claimed at least $788,220 in fraudulent refunds, according to the complaint. 

Return preparer fraud is one of the IRS’s Dirty Dozen Tax Scams for 2016.  The IRS has some tips on their website for choosing a tax preparer and has launched a free directory of federal tax preparers.  In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers.  Information about these cases is available on the Justice Department website.  An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page.  If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.