District Not Recorded

A Houston, Texas, man pleaded guilty today in the U.S. District Court for the Southern District of Texas in Houston to one count of theft of public money, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Kenneth Magidson of the Southern District of Texas.

An indictment returned on Nov. 10, 2015, charged Denzel Roberts, 24, with participating in a scheme that used stolen personal identification information to file false federal income tax returns for tax year 2014.  The indictment alleged that participants in the scheme obtained means of identification of actual individuals, including their names and social security numbers, and used this information to access the Internal Revenue Service’s (IRS) “Get Transcript” database.  Using the stolen identities and information obtained from the Get Transcript database, other members of the scheme prepared and filed false tax returns fraudulently requesting refunds.  According to the plea agreement, Roberts used a fraudulent passport to open several bank accounts into which the refunds were deposited. Roberts withdrew the illicit proceeds, retaining a portion of the money as a fee and providing the remainder of the funds to others.

Roberts faces a statutory maximum sentence of 10 years in prison and a maximum fine of $250,000.  As part of his plea agreement, Roberts agreed to pay restitution to the IRS in the amount of $74,341.39. U.S. District Judge Lynn Hughes of the Southern District of Texas set sentencing for Aug. 8. 

Acting Assistant Attorney General Ciraolo and U.S. Attorney Magidson thanked special agents of IRS-Criminal Investigation and the FBI Houston Area Cyber Crime Task Force, who investigated the case and Trial Attorneys Michael Boteler and Grace Albinson of the Tax Division, who are prosecuting this case with assistance from Assistant U.S. Attorney Jimmy Sledge of the Southern District of Texas.

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

The Justice Department’s Office on Violence Against Women (OVW) today released a grant solicitation launching the new Grants to Tribal Governments to Exercise Special Domestic Violence Criminal Jurisdiction Program (Tribal Jurisdiction Program).  This new program was authorized in the Violence Against Women Reauthorization Act of 2013 (VAWA 2013) and received its first appropriation in fiscal year 2016. 

VAWA 2013 recognizes tribes’ inherent power to exercise “special domestic violence criminal jurisdiction” (SDVCJ) over certain defendants, regardless of their Indian or non-Indian status, who commit acts of domestic violence or dating violence or violate certain protection orders in Indian country.  Specifically, tribes can investigate, prosecute, convict and sentence Indians and non-Indians who assault Indian spouses or dating partners or violate a protection order in Indian country.

“VAWA 2013 closed jurisdictional gaps that had long compromised American Indian and Alaska Native women’s safety and access to justice,” said Principal Deputy Director Bea Hanson for OVW.  “And this new grant program is another step in the department’s ongoing effort to help tribes across the country make full use of the SDVCJ authority.”

The Tribal Jurisdiction Program encourages the coordinated involvement of the entire tribal criminal justice system and victim service providers to incorporate systemic change that ensures victim safety and offender accountability.  Funds from the Tribal Jurisdiction Program can be used to:

• strengthen tribal criminal justice systems to assist Indian tribes in exercising SDVCJ;
• provide indigent criminal defendants with the effective assistance of licensed defense counsel, at no cost to the defendant, in criminal proceedings in which a participating tribe  prosecutes a crime of domestic violence or dating violence or a criminal violation of a protection order;
• ensure that, in criminal proceedings in which a participating tribe exercises SDVCJ, jurors are summoned, selected and instructed in a manner consistent with all applicable requirements; and
• accord victims of domestic violence, dating violence and violations of protection orders rights that are similar to the rights of a crime victim described the federal Crime Victims’ Rights Act, consistent with tribal law and custom.

OVW anticipates making 36-month awards in the range of $300,000 to $450,000.  Applications are due by 11:59 p.m. Eastern Time (E.T.) on June 20.

OVW will conduct a pre-application webinar on Wednesday, May 25, 4:00 – 5:00 p.m. E.T.  During this webinar, OVW staff will review the FY 2016 Tribal Jurisdiction Program solicitation and grant requirements followed by a brief question and answer session.  To register, e-mail OVW.TribalJurisdiction@usdoj.gov no later than Monday, May 23.

All OVW open solicitations are posted at www.justice.gov/ovw/open-solicitations. 

          U.S. Attorney Alicia A.G. Limtiaco, Districts of Guam and the Northern Mariana Islands (NMI), announced that Organized Crime Drug Enforcement Task Force (OCDETF) trainers provided training to law enforcement partners on Guam and in Saipan, NMI.  The OCDETF training was conducted by Lela Johnson, Attorney Advisor from the OCDETF Executive Office in Washington, D.C.; Mark Sweeting, Deputy United States Marshal from Chicago, Illinois; Oscar F. Hagelsieb, Deputy Director, OCDETF Fusion Center in Fairfax, Virginia; Karen D. Beausey, Assistant U.S. Attorney’s Office in Boston, Massachusetts; Jamie Harrison, Special Agent with the IRS in San Diego, California; and Joseph (Josh) Green, Deputy Chief, Criminal Enterprises Section of the U.S. Attorney’s Office in San Diego, California.  The training was held at the U.S. Attorney’s Office in Guam on May 4, 2016, and in Saipan on May 5, 2016.  The training was attended by approximately 60 local and federal law enforcement officers in Guam and Saipan.

          The training topics included Developing a Financial Case; OCDETF Resources; Information Sources for Financial Investigations; OCDETF Fusion Center; Exploiting Financial Evidence and Charges to Improve the Drug Case; Traditional and Alternative Money Laundering Charges; Obtaining Foreign Records; Preparing and Presenting Financial Evidence at Trial; Plea Agreements; Search and Seizure Warrants; and Case Study of a Successful Investigation. 

          The OCDETF Program was established in 1982 to mount a comprehensive attack against organized drug traffickers. Today, the OCDETF Program is the centerpiece of the United States Attorney General's drug strategy to reduce the availability of drugs by disrupting and dismantling major drug trafficking organizations and money laundering organizations and related criminal enterprises.

          OCDETF investigations involve a focused multi-agency, multi-jurisdictional task force that investigates and prosecutes the most significant drug trafficking organizations throughout the United States by leveraging the combined expertise of federal, state and local law enforcement agencies.

            An OCDETF investigation involves federal agents and local law enforcement officers of the Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF), the Drug Enforcement Administration (DEA), the Federal Bureau of Investigations (FBI), the Internal Revenue Service–Criminal Investigations (IRS-CI), the U.S. Coast Guard Criminal Investigative Service (CGIS), the U.S. Department of Homeland Security Investigations (HSI), the U.S. National Oceanic Atmosphere Administration (NOAA), the U.S. Marshal’s Service, the U.S. Postal Inspection Service (USPIS), the Guam Police Department (GPD), Guam Customs and Quarantine Agency (GCQA), the CNMI Department of Public Safety, the CNMI Division of Customs, and other law enforcement partners.

 

Participants at the OCDETF Training held in Guam

 

U.S. Attorney Alicia Limtiaco shows appreciation to the trainers for their roles in the OCDETF Training held in Guam and Saipan, NMI

 

Participants at the OCDETF Training held in Saipan, NMI

 

Fraudsters Allegedly Scammed Victims Out of More Than $180 Million

The U.S. District Court for the Eastern District of New York entered a consent decree on Friday that permanently barred eight individuals and entities from operating an alleged international multi-million dollar mail-fraud scheme in the name of alleged psychics Maria Duval and Patrick Guerin.  Pursuant to the consent decree entered, the defendants are barred from using the U.S. mail to distribute any advertisements, solicitations or promotional materials on behalf of any psychics, clairvoyants or astrologers.  The consent decree also enjoined the defendants from using the U.S. mail to distribute materials representing that services or items offered for purchase will increase the recipient’s odds of winning a lottery, will bring the recipient good luck or will entitle the recipient to receive an inheritance.  The consent decree also authorized the U.S. Postal Inspection Service to return any money or personal checks sent to the defendants and detained by the Postal Inspection Service.

The following eight international defendants agreed to be bound by a permanent injunction in order to resolve the United States’ civil suit against them: Canadian company 9097-9394 Québec Inc. dba Infogest Direct Marketing (Infogest); Infogest employees Mary Thanos, Daniel Sousse and Philip Lett, all of Quebec, Canada; Hong Kong corporation Destiny Research Center Ltd.; Destiny Research Center President Martin Dettling of Zurich, Switzerland; Patrick Guerin of France and Maria Duval of France. 

In an amended complaint filed in November 2015, the United States alleges that the defendants operated a mail fraud scheme in which they sent letters purporting to be written by psychics Maria Duval and Patrick Guerin to American consumers through the U.S. mail. The letters claim that the psychics have had a specific, personalized vision or psychic reading revealing that the recipient of the letter has the opportunity to achieve great wealth, including claims of winning millions in the lottery.  The solicitations urge victims to purchase various products and services in order to ensure that the foreseen good fortune comes to pass.  In reality, the solicitations are identical, mass produced form letters sent to tens of thousands of recipients throughout the United States every month.  Many of the customers who receive the solicitations are vulnerable victims, including the desperate, elderly and infirm.

The United States alleges that the fraud scheme victimized more than one million Americans, who sent the defendants payments totaling more than $180 million.

“This widespread scam targeted more than one million Americans, many of whom were elderly or in financial distress,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “The Justice Department is committed to stopping such fraud and pursuing all those responsible for lying to vulnerable consumers for their own financial gain.”

“To line their own pockets, the defendants preyed upon the superstition and desperation of millions of vulnerable Americans,” said U.S. Attorney Robert L. Capers for the Eastern District of New York.  “We will use every means at our disposal to protect our citizens from fraudulent schemes like this, that target the lonely, the ill, and the elderly.”

The defendants have all agreed to settle the case and be bound by a permanent injunction.  The permanent injunction also bars the defendants from making various claims in advertisements sent through the U.S. mail, including claims that products offered for sale will increase the recipient’s odds of winning the lottery or bring the recipient luck or good fortune.  The permanent injunction further bars the defendants from using or selling lists of consumers who have responded to the Duval and Guerin solicitations.

The United States’ case is being handled by Trial Attorney Ann F. Entwistle of the Civil Division’s Consumer Protection Branch, and Chief of Affirmative Civil Enforcement John Vagelatos for the U.S. Attorney’s Office of the Eastern District of New York, in coordination with the U.S. Postal Inspection Service.

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 New York, visit its website at https://www.justice.gov/usao-edny.    

Attorney General Loretta E. Lynch announced today that the Justice Department has filed a complaint against the state of North Carolina, the University of North Carolina (UNC) and the North Carolina Department of Public Safety (DPS) alleging that they are discriminating against transgender individuals in violation of federal law as a result of the state’s compliance with and implementation of House Bill 2 (H.B. 2).  H.B. 2 requires public agencies to treat transgender individuals, whose gender identity does not match the sex they were assigned at birth, differently from similarly situated non-transgender individuals.

The complaint, filed in the Middle District of North Carolina, follows the department’s notice to the defendants on May 4, 2016, that they are in violation of Title VII of the Civil Rights Act of 1964, Title IX of the Education Amendments of 1972 and the Violence Against Women Reauthorization Act of 2013 (VAWA).

“This action is about a great deal more than just bathrooms,” said Attorney General Lynch.  “This is about the dignity and respect we accord our fellow citizens, and the laws that we, as a people and as a country, have enacted to protect them – indeed, to protect all of us.  It’s about the founding ideals that have led this country – haltingly but inexorably – in the direction of fairness, inclusion, and equality for all Americans.  This is not a time to act out of fear.  This is a time to summon our national virtues of inclusivity, diversity, compassion, and open-mindedness.  What we must not do – what we must never do – is turn on our neighbors, our family members, our fellow Americans, for something they cannot control, and deny what makes them human.”

The complaint alleges that the defendants, as a result of compliance with and implementation of the bathroom and changing facility provisions of H.B. 2, are engaging in a pattern or practice of discrimination against transgender public employees and applicants in violation of Title VII, which prohibits discrimination in employment on the basis of sex.  Access to restrooms is an important, basic condition of employment and denying transgender individuals access to restrooms and changing facilities consistent with their gender identity constitutes unlawful sex discrimination. 

The complaint also alleges that, as a result of these same provisions in H.B. 2, UNC and DPS are violating the non-discrimination provision of VAWA, which prohibits discrimination on the basis of sex and gender identity.  Additionally, the complaint alleges that UNC is violating Title IX, which prohibits discrimination on the basis of sex.  These laws apply to recipients of federal funding. 

“H.B. 2 violates the laws that govern our nation and the values that define us as a people,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division.  “Transgender men are men – they live, work and study as men.  Transgender women are women – they live, work and study as women. America protects the rights of all people to be who they are, to express their true selves and to live with dignity.”

The complaint is being handled by the Civil Rights Division which enforces the non-discrimination provisions of Title VII, Title IX and VAWA.

North Carolina Complaint

A California man was convicted late Friday by a federal jury in the U.S. District Court for the District of Oregon.

Assistant Attorney General Leslie R. Caldwell of the Criminal Division; Assistant Special Agent in Charge Cam B. Strahm of the Drug Enforcement Administration’s Portland District Office; Special Agent in Charge Gregory Bretzing of the FBI‘s Portland Division; and Chief Lawrence P. O’Dea III of the Portland Police Bureau, made the announcement today following the jury’s verdict.

Fulgencio Arias Jr., 43, of Whittier, California, was convicted of conspiracy to distribute and possess with the intent to distribute 500 grams or more of a mixture and substance containing methamphetamine, conspiracy to commit money laundering, distribution of 500 grams or more of a mixture and substance containing methamphetamine, and attempted distribution of 500 grams or more of a mixture and substance containing methamphetamine.

The defendant was charged in an indictment on Dec 15, 2011.  The evidence at trial showed that the defendant was the leader of a drug trafficking organization from approximately January 2008 until Dec 15, 2011.  The defendant sent large quantities of methamphetamine from the Los Angeles area to Oregon and other states in the Pacific Northwest through the use of couriers.  One of the defendant’s Oregon-based co-conspirators received the methamphetamine for distribution in Oregon.  In turn, co-conspirators returned proceeds from the distribution to the defendant using hidden bulk cash shipments and nominee bank accounts.

Sentencing is scheduled for Aug 30, 2016.  The defendant faces a maximum penalty of life in prison.

The case was prosecuted by Trial Attorneys Clayton O’Conner and Michael Lang, respectively, of the Criminal Division’s Human Rights and Special Prosecutions Section and Narcotic and Dangerous Drug Section.  The case was investigated by the DEA, FBI, the Portland Metro Gang Task Force, Portland Police Bureau, Tigard Police Department, Medford Police Department, Marion County Sheriff’s Office, Oregon State Police Forensic Laboratory with assistance from the Multnomah County Sheriff’s Office and Los Angeles Sheriff’s Department.

The United States today filed a civil complaint on its own behalf and for the benefit of the Pueblo of Santa Clara in federal court in Albuquerque, New Mexico, against the city of Española, New Mexico.  The complaint alleges that the city lacks valid rights-of-way for portions of its public water and sanitary sewer lines located on the Pueblo’s lands and is therefore trespassing on those lands.  With the Pueblo’s consent, the city obtained rights-of-way in the early 1980s for the water and sewer lines under the Indian Right-of-Way Act and its implementing regulations, which authorize grants of easement across Indian lands.  Those rights-of-way expired in 1994 and 2002.  The complaint seeks to compel the city to comply with the Indian Right-of-Way Act by renewing its rights of way and compensating the Pueblo for the unauthorized use of the Pueblo’s property.

The Pueblo of Santa Clara and Española engaged in negotiations for almost a decade, seeking to resolve these expired rights-of-way.   Those negotiations proved unsuccessful and on Nov. 13, 2013, the Bureau of Indian Affairs sent the city a Notice to Show Cause concerning trespass arising out of the expired rights-of-way. 

On July 21, 2014, U.S. Attorney Damon P. Martinez for the District of New Mexico, sent a follow-up letter to the city, reporting that the city’s “Response to the Notice to Show Cause” fails to provide evidence or argument to establish a legal basis for the city’s presence on Pueblo property or otherwise establish that it is not in trespass.”  The city disagreed.

In response to that letter, the city stated that no trespass has taken place and no compensation is due.  On April 7, U.S. Attorney Martinez met with Española’s mayor, Alice Lucero and the city’s attorney to determine whether this dispute could be resolved through settlement without filing suit.  The city stressed that its position on the trespass issue had not changed. 

Española’s continuing denial of trespass on lands for which it previously paid and acquired valid rights-of-way and its refusal to comply with federal law precipitated today’s filing. 

“The United States takes seriously enforcement of the rule of law, particularly as it affects Indian Country,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division.  “Compliance with the Indian Right-of-Way Act and other federal statutes is not optional, but a legal requirement that ensures Indian tribes retain control of their lands and resources.”

“The filing of today’s complaint is intended to bring the city of Española into compliance with federal law,” said U.S. Attorney Martinez.  “The complaint was filed only after all other options for resolving this dispute had been exhausted.  While previous discussions among the parties have failed to resolve this dispute, we are hopeful that meaningful discussions will be possible while the federal court action proceeds.”

Trial Attorney Samuel D. Gollis of the Indian Resources Section of the Justice Department’s Environment and Natural Resources Division and Assistant U.S. Attorney Howard R. Thomas of the U.S. Attorney’s Office for the District of New Mexico are representing the United States in this litigation.

            ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands (NMI), announced the U.S. Attorney’s Office participation in various events for Law Week.

            The U.S. Attorney’s Office was invited to participate in the annual Law Week Law Fair held on April 30, 2016, at the Judiciary of Guam, at which members of the law community were encouraged to disseminate materials relating to their respective organizations to the public and to answer questions about their organization’s mission and purpose.

            This year's Law Day theme was "Miranda: More than Words."  The theme highlighted the procedural protections afforded to all by the U.S. Constitution; how these rights are safeguarded by the courts; and why the preservation of these principles is essential to our liberty.  In addition to the Law Day theme, Law Week activities sought to educate about the legal system and the rule of law, with events focused on teaching students and the general public about court proceedings and the justice system.  Law Week activities allowed the community to obtain first-hand information of the different aspects of the law from our justice system partners.

            On May 6, 2016, U.S. Attorney Limtiaco participated in a Conversatorio panel on “Miranda: More than Words” at the U.S. District Court of Guam and spoke with Criminal Justice students from Guam Community College and the University of Guam about Miranda and related U.S. Constitution and justice system issues.  Also present were U.S. District Court of Guam Chief Judge Frances Tydingco-Gatewood, U.S. District Court of Guam Magistrate Judge Joaquin Manibusan, Supreme Court of Guam Associate Justice F. Philip Carbullido, Supreme Court of Guam Associate Justice Katherine Maraman, Federal Public Defender John Gorman, Judge Advocates from all military branches, and Federal Law Enforcement Officers/Deputies/Agents. 

 

            See the following photos taken at the events.

 

Student Clerk Jack Ruane and his daughter, with U.S. Attorney Alicia Limtiaco and Legal Assistant Roxanne Ferrer at the U.S. Attorney’s Office’s exhibit at the Law Fair held at the Judiciary of Guam U.S. Attorney Alicia Limtiaco, second from left, responds to a question from visitors receiving handouts from the U.S. Attorney’s Office U.S. Attorney Alicia Limtiaco is pictured here in the U.S. District Court of Guam for Law Week U.S. Attorney Alicia Limtiaco with Federal Public Defender John Gorman during their discussion on Miranda Rights at the U.S. District Court of Guam

 

Arthur Budovsky, 42, was sentenced today in the Southern District of New York to 20 years imprisonment for running a massive money laundering enterprise through his company Liberty Reserve S.A. (“Liberty Reserve”), a virtual currency once used by cybercriminals around the world to launder the proceeds of their illegal activity.

Assistant Attorney General Leslie R. Caldwell for the Justice Department’s Criminal Division and U.S. Attorney Preet Bharara for the Southern District of New York made the announcement. 

In January, Budovsky pleaded guilty to one count of conspiring to commit money laundering.  In imposing sentence, the court noted that Budovsky ran an “extraordinarily successful” and “large-scale international money laundering operation.”  U.S. District Judge Denise L. Cote also ordered Budovsky to pay a $500,000 fine.

“The significant sentence handed down today shows that money laundering through the use of virtual currencies is still money laundering, and that online crime is still crime,” said Assistant Attorney General Caldwell.  “Together with our American and international law enforcement partners, we will protect the public even when criminals use modern technology to break the law.”

“Liberty Reserve founder Arthur Budovsky ran a digital currency empire built expressly to facilitate money laundering on a massive scale for criminals around the globe,” said Manhattan U.S. Attorney Bharara.  “Despite all his efforts to evade prosecution, including taking his operations offshore and renouncing his citizenship, Budovsky has now been held to account for his brazen violations of U.S. criminal laws.” 

According to the indictment, Liberty Reserve billed itself as the Internet’s “largest payment processor and money transfer system” and allowed people all over the world to send and receive payments using virtual currency.  At all relevant times, Budovsky directed and supervised Liberty Reserve’s operations, finances, and business strategy and was aware that digital currencies were used by other online criminals, such as credit card traffickers and identity thieves. 

Liberty Reserve grew into a financial hub for cybercriminals around the world, trafficking the criminal proceeds of Ponzi schemes, credit card trafficking, stolen identity information and computer hacking.  By May 2013, when the government shut it down, Liberty Reserve had more than 5.5 million user accounts worldwide and had processed more than 78 million financial transactions with a combined value of more than $8 billion.  United States users accounted for the largest segment of Liberty Reserve’s total transactional volume – between $1 billion and $1.8 billion – and the largest number of user accounts – over 600,000.  

Four co-defendants, Vladimir Kats, Azzeddine El Amine, Mark Marmilev and Maxim Chukharev, have already pleaded guilty.  Marmilev and Chukharev were sentenced to five years and three years in prison, respectively.  Judge Cote is expected to sentence Kats and El Amine May 13. Charges remain pending against Liberty Reserve and two individual defendants who are fugitives.

The U.S. Secret Service, the Internal Revenue Service-Criminal Investigation and the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations investigated this case as part of the Global Illicit Financial Team.  The U.S. Secret Service’s New York Electronic Crimes Task Force assisted with the investigation.  The Judicial Investigation Organization in Costa Rica, Interpol, the National High Tech Crime Unit in the Netherlands, the Spanish National Police’s Financial and Economic Crime Unit, the Cyber Crime Unit at the Swedish National Bureau of Investigation and the Swiss Federal Prosecutor’s Office also provided assistance. 

Trial Attorney Kevin Mosley of the Criminal Division’s Asset Forfeiture and Money Laundering Section and Assistant U.S. Attorneys Christian Everdell, Christine Magdo and Andrew Goldstein of the Southern District of New York are prosecuting the case.  The Criminal Division’s Office of International Affairs and Computer Crime and Intellectual Property Section provided substantial assistance.

Two Atlanta, Georgia, residents were arrested this week by a team of federal and Georgia state agents, the Department of Justice announced. 

Rojen Burnett, 33, and Amber McLaughlin, 32, were charged in a 25-count indictment with securities fraud, making false odometer statements and conspiracy to commit these offenses.  Burnett owned and operated Lifestyle Auto Broker LLC, a Georgia corporation that bought and sold used motor vehicles.  McLaughlin was a customer service specialist at the Motor Vehicle Department (MVD) of the Georgia Department of Revenue, the indictment alleges.

According to the indictment, as early as February 2012 and through at least May 2013, the defendants devised a scheme to defraud buyers of used motor vehicles by rolling back the vehicles’ odometers and causing consumers to pay more for the vehicles than they would have paid if they had known the vehicles’ actual miles.

As part of the scheme, the indictment charges that Burnett purchased high-mileage, used motor vehicles from auctions in Maryland and Virginia. Burnett then caused the odometers in these vehicles to be altered to reflect false, lower mileage, according to the charges. The indictment also alleges that Burnett caused the existing titles associated with these vehicles to be altered to reflect the false, lower mileages.  McLaughlin provided him with newly issued, clean Georgia titles reflecting the false, lower mileages, according to the charges.

Using these new Georgia titles, Burnett subsequently sold the motor vehicles to other dealers through an auto auction, the indictment alleges.

“Individuals who buy and sell used vehicles cannot alter odometers and the associated paperwork to increase their value,” said Principal Deputy Assistant Attorney General Benjamin J. Mizer, head of the Justice Department’s Civil Division. “Consumers who purchase used vehicles need accurate mileage information to assess the value and safety of a potential vehicle purchase.  We take seriously our obligation to prosecute those who violate these statutes and prey upon unsuspecting consumers.”

If convicted, each defendant faces up to 10 years in prison on the most serious of the charges.

This case was investigated by the Auto Crimes Title Fraud Unit of the Georgia Department of Revenue and the U.S. Department of Transportation, National Highway Traffic Safety Administration. It is being prosecuted by Trial Attorneys Kerala Thie Cowart and David Sullivan of the Civil Division’s Consumer Protection Branch. 

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.

These charges are only allegations and the defendants are presumed innocent unless and until proven guilty.

Three members of a 2012 presidential campaign committee were convicted by a federal jury in Des Moines, Iowa, on all counts of an indictment charging the concealment of campaign expenditures made to secure the endorsement of an Iowa State Senator. 

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Assistant Director in Charge Paul M. Abbate of the FBI’s Washington Field Office made the announcement. 

“Concealing and falsely reporting campaign expenditures undermines the integrity and transparency of the federal election process,” said Assistant Attorney General Caldwell.  “When political operatives secretly buy an elected official’s political support, it undermines public confidence in our entire political system.”

“Violating campaign finance transparency laws by falsifying expenditure records and reports deceives the public and facilitates corruption,” said Assistant Director in Charge Abbate.  “The FBI will aggressively investigate those who corrupt the integrity of our democratic process. I want to thank the special agents, analysts and prosecutors who worked diligently to see this case through to today’s result.”

Jesse R. Benton, 38, of Louisville, Kentucky, and John M. Tate, 53, of Warrenton, Virginia, were convicted of conspiracy, causing false records to obstruct a contemplated investigation, causing the submission of false campaign expenditure reports to the Federal Election Commission (FEC) and engaging in a scheme to make false statements to the FEC.  Dimitrios N. Kesari, 50, of Leesburg, Virginia, was convicted of the same offenses, except causing false campaign expenditure reports, for which he was previously convicted by a jury in a separate trial in October 2015.

Chief Judge John A. Jarvey of the Southern District of Iowa noted that he would schedule sentencing for a later date.

The defendants were the senior leadership of a campaign for a candidate in the 2012 presidential election.  According to the indictment, former Iowa State Senator Kent Sorenson initially supported one candidate in the 2012 presidential election, but between October and December 2011, negotiated with the defendants to switch his support to their candidate in exchange for money.  On December 28, 2011, at a political event in Des Moines, Iowa, Sorenson publicly announced his switch of support.  

Evidence at trial proved that the campaign expenditures to Sorenson were made in monthly installments of approximately $8,000 each and ultimately amounted to over $70,000.  The defendants concealed the payments by causing them to be recorded – both in campaign accounting records and in FEC filings – as campaign-related audio-visual expenditures, and by causing them to be transmitted to a film production company and then to a second company that was controlled by Sorenson.  The conspirators concealed their campaign’s payments to Sorenson from their candidate and also from the FEC, the FBI, and the public.   

Trial evidence showed that in response to criticism of Sorenson’s change of support from one candidate to the other, the conspirators arranged for Sorenson to issue public statements denying allegations that he was offered money for his endorsement and noting that the campaign committee’s FEC filings would show that it made no payments to Sorenson. 

On August 27, 2014, Sorenson pled guilty to causing a campaign committee to falsely report its expenditures to the FEC and to obstruction of justice.  He has not yet been sentenced.

The case is being investigated by the FBI’s Washington Field Office, with assistance from the Omaha, Nebraska, Field Office and the Des Moines Resident Agency.  The case is being prosecuted by Director Richard C. Pilger of the Criminal Division’s Public Integrity Section’s Election Crimes Branch, Deputy Chief J.P. Cooney, and Trial Attorney Jonathan I. Kravis.

Today, President Barack Obama granted commutation of sentence to the following 58 individuals:

• Jasmine Allen – Bunnell, FL
  Offense: Conspiracy to distribute 50 grams or more of cocaine base; manage or control a residence for the purpose of unlawfully manufacturing, storing and distributing a controlled substance; distribution of five grams or more of cocaine base; Middle District of Florida
  Sentence: 235 months' imprisonment; five years' supervised release (November 5, 2008); amended to 188 months' imprisonment (February 29, 2016)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• Timothy Antjuan Augustus – Hampton, VA
  Offense: Conspiracy to possess with intent to distribute and to distribute cocaine base and cocaine; Eastern District of Virginia
  Sentence: 210 months' imprisonment; five years' supervised release (March 1, 2007)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• Shannon Lee Blake – Phoenix, AZ
  Offense: Conspiracy to possess with intent to distribute and to distribute methamphetamine; possession with intent to distribute methamphetamine; District of Wyoming
  Sentence: 240 months' imprisonment; 10 years' supervised release; $1,000 fine (July 2, 2007)

Commutation Grant: Prison sentence commuted to expire on May 5, 2018.

• Steven Bernard Boyd – Augusta, GA
  Offense: Conspiracy to distribute and to possess cocaine and cocaine base with intent to distribute; distribution of cocaine hydrochloride (three counts); possession of cocaine and cocaine base with intent to distribute; Southern District of Georgia
  Sentence: Life imprisonment; 10 years' supervised release (September 29, 1998)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• Donald Brooks – West Point, GA
  Offense: Conspiracy to possess with intent to distribute at least five kilograms of cocaine and at least 50 grams of cocaine base; Northern District of Georgia
  Sentence: Life imprisonment; 10 years' supervised release (October 18, 2002)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• Eddie Brown – Washington, DC
  Offense: Unlawful possession with intent to distribute 50 grams of cocaine base; District of Columbia
  Sentence: Life imprisonment;  (September 20, 1990)

Commutation Grant: Prison sentence commuted to expire on May 5, 2017.

• Charles C. Brown – Providence, RI
  Offense: Conspiracy to distribute and possess with intent to distribute more than 50 grams of cocaine base; possession with intent to distribute more than 50 grams of cocaine base, aiding and abetting; possession with intent to distribute more than five grams of cocaine base; District of Rhode Island
  Sentence: Life imprisonment; 10 years' supervised release (May 20, 2004)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• Aundra Coats – Cleveland, OH
  Offense: Distribution of cocaine base; Northern District of Ohio
  Sentence: 240 months' imprisonment; 10 years' supervised release (June 21, 2005)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• Jacob George Colbert – Richmond, CA
  Offense: Conspiracy to possess with intent to distribute in excess of 50 grams of cocaine base; District of Minnesota
  Sentence: 235 months' imprisonment; five years' supervised release (December 8, 2005)

Commutation Grant: Prison sentence commuted to expire on May 5, 2018.

• Dwayne Berman Cooper – Miami, FL
  Offense: Conspiracy to possess cocaine with intent to manufacture cocaine base; possession with intent to distribute cocaine base; possession of cocaine with intent to manufacture cocaine base; Middle District of Florida
  Sentence: Life imprisonment; 10 years' supervised release (August 27, 1996)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• Marion Clarence Cooper – Miami, FL
  Offense: Possession with intent to distribute a controlled substance and aiding and abetting; District of South Carolina
  Sentence: Life imprisonment; 10 years' supervised release (November 12, 1996)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• Vernon Copeland – Smyrna, GA
  Offense: Conspiracy to distribute cocaine; laundering of monetary instruments (three counts); Northern District of Georgia
  Sentence: 360 months' imprisonment; five years' supervised release (May 19, 1992)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• Wade Cutchen – Newport News, VA
  Offense: Conspiracy to possess with intent to distribute and distribute heroin and cocaine; possession with intent to distribute heroin; Eastern District of Virginia
  Sentence: 324 months' imprisonment; five years' supervised release (September 15, 2000); amended to 262 months' imprisonment (May 19, 2015)

Commutation Grant: Prison sentence commuted to expire on February 2, 2017.

• Roberto Antonio Davila – San Antonio, TX
  Offense: Conspiracy to possess with intent to distribute marijuana; distribution of marijuana and aiding and abetting said offense; Western District of Texas
  Sentence: Life imprisonment; three years' supervised release (February 28, 1995)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• Efrem Rahoman Douglas – Knoxville, TN
  Offense: Possession with intent to distribute 50 grams or more of cocaine base; Eastern District of Tennessee
  Sentence: 300 months' imprisonment; 10 years' supervised release (September 19, 2005)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• Thomas Farmer – Cincinnati, OH
  Offense: Possession with intent to distribute cocaine base; Eastern District of Kentucky
  Sentence: Life imprisonment;  (December 7, 1995)

Commutation Grant: Prison sentence commuted to expire on May 5, 2017.

• Roy Geer – Tavanier, FL
  Offense: Conspiracy to import cocaine; attempt to import cocaine; conspiracy to possess with intent to distribute cocaine; attempt to possess with intent to distribute cocaine; Southern District of Florida
  Sentence: 252 months' imprisonment; 10 years' supervised release, $8,500 fine (May 24, 2004)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• Christopher Gulley – Pensacola, FL
  Offense: Conspiracy to possess with intent to distribute cocaine and cocaine base; Northern District of Florida
  Sentence: Life imprisonment; 10 years' supervised release (June 12, 1996)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• Jamal Hanson – Temple Hills, MD
  Offense:          1. Distribution of 50 grams or more of cocaine base; District of Columbia

2. Possession of contraband in federal prison; District of New Jersey

Sentence:         1. 262 months' imprisonment; five years' supervised release (August 2, 2002)

                        2. Eight months’ imprisonment (July 16, 2004)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• Antonio Nicholas Hill – Taylors, SC
  Offense: Possession with intent to distribute 50 grams or more of cocaine base; District of South Carolina
  Sentence: 240 months' imprisonment; 10 years' supervised release (June 15, 2006)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• Carla Yvette Holte – Largo, FL
  Offense: Conspiracy to distribute 50 grams or more of cocaine base; conspiracy to possess with intent to distribute five kilograms or more of cocaine; distribution of five grams or more of cocaine base (two counts); possession with intent to distribute 500 grams or more of cocaine; Middle District of Florida
  Sentence: 262 months' imprisonment; five years' supervised release (November 2, 2001)

Commutation Grant: Prison sentence commuted to expire on May 5, 2018.

• Corey D. Howard – Indianapolis, IN
  Offense: Conspiracy to possess with intent to distribute and to distribute in excess of five kilograms of cocaine (mixture); Southern District of Indiana
  Sentence: 240 months' imprisonment; 10 years' supervised release; $2,000 fine (February 9, 2005)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• George Howard Jones – Raleigh, NC
  Offense: Conspiracy to possess with intent to distribute and distribute cocaine base and cocaine; Eastern District of North Carolina
  Sentence: Life imprisonment; 10 years' supervised release (August 22, 1996)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• Joseph John Jones – Tarpon Springs, FL
  Offense: Conspiracy to possess with intent to distribute five kilograms or more of a mixture containing cocaine and 50 grams or more of cocaine base; Middle District of Florida
  Sentence: 240 months' imprisonment; 10 years' supervised release (August 6, 2007)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• Twaine Jones – Washington Park, IL
  Offense: Possession with intent to distribute cocaine; possession with intent to distribute cocaine hydrochloride; possession with intent to distribute marijuana; Southern District of Illinois
  Sentence: 360 months' imprisonment; five years' supervised release, $5,000 fine (November 6, 2000); amended to 324 months' imprisonment (October 29, 2008)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• Abbas Rauf Kareem – Daytona Beach, FL
  Offense: Possession with intent to distribute cocaine base; Middle District of Florida
  Sentence: 240 months' imprisonment; 10 years' supervised release (June 12, 2008)

Commutation Grant: Prison sentence commuted to expire on May 5, 2018.

• Kenneth W. Kemp – Guttenberg, NJ
  Offense: Conspiracy to distribute and possession with intent to distribute cocaine and cocaine base; distribution of cocaine base (three counts); did cause interstate travel in aid of racketeering (two counts); possession with intent to distribute cocaine; distribution of cocaine; Eastern District of Virginia
  Sentence: Life imprisonment; five years' supervised release (April 11, 1994)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• Tomma Jean Kent – Des Moines, IA
  Offense: Conspiracy to distribute methamphetamine; Southern District of Iowa
  Sentence: 240 months' imprisonment; 10 years' supervised release (September 21, 2007)

Commutation Grant: Prison sentence commuted to expire on May 5, 2018.

• Rick Lee Lamere – Bellingham, WA
  Offense: Conspiracy to possess methamphetamine with intent to distribute; District of Montana
  Sentence: 460 months' imprisonment; 10 years' supervised release (January 13, 2005); amended to 320 months' imprisonment, 10 years' supervised release (January 11, 2007)

Commutation Grant: Prison sentence commuted to expire on May 5, 2018.

• Ohara Linear Laws – Houston, TX
  Offense: Possession with intent to distribute 50 grams or more of cocaine base; Southern District of Texas
  Sentence: 282 months' imprisonment; 10 years' supervised release (September 19, 2003); amended to 240 months' imprisonment (May 8, 2008)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• Larry Lewis – Pensacola, FL
  Offense: Conspiracy to possess with intent to distribute cocaine and cocaine base; possession with intent to distribute cocaine; possession with intent to distribute cocaine base; Northern District of Florida
  Sentence: 360 months' imprisonment; 10 years' supervised release; $1,000 fine (October 20, 1999); amended to 324 months’ imprisonment  (June 18, 2006); amended to 262 months' imprisonment (July 2, 2015)

Commutation Grant: Prison sentence commuted to expire on May 5, 2017.

• Trevis Love – Harriman, TN
  Offense: Conspiracy to distribute and possession with the intent to distribute five kilograms or more of cocaine; Eastern District of Tennessee
  Sentence: 240 months' imprisonment; 10 years' supervised release (June 27, 2005)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• Leonard Mason – Claymont, DE
  Offense: Conspiracy to distribute five kilograms or more of cocaine; distribution and possession with intent to distribute cocaine; Eastern District of Pennsylvania
  Sentence: 240 months' imprisonment; 10 years' supervised release; $2,500 fine (February 2, 2011)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• Christopher Dale Masters – Broken Bow, OK
  Offense: Maintaining a place for purpose of manufacturing, distributing, and using methamphetamine; Eastern District of Oklahoma
  Sentence: 240 months' imprisonment; three years' supervised release (March 10, 2005); amended to 235 months' imprisonment (February 29, 2016)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• Stanford Mathis – Valdosta, GA
  Offense: Distribution of more than 50 grams of cocaine base; Middle District of Georgia
  Sentence: 240 months' imprisonment; 10 years' supervised release (December 18, 2003)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• Maurice Matthews – Katy, TX
  Offense: Distribution of 50 grams or more of cocaine base; Eastern District of Louisiana
  Sentence: 240 months' imprisonment; 10 years' supervised release (April 29, 2009)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• Michael Tyree Mays – North Las Vegas, NV
  Offense: Possession with intent to distribute cocaine; Central District of California
  Sentence: 360 months' imprisonment; eight years' supervised release (May 13, 1999)

Commutation Grant: Prison sentence commuted to expire on May 5, 2018.

• Javier Mendoza – Pharr, TX
  Offense: Conspiracy to possess with intent to distribute more than five kilograms of cocaine; possession with intent to distribute 1,264 kilograms of cocaine; Southern District of Texas
  Sentence: Life imprisonment; 10 years' supervised release (August 25, 1998)

Commutation Grant: Prison sentence commuted to expire on May 5, 2018.

• Jerome Lee Menefee – Montgomery, AL
  Offense: Possession with intent to distribute cocaine base; Central District of California
  Sentence: 240 months' imprisonment; 10 years' supervised release (October 24, 2005)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• Michelle Miles – Brooklyn, NY
  Offense: Conspiracy to distribute and possess with intent to distribute heroin and cocaine base; distribute and possess with intent to distribute cocaine base; Eastern District of New York
  Sentence: 360 months' imprisonment; five years' supervised release (March 24, 2000)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• Troy Lamar Morton – Iron Station, NC
  Offense: Conspiracy to possess with intent to distribute cocaine, methamphetamine, and marijuana; Western District of North Carolina
  Sentence: 240 months' imprisonment; 10 years' supervised release (November 18, 2003)

Commutation Grant: Prison sentence commuted to expire on May 5, 2018.

• Cintheia Denise Parra – Memphis, TN
  Offense: Possess with intent to distribute in excess of 500 grams of methamphetamine; Northern District of Mississippi
  Sentence: 235 months' imprisonment; five years' supervised release (September 21, 2006); amended to 188 months' imprisonment (March 18, 2015)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• Gerardo Gilberto Rivera – Brownsville, TX
  Offense: Possession with intent to distribute 11.02 kilograms of methamphetamine; Southern District of Texas
  Sentence: 235 months' imprisonment; five years' supervised release (June 8, 2005)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• Jessie Lee Robinson – Jefferson City, MO
  Offense: Distribution of cocaine base (two counts); possession with intent to distribute cocaine base; Western District of Missouri
  Sentence: Life imprisonment; 10 years' supervised release (November 15, 2005)

Commutation Grant: Prison sentence commuted to expire on May 5, 2018.

• Alberto A. Rosales, Sr. – Miami, FL
  Offense: Continuing criminal enterprise; importation of marijuana; attempted importation of marijuana; possession with intent to distribute heroin (three counts); Southern District of Florida
  Sentence: 85 years' imprisonment; three years' special parole (March 29, 1989); amended to 70 years' imprisonment (October 28, 1992)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• Artrez Nyroby Seymour – Chicago Heights, IL
  Offense: Narcotics conspiracy; Northern District of Illinois
  Sentence: 300 months' imprisonment; 10 years' supervised release (September 21, 2005); amended to 240 months' imprisonment (March 3, 2016)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• Larry Simmons – Savannah, GA
  Offense: Conspiracy to possess with intent to distribute and to distribute more than 50 grams of crack cocaine; distribution of more than 5 grams of crack cocaine (two counts); Southern District of Georgia
  Sentence: Life imprisonment; 10 years' supervised release (April 21, 2003)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• Lavelle Span – Milwaukee, WI
  Offense: Conspiracy to distribute cocaine base; distribution of cocaine base (two counts); Western District of Wisconson
  Sentence: 372 months' imprisonment; five years' supervised release (May 26, 1999)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• Jerome Clarence Sumral – Los Angeles, CA
  Offense: Conspiracy to possess with intent to distribute 50 grams or more of methamphetamine; District of Hawaii
  Sentence: 20 years' imprisonment; 10 years' supervised release (June 20, 2005)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• Golden Sutton – Henderson, KY
  Offense: Conspiracy to manufacture, possess with intent to distribute in excess of 50 grams of cocaine base; possession of cocaine with intent to distribute; Southern District of Indiana
  Sentence: 300 months' imprisonment; 10 years' supervised release (October 28, 2002)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• John Herbert Talley – Chattanooga, TN
  Offense: Conspiracy to possess with the intent to distribute and distribute cocaine base; use of a communications facility to wit: the telephone, to facilitate the commission a felony (two counts); Eastern District of Tennessee
  Sentence: Life imprisonment; 10 years' supervised release (December 4, 1995)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• Derrick Terry – Chicago, IL
  Offense: Possession with intent to distribute cocaine base; Northern District of Illinois
  Sentence: 262 months' imprisonment; five years' supervised release (January 29, 2003)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• David Anthony Trotter – Pensacola, FL
  Offense: Conspiracy to possess with intent to distribute cocaine base; Northern District of Florida
  Sentence: Life imprisonment; 10 years' supervised release (October 15, 1993)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

 

• Jedrek W. Underwood – Houston, TX
  Offense: Possession with intent to distribute 50 grams or more of cocaine base and aiding and abetting; conspiracy to possess with intent to distribute 50 grams or more of cocaine base; Southern District of Texas
  Sentence: 240 months' imprisonment; 10 years' supervised release (March 8, 2004)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• Chela H. Urbina – Boynton Beach, FL

Offense:          1. Conspiracy to import cocaine; importation of cocaine; possession with intent to distribute cocaine; possession with intent to distribute a mixture containing cocaine (Southern District of Florida)

                        2. Conspiracy to possess with intent to distribute narcotics (Southern District of New York)

Sentence:         1. 360 months’ imprisonment; five years’ supervised release (November 14, 1995)

                        2. 27 months’ imprisonment (concurrent); three years’ supervised release (May 1, 1997)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• Fulton Leroy Washington – Compton, CA
  Offense: Conspiracy to manufacture phencyclidine; possession of piperidinocyclohexane-carbonitrile with intent to manufacture PCP; attempt to manufacture PCP; Central District of California
  Sentence: Life imprisonment; five years' supervised release (October 10, 1997)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• Bill Westcott – Candler, NC
  Offense: Conspiracy to distribute and possess with intent to distribute five kilograms or more of cocaine; Middle District of Florida
  Sentence: Life imprisonment; 10 years' supervised release (December 19, 1991)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

• Wayland Thomas Wilson – Dallas, TX
  Offense: Conspiracy; use of a communication facility (three counts); money laundering and aiding and abetting; Northern District of Texas
  Sentence: 444 months' imprisonment; three years' supervised release; $25,000 fine (November 12, 1993)

Commutation Grant: Prison sentence commuted to expire on September 2, 2016.

The Department of Justice has an unparalleled commitment to, and record of, fighting corruption through law enforcement action. These efforts are currently reflected through six anti-corruption programs aimed at public integrity prosecutions, bribery prosecutions, prosecutions of taxpayers who seek to conceal foreign accounts, money laundering prosecutions, our Kleptocracy Initiative and finally, our assistance to foreign counterparts to fight corruption. 

In order to advance those efforts and provide additional tools to advance our anti-corruption work, the department will submit to Congress proposals for legislative amendments in two areas:  first, regarding the illegal proceeds of transnational corruption; and second, regarding substantive corruption offenses.  Details of those proposals are below.

PROPOSALS REGARDING THE ILLEGAL PROCEEDS OF TRANSNATIONAL CORRUPTION

1. EXPAND FOREIGN MONEY LAUNDERING PREDICATES TO INCLUDE ANY VIOLATION OF FOREIGN LAW THAT WOULD BE A MONEY LAUNDERING PREDICATE IF COMMITTED IN THE UNITED STATES.

Currently, U.S. prosecutors can charge money laundering cases and file asset recovery actions for specific acts of foreign corruption and these actions can capture, without specifically charging violations of foreign law relating to conduct occurring in another country, most of the foreign corruption predicate acts.  The proposed amendment will allow prosecutors to directly pursue kleptocracy cases and prosecute for money laundering the use of proceeds from the full range of foreign corruption activities criminalized pursuant to the 2003 U.N. Convention Against Corruption. Adopting this amendment will complement the ability of U.S. prosecutors to charge money launderers and recover kleptocracy proceeds while also enhancing the stature of the United States in promoting an anti-corruption and anti-organized crime agenda worldwide.

2. ALLOW ADMINISTRATIVE SUBPOENAS FOR MONEY LAUNDERING INVESTIGATIONS.

Adopting the proposed amendment will enhance the ability of investigators to obtain records in money laundering investigations.  In criminal money laundering investigations, such records are often obtained through the issuance of grand jury subpoenas, but law enforcement occasionally needs the speed and flexibility to subpoena administratively. 

3. ENHANCE LAW ENFORCEMENT’S AUTHORITY TO ACCESS FOREIGN BANK OR BUSINESS RECORDS BY SERVING BRANCHES LOCATED IN THE UNITED STATES.

Current law permits U.S. law enforcement to obtain bank records located abroad by serving subpoenas on branches of the bank located in the United States.  However, obtaining such records as legally admissible evidence can still result in protracted negotiation and litigation.  This can ultimately result in law enforcement not being able to obtain those records.  Adopting this amendment will enhance the ability of U.S. investigators to obtain overseas records as a form of legally admissible evidence.

4. CREATE A MECHANISM TO USE AND PROTECT CLASSIFIED INFORMATION IN CIVIL ASSET RECOVERY CASES.

Because kleptocracy investigations typically involve high-ranking foreign government officials, the cases may increasingly involve classified information.  In criminal cases, the Classified Information Procedures Act (CIPA) provides a framework for utilizing and disclosing such information.  Currently, if litigation over classified information arises in a civil kleptocracy case, there are no CIPA-type procedures in place.  This amendment creates a framework for the use of classified information in kleptocracy-related civil asset recovery cases. 

5. MAKE THE TIME PERIOD IN WHICH THE U.S. CAN RESTRAIN PROPERTY BASED ON A REQUEST FROM A FOREIGN COUNTRY, CURRENTLY 30 DAYS, PARALLEL TO THE DOMESTIC RESTRAINT PERIOD, WHICH IS 90 DAYS;   AND EXTEND THE PROCEDURES TO AUTHENTICATE FOREIGN RECORDS OF REGULARLY CONDUCTED ACTIVITY IN CRIMINAL CASES TO CIVIL ASSET RECOVERY CASES.

Multilateral cooperation in kleptocracy cases is essential for sharing evidence and determining which authorities are best positioned to seize particular assets.  There are several impediments, however, to effective parallel work.  First, there is a discrepancy between the time limits imposed in domestic and foreign asset recovery cases.  In a case initiated by U.S. authorities, the government has 90 days from the time of seizure to initiate a forfeiture proceeding –  but the government has only 30 days from seizure based on a request from a foreign government.  This amendment extends the 90 day period to requests from a foreign country.  Second, in these cases U.S. prosecutors may seek to use foreign business records.  In a criminal case, foreign business records are admissible if there is a certificate attesting that the document meets the business records test.  This amendment extends the certificate process to civil asset recovery cases.

PROPOSALS REGARDING SUBSTANTIVE CORRUPTION OFFENSES

1. AMEND 18 U.S.C. § 666 (THEFT OR BRIBERY CONCERNING PROGRAMS RECEIVING FEDERAL FUNDS) TO EXPRESSLY CRIMINALIZE THE CORRUPT OFFER OR ACCEPTANCE OF PAYMENTS TO “REWARD” OFFICIAL ACTION AS WELL AS THOSE INTENDED TO “INFLUENCE” OFFICIAL ACTION. 
2. AMEND 18 U.S.C. § 666 (THEFT OR BRIBERY CONCERNING PROGRAMS RECEIVING FEDERAL FUNDS) TO CORRECT A DRAFTING ERROR REGARDING BONA FIDE SALARY and TO LOWER THE DOLLAR THRESHOLD FROM $5,000 TO $1,000.

The two proposed amendments to 18 U.S.C. § 666 are intended to give full effect to the language that Congress initially enacted and clarify Congress’s intent.  The first proposed amendment will resolve a conflict among Federal circuit courts on the issue of whether after-the-fact gratuities are covered by Section 666 and would also be consistent with the interpretations of six of eight Circuit Courts of Appeals which have addressed this issue, finding that the plain language of the statute criminalizes the corrupt offer or acceptance of rewards.  The second proposed amendment will correct a drafting error regarding bona fide salary and lower the dollar threshold to address those cases where the dollar amount involved may be low but the threat to the integrity of a government function is high.

The department has transmitted these proposals to Congress and encourages review and approval in order to further advance the U.S. government’s anti-corruption tools and efforts.

James Powers, 59, of Washington, D.C., was indicted today for violating the Clean Air Act and for fraud stemming from a scheme to improperly remove asbestos from a historic building in the District of Columbia.

The seven-count indictment, returned by a grand jury in the U.S. District Court for the District of Columbia, was announced by Assistant Attorney General John C. Cruden of the Justice Department’s Environment and Natural Resources Division, U.S. Attorney Channing D. Phillips for the District of Columbia, and Jennifer Lynn, Acting Special Agent in Charge of the Environmental Protection Agency’s (EPA) criminal enforcement program in the Mid-Atlantic States.  It charges Powers with violations of the Clean Air Act, wire fraud and first-degree fraud, which is a District of Columbia offense.  The indictment also includes a forfeiture allegation seeking all proceeds that can be traced to the fraud scheme.

According to the indictment, asbestos, a once-popular fireproofing insulation, is now known to cause lung cancer, asbestosis and mesothelioma in people who inhale the fibers released when asbestos is disturbed.  Congress has determined that there is no safe level of exposure to asbestos.  The Clean Air Act requires that renovation in asbestos-containing properties follow specific protocols designed to safely remove asbestos from the property prior to any renovation or demolition activity, so as not to expose workers to the risk of deadly respiratory diseases.

“The Clean Air Act asbestos standards exist to protect the public, especially demolition and renovation workers, from harmful and potentially fatal exposure to asbestos,” said Assistant Attorney General Cruden.  “The Justice Department and the EPA will fully investigate and prosecute those individuals who skirt the law and put workers in danger.”

“This businessman is accused of endangering his own work crew by not taking the proper steps to renovate a building containing asbestos,” said U.S. Attorney Phillips. “The indictment in this case reflects our determination to enforce the federal Clean Air Act and other laws that protect the health and safety of workers and citizens of the District of Columbia.”

“Asbestos must be removed and disposed of safely and legally,” said Acting Special Agent in Charge Lynn.  “The federal Clean Air Act helps protect not only workers’ health and safety, but that of the entire community.  Today’s charges demonstrate that EPA and its partner agencies are committed to enforcing important environmental and public health protection laws.”

The development project at issue involved renovating the historic Friendship House, located at 619 D Street SE in Washington, D.C., into condominiums, a development known as the Maples. The indictment alleges that, in March 2010, Powers formed a partnership with a local real estate development firm to purchase and renovate the property. According to the indictment, an asbestos survey of the property documented asbestos throughout the property, including in floor tiles, wall board, and pipe insulation.  After the survey, the partnership received bids from licensed professional asbestos abatement and renovation firms in the area.  The indictment alleges that, despite receiving those bids and despite knowing that the building contained asbestos, Powers hired Larry Miller, 58, of Palmetto, Georgia, a general contractor from Atlanta with no training, certification, or experience in asbestos abatement, to conduct interior demolition and renovation of the building. Powers represented to his partners that a qualified entity would conduct appropriate asbestos abatement at the property and emailed them a proposed contract, but the contract was with a corporation that, unbeknownst to his partners, was an alter-ego for Powers.

The indictment further alleges that Miller and his crew of workers conducted interior demolition at the Maples during September and October 2011, without any asbestos abatement having occurred. Even after an inspection by local environmental authorities revealed asbestos in the building, Powers had the workers continue demolition. Over the course of the project, the workers disturbed substantial quantities of asbestos, exposing themselves to a substantial risk of serious illness later in life.

Miller pleaded guilty on Nov. 19, 2015, to one count of negligent endangerment under the Clean Air Act. He is awaiting sentencing by the Honorable Amy Berman Jackson in the U.S. District Court for the District of Columbia. The charge carries a maximum sentence of not more than one year of imprisonment, a fine of up to $100,000, and a term of supervised release and/or probation.

If convicted, Powers faces up to five years in prison and a fine of up to $250,000 or twice the gross gain or loss to victims under the Clean Air Act, and a maximum of 20 years in prison and a fine of up to $250,000 or twice the gross gain or loss to victims under the wire fraud statute.

After the acts described in this Indictment, a licensed asbestos abatement firm conducted abatement at the Maples.  The District of Columbia Department of the Environment subsequently conducted inspections and found the property to be free of all asbestos-containing materials.

An indictment is merely a formal charge that a defendant has committed a violation of criminal laws and every defendant is presumed innocent until, and unless, proven guilty.

In announcing the charges, Assistant Attorney General Cruden, U.S. Attorney Phillips, and Acting Special Agent in Charge Lynn expressed appreciation for the work performed by Special Agents from EPA and the Department of Transportation.  They also acknowledged the efforts of Trial Attorney Cassandra J. Barnum, Senior Trial Attorney Lana Pettus and Paralegal Specialist Cynthia Longmire of the Environmental Crimes Section and those working at the U.S. Attorney’s Office, including Paralegal Specialists Kaitlyn Krueger, John Lowell, and former Paralegal Specialist Krishawn Graham and Assistant U.S. Attorneys Jonathan Hooks and Zia Faruqui.

Deputy Attorney General Sally Q. Yates released the following statement following President Obama’s clemency announcement today:

“As a result of the President’s actions today, 58 more individuals, 18 of whom had been sentenced to life in prison, have been granted a second chance to lead productive and law-abiding lives.  Our clemency work is continuing as part of our broader efforts to effectuate criminal justice reform and ensure fairness and proportionality in sentencing.  That includes supporting the bipartisan efforts in Congress to pass criminal justice reform legislation, working with the U.S. Sentencing Commission, and continuing the department’s successful Smart on Crime initiative.”

A California man was sentenced today to 16 years and three months in prison for producing child pornography, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting U.S. Attorney Phillip A. Talbert of the Eastern District of California, Special Agent in Charge Ryan Spradlin of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI) San Francisco Field Division and Chief of Police Robert D. Landon of the Yuba City, California, Police Department.

Nathan Penner, 26, of Yuba City, California, pleaded guilty on Nov. 5, 2015, to one count of production of child pornography.  U.S. District Judge Troy L. Nunley of the Eastern District of California sentenced Penner today and also ordered him to serve a lifetime term of supervised release.

In connection with his plea, Penner admitted to producing sexually explicit images and videos of a five-year old minor in September and October of 2012.  Evidence revealed that Penner shared hundreds of files of child pornography located on his computer and distributed such material using an online chat messaging service.

This case was investigated by HSI and the Yuba City Police Department.  Trial Attorney Reginald E. Jones of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) and Special Assistant U.S. Attorney Josh F. Sigal of the Eastern District of California prosecuted the case.  CEOS’ High Technology Investigative Unit assisted with computer forensic analysis for the case.

This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice.  Led by the 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.projectsafechildhood.gov. 

Failed to Report More than $650,000 in Income from Online Sales of Sunglasses and Eyeglasses

A Brooklyn, New York, business owner pleaded guilty today to two counts of filing false tax returns, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.

According to court documents and information presented in court, Michael Stern, 48, was the founder and operator of Prestige Optical, a retailer of sunglasses and eyeglasses.  For the 2006 and 2007 tax years, Stern filed false federal income tax returns with the Internal Revenue Service (IRS) on which he failed to report approximately $656,780 of income from online retail sales.

U.S. District Judge Nicholas G. Garaufis of the Eastern District of New York set sentencing for Sept. 9.  Stern faces a statutory maximum sentence of three years in prison and a fine of $250,000 for each count of filing a false tax return.  As part of his plea agreement, Stern also agreed to pay restitution to the IRS in the amount of $190,781.

Acting Assistant Attorney General Ciraolo commended special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorneys Mark Kotila and Jack Morgan 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.

Forty-eight alleged members of the violent Gangster Disciples Gang – including the top leaders in Tennessee and Georgia – have been charged in two indictments and accused of conspiring to participate in a racketeering enterprise that included multiple murders, attempted murder and drug crimes.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney John A. Horn of the Northern District of Georgia, U.S. Attorney Edward L. Stanton III of the Western District of Tennessee, Special Agent in Charge J. Britt Johnson of the FBI’s Atlanta Division and Special Agent in Charge A. Todd McCall of the FBI’s Memphis Division made the announcement.

A 12-count indictment was returned by a grand jury on April 27, and unsealed today in the U.S. District Court of the Northern District of Georgia.  Thirty individuals were taken into custody today and two remain at large.  A 16-count indictment was returned by a grand jury on April 22, and unsealed today in the U.S. District Court of the Western District of Tennessee.  Fifteen individuals were taken into custody today and one remains at large.    

“It is the very of core of law enforcement’s mission to ensure that everyone feels safe in their homes and neighborhoods, and it is a hard reality that many people across our country simply do not enjoy this basic sense of security because of gangs like the Gangster Disciples,” said Assistant Attorney General Caldwell.  “That is why it is so significant that today’s indictments charge top leaders within the Gangster Disciples.  There are a lot of people out there willing to join gangs, and eager to get easy money from criminal activity.  But there are far fewer people with the wherewithal to lead organizations like the Gangster Disciples.  These are the people who keep gangs like the Gangster Disciples alive, year in and year out, generation after generation.  Cases like these make a difference, and I want to thank all the law enforcement and U.S. Attorney Office and Organized Crime and Gang Section prosecutors who worked so hard to build this case.”

“Atlanta has historically been resistant to the incursion of these national gangs, but unfortunately today’s indictment shows how this landscape has changed in just the last few years, as the Gangster Disciples are only one of several gangs that now boast a strong foothold,” said U.S. Attorney John Horn.  “These charges show how a national gang like Gangster Disciples can wreak havoc here and in communities across the country, with crimes that run the gamut from murder to drug trafficking to credit card fraud.  Within Georgia, the leadership of the Gangster Disciples resided mostly in metro Atlanta, yet the reach of the crimes committed extended into far south and west Georgia.  We hope this indictment warns the leaders of these gangs that Atlanta is not a good place to do business.”

“As the indictment alleges, the Gangster Disciples flooded communities throughout the southeast and beyond with large amounts of drugs, and ruthlessly used fear, intimidation, and even murder to promote and protect their nationwide criminal enterprise,” said U.S. Attorney Stanton.  “We will continue to work with our law enforcement partners to eliminate the terror gang members inflict upon our communities, and will exhaust every available resource, including the federal RICO statute, to bring them to justice.  Dismantling violent gangs at the highest levels remains a priority for the U.S. Attorney's Office.”

“Today's Gangster Disciple arrests across nine states merely marks the first wave of the FBI’s strategic campaign to dismantle this violent criminal organization,” said Special Agent in Charge Johnson.  “The Gangster Disciples are a highly organized and ruthless gang that recognizes no geographical boundaries, and its members have far too long indiscriminately preyed upon and infected the good people of our communities like a cancer.  The FBI’s Safe Streets Gang Task Forces recognize no boundaries either, and we are committed to identifying, disrupting and dismantling the most violent gangs that seek to harm our communities.  The FBI, along with our law enforcement partners, are committed to seeing this campaign through, and once and for all putting an end to the Gangster Disciples' reign of violence.”

According to court documents, the Gangster Disciples is a national gang active in more than 24 states with a highly organized structure including board members and governor-of-governors who each controlled geographic regions; governors, assistant governors, chief enforcers and chiefs of security for each state or regions within the state where the Gangster Disciples were active; and coordinators and leaders within each local group.  To enforce discipline among Gangster Disciples and adherence to the strict rules and structure, members and associates were routinely fined, beaten and even murdered for failing to follow the gang’s rules. 

The scope of the Gangster Disciples’ crimes is wide-ranging and consistent throughout the national operation.  The RICO conspiracies charged here include attempted murder, narcotics trafficking, extortion, firearms crimes, obstruction of justice and other crimes in furtherance of the Gangster Disciples enterprise and to raise funds for the gang.  In Georgia, for example, the Gangster Disciples brought money into the gang through, among other things, drug trafficking, robbery, carjacking, extortion, wire fraud, credit card fraud, insurance fraud and bank fraud. 

The gang protected its power and operation through threats, intimidation and violence, including murder, attempted murder, assault and obstruction of justice.  It also promoted the Gangster Disciples enterprise through member-only activities, including conference calls, birthday celebrations of the gang’s founder, the annual Gangster Ball, award ceremonies and other events. 

The gang also provided financial and other support to members charged with or incarcerated for gang-related offenses and members who were fugitives from law enforcement were provided “safe houses” in which to hide from police.  To introduce the criminal nature of the Gangster Disciples to a new member, older members and leaders in the various local groups ordered newer members to commit crimes, including murder, robbery and drug trafficking.  Further, Gangster Disciples members would teach other members how to commit certain crimes, including frauds and would provide drugs on discount to other Gangster Disciples members for resale. 

The Atlanta RICO conspiracy indictment names the following defendants and their alleged roles within the Gangster Disciples:

• Shauntay Craig, 37, of Birmingham, held the rank of Gangster Disciples board member;

• Alonzo Walton, 47, of Atlanta, held at different relevant times the positions of governor of Georgia and governor of governors, the latter position controlling Georgia, Florida, Texas, Indiana and South Carolina;

• Kevin Clayton, 43, of Decatur, Georgia, was the chief enforcer for the state of Georgia;

• Donald Glass, 26, of Decatur, served as a first coordinator of the eastside group of the Gangster Disciples;

• Lewis Mobely, 38, of Atlanta, was an enforcer;

• Vertious Wall, 40, of Marietta, was a first coordinator for the Macon Gangster Disciples group;

• Adrian Jackson, 37, of San Jose, California, was the national treasurer for the Gangster Disciples;

• Terrence Summers, 45, of Birmingham, held at different relevant times the positions of governor of Alabama and governor of governors for Georgia, Alabama, South Carolina and Florida;

• Markell White, 43, of Atlanta, was a regional leader in Macon;

• Ronald McMorris, 34, of Atlanta, was first coordinator of the Atlanta group;

• Perry Green, 29, of Decatur, was a member of the Gangster Disciples and acted as enforcer of a Gangster Disciples group;

• Dereck Taylor, 29, of Macon, was a member of the Gangster Disciples and acted as security for a Macon group;

• Alvis O’Neal, 37,of Denver, was a senior member of and money launderer for the Gangster Disciples;

• Jeremiah Covington, 32, of Valdosta, Georgia, was a first coordinator for the Valdosta region;

• Antonio Ahmad, 33, of Atlanta, was the chief of security for the state of Georgia;

• Eric Manney, 39, of Atlanta, was a member of the Gangster Disciples and stored multiple guns at his house;

• Quiana Franklin, 33, of Birmingham, served as treasurer for the state of Alabama;

• Frederick Johnson, 37, of Marietta, was a chief enforcer for a Gangster Disciples group;

• Charles Wingate,25, of Conyers, Georgia, was chief of security for a Covington, Georgia group;

• Vancito Gumbs, 25, of Stone Mountain, Georgia, was a member of the Gangster Disciples while at the same time serving as a police officer with the DeKalb County Police Department;

• Thomas Pasby, 42, of Cochran, Georgia, was a member of the Gangster Disciples;

• Denise Carter, 41, of Detroit, was a member of the Gangster Disciples;

• Carlton King Jr., 25, of Cochran, was a member of the Gangster Disciples;

• Kelvin Sneed, 26, of Cochran, was a member of the Gangster Disciples;

• Arrie Freeney, 32, of Detroit, was a member of the Gangster Disciples;

• Myrick Stevens, 26, of Madison, Wisconsin, was a member of the Gangster Disciples;

• Curtis Thomas, 45, of Cochran, was a member of the Gangster Disciples;

• Yohori Epps, 36,of Marietta, was a member of the Gangster Disciples; and

• Michael Drummound, 49, of Marietta, was a member of the Gangster Disciples.

  In addition to the RICO conspiracy, Glass and Mobely are each charged with committing or attempting to commit murder in aid of racketeering and using firearms during those crimes.  Mobely, Glass, Craig, O’Neal, Covington and Travis Riley, 35, of Wichita, Kansas are also charged with various drug distribution crimes and Mobely and Glass are further charged with related firearms crimes.  Walton, Ahmad and Laderris Dickerson, 45, of Chicago, are also charged with carjacking and Walton and Dickerson are charged with a related firearms offense.  

  The Memphis RICO conspiracy indictment names the following defendants and their alleged roles within the Gangster Disciples:

• Byron Montrail Purdy, aka “Lil B” or “Ghetto,” 37, of Jackson, Tennessee, served as Gangster Disciples leader in Tennessee;

• Derrick Kennedy Crumpton, aka “38,” 32, of Memphis, served as Gangster Disciples leader in Tennessee;

• Demarcus Deon Crawford, aka “Trip,” 32, of Jackson, served as leader of security in Tennessee;

• Henry Curtis Cooper, aka “Big Hen,” 36, of Memphis, served as leader of security in Tennessee;

• Rico Terrell Harris, aka “Big Brim,” 43, of Memphis, served as leader of security in Tennessee;

• Shamar Anthony James, aka “Lionheart,” 37, of Memphis, held the rank of governor of a region in Memphis;

• Demario Demont Sprouse, aka “Taco,” 35, of Memphis, held the rank of chief of security of a region in Memphis;

• Robert Elliott Jones, aka “Lil Rob” or “Mac Rob,” 36, of Memphis, held the rank of governor of a region in Memphis;

• Denton Suggs, aka “Denny Mo” or “Diddy Mo,”40, of Memphis, held the rank of chief of security in a section of Memphis;

• Santiago Megale Shaw, aka “Mac-T,” 23, of Jackson, was a member of the security team or blackout squad in Jackson;

• Tarius Montez Taylor, aka “T,” 26, of Jackson, was a member of the security team or blackout squad in Jackson;

• Tommy Earl Champion Jr., aka “Duct Tape,” 27, of Jackson, held the rank of chief of security of Jackson;

• Cory Dewayne Bowers, aka “Bear Wayne,” 32, of Jackson, was associated with the Gangster Disciples and acted as a member of the security team in Jackson;

• Gerald Eugene Hampton, aka “G30,” 30, of Jackson, held the rank of assistant chief of security and was a member of the security team’s blackout squad in Jackson;

• Daniel Lee Cole, aka “D-Money,” 37, of Jackson, acted as assistant governor and assistant education coordinator for the Gangster Disciples in Jackson; and

• Tommy Lee Wilkins (Holloway), aka “Tommy Gunz,” 28, of Memphis, was a member of the security team in Memphis.                                                                     

In addition to the RICO conspiracy, all 16 defendants are charged with a cocaine-distribution conspiracy, and Crawford, Shaw, Taylor, Champion and Bowers are charged with seven counts of attempted murder in aid of racketeering and using a firearm during the commission of those offenses. 

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

The Atlanta case is being investigated by the FBI Atlanta's Safe Streets Gang Task Force (composed of members of the FBI, Alpharetta Police Department (PD), Atlanta PD, Clayton County PD, DeKalb PD, Forest Park PD, GA Dept. of Community Supervision, GA Dept. of Corrections, Gwinnett County PD, and Marietta PD), Internal Revenue Service Criminal Investigation, United States Marshal's Service and United States Postal Inspection Services. The Atlanta case is being prosecuted by Trial Attorney Hans B. Miller of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorneys Kim S. Dammers, Ryan K. Buchanan and Stephanie Gabay-Smith of the Northern District of Georgia.

The Memphis case is being investigated by a multi-agency task force consisting of the FBI; the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Memphis Multi-Agency Gang Unit; the Memphis PD; the Shelby County, Tennessee Sheriff’s Office; the Jackson PD Gang Enforcement Team; the Tennessee Bureau of Investigation; the Madison County, Tennessee Sheriff’s Department; the 28th District West Tennessee Drug Task Force; the Tipton County, Tennessee, Sheriff's Office; the 26th Judicial District Attorney General’s Office; the 25th Judicial District Attorney General’s Office; the Atascosa County, Tennessee District Attorney’s Office; and the Shelby County District Attorney General’s Office.   The Memphis case is being prosecuted by David N. Karpel of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorneys Jerry Kitchen, Samuel Stringfellow, Beth Boswell, and Michelle Parks of the U.S. Attorney’s Office for the Western District of Tennessee. 

Stole Identities from D.C. Government Agency for Use in Filing False Tax Returns

A resident of Bowie, Maryland, was sentenced today to four years in prison after pleading guilty in January for his involvement in a far-reaching identity theft and tax fraud scheme in which he assisted in the filing of fraudulent federal income tax returns seeking more than $4.4 million in refunds, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division, U.S. Attorney Channing D. Phillips of the District of Columbia, Special Agent in Charge Thomas Jankowski of Internal Revenue Service-Criminal Investigation (IRS-CI), Inspector in Charge Maria L. Kelokates of the U.S. Postal Inspection Service’s Washington Division and Assistant Inspector General for Investigations John L. Phillips of the U.S. Department of the Treasury.

Marc A. Bell, 49, a former employee of the District of Columbia’s Department of Youth Rehabilitation Services (DYRS), admitted taking part in a massive and sophisticated identity theft and false tax return scheme that involved an extensive network of more than 130 people, many of whom were receiving public assistance.  According to court documents, the scheme involved the filing of at least 12,000 fraudulent federal income tax returns that sought refunds of at least $42 million from the U.S. Treasury.  The false tax returns sought refunds for tax years 2005 through 2013 and were often filed in the names of people whose identities had been stolen, including the elderly, people in assisted living facilities, drug addicts and incarcerated individuals.  Refunds also were sent to people who were willing participants in the scheme.  The refunds listed more than 400 “taxpayer” addresses located in the District of Columbia, Maryland and Virginia. 

According to documents filed with the court, from 2005 to 2013, Bell was employed as a program manager, program officer or placement expeditor at the District of Columbia’s Department of Youth Rehabilitation Services (DYRS).  The agency is responsible for the supervision, custody and care of young people charged with a delinquent act in the District of Columbia and either detained in a DYRS facility while awaiting adjudication or committed to DYRS by a District of Columbia Family Court judge following adjudication.  In his various capacities at DYRS, Bell had access to the agency’s database system, which contained the personal identifying information of DYRS youth, including their names and social security numbers.  Bell admitted that between approximately May 2010 and April 2013, he used his computer access to obtain the personal identifying information of at least 645 then-current and former DYRS youth.  Bell admitted that he provided this information to other scheme participants, who used the names and social security numbers to file at least 1,160 fraudulent federal income tax returns that claimed refunds of approximately $4,441,194.  The IRS issued approximately 700 U.S. Treasury checks, totaling approximately $2,422,211, in the names of the DYRS youth in whose names the tax returns were filed.  Bell received financial compensation from co-conspirators for providing the stolen identities.

Bell is one of approximately 20 participants in this scheme who have pleaded guilty to federal charges in the U.S. District Court for the District of Columbia.  Bell pleaded guilty in January to one count of conspiracy to defraud the government with respect to claims, one count of aiding and abetting in the filing of fictitious or false claims and one count aiding and abetting fraud and related activity in connection with identification documents.  In addition to the prison term, U.S. District Judge Ellen S. Huvelle ordered Bell to serve three years of supervised release and pay restitution to the IRS in the amount of $1,972,710.   

This morning, Lakisha Jackson, 40, of District Heights, Maryland, pleaded guilty to one count of conspiracy to commit theft of public money for her role in the scheme.  As part of her plea, she admitted that between September 2010 and May 2012 she allowed her residential address to be used to file approximately 70 fraudulent federal income tax returns seeking refunds of approximately $229,199 and to receive 61 fraudulently-procured U.S. Treasury checks totaling approximately $193,977.  Jackson faces a statutory maximum sentence of five years in prison and a $250,000 fine.  She has agreed to pay restitution to the IRS in the amount of $175,953. Jackson is scheduled to be sentenced on July 13.

Acting Assistant Attorney General Ciraolo, U.S. Attorney Phillips, Special Agent in Charge Jankowski, Inspector in Charge Kelokates and Assistant Inspector General Phillips commended those who investigated the case.  They also acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office for the District of Columbia, including former Assistant U.S. Attorney Sherri L. Schornstein, Paralegal Specialists Donna Galindo, Corinne Kleinman and Julie Dailey and Legal Assistant Angela Lawrence.  Finally, they thanked Assistant U.S. Attorney Ellen Chubin Epstein of the District of Columbia’s Fraud and Public Corruption Section and Trial Attorneys Jeffrey B. Bender and Thomas F. Koelbl and former Trial Attorney Jessica Moran of the Tax Division, who prosecuted the case. 

The Justice Department announced today a settlement with the Columbia, South Carolina, Police Department (CPD) to ensure that persons who are deaf or hard of hearing receive sign language interpreters and other services necessary for effective communication when interacting with CPD police officers, whether on the road or at a precinct. 

Title II of the Americans with Disabilities Act (ADA) requires public entities such as police officers, firefighters and correctional officers to ensure that their communications with people with hearing disabilities are as effective as their communications with people without disabilities.  

CPD, under the leadership of Chief W.H. “Skip” Holbrook, serves the largest city in the state of South Carolina with more than 133,000 residents.  After the department completed an investigation that found that CPD was not providing the required services to allow for effective communication with persons who are deaf or hard of hearing, CPD worked cooperatively to reach an agreement to ensure effective communication with individuals with disabilities.  Under the settlement agreement, CPD will:

• Provide auxiliary aids and services free of charge, including sign language interpreters, to people who are deaf or hard of hearing, within proscribed time frames;
• Modify handcuffing policies to handcuff deaf individuals in front, safety permitting, to enable the person to communicate using sign language or writing;
• Designate an ADA coordinator for law enforcement;
• Develop and utilize a communication card to communicate with persons who are deaf or hard of hearing during routine interactions in the field;
• Develop a communication assessment form to assess, in consultation with an arrestee, what auxiliary aids or services are necessary, and the timing, duration and frequency with which they will be provided;
• Provide at least one TTY and one videophone at each CPD station and sub-station;
• Conduct annual ADA training for CPD personnel and;
• Adopt and publish grievance procedures providing for prompt and equitable resolution of complaints against CPD alleging any action that would be prohibited by Title II or the agreement.

“Our first responders play a critical role in protecting the safety of our communities, and we must ensure they can communicate effectively with all people, including those with hearing disabilities,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division.  “This settlement will ensure that the Columbia Police Department complies with federal law, protects the civil rights of all its residents and more effectively advances public safety.”

The Justice Department has a number of publications available to assist entities to comply with the ADA, including Effective Communication, which provides guidance on the department’s regulations relating to communicating effectively with people who have vision, hearing or speech disabilities.  For more information on the ADA and to access these publications, visit www.ada.gov.  Those interested in learning more about this settlement or the obligations of public accommodations 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 by email to ada.complaint@usdoj.gov.

CPD Settlement Agreement

The Departments of Justice and Education entered into a voluntary settlement agreement late yesterday with the Arizona Department of Education (ADE) under the Equal Educational Opportunities Act and Title VI of the Civil Rights Act of 1964.  The agreement requires ADE to raise its English proficiency criteria to properly identify English language learner (ELL) students in grades three through 12 and to properly determine when those students no longer need language services.  The agreement also requires ADE to ensure that Arizona public schools offer language support services to thousands of students who were prematurely moved out of language services or incorrectly identified as initially fluent English proficient from the 2012-13 school year to the present. 

The agreement follows a separate settlement agreement with the United States on April 22, 2016, that requires ADE to raise its proficiency criteria for identifying ELL students in kindergarten and to offer language services to ELL students incorrectly identified as English proficient in kindergarten.  That agreement also requires ADE to ensure that ELL students who opt out of ELL services have their English language proficiency assessed every year until they are proficient in English. 

“We commend Arizona’s Superintendent of Public Instruction and ADE for voluntarily agreeing to take these important steps to ensure that ELL students are timely identified and receive language services critical to their academic success,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division.

“Today’s agreement recommits the State of Arizona to fully serve all Arizona ELL students so they will receive the services they need to be college and career ready,” said Assistant Secretary Catherine E. Lhamon for the Department of Education’s Office for Civil Rights. “We are thrilled for the thousands of students every year who will benefit from this critically important agreement.”

These agreements arise out of the departments’ monitoring of a 2012 settlement agreement with ADE that aimed to resolve the departments’ findings that ADE had under-identified and prematurely removed from ELL status and ELL services tens of thousands of ELL students between 2006 and 2012.  As contemplated in that 2012 settlement agreement, the departments and ADE resolved issues that arose during monitoring with the agreements announced today.

The Equal Educational Opportunities Act requires state and local education agencies to take appropriate action to overcome language barriers that impede students’ equal participation in instructional programs, and Title VI of the Civil Rights Act of 1964 bans discrimination on the basis of race and national origin by schools that receive federal funds.  Enforcing these laws is a top priority of the Justice Department’s Civil Rights Division.  Additional information about the Civil Rights Division is available on its website at www.justice.gov/crt.  Enforcement of Title VI is also a top priority of the Department of Education’s Office for Civil Rights.  Additional information about the Department of Education’s Office for Civil Rights is available on its website at www.ed.gov/ocr/.  

ADE Kindergarten Settlement Agreement

ADE Grades 3-12 Settlement Agreement

The last of three defendants charged with racketeering offenses was sentenced today by the Honorable Lawrence J. O’Neill.  Gary Anthony Romero, 50, of Stockton, California, was sentenced on April 11, to 20 years imprisonment for racketeering conspiracy.  Today, Judge O’Neill sentenced Joe Anthony Felix, 36, of Modesto, California, to 151 months imprisonment for racketeering conspiracy, and Jesus Gomez Felix, 32, of Modesto, to 30 months imprisonment for Assault With a Deadly Weapon in Aid of Racketeering Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Acting U.S. Attorney Phillip Talbert of the Eastern District of California announced.

According to court documents, Nuestra Familia is a prison gang that originally formed in the California state prison system in the 1960s.  Nuestra Familia leaders control and direct the gang’s criminal activities both inside and outside of the prison system.

According to court documents, Romero has been a member of Nuestra Familia for about 20 years and has reached one of the highest levels of authority in Nuestra Familia.  He ordered various crimes to be committed for the benefit of the gang in Stanislaus County, including aggravated assaults, robberies and drug dealing.  Romero ordered a home invasion robbery in Turlock in which the robbers wielded firearms and made off with a vehicle and several other items.  While Romero was in custody at the Stanislaus County Jail, he ordered the “removal” of several Nortenos who had violated Nuestra Familia rules.  A “removal” involved assaulting the individuals with homemade weapons, as well as fists and feet.  Several of the victims suffered stab wounds.  Romero also directed a gang member to set up subsets of the gang throughout Stanislaus County, to collect money from the members, including from their drug trafficking activities and to put the funds on Romero’s books at Stanislaus County Jail.

Joe Felix was a Norteno, a gang under the Nuestra Familia umbrella, who was in charge of Stanislaus County and provided direction to other Nortenos to commit various crimes, including attempted murder and drug trafficking in Modesto.  Joe Felix participated in an assault of two individuals who had dropped out of the gang.  As a result of the attack, one of the victims suffered a fractured orbital bone and injury to his eye.  Joe Felix also provided direction to other Nortenos regarding the sales of methamphetamine, and profited from the drug trafficking operation.

Jesus Felix went armed to the assault of the two gang drop-outs.  He exchanged gunfire with someone from the opposing side during the incident.  No one was shot.

“I would like to thank the United States Department of Justice and the hard work of the federal prosecutors who prosecuted this case,” said District Attorney Birgit Fladager for Stanislaus County.  “We will remain committed to working collaboratively with our federal partners to pursue criminal gang members who commit violent crimes and pose a threat to the citizens of Stanislaus County.”

In addition to the prison term, Joe Felix is to serve 60 months of supervised release on the instant matter, and nine months imprisonment consecutive on a supervised release violation on a 2004 case.  Jesus Felix is to serve three years of supervised release.

This case was investigated by the Central Valley Gang Impact Task Force under the FBI’s Safe Streets Initiative, with the assistance of the Stanislaus County District Attorney’s Office, Stanislaus County Sheriff’s Office, Modesto Police Department, Ceres Police Department, the California Highway Patrol, the California Department of Corrections and Rehabilitation, the Bureau of Prisons and the Stanislaus County Probation Department.

The case was prosecuted by Trial Attorneys Louis A. Crisostomo and Kelly Pearson of the Criminal Division’s Organized Crime and Gang Section and Assistant United States Attorneys Kimberly A. Sanchez and Laurel J. Montoya of the Eastern District of California.

On Saturday, a jury in New Orleans convicted the owner of a health care company for her role in a $3.2 million Medicare fraud scheme operating in and around New Orleans. 

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Kenneth A. Polite of the Eastern District of Louisiana, Special Agent in Charge Jeffrey S. Sallet of the FBI’s New Orleans Division and Special Agent in Charge CJ Porter of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG)’s Dallas Regional Office made the announcement.

Tracy Richardson Brown, 46, of New Orleans, was convicted of 18 counts after a five-day trial before U.S. District Judge Stanwood R. Duval Jr. of the Eastern District of Louisiana.  Brown was convicted of one count of conspiracy to commit health care fraud, nine counts of health care fraud, one count of conspiracy to pay illegal kickbacks and seven counts of paying illegal kickbacks.  Brown’s sentencing hearing is scheduled for Aug. 10, 2016. 

Evidence introduced at trial showed that Brown owned and operated Psalms 23 DME LLC (Psalms) and caused Psalms to bill Medicare for durable medical equipment and orthotics that were not needed and/or were not provided.  Brown paid patient recruiters for the names and Medicare numbers of Medicare recipients in and around New Orleans and then used these Medicare numbers to bill Medicare, claiming that Psalms provided them power wheelchairs, accessories and orthotics.  Trial evidence showed that a vast majority of these patients did not need and often did not receive, or even want, the equipment.  Evidence also revealed that Brown engaged in “upcoding,” billing Medicare as if she provided these patients with high-cost back and knee braces, when she in fact provided them much cheaper versions of these braces.  Brown caused Psalms to bill Medicare for more than $3.2 million in claims, a large number of which were fraudulent.  Medicare paid Psalms approximately $1.9 million on these claims.

This case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Louisiana.  This case was prosecuted by Assistant U.S. Attorney Patrice Sullivan of the Eastern District of Louisiana and Trial Attorney William Kanellis of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,300 defendants who have collectively billed the Medicare program for more than $7 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers. 

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

          United States Attorney ALICIA A.G. LIMTIACO, U.S. Attorney for the Districts of Guam and the Northern Mariana Islands (NMI), together with Drug Enforcement Administration (DEA) Resident Agent in Charge Michael Puralewski, announced that the National Prescription Drug Take Back Day was held on Saturday, April 30, 2016.

          The first National Prescription Drug Take-Back Day event was held nationwide in September 2010.  Guam and the NMI have participated every year since.  The purpose of the National Drug Take-Back Initiative is to help prevent increased pill abuse and theft, to encourage the public to rid their household of unused prescription drugs that pose a safety hazard and can contribute to prescription drug abuse, and to provide a venue for persons who want to dispose of unwanted and unused prescription drugs for safe disposal by DEA.

          The following sites in Guam and in the NMI were designated to receive unused prescription drugs:

• Naval Base Guam (Navy Exchange Food Court)
• Agana Shopping Center (Across Vitamin World)
• Agat Village Mayor's Office
• Andersen Air Force Base (Exchange & Commissary)
• Dededo Village Mayor’s Office
• Rota Health Center
• Saipan Commonwealth Health Center
• Tinian Health Center

   

          Take-back programs are the best way to dispose of old drugs.  Unused or expired prescription medications are a public safety issue, leading to accidental poisoning, overdose, and abuse.   Pharmaceutical drugs can be just as dangerous as street drugs when taken without a prescription or a doctor’s supervision.  The majority of teenagers abusing prescription drugs get them from family and friends – and the home medicine cabinet.

          The non-medical use of prescription drugs ranks second only to marijuana as the most common form of drug abuse in America.  Unused prescription drugs thrown in the trash can be retrieved and abused or illegally sold.  Unused drugs that are flushed contaminate the water supply. Proper disposal of unused drugs saves lives and protects the environment.

           For more information on prescription drug abuse, go to:  www.dea.gov, www.getsmartaboutdrugs.com, or www.justthinktwice.com.

A former FBI special agent pleaded guilty today for stealing over $136,000 of drug proceeds seized during the execution of search warrants in 2014 and falsifying reports and tampering with a witness.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Special Agent in Charge Angel D. Gunn of the Department of Justice Office of the Inspector General Los Angeles Field Office made the announcement.

Scott M. Bowman, 45, of Moreno Valley, California, pleaded guilty to one count of conversion of property by a federal employee, one count of obstruction of justice, one count of falsification of records and one count of witness tampering before U.S. District Judge Jesus G. Bernal of the Central District of California.  Sentencing is set for Aug. 15.

In connection with his plea, Bowman admitted that he misappropriated drug proceeds seized during the execution of three search warrants in June and August 2014, after they were transferred to his custody in his official capacity as a federal law enforcement officer.  Bowman then spent the stolen money for his own personal use, including by spending $43,850 to purchase a 2012 Dodge Challenger coupe, $27,500 to purchase a 2013 Toyota Scion FR-S coupe and $26,612 to outfit these vehicles with new speakers, rims, tires and other equipment.  Bowman also admitted that he used $15,000 of the misappropriated cash to pay for cosmetic surgery for his spouse and opened a new checking account into which he deposited $10,665 of the stolen funds.

In order to conceal his embezzlement, Bowman falsified official FBI reports, submitted a receipt with a forged signature and asked a local police detective to provide false information to law enforcement officers if asked about Bowman’s activities with respect to the drug proceeds.  Specifically, Bowman sent emails to the local police detective in October 2014 containing a detailed cover story that the detective was instructed to provide and a copy of the receipt with the forged signature, so that the detective could falsely claim the forged signature as his own.

“When the FBI became aware of allegations of misconduct by defendant Bowman, FBI management took immediate action by contacting the Justice Department’s Office of Inspector General,” said Acting Assistant Director in Charge James Struyk of the FBI’s Los Angeles Field Office.  “As Mr. Bowman takes responsibility for his actions by pleading guilty, the public should be reminded that FBI personnel are held to the highest standards and misconduct of any kind is taken very seriously.”

This case was investigated by the Department of Justice Office of the Inspector General and is being prosecuted by Trial Attorneys Lauren Bell and Robert J. Heberle of the Criminal Division’s Public Integrity Section.  

Convictions Part of First-Ever Prosecution of Mobile App Piracy Groups

A leading member of an online piracy group pleaded guilty today and a co-conspirator pleaded guilty in January for their roles in a scheme to distribute more than four million pirated copies of copyrighted Android apps with a total retail value of more than $17 million.  

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney John A. Horn of the Northern District of Georgia and Special Agent in Charge J. Britt Johnson of the FBI’s Atlanta Field Office made the announcement.

Aaron Blake Buckley, 22, of Moss Point, Mississippi, pleaded guilty today to one count of conspiracy to commit criminal copyright infringement and to one count of criminal copyright infringement before U.S. District Judge Timothy C. Batten Sr. of the Northern District of Georgia.  Gary Edwin Sharp II, 29, of Uxbridge, Massachusetts, a co-conspirator, pleaded guilty to one count of conspiracy to commit criminal copyright infringement on Jan. 13.  The defendants are scheduled to be sentenced on Aug. 1.

According to statements made in court, the conspirators identified themselves as members of the Applanet Group.  From May 2010 through August 2012, they conspired to reproduce and distribute more than four million copies of copyrighted Android apps through the Applanet alternative online market without permission from the victim copyright owners, who would otherwise sell copies of the apps on legitimate online markets for a fee.  On Aug. 21, 2012, the FBI seized the Applanet website, which marked the first seizure of the domain name for a website involving a mobile device app marketplace.

Sharp also pleaded guilty for his role in conspiring to commit criminal copyright infringement as the leader of another online piracy group, the SnappzMarket Group.  Sharp admitted that he and two other members of the SnappzMarket Group conspired to distribute more than one million pirated copies of copyrighted Android apps with a total retail value of more than $1.7 million through the group’s website, which was also seized on Aug. 21, 2012.  

The FBI investigated the case.  Assistant Deputy Chief John H. Zacharia of the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS) and Assistant U.S. Attorney Christopher Bly of the Northern District of Georgia are prosecuting the case.  The CCIPS Cybercrime Lab and the Criminal Division’s Office of International Affairs provided significant assistance. 

The Department of Justice announced today that Halliburton and Baker Hughes have abandoned their planned merger, originally valued at $34 billion.  The department filed suit on April 6, 2016, to block the merger, alleging that the transaction would unlawfully eliminate significant head-to-head competition between the companies in at least 23 markets crucial to the exploration and production of oil and natural gas in the United States.

“The companies’ decision to abandon this transaction – which would have left many oilfield service markets in the hands of a duopoly – is a victory for the U.S. economy and for all Americans,” said Attorney General Loretta E. Lynch.  “This case serves as a stark reminder that no merger is too big or too complex to be challenged, and that the hardworking men and women of the department’s Antitrust Division stand ready, willing and able to vigorously enforce the nation’s antitrust laws when companies propose deals that would enhance shareholder value at the expense of consumer interests.  I am proud of the lawyers, economists, and others at the Justice Department whose work on this multi-year investigation and litigation made this result possible.”

“Very few things are as important to our economy as oil and gas,” said Deputy Assistant Attorney General David I. Gelfand of the Justice Department’s Antitrust Division.  “But the merger of Halliburton and Baker Hughes would have raised prices, decreased output and lessened innovation in at least 23 oilfield products and services critical to the nation’s energy supply.  We achieved the only result that could adequately protect American consumers – an abandonment of this unlawful merger.  We thank our enforcement partners around the world, especially from the European Commission, Australia, Brazil and Mexico, for their close and constructive collaboration on this matter.”

Before the lawsuit was filed, Halliburton had offered to divest certain assets in an effort to address the department’s competitive concerns.  According to the complaint, however, the proposal was inadequate because it did not include full business units, withheld many critical assets and personnel, involved numerous ongoing entanglements between the merged company and the divestiture buyer and generally failed to replicate the robust competition between the parties that exists today.

Halliburton is a Delaware corporation headquartered in Houston.  Founded in 1919, Halliburton is the largest provider of services and products to the oil and gas industry in the United States.  It has operations in approximately 80 countries and earned revenue of $23.6 billion in 2015.

Baker Hughes is a Delaware corporation headquartered in Houston.  It was formed in 1987 with the merger of Baker International and Hughes Tool Company, both founded over 100 years ago.  The third-largest provider of oilfield services in the world, Baker Hughes operates in more than 80 countries and earned revenue of $15.7 billion in 2015.

Showcases Work on Merger Remedies, Unilateral Conduct and Agency Assessment

At its annual meeting, the International Competition Network (ICN) approved new work on crafting remedies in merger review, agency assessment and performance measurement, cartel investigative powers, market studies, competition agency ethics programs, and advocacy to the business community, the Justice Department’s Antitrust Division announced today.  The ICN also presented the outcome of a network-wide assessment to guide its operations, agenda and future work plans, known as its “Second Decade initiative.”

The ICN held its 15th annual conference, hosted by the Competition Commission of Singapore (CCS), on April 26-29, 2016.  More than 500 delegates from more than 75 jurisdictions participated, including competition experts from international organizations and the legal, business, consumer and academic communities.  Principal Deputy Assistant Attorney General Renata Hesse of the Department of Justice’s Antitrust Division and Federal Trade Commission Chairwoman Edith Ramirez led the U.S. delegation.  The conference showcased the achievements of ICN working groups on unilateral conduct, agency effectiveness, mergers, cartels and competition advocacy.

Principal Deputy Assistant Attorney General Hesse moderated a panel on monopolization and the global economy.  The panel was part of the Unilateral Conduct Working Group’s on-going project on the analytical framework for single firm conduct enforcement, exploring various perspectives to inform and articulate common principles of sound competition analysis.  The Unilateral Conduct Working Group, co-chaired by the Justice Department, promotes convergence and sound enforcement of laws and policies applicable to conduct by firms with substantial market power.

“The ICN has become a crucial instrument for dialogue, cooperation, and convergence within the global antitrust community,” said Principal Deputy Assistant Attorney General Hesse.  “The Annual Conference provides us all with an opportunity to reflect on the great progress that has been made in competition policy and enforcement around the world, as well as the challenges that lie ahead.  This practical cooperation with many other jurisdictions helps to create a strong foundation for more effective enforcement in a globalized economy.  We look forward to continuing our work with ICN and its members on these important issues in the coming year.”

Chairwoman Ramirez spoke on a panel about disruptive innovation and competition issues.  She highlighted the FTC’s advocacy relating to emerging internet peer-to-peer platforms, as reflected in a 2015 FTC Workshop on the Sharing Economy.  This panel was the culmination of a CCS-led special project devoted to government advocacy and disruptive innovation that also produced a comparative report based on input from 44 competition agencies.  Chairwoman Ramirez also accepted an award for the FTC’s advocacy work involving the sharing economy as part of the Annual ICN/World Bank Advocacy Contest, which recognizes and promotes successful advocacy initiatives by ICN members.

“Since its founding 15 years ago, ICN has become the premier forum for promoting convergence and cooperation in competition enforcement,” said Chairwoman Ramirez. “In developing consensus-based, common-sense guidance on enforcement, the ICN helps its members be effective champions for competition and consumers.”

The Unilateral Conduct Working group provided an update of its work on the Analytic Framework for Assessing Unilateral Conduct.  Over the past year, the group received position papers and held teleconferences on two topics: what is substantial market power and what conduct is exclusionary.  The working group also announced the launch of a new project to analyze the effects of vertical restraints in online markets.

The Agency Effectiveness Working Group, co-chaired by the FTC from 2012 to 2016, addresses competition agency strategy, operations, and procedures.  The working group developed reports on agency ethics and measuring agency performance, which were adopted at the conference.  An agency’s commitment to its ethics rules and the evaluation of its actions are core components of agency governance.  Evaluation, and the accountability it reinforces, can provide an informed foundation for future agency planning and enforcement choices and helps justify the resources an agency receives for its mission.  The working group also presented new on-line training modules on setting up a new competition agency, setting priorities, conducting dawn raids in cartel investigations, applying economic analytical tools, and addressing state restraints – adding to the ICN’s Training on Demand online curriculum.

The ICN’s members also adopted the Merger Remedies Guide presented by the Merger Working Group.  The guide details the overarching principles that form the basis of merger remedies and provides practical guidance on how these principles inform the design and implementation of merger remedies.  The Justice Department and the FTC were active contributors to the development of the Guide.  Following the conference, the FTC will co-chair the Merger Working Group.

The ICN’s Cartel Working Group presented two new work products designed to aid members’ cartel enforcement efforts: a catalogue of agency investigative powers and a framework for sharing non-confidential information.  The framework aims to facilitate improved cooperation among member agencies.  Working group discussions at the conference addressed effective detection and deterrence, enforcement cooperation, leniency, compliance and sanctions.

The Advocacy Working group presented an update of its Market Studies Good Practices Handbook and online Market Studies Information Store, a unique resource of over 600 competition agency market studies spanning 10 years and covering more than 30 jurisdictions.  The working group also expanded its web-based toolbox on competition advocacy, providing examples of agency messages to business on the benefits of competition.

The results of the ICN’s Second Decade initiative reinforced the network’s commitments to inclusive engagement with its members and non-governmental advisors, experience sharing and the exchange of best practices among members, promotion of convergence and cooperation around sound enforcement approaches, and international advocacy for competition principles to the benefit of member agencies, consumers, and economies worldwide.

The ICN was created in October 2001, when the FTC and the Justice Department joined antitrust agencies from 13 other jurisdictions to increase understanding of competition policy and promote convergence toward best practices around the world.  The ICN now comprises 132 member agencies from 120 jurisdictions.

More resources are available on the ICN website.

President Obama Establishes Federal Interagency Reentry Council

An estimated 70 million or more Americans have some kind of criminal record.  Each year, more than 600,000 individuals are released from Federal and State prisons, and millions more are released each year from local jails. Promoting the rehabilitation and reintegration of individuals who have paid their debt to society makes communities safer by reducing recidivism and victimization; assists those who return from prison, jail, or juvenile justice facilities to become productive citizens; and saves taxpayer dollars by lowering the direct and collateral costs of incarceration. 

Providing incarcerated individuals with job and life skills, education programming, and mental health and addiction treatment increases the likelihood that they will be successful when released. Policies that limit opportunities for people with criminal records create barriers to employment, education, housing, health care, and civic participation. All of these are critical to reducing recidivism and strengthening communities.

As part of National Reentry Week, the Administration has taken a series of steps to reform the federal approach to reentry by addressing barriers to reentry, supporting state and local efforts to do the same, and engaging the private sector to provide individuals who have earned a second chance the opportunity to participate in the American economy.

Today, the President will sign a Presidential Memorandum establishing the Federal Interagency Reentry Council to lead the Government’s work on the rehabilitation and reintegration of individuals returning to their communities from prisons and jails. The Attorney General has successfully led a Cabinet-level working group for the last five years, and this Memorandum will build on that success and ensure that the Federal Government will continue this important work. 

The Administration is taking important steps to reduce barriers to employment for formerly incarcerated individuals:

•          The Office of Personnel Management (OPM) is publishing a proposed rule that would prohibit federal agencies from asking questions about criminal and credit history to applicants for tens of thousands of jobs in the competitive service, as well as the career senior executive service, until a conditional offer of employment has been made. People with criminal records are already eligible to compete for the vast majority of federal jobs; the proposed rule builds on current practice at many agencies by ensuring that hiring managers are making selection decisions based solely on applicants' qualifications.

Early inquiries into an applicant's criminal history may discourage motivated, well-qualified individuals who have served their time from applying for a federal job. Early inquiries could also lead to the disqualification of otherwise eligible candidates, regardless of whether an arrest actually resulted in charges or a conviction, and regardless of whether consideration of an applicant's criminal history is justified by business necessity. These barriers to employment unnecessarily narrow the pool of eligible and qualified candidates for federal employment, while also limiting opportunities for those with criminal histories to obtain the means to support themselves and their families.

The rule would also allow agencies to request exceptions where there are legitimate job-related reasons why they might need to obtain a candidate's background information sooner in the hiring process. Unless an exception is granted, only after a conditional job offer is made will candidates be asked questions about criminal and credit history that may bear on their suitability for federal employment. 

•          The Presidential Memorandum directs all agencies and departments to review their procedures for conducting a suitability determination for a job applicant with a criminal record. These suitability determinations evaluate each individual’s character and conduct and consider such factors as the relevance of any past criminal conduct to the job; the nature, seriousness, recency, and circumstances of any criminal conduct; the age of the individual at the time of the conduct; contributing societal conditions; and whether any efforts have been made toward rehabilitation.
•          The Presidential Memorandum directs all agencies with discretion to grant or deny occupational licenses to revise their procedures, consistent with the need to protect public safety, to ensure that a criminal record is not an automatic disqualifier and that the determination to grant or deny a licenses is made after consideration of all relevant facts and circumstances. 

Engaging the Private Sector and Honoring Champions of Change

The President continues to call on members of the private sector to improve their communities by creating a pathway to a job for a formerly incarcerated individual. On April 11th, the White House hosted 19 companies to launch the Fair Chance Business Pledge, including American Airlines, Busboys and Poets, The Coca-Cola Company, Facebook, Georgia Pacific, Google, Greyston Bakery, The Hershey Company, The Johns Hopkins Hospital and Health System, Koch Industries, Libra Group, PepsiCo, Prudential, Starbucks, Uber, Under Amour/Plank Industries, Unilever and Xerox. 

In the two weeks since these initial companies took the pledge, an additional 93 companies and organizations have joined the pledge, including Microsoft, Best Buy, Lyft, Kellogg Company, Staples, TrueBlue, the Oklahoma City Thunder, Catholic Charities USA, NAACP, Manufacturing Alliance of Philadelphia, American Civil Liberties Union, the American Sustainable Business Council and dozens of small and medium-sized companies from across the country.

Together, these 112 companies and organizations employ well over 1.5 million people. By joining the pledge, they are committing to take action to reduce barriers to a second chance, such as “banning the box,” ensuring information regarding a criminal record is considered in the proper context, and engaging in hiring practices that do not unnecessarily place jobs out of reach for those with criminal records. Companies and organizations interested in joining the pledge can continue to do so by visiting www.whitehouse.gov/fairchancepledge.

This past Wednesday, the White House honored 10 individuals as “White House Champions of Change for Expanding Fair Chance Opportunities.”  These individuals were recognized for their leadership and tireless work to remove barriers to a second chance for those with a criminal records.

Additional Federal Agency Actions To Reduce Barriers During National Reentry Week

As part of National Reentry Week, the Federal Interagency Reentry Council agencies have announced additional steps to improve the rehabilitation and reintegration of formerly incarcerated individuals:

•          The Council of Economic Advisors released a report, “Economic Perspectives on Incarceration and the Criminal Justice System,” and hosted an event with the Brennan Center for Justice and the American Enterprise Institute focused on the economic impact of the criminal justice system and identified cost-effective ways to reduce crime and incarceration rates. 
•          The Department of Justice (DOJ) announced its “Roadmap to Reentry,” outlining five evidence-based principles of reform to be implemented by the Bureau of Prisons to ensure DOJ’s commitment to reentry is incorporated throughout incarceration – from intake to release. 
•          Attorney General Lynch sent a letter to governors asking them to allow individuals reentering the community to exchange their corrections identification card for a state identification cards or to accept a corrections identification card as a form of identification. The lack of state-issued identification is another common barrier in getting a job, housing, or opening a bank account.
•          The U.S. Attorneys’ Offices and Bureau of Prisons are hosting hundreds of events in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands, including job fairs and resource fairs, mock interview sessions, resume workshops, family engagement events.
•          The Department of Housing and Urban Development (HUD) released guidance on the application of Fair Housing Act standards to the use of criminal records by providers of housing and guidance for public housing authorities on excluding the use of arrest records in housing decisions. 
•          HUD and DOJ announced recipients of $1.75 million in grants for Public Housing Authorities and nonprofit legal service organizations to assist young people residing in public housing or who would be residing in public housing but for their criminal record. 

·         The Department of Health and Human Services released guidance clarifying that individuals in state or local halfway houses and those on probation or parole are not excluded from Medicaid and describing how states can better facilitate access to Medicaid services for individuals reentering the community. 

•          The Department of Veterans Affairs (VA) is participating in 120 events at Bureau of Prison facilities and VA medical centers to serve justice-involved Veterans.  VA’s Veterans Justice Outreach initiative is active in over 350 Veterans Treatment Courts and other Veteran-focused court programs and 1,284 local jails.     

The U.S. District Court for the Middle District of Florida entered a permanent injunction against Paul W. Franck, who has owned and operated numerous compounding pharmacies, to enjoin the distribution of certain sterile drugs products, the Department of Justice announced today.

“The American people must be protected from compounded sterile drugs that pose a risk to the public health,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “The Department of Justice will continue to work aggressively with the FDA to deter compounding pharmacies that distribute adulterated or misbranded drugs and put patients at risk of significant harm.”

The department filed a complaint in the District Court at the request of the Food and Drug Administration (FDA), alleging that Franck violated the federal Food, Drug and Cosmetic Act (FDCA) by causing drugs to become adulterated and misbranded while such drugs were held for sale after shipment of one or more of their components in interstate commerce. 

As alleged in the complaint, Franck has owned and operated numerous compounding pharmacies in the state of Florida over the past 20 years and he was responsible for providing final approval for all decisions concerning manufacturing and quality operations.  The complaint alleged that the defendant and/or his employees manufactured, processed, packed, labeled, held and/or distributed drugs, including sterile drugs such as antibiotics, antivirals, cardiovascular drugs, drugs for pain management and total parental nutrition. 

In conjunction with the filing of the complaint, Franck agreed to settle the case.  The permanent injunction entered by the court requires that Franck cannot manufacture, hold or distribute any sterile drugs at or from his facility unless and until his facility, equipment, processes and procedures used to manufacture, hold, or distribute drugs are established, maintained, operated and administered in conformity with the permanent injunction and all applicable laws and regulations and are adequate to prevent such drugs from becoming adulterated or misbranded as defined in the order.  Franck must also, among other things, establish and maintain a system to report to FDA all adverse drug experiences associated with his drugs.      

The complaint alleged that a FDA inspection of Franck’s Lab Inc., doing business as Trinity Care Solutions in May 2014, found conditions establishing that the drugs manufactured and distributed by the defendant were adulterated.  For example, FDA observed dead spiders, beetles, ants, wasps and cockroaches in the ceiling panel directly above the sterile manufacturing area, the area where non-sterile gowns were stored and donned, and the sink where employees prepared for sterile processing.  In addition, as alleged in the complaint, FDA found other insanitary conditions, such as lack of sufficient physical barriers to prevent the introduction of contamination from nearby construction; lack of positive air pressure in the clean room relative to surrounding rooms which compromises the cleanliness of the clean room’s air; and materials around the laminar flow hood’s vent that were not cleanable and were potential sources of viable and non-viable particles.  The complaint alleged that the defendant violated the FDCA by causing articles of drug to become adulterated, in that they are prepared, packed, or held under insanitary conditions whereby they may have been rendered injurious to health, while such drugs were held for sale after shipment of one or more of their components in interstate commerce.

The complaint also alleged that FDA inspected the defendant’s pharmacy, Franck’s Lab Inc. dba Franck’s Compounding Pharmacy, between March and May 2012.  As alleged in the complaint, FDA initiated this inspection following reports of eye infections in patients who had been administered an injectable sterile eye solution, Brilliant Blue G (BBG) and/or injectable drug products containing triamcinolone (triamcinolone drugs) that had been compounded by Franck’s Lab.  As alleged in the complaint, FDA laboratory analysis of samples of the defendant’s compounded BBG collected during this inspection revealed that the drug was contaminated with a fungus as well as other microorganisms, and these fungus-type organisms matched the clinical isolates from patients who developed eye infections after administration of this drug. 

The complaint alleged, among other things, that the defendant violated the FDCA by causing drugs to become adulterated in that they consisted in whole or in part of a filthy, putrid, or decomposed substance, while such drugs were held for sale after shipment of one or more of their components in interstate commerce and that because the defendant’s purportedly sterile drugs contained microbiological contamination, the defendant’s labeling for such drugs was false or misleading.  According to the complaint, as of March 2013, the U.S. Center for Disease Control had identified 47 cases of eye infections among 45 patients in nine states linked to exposure to the defendant’s BBG and/or triamcinolone drugs.

In addition, as noted in the complaint, the defendant has conducted a number of recalls of drugs over the years manufactured and distributed from his pharmacies.    

As part of the proposed consent decree submitted to the court, the defendant represented that as of the date of the entry of the decree, he is not engaged in the manufacture, holding, or distribution of any drugs, nor he is causing the manufacture, holding, or distribution of drugs.  The permanent injunction provides that if the defendant intends to resume manufacturing, holding or distributing any drugs at or from his facility, he shall notify FDA in advance of doing so.

The permanent injunction includes limited, precise exceptions for drugs for animal use or any drug for which the defendant is the sponsor of a new drug application approved by FDA.

“Mr. Franck risked the health of the American public by compounding drugs under unacceptable conditions,” said Director Janet Woodcock of the FDA’s Center for Drug Evaluation and Research.  “Today’s action reflects the FDA’s continued efforts to take appropriate and aggressive enforcement action against those who put patients’ health at risk by choosing not to follow the law.”

The government is represented by Trial Attorney Roger Gural of the Civil Division’s Consumer Protection Branch, with the assistance of Senior Counsel Michele Svonkin of the Department of Health and Human Services’ Office of General Counsel – Food and Drug Division.

The Department of Justice announced today that Hollister Inc. (Hollister), a manufacturer of disposable health care products, and Byram Healthcare Centers Inc. (Byram), a supplier of medical products, have agreed to pay $11.44 million and $9,372,882.50, respectively, to resolve allegations that Hollister paid unlawful kickbacks to Byram and that Byram received unlawful kickbacks from Hollister and several other manufacturers, with the intent to induce Byram to conduct promotional campaigns designed to refer patients to the manufacturers’ products.  The settlement with Byram also calls for the company to pay $127,117.50 to the state of California to resolve allegations that Byram submitted falsely inflated claims to that state’s Medicaid program, Medi-Cal, in violation of California regulations.

“This settlement demonstrates the Justice Department’s continuing determination to prevent manufacturers and suppliers of medical devices covered by federal health care programs from paying or receiving kickbacks,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “We will not permit such illegal payments to taint the decision-making of those who serve the beneficiaries of these important programs.”

“We are committed to rooting out commercial bribery, especially in the healthcare industry where the payment of kickbacks erodes patients’ trust in the quality of their medical care,” said U.S. Attorney Carmen M. Ortiz for the District of Massachusetts.  “These unlawful cash incentives also threaten the integrity of the health care system and siphon taxpayer dollars from our nation’s health care programs.” 

“The FBI will aggressively investigate companies that engage in kickback schemes at the expense of both patients and taxpayers,” said Special Agent in Charge Harold H. Shaw of the FBI’s Boston Field Division.  “Those who seek to exploit the nation’s health care system through bribes or other fraudulent conduct will be held accountable for their actions.”

The settlement with Hollister resolves allegations that, from 2007 through 2014, it paid kickbacks to Byram in return for marketing promotions, conversion campaigns and other referrals of patients to Hollister’s ostomy and continence care products.  On seven occasions from 2007 through 2012, Hollister allegedly agreed to pay Byram the costs of bonus commissions (sometimes called spiffs) that Byram paid to its sales personnel for each new patient order for a Hollister product.  In addition, each year from 2009 to 2014, Hollister allegedly agreed to pay Byram $200,000, for “catalog funding” that was actually intended to induce Byram’s recommendation of Hollister products to patients.  

The settlement with Byram resolves the same catalog funding claims, as well as allegations that, in 2012 and 2013, Byram received numerous kickbacks from Hollister and three other manufacturers of ostomy and continence care products, namely Coloplast Corp., Montreal Ostomy and Safe N’ Simple, in return for Byram’s agreement to conduct promotional campaigns and to refer patients to the manufacturers’ products.  The settlement with Byram also resolves allegations by the United States and the state of California that Byram submitted falsely inflated claims to the California Medi-Cal program in violation of California’s upper billing limit regulation, Cal. Code Regs., tit. 22, § 51008.1, which limits the amount a provider can bill for certain products.  The United States and the state of California allege that, when Byram billed Medi-Cal for Coloplast urology products that Byram sold to Medi-Cal beneficiaries, Byram knowingly failed to account for substantial discounts that Byram knew, at the time it billed the Medi-Cal program, materially reduced the prices it paid for the products. 

In connection with the False Claims Act settlement, Byram has also entered into a corporate integrity agreement with the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG).

“Health care product manufacturers that financially reward suppliers in exchange for the referral of business can improperly direct patients to certain products over others,” said Special Agent in Charge Phillip M. Coyne of HHS-OIG.  “We will continue to investigate such wasteful business arrangements.”

The settlements resolve allegations in a whistleblower lawsuit filed by two former employees and one current employee of Coloplast under the qui tam provisions of the False Claims Act, which allow private parties to bring suit on behalf of the government and to share in any recovery.  The whistleblowers’ share of the Hollister and Byram settlements has not been determined.  Claims against two other defendants in the lawsuit, Coloplast Corp. and Liberator Medical Supply Inc., were resolved in December 2015 for a total of $3.66 million.  The settlements announced today bring the total recovery in the case to $24.6 million.  The whistleblowers are pursuing certain additional claims in the case. 

The investigation was conducted by the FBI and HHS-OIG.  The case was handled by the U.S. Attorney’s Office for the District of Massachusetts with assistance from the Civil Division’s Commercial Litigation Branch.

The case is captioned United States ex rel. Herman, et al. v. Coloplast Corp., et al. Case No. 11-cv-12131-RWZ (D. Mass.).  The claims resolved by the settlements are allegations only, and there has been no determination of liability.

Charges were filed today against 25 Miami-area defendants in three separate cases for their alleged participation in various schemes to defraud Medicare of approximately $26 million in false claims through the Medicare Part D program. 

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Assistant Special Agent in Charge William J. Maddalena of the FBI’s Miami Division and Special Agent in Charge Shimon R. Richmond of the U.S. Department of Health and Human Services-Office of Inspector General’s (HHS-OIG) Miami Regional Office made the announcement.

“These cases build on our recent efforts to focus on Medicare prescription drug benefit fraud, targeting those who take advantage of the fastest-growing component of the Medicare program,” said Assistant Attorney General Caldwell.  “Working with our partners in the Medicare Fraud Strike Force, the Criminal Division uses cutting-edge data analysis techniques to identify emerging fraud schemes and to stay ahead of the criminal curve.”

“Those who commit Medicare fraud through the filing of false claims, payment or receipt of kickbacks, or fraudulent medical practices jeopardize the integrity of the government benefit programs that countless citizens rely on for their well-being,” said U.S. Attorney Ferrer.  “The U.S. Attorney’s Office and our law enforcement allies will continue to pro-actively identify for prosecution the individuals who pay kick-backs for the unauthorized use of Medicare benefits for their own illicit financial gain.”

“The actions of the FBI and our partners in the Medicare Fraud Strike Force have disrupted several health care fraud operations today,” said Assistant Special Agent in Charge Maddalena.  “Unfortunately, South Florida remains ground zero for these types of scams.  As such, we will continue to pursue those individuals who pay kickbacks and fraudulently bill for medical services that are not necessary or ever provided.”

“A dangerous trend is fraudulent pharmacy billing for drugs,” said Special Agent in Charge Richmond.  “But exploitation of the Medicare prescription drug benefit will not be tolerated and suspects will face aggressive investigation and prosecution.”

United States v. Antonio Hevia et al. charges 18 defendants for their participation in a scheme to defraud the Medicare Part D program through false claims from eight separate Miami-Dade County area pharmacies.  The defendants each face various charges from among the following offenses included in the indictment:  conspiracy to commit health care fraud and wire fraud; substantive counts of health care fraud; and conspiracy to defraud the United States and pay and receive health care kickbacks.  The indictment alleges that the fraud scheme was orchestrated by Pedro Torres, 43, of North Bay Village, Florida, and Antonio Hevia, 53, of Miami, who recruited individuals to be the owners of pharmacies in Miami-Dade County, which were then used to submit false and fraudulent claims to the Medicare Part D program.  Hevia and Torres allegedly controlled pharmacies that were used to facilitate the fraudulent scheme, including:  Sun View Pharmacy, K.A.R. Pharmacy, Lola Pharmacy, Latin Quarters Drug Store, Lily and Rosy Pharmacy, Norton Pharmacy, Health Star Pharmacy and Supply, Ultra Medical Services and OMG Pharmacy Discount.  Torres and Hevia allegedly instructed the staff at the respective pharmacies to submit false and fraudulent claims for millions of dollars for prescription drugs that were not medically necessary and not provided to the Medicare Part D beneficiaries.  Medicare beneficiaries were frequently referred to the pharmacies by patient recruiters, who received kickbacks for referring patients.  The 18 co-conspirators are charged as owners and/or patient recruiters in the fraudulent scheme.  As a result of the filing of false and fraudulent claims, Medicare made approximately $16.7 million in payments. 

Assistant U.S. Attorney James Hayes of the Southern District of Florida is prosecuting this case.

United States v. Kenia Gonzalez et al. charges Julio Espinosa Moret, 40; Kenia Gonzalez Fernandez, 41; Frank Dunier Perez, 39; and Luzbella Nunez de la Torre, 47, all of Miami, with conspiracy to defraud the United States and pay and receive kickbacks and for receiving kickbacks.  The indictment alleges that the defendants solicited and received kickbacks and bribes to recruit Medicare beneficiaries and induce the Medicare beneficiaries to obtain prescriptions for pharmaceutical drugs to be used in conjunction with the submission of claims to the Medicare Part D Program through OMG Pharmacy.  

Trial Attorney Vasanth Sridharan of the Criminal Division’s Fraud Section is prosecuting this case.

United States v. Ronald Diaz, et al. charges Ronald Diaz, 28, Mercedes Maya, 30, and Gladys Cabrera, 28, all of Miami, with various charges, including conspiracy to commit health care fraud, health care fraud and money laundering.  The indictment alleges that Diaz is the named owner of Total Pharmacy, New Life Community Pharmacy, La Botica Pharmacy, La Botica Pharmacy No 02, Solutions Drug Store, M & P Pharmacy, La Roca Pharmacy and Richard’s Pharmacy Discount, pharmacies located in Miami-Dade County, that purportedly provided prescription drugs to Medicare beneficiaries.  Diaz, Maya and Cabrera allegedly submitted and caused the submission of claims via interstate wires that falsely and fraudulently represented that various health care benefits, primarily prescription drugs, were medically necessary, prescribed by a doctor and had been provided by these pharmacies to Medicare beneficiaries.  As a result of these claims, Medicare prescription drug plan sponsors, through their pharmacy benefit managers, made approximately $10,428,019 in payments that were funded by the Medicare Part D program to the pharmacies.

Assistant U.S. Attorney Christopher Clark of the Southern District of Florida is prosecuting this case. 

The Medicare Fraud Strike Force operations are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009 by the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.  Since its inception in March 2007, the Medicare Fraud Strike Force has charged over 2,300 defendants who have collectively billed the Medicare program for more than $7 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

In the Southern District of Florida, nearly 900 individuals have been charged for their involvement in more than $2.5 billion in fraudulent Medicare billings.

Part D prescription medicine coverage is the fastest-growing area of the Medicare program.  Last year alone, more than $120 billion was spent on the Medicare Part D program, up from $78 billion in 2010.  Based on U.S. Government Accountability Office estimates, as much as $10 billion of last year’s $120 billion in Medicare Part D spending may be fraudulent.  The Department of Justice, along with its law enforcement partners, is committed to aggressively targeting Part D fraud. 

The Medicare Fraud Strike Force investigated the various cases with assistance from the FBI and HHS-OIG.   

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

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

Hevia et al Indictment

Fernandez et al Indictment

Diaz et al Indictment

Eighteen Branches in Greater Buffalo, New York, to Be Divested

The Department of Justice announced today that KeyCorp and First Niagara Financial Group Inc. have agreed to sell 18 of First Niagara’s branches in and around Buffalo, New York, with approximately $1.7 billion in deposits, to resolve antitrust concerns that arose from KeyCorp’s planned acquisition of First Niagara.  The department said that the divestitures will ensure that the transaction does not harm competition for retail banking services in the Greater Buffalo area.  As a result of the acquisition, KeyCorp will become the 13th largest bank in the nation, with about $135 billion in assets, $99.8 billion in deposits and more than 1000 branches across 15 states.

Under their agreement with the department, the companies have agreed to divest 13 branches in Erie County and 5 branches in Niagara County, New York.  The divested assets will include the commercial loans associated with the divested branches.  The companies have also agreed to suspend existing, and not to enter into new, non-compete agreements with their small business and middle market relationship managers and their retail regional and branch managers, in the state of New York, for a period of 180 days following the consummation of their merger.  Further, the companies have agreed to sell or lease branches closed within two years of the consummation of the merger in the state of New York to other depository institutions.

“Americans value the convenience of retail bank branches,” said Principal Deputy Assistant Attorney General Renata Hesse of the Justice Department’s Antitrust Division.  “Today’s agreement will ensure that customers in Buffalo and other New York markets will continue to enjoy the benefits of competition among banks with retail branch networks.” 

The proposed merger is subject to the final approval of the Board of Governors of the Federal Reserve System.  The department said that it will advise the Federal Reserve Board that it will not challenge the merger provided that: the parties divest the branch offices, associated loans and deposits and the entire customer relationships associated with the divestiture branches; the parties commit to the Federal Reserve Board that they will comply with the agreement with the department; and the parties’ commitments to the department are included as a condition to any order the Federal Reserve Board enters allowing the transaction.

KeyCorp is a financial holding company headquartered in Cleveland with approximately ­$95 billion in total assets.  KeyCorp, through its subsidiary KeyBank N.A., operates 972 branches in 12 states: Ohio, New York, Washington, Oregon, Indiana, Colorado, Utah, Maine, Florida, Michigan, Alaska and Vermont.  With two major business segments, Key Community Bank and Key Corporate Bank, KeyBank serves individuals, small and mid-sized businesses and corporate clients.

First Niagara Financial Group Inc. is a financial holding company headquartered in Buffalo with approximately $39 billion in total assets.  Providing retail and commercial banking services, First Niagara, through its subsidiary First Niagara Bank N.A., operates 394 branches in New York, Pennsylvania, Connecticut and Massachusetts.  First Niagara focuses on traditional banking products that include loans, deposits and insurance.

A list of the branches to be divested is attached.

Attachment A

The Department of Justice’s Office on Violence Against Women (OVW) today released the National Protocol for Sexual Abuse Medical Forensic Examinations – Pediatric (Pediatric SAFE Protocol).  The Pediatric SAFE Protocol is a guide for health care providers who conduct sexual abuse medical forensic examinations of prepubescent children, and other professionals and agencies/facilities involved in coordinating with health care providers to facilitate medical forensic care in cases of sexual abuse of juveniles.

The Pediatric SAFE Protocol recommendations are organized into two broad sections.  The first section focuses on guiding communities in laying a foundation of approaches and practices that support successful response during the exam process to disclosures or suspicions of sexual abuse in prepubescent children.  The second section focuses on the various components of the sexual abuse medical forensic exam process. 

According to the Pediatric SAFE Protocol, the primary goals of a pediatric sexual abuse medical forensic examination are threefold: address the health care needs of prepubescent children who disclose sexual abuse or for whom sexual abuse is suspected; promote their healing; and gather forensic evidence for potential use within the criminal justice and/or child protection systems.

The protocol builds upon existing state, federal, tribal and national and international resources, as well as research related to community response to child sexual abuse and pediatric sexual abuse medical forensic examinations, and is intended to supplement, not supplant, existing protocols. 

The Pediatric SAFE Protocol was created to supplement the National Protocol for Sexual Assault Medical Forensic Examinations, Adults/Adolescents (SAFE Protocol). First released in 2004, it is a voluntary best practices guide for criminal justice and health care professionals responding to adult and adolescent sexual assault victims.  In 2013, the Attorney General released a second edition of the SAFE Protocol that reflected the latest scientific advancements as well as the changes in practice since 2004.  In August, 2013, OVW issued a companion document to the SAFE Protocol, which was focused on assisting correctional facilities to implement the SAFE Protocol.  Following the release of the second edition, OVW partnered with the International Association of Forensic Nurses to develop the Pediatric SAFE Protocol to address the unique challenges of sexual abuse medical forensic examinations of prepubescent children. 

OVW, headed by Principal Deputy Director Bea Hanson, provides leadership in developing the nation’s capacity to reduce violence against women through the implementation of the Violence Against Women Act (VAWA) and subsequent legislation.  Created in 1995, OVW administers financial and technical assistance to communities across the country that are developing programs, policies and practices aimed at ending domestic violence, dating violence, sexual assault and stalking.  More information is available at www.justice.gov/ovw.  Assistant Attorney General Karol V. Mason for the Office of Justice Programs and Principal Deputy Director Hanson also authored a blog post today on the importance of the Pediatric SAFE Protocol.

Two men who conspired to file more than 1,200 false tax returns using stolen identities were sentenced to prison today, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney George L. Beck Jr. of the Middle District of Alabama.

Ernest James Simmons Jr., 29, of Phenix City, Alabama, was sentenced to 24 months and 15 days in prison followed by five months of home detention and Calvin J. Perry, 28, of Atlanta, Georgia, was sentenced to 32 months in prison.  Simons and Perry each pleaded guilty in December 2015 to one count of conspiracy to defraud the government with respect to filing false income tax refund claims and one count of aggravated identity theft.

According to court documents and evidence presented at the sentencing hearing, between 2010 and 2012, Simmons and Perry conspired with Perry’s mother, Pamela Ann Smith, to run a large-scale stolen identity refund fraud scheme from Smith’s tax return preparation business, Jaycal Tax Service, in Phenix City.  Smith recruited her son Perry, and Perry’s friend, Simmons, to participate in the scheme.  As part of the conspiracy, Smith, Perry and Simmons opened multiple bank accounts and post office boxes.  They filed more than 1,200 federal income tax returns using the stolen personal identification information of actual individuals, which included their names and social security numbers.  Simmons was directly connected to false returns claiming more than $700,000 in fraudulent refunds and Perry was directly connected to false returns claiming over $1 million in fraudulent refunds.  U.S. Treasury checks were mailed to physical addresses and post office boxes and then deposited into multiple bank accounts, all under the control of Simmons, Perry and Smith.  Perry personally obtained more than $300,000 and Simmons personally obtained more than $150,000, from the scheme.

In addition to the prison term, U.S. District Judge Myron H. Thompson ordered Perry and Simmons each to serve three years of supervised release.  Perry was also ordered to pay restitution in the amount of $308,152 and Simmons was ordered to pay restitution in the amount of $167,194.  In February, Smith was sentenced to serve 51 months in prison after pleading guilty for her role in the scheme.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Beck commended special agents of Internal Revenue Service–Criminal Investigation, who investigated the case and Trial Attorneys Gregory P. Bailey, Michael C. Boteler and Robert J. Boudreau of the Tax Division and Assistant U.S. Attorney Jonathan Ross of the Middle District of Alabama, who prosecuted the case.

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

The Department of Justice announced today that pharmaceutical companies Wyeth and Pfizer Inc. have agreed to pay $784.6 million to resolve allegations that Wyeth knowingly reported to the government false and fraudulent prices on two of its proton pump inhibitor (PPI) drugs, Protonix Oral and Protonix IV.  Pfizer, which is headquartered in New York City, acquired New Jersey-based Wyeth in 2009, approximately three years after Wyeth had ended the conduct that gave rise to the settlement.

“This settlement demonstrates our unwavering commitment to hold pharmaceutical companies responsible for pursuing pricing schemes that attempt to manipulate and overcharge federal health care programs – programs that protect the poor and disabled – for drugs sold to commercial customers at much lower prices,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. 

“This significant settlement illustrates that the government will not permit drug companies to dodge their obligations to the Medicaid program or create elaborate pricing schemes to deceive Medicaid into paying more than it should for drugs,” said U.S. Attorney Carmen Ortiz for the District of Massachusetts.  “This settlement, after years of hard-fought litigation, shows our commitment to ensuring that healthcare businesses do not take advantage of the federal health insurance programs which serve those who need assistance most.”

PPI drugs are used to treat symptoms of, among other things, acid reflux.  In a complaint filed in 2009, the government alleged that Wyeth failed to report deep discounts on Protonix Oral and Protonix IV that it made available to thousands of hospitals nationwide.  As part of the settlement, Wyeth and Pfizer do not deny the government’s allegations.

According to the government’s complaint, Wyeth sold Protonix Oral and Protonix IV through a bundled sales arrangement in which a hospital could earn deep discounts on both drugs if it placed them on formulary and made them “available” within the hospital.  Through this bundled arrangement, Wyeth sought to induce hospitals to buy and use Protonix Oral, which hospitals otherwise would have had little incentive to use, because other pre-existing oral PPI drugs were priced competitively and were considered to be as safe and effective.  Wyeth wanted to control the hospital market because patients discharged from the hospital on Protonix Oral were likely to stay on the drug for long periods of time, rather than switch to competing PPIs, during which time payers, including Medicaid, would pay nearly full price for the drug.

Under the Medicaid program, which is the nation’s provider of health insurance to the poor and disabled, drug companies must report to the government the best prices they offer other customers for their brand name drugs.  Based on these reported best prices, the drug companies pay rebates to the state Medicaid programs so that Medicaid, a large purchaser of drugs, receives the benefit of the same discounts drug companies offer to other large customers in the marketplace.

The government alleged that Wyeth hid from Medicaid the bundled discounts Wyeth gave to hospitals on Protonix Oral and Protonix IV.  As a result, Wyeth wrongfully avoided paying hundreds of millions of dollars in rebates to Medicaid during the period from 2001 to 2006.  Under the terms of today’s settlement, Wyeth will pay $413,248,820 to the federal government and $371,351,180 to state Medicaid programs. 

“When we make agreements with others we expect follow-through,” said Special Agent in Charge Phillip Coyne of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG).  “Similarly, taxpayers rightly expect large pharmaceutical companies will not falsely report prices to boost profits.  Any drug company shirking those responsibilities can expect to be held accountable for its deception.”    

“This litigation and settlement demonstrate the commitment of my office and other state attorneys general across the country to ensuring that pharmaceutical companies live up to their obligations to the Medicaid program,” said New York Attorney General Eric T. Schneiderman.

The settlement resolves allegations filed under the False Claims Act by Lauren Kieff, a former hospital sales representative for the pharmaceutical company AstraZeneca Pharmaceuticals, LP, and William St. John LaCorte, a physician practicing in New Orleans, Louisiana.  Under the False Claims Act, private parties may sue on behalf of the government for false claims for government funds and to receive a share of any recovery.  The relator share in this case will be $98,058,190 and will be paid from the proceeds of the federal and state settlements. 

The settlement was the result of close cooperation between the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the District of Massachusetts, the state attorneys general and other law enforcement entities including Medicaid Fraud Control Units, and the HHS-OIG.

This settlement illustrates the government’s 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.  The case is captioned United States ex rel. Kieff and LaCorte v. Wyeth and Pfizer, Inc., Nos. 03-12366 and 06-11724-DPW (D. Mass.).

TUCSON, Ariz. – The Department of Justice has designated the week of April 24-30, 2016, as “National Reentry Week.”  Reentry is a key priority of the Department and involves helping formerly-incarcerated individuals successfully reenter their communities, and avoid recidivism, by competing for jobs, attaining stable housing, and supporting their families.

     On April 25, 2016, as part of National Reentry Week, the Arizona U.S. Attorney’s Office partnered with the U.S. Probation Office, the Federal Bureau of Prisons, and several faith-based and non-governmental agencies to host a “What Happens Now” seminar in Tucson.  The event was geared toward the families of federal inmates scheduled to be released to Pima County in the coming months.  During the seminar, family members were encouraged to support their loved ones’ transition from prison, to maintain ongoing communication with their loved ones, and to provide positive reinforcement.   

     “Inmates should have a meaningful second chance to rebuild their lives, and their family relationships, after they have paid their debt to society,” said U.S. Attorney John S. Leonardo.  “Promoting reentry is crucial to making our communities stronger and safer.”

RELEASE NUMBER:   2016-035_Reentry Initiative

# # #

 

For more information on the U.S. Attorney’s Office, District of Arizona, visit http://www.justice.gov/usao/az/

Follow the U.S. Attorney’s Office, District of Arizona, on Twitter @USAO_AZ for the latest news.

 

Preparer Allegedly Fabricates Businesses Losses, Claims Fraudulent Credits In Order to Understate Her Customers’ Tax or Overstate their Refunds

A number of tax return preparation businesses in the Birmingham, Alabama area unlawfully understate their customers’ income tax liabilities and overstate refunds by making deliberate misstatements on the returns, according to a new civil lawsuit filed by the Justice Department today.  The suit, filed in federal court in Birmingham, asks the court to permanently bar Jessica Leverett aka Jessica Harris, from preparing tax returns for others.  The suit also asks the court to order Leverett to turn over a list of all of the tax returns she has prepared. 

According to the complaint, Leverett owns and operates a number of different tax preparation businesses in the area, including Tax Money Now, L.L.C., Dynamic Tax Services, Dynamic Tax Solutions and Express Money Tax.  The government’s complaint alleges that Leverett and her associates prepared returns that fabricate self-employment businesses and business losses to offset their customers’ taxable income from other sources and to increase their customers’ Earned Income Tax Credit.  When a customer does have a small business, the complaint alleges, Leverett and her associates mischaracterize the business income as household employee wages in order to avoid paying the required self-employment tax.  The complaint also alleges that Leverett’s businesses claim education credits that the customers are not entitled to receive.

According to the complaint, the Internal Revenue Service (IRS) has examined 264 returns prepared by Leverett’s businesses and found that 206 understate the tax owed by Leverett’s customers by thousands of dollars on average.  The complaint alleges that Leverett’s activities may have caused the United States to lose over $2.5 million in understated taxes and/or fraudulent refunds.   

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.

Civil and Criminal Enforcement Actions Are Taken Against Employers and Individuals Who Violate Employment Tax Laws

With the first quarterly employment tax returns of 2016 due April 30, the Justice Department reminds employers that they have a legal responsibility to collect and pay over to the Internal Revenue Service (IRS) taxes withheld from their employees’ wages. For employers and other responsible persons who fail to withhold, report, and pay employment taxes to the IRS, the Department is committed to enforcing federal employment tax laws through both civil litigation and criminal prosecutions.

Employers Must Comply with Employment Tax Laws

Employers in the United States are required to collect, account for, and pay over to the IRS tax withheld from employee wages, including federal income tax and taxes under the Federal Insurance Contributions Act (FICA), including old-age, survivors, and disability insurance taxes, also known as social security taxes, and the hospital insurance tax, also known as Medicare taxes. Employers also have an independent responsibility to pay their matching portion of social security and Medicare taxes. 

Tax withheld from employee wages accounts for approximately 70 percent of annual revenue collected by the IRS. When last measured, underreported and unpaid employment taxes represented approximately $72 billion of the overall tax gap in the United States. As of September 2015, more than $59 billion of tax reported on employment tax returns remained unpaid.

“Employers who comply with our nation’s tax laws are entitled to a level playing field,” said Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division. “Those individuals and entities that fail to withhold employment tax, or withhold and fail to pay employment taxes over to the IRS, not only steal from their employees and the U.S. Treasury, but gain an unfair competitive advantage over businesses down the street and across the country. The Department and its colleagues in the IRS have increased their efforts in this area, and are holding delinquent employers accountable.”

“Fairness in the employment tax arena is an important part of the nation’s tax system,” said IRS Commissioner John Koskinen. “The IRS is committed to working with the Justice Department to protect this important area, and there’s a long list of efforts we’ve taken in both civil and criminal investigation areas when employers try to evade their legal responsibilities and, in the process, gain an advantage over their competitors who are honoring their legal responsibilities. In addition, the IRS is taking new steps to identify and contact employers falling behind on their payments before they file their tax returns, offering to assist them earlier in the process to head off steeper interest and penalty charges. This effort not only provides an important service, it could help prevent the need for future enforcement activity.”

Willful Failure to Comply with Federal Employment Tax Laws is a Crime

An individual’s failure to comply with employment-tax obligations is not simply a civil matter.  Employers who view amounts withheld from employee wages as a personal slush fund, treat withheld employment taxes as a loan from the government that can be repaid if and when they see fit, or whose business model is based on a continued failure to pay employment tax, are engaging in criminal conduct and face prosecution, imprisonment, monetary fines and restitution.  According to statistics provided by IRS Criminal Investigation, in the 2015 fiscal year, individuals convicted of employment tax crimes were sentenced to an average of 24 months in prison.  Recent prosecutions include:

• Employers using employment taxes for personal expenses

In March 2016, Larry C. Thornton, the owner, president, and chief executive of a Tennessee-based check-processing company and a credit-card processing company, pleaded guilty to failing to pay more than $6.8 million in employment taxes. Thornton admitted that he was responsible for collecting, accounting for and paying over to the IRS the employment taxes withheld from the wages of his companies’ employees, but from the second quarter of 2007 until at least the second quarter of 2011, Thornton caused the companies to stop paying over the taxes required to be withheld from the companies’ employees’ paychecks and caused the companies to stop timely filing Employer’s Quarterly Federal Tax Returns (Forms 941) with the IRS. During the years that Thornton failed to comply with his employment tax obligations, he spent over $6.2 million on personal expenses, including house and condominium payments; vehicle, yacht, and motorcycle loan payments; personal travel; and start-up funding for his wife’s beauty boutique. As part of his guilty plea, Thornton admitted that his fraudulent conduct caused a tax loss of more than $8.9 million, and agreed to pay restitution of more than $10 million.

In June 2015, Wilbur Anthony Huff, a Kentucky man who controlled a professional employer organization (PEO) located in Tampa, Florida, was sentenced to 12 years in prison for both committing various tax crimes that caused more than $50 million in losses to the IRS and engaging in a massive fraud scheme. The PEO was paid to manage the payroll and tax and workers’ compensation insurance obligations of its client companies. However, instead of paying the $53 million in taxes that the PEO’s clients paid to the PEO and owed the IRS, Huff stole the money, diverting millions of dollars to fund his investments in unrelated business ventures and paid his family members’ personal expenses, including mortgages on Huff’s homes, rent payments for his children’s apartments, staff and equipment for Huff’s farm, and designer clothing, jewelry, and luxury cars.  The court also ordered Huff to pay more than $108 million in restitution.

• Employers using employment taxes to pay other creditors

In July 2015, Maria Elizabeth Townsend, the president and majority shareholder of a Washington-based electrical contractor was sentenced to 40 months in prison and ordered to pay $3.3 million in restitution to the IRS for failing to pay over employment taxes to the IRS. For 16 quarters between 2005 and 2009, Townsend withheld over $3 million in employment taxes but failed to pay those taxes to the IRS. Instead, between April 2007 and September 2009, Townsend authorized the disbursement of over $31 million in company funds to pay the company’s vendors and employees, a large dividend to one of her partners, $300,000 toward payment of her joint personal income tax obligations, more than $260,000 to family members, and personal expenses including constructing a pool at her residence, and buying a boat and personal vehicles.

• Employers paying employees in cash to avoid employment tax

In April 2016, Kyle Archie, the owner of several Reno, Nevada landscaping and rock hauling businesses pleaded guilty to one count of failure to pay over employment taxes.  Archie admitted that, although he collected these taxes from his employees’ wages and held them in trust, he failed to pay over the employment taxes to the IRS.  In documents filed with the court, the government alleged that Archie paid employees’ overtime wages in cash to avoid employment tax obligations. While failing to pay employment tax due, Archie used available funds to build a house, purchase motor vehicles and personal watercraft, and travel.  Linda Archie, Kyle’s mother and the bookkeeper for the businesses, pleaded guilty to one count of willful failure to file a tax return, admitting that between 2003 and 2009, she failed to file Employer’s Quarterly Federal Tax Returns (Forms 941) on behalf of these businesses to account for the taxes that were withheld from the employees’ wages. The Archies stipulated that the tax loss caused by their crimes exceeded $545,000.  They are scheduled to be sentenced on August 15.

In July 2015, Eric Anderson, the owner of three New York construction companies, was sentenced to serve 18 months in prison and was ordered to pay more than $1 million in restitution. Anderson used a commercial check cashing service to cash more than $10.5 million in checks paid to his construction companies and used a portion of the cash to pay his employees “under the table,” while failing to collect and pay over employment taxes to the IRS.

• Employers filing false employment tax returns

In October 2015, James Pielsticker, former chief executive officer and president of Arrow Trucking Company, was sentenced to serve 7 ½ years in prison and ordered to pay $21 million in restitution for conspiring to defraud the United States and to commit bank fraud, and for attempting to evade his individual income taxes.  Pielsticker, his chief financial officer, James Moore, and others withheld employment tax from Arrow’s employees’ wages but did not report or pay over the tax to the IRS, despite knowing they were required to do so. The conspirators paid Pielsticker’s personal expenses and submitted fraudulent invoices to induce a bank to pay unwarranted funds.  After cooperating with the government and testifying against Pielsticker, Moore was sentenced to 35 months in prison.

In July 2015, Happy Asker, the president, founder, and public face of the Happy’s Pizza franchise, a chain based in Farmington Hills, Michigan, was sentenced to 50 months in prison and ordered to pay $2.5 million in restitution to the IRS. Evidence at trial established that from 2004 through 2011, Asker, along with others, executed a systematic and pervasive scheme to defraud the IRS. Gross sales and payroll amounts were substantially underreported on numerous corporate income tax returns and payroll tax returns filed for nearly all 60 Happy’s Pizza franchise locations. From 2008 to 2010, Asker and his co-conspirators diverted for personal use more than $6.1 million in cash gross receipts from approximately 35 different Happy’s Pizza stores in the Detroit area, Illinois and Ohio. In total, Asker and certain employees and franchise owners failed to report to the IRS approximately $3.84 million of gross income and approximately $2.39 million in payroll taxes from the various Happy’s Pizza franchises.

Delinquent Employers also face Civil Litigation and Injunctions

Employers that ignore their employment tax obligations will face civil enforcement efforts, including federal lawsuits to enjoin noncompliance, ensure future compliance, and collect amounts due.

In the last year, federal courts have entered permanent injunctions against delinquent employers across the country, requiring the timely deposit of payroll taxes and filing of employment tax returns, notice to the IRS that the requisite deposits have been made and notice to the IRS if the employer, or someone working at the employer’s behest, begins operating a new business.  The injunctions also preclude defendants from assigning property or making payments to other creditors until the employment tax obligations accruing after the date of the injunction are paid.  Injunctions have been entered against a Los Angeles County pizza parlor and its owner, a Washington-based dentist, the owner of a Delaware donut shop, a South Carolina trucking company, and a Baltimore-area marble and granite importer, just to name a few.  Since Jan. 1, the Department has filed 16 complaints and obtained 10 permanent injunctions against delinquent employers, and additional actions are forthcoming.

When individuals and entities subject to these injunctions knowingly violate the terms of the injunction, the Tax Division stands ready to seek orders of civil or criminal contempt, including incarceration, to bring the defendants into compliance.

Liability Extends to Responsible Individuals

Any individual who is responsible for ensuring that employment taxes are collected, accounted for, and paid over to the IRS, and willfully fails to do so may be subject to a civil penalty equal to the amount of the unpaid withholdings.  This civil penalty, referred to as the trust fund recovery penalty, may be imposed even if the individual uses the employment tax to pay other creditors or keep the business afloat.  Individuals subject to these penalties include, but are not limited to, bookkeepers, managers, treasurers, and corporate officers.  The Department assists the IRS to defend challenges to trust fund recovery penalty assessments, and to ensure that such assessments are collected.

In August 2015, a federal court in Michigan held that Eric Kus and Roger Byrne, the chairman and the president of an automobile interior trim manufacturer, were liable for unpaid employment taxes even though they did not know that the taxes were unpaid. The court found that they “recklessly disregarded known risks” that the employment taxes would not be paid because they relied on the company’s controller, who they knew had previously failed to pay employment taxes when they were due.

In July 2015, the Court of Federal Claims ruled that Douglas Waterhouse, a vice president and partial owner of a California glass design and installation company, was individually liable for unpaid employment tax based on his authority, and therefore responsibility, over the company’s finances, even though he was not involved in day-to-day operations.  The court found that Waterhouse acted willfully because, despite knowledge of the outstanding employment tax liabilities, he chose to continue operating the business and sought payments for vendors and employees instead of the IRS.

“The American taxpayer should not be forced to subsidize businesses that refuse to comply with the tax laws,” said Acting Assistant Attorney General Ciraolo. “The Justice Department and the IRS will continue to identify, investigate, and hold accountable those individuals and businesses that willfully evade their employment tax obligations.”

For more information about civil and criminal employment tax enforcement efforts, visit the Tax Division’s website.

Second Company to Plead Guilty in Ongoing Investigation

Hitachi Chemical Co. Ltd. will plead guilty for conspiring with competitors between 2002 and 2010 to fix prices for electrolytic capacitors sold to customers in the United States and elsewhere, the Department of Justice announced today. 

“Hitachi Chemical subsidiaries and co-conspirators fixed the prices of capacitors, a fundamental component of widely used electronic products,” said Deputy Assistant Attorney General Brent Snyder.  “This is the second guilty plea in this investigation, and we will continue to pursue companies and individuals that conspire to undermine competition for technology components of all shapes and sizes.”

“We will not tolerate the behavior of companies or individuals who attempt to profit unfairly from business practices that ultimately hurt our economy and the consumer,” said Acting Special Agent in Charge Bertram Fairries of the FBI’s San Francisco Division.  “We will pursue and bring to justice those who commit these types of crimes.”

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

The one-count felony charge was filed today in the U.S. District Court of the Northern District of California in San Francisco.  In addition to pleading guilty to that charge and paying a criminal fine, Tokyo-based Hitachi Chemical has agreed to cooperate in the department’s ongoing investigation.  The plea agreement is subject to court approval. 

On Jan. 21, 2016, NEC TOKIN Corp. pleaded guilty to participating in the same worldwide conspiracy from 2002 to 2013 and was sentenced to pay a fine of $13.8 million.  On March 12, 2015, a grand jury indicted Takuro Isawa, a former Global Sales General Manager for one of the capacitor manufacturers, for his participation in the conspiracy.   

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

The U.S. District Court for the Northern District of California entered a consent decree of permanent injunction against Kun Wo Food Products Inc. (Kun Wo) and the firm’s co-owners, Zi Xing Liu and Zi Cheng Liu, to prevent the distribution of adulterated rice noodles, the Department of Justice announced today.

The department filed a complaint in the Northern District of California on April 12, at the request of the U.S. Food and Drug Administration (FDA).  The complaint alleged that the defendants have a history of processing rice noodles under insanitary conditions.  As detailed in the complaint, the company prepared, processed, manufactured, packed, held and distributed rice noodles to local customers in the San Francisco area.  The complaint alleged that Zi Xing Lui has ultimate authority over all of the firm’s operations, including financial expenditures, production processes and employee supervision and that Zi Cheng Liu shares responsibility with Zi Xing Liu for the firm’s production processes and is also responsible for product distribution. 

In conjunction with the filing of the complaint, the defendants agreed to settle the litigation and to be bound by a permanent injunction.  As part of the settlement, the defendants represented that they have ceased receiving, preparing, processing, packing, holding, or distributing any type of food at or from any location.  Under the permanent injunction, if the defendants seek to resume such activity, they must first inform FDA, take specific steps to improve the firm’s manufacturing practices, and then receive written approval from FDA. 

“Kun Wo Food Products was repeatedly informed that the sanitation practices at its facility were deficient,” said Principal Deputy Assistant Attorney Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “The Department of Justice will continue to aggressively pursue food companies and individuals responsible for the production of food under insanitary conditions in order to protect the American people and make sure America’s food supply is safe.”

According to the complaint, a 2016 inspection by FDA documented that defendants failed to take all necessary precautions to prevent food handlers from contaminating food with microorganisms or foreign material.  For example, as alleged in the complaint, an employee used the vat containing rice soaking for the day’s production to rinse her bare hands after handling equipment.  In addition, as noted in the complaint, during a 2015 inspection, FDA documented employees using the vat containing soaking rice to rinse their bare hands, rags and buckets after using the rags and buckets to clean the production area with detergent.  The complaint also alleged that employees touched dirty equipment and then used their bare, unwashed hands to grab rice noodles for packaging.  The complaint further alleged that during the most recent inspection, FDA found that machines used to steam, cool, slice and weigh the rice noodles were covered in grease and grime, causing the first sheet of rice noodles coming off the production machine to contain particulate matter. 

According to the complaint, the most recent inspection also found that condensate dripped from a hose suspended from the ceiling into the vat containing soaking rice.  Also, as noted in the complaint, condensate dripped from a copper pipe, with a green and black film on its surface, into a grinder containing rice for processing. 

Further, the complaint alleged that during the 2015 inspection, FDA swabbed various surfaces in the firm’s production area, including the buckets used during processing and found the presence of bacterial contamination at the facility -- L. mono was identified on the exterior of one bucket and L. seeligeri was found on the exterior of another bucket.  The complaint alleged that the firm’s employees routinely submerged these buckets in the water that contained soaking rice.

L.mono is the bacterium that causes the disease listeriosis.  The most serious forms of listeriosis can cause meningitis and septicemia.  L. seeligeri does not cause disease; however, it is a marker indicating that conditions are favorable for the survival and growth of L. mono.

Under federal law, food processors are required to comply with current good manufacturing practices provided by FDA regulation.  Failure to follow such regulations renders food adulterated under the Federal Food, Drug, and Cosmetic Act.  In this matter, the complaint alleged that defendants violated the law by causing food to become adulterated while it was held for sale after shipment of one or more of its components in interstate commerce. 

The government is represented by trial attorney Kathleen Konopka of the Civil Division’s Consumer Protection Branch, with the assistance of Senior Counsel Claudia Zuckerman of the U.S. Department of Health and Human Services’ Office of General Counsel’s Food and Drug Division.   

The Department of Justice announced today that Z Gallerie LLC has agreed to pay $15 million to resolve allegations that the company engaged in a scheme to evade customs duties on imports of wooden bedroom furniture from the People’s Republic of China (PRC), in violation of the False Claims Act.  Z Gallerie sells upscale furniture and accessories in stores across the United States and through the Internet.  The company is headquartered in Los Angeles, California. 

“This settlement reflects the Department of Justice’s commitment to ensure that those who import and sell foreign-made goods in the United States comply with the law, including laws meant to protect domestic companies and American workers from unfair competition abroad,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “The Department of Justice will zealously pursue those who seek an unfair advantage in U.S. markets by evading the duties owed on goods imported into this country.”

The Department of Commerce assesses, and the U.S. Department of Homeland Security’s Customs and Border Protection (CBP) collects, duties to protect U.S. manufacturers from unfair competition abroad by leveling the playing field for domestic products.  The particular duties at issue in this case are antidumping duties, which protect domestic manufacturers against foreign companies “dumping” products on U.S. markets at prices below cost.  Imports of wooden bedroom furniture manufactured in the PRC have been subject to antidumping duties since 2004.

The settlement announced today resolved allegations that Z Gallerie evaded antidumping duties on wooden bedroom furniture imported from the PRC from 2007 to 2014, by misclassifying, or conspiring with others to misclassify, the imported furniture as pieces intended for non-bedroom use on documents presented to CBP.  For example, Z Gallerie allegedly sold certain Bassett Mirror Company products, including a six-drawer dresser and three-drawer chest, as part of a bedroom collection; however, these goods were misidentified on CBP documents, using descriptions such as “grand chests” and “hall chests,” in order to avoid paying antidumping duties on wooden bedroom furniture.

“Savannah is home to one of the fastest growing ports in the country, handling almost 10 percent of all the containerized cargo volume in the United States,” said U.S. Attorney Edward J. Tarver for the Southern District of Georgia.  “This U.S. Attorney’s Office will work hard to make sure those using the Port of Savannah play by the rules, and to hold those who try to cheat their way out of paying customs duties accountable.”

“Under the new Trade Facilitation and Trade Enforcement Act, CBP will likely see an increase in these types of settlements as the streamlined processes take effect concerning allegations of duty evasion,” said CBP Commissioner R. Gil Kerlikowske. “The Act reinforces CBP’s existing authorities and tools to collect and investigate public allegations of duty evasion improving the overall effectiveness and enforcement of CBP law enforcement actions concerning illicit trade activity, specifically in the area of antidumping and countervailing duty evasion schemes.”

“Companies that intentionally mislabel shipments or misrepresent the value of goods being imported into the United States to avoid paying the appropriate duties do so in an attempt to create an unfair advantage over businesses that play by the rules,” said Special Agent in Charge Nick S. Annan of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE HSI) in Atlanta.  “This type of activity hurts legitimate U.S. businesses and, by extension, our overall national economy.  Uncovering these types of schemes will continue to be a major investigative priority for ICE HSI.”

The allegations resolved by the settlement were originally brought by whistleblower Kelly Wells, an e-commerce retailer of furniture, under the qui tam provisions of the False Claims Act.  The act permits private parties to sue on behalf of the United States those who falsely claim federal funds or, as in this case, those who avoid paying funds owed to the government or cause or conspire in such conduct.  The act also allows the whistleblower to receive a share of any funds recovered.  Wells will receive $2.4 million as her share of the settlement.

The investigation was handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Southern District of Georgia, CBP and HSI Atlanta.

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

NOTE: The prepared remarks for the Deputy Attorney General are attached as a PDF.

National Reentry Week Initiatives Aimed at Children of Incarcerated Parents and Enhancing Communication and Coordination Between Inmates and Family Members

As part of National Reentry Week, Deputy Attorney General Sally Q. Yates today announced several family-friendly initiatives aimed at strengthening the bonds between inmates and their children and families.  The Deputy Attorney General also announced the launch of a new reentry hotline for returning citizens seeking help navigating life outside prison.

The announcement was made following the Deputy Attorney General’s visit to the Bureau of Prisons’ (BOP) female facility in Bryan, Texas, and a subsequent stop at Santa Maria Hostel, a residential reentry center for women in Houston.

The family-friendly initiatives announced and highlighted by the Deputy Attorney General include expanding video-conferencing visitation; a pilot program that engages children of incarcerated parents in positive youth development activities; guidance and training for BOP staff on how to make visitation spaces more child friendly and interact with children in a developmentally appropriate way; educating inmates on how to keep in contact with children who may be in foster care; tip sheets for parents, correctional staff and mentors to support children of incarcerated parents; and a new interagency partnership to develop model policies that can be used by state and local prison facilities to help strengthen family ties.

In addition to the department’s efforts to promote family engagement, the Deputy Attorney General announced the launch of the first ever reentry hotline (1‐877‐895‐9196) for individuals who have been released from federal custody and their families.  The hotline, which opened this week, will aid returning citizens who need help finding government and private resources to aid their successful reentry.  That includes help in determining how to get a copy of their birth certificate, where to start a job search and where to find legal aid service providers, among other crucial resources.  The Deputy Attorney General toured the hotline’s control center during her visit to the BOP facility in Bryan today.  The hotline is staffed by female inmates working for Federal Prison Industries, BOP’s largest reentry program.

“Assisting inmates in maintaining family relationships while they are in prison is not only good for the individuals returning from prison and their families, it’s good for the community as well, because when a person has a strong support system when they are released, they are less likely to re-offend,” said Deputy Attorney General Yates.  “Doing everything we can to equip inmates to be successful when they leave prison, including assisting them in maintaining family relationships, is one of the most important things we can do for the safety of our communities.”

As laid out yesterday in Principle III of the Attorney General’s “Roadmap to Reentry,” research shows that close and positive family relationships reduce recidivism, improve an individual’s likelihood of finding and keeping a job after leaving prison and ease the harm to family members separated from their loved ones.  To help ensure that all returning citizens have a robust support system, prisons must have significant opportunities for family engagement.

The BOP initiatives announced and highlighted by the Deputy Attorney General today include:

• Expansion of the pilot program that provides video services for visitation to all of BOP’s female facilities by June 2016 and development of an implementation plan to expand the video services visitation program to all of BOP’s facilities.
• A children of incarcerated parents pilot program at four BOP facilities.  BOP is working with the Office of Juvenile Justice and Delinquency Prevention on this pilot program, which engages children of incarcerated parents in positive youth development activities and includes their parents in these activities.  The programs are scheduled to begin in June 2016, following the awarding of $1.3 million in grant funding to service providers last September.  Facilities chosen for the pilot are in Connecticut, New York, West Virginia and Pennsylvania.
• Development of “best practices” guidance and training for BOP staff regarding interacting with children in a developmentally appropriate way during visitation and creating visiting spaces at BOP facilities that are welcoming to children.  Specifically, wardens will be encouraged to consider the potential stress and anxiety some children experience when visiting their incarcerated parents.  The suggested best practices include making waiting areas and children’s centers child-friendly and encouraging positive conversations between prison staff and children visitors.

The Deputy Attorney General also announced and highlighted three interagency initiatives developed to support incarcerated parents and their children:

• Guide for Incarcerated Parents who have Children in the Child Welfare System.  This guide, co-authored by the Department of Health and Human Services (HHS) and BOP, is a resource to help incarcerated parents who have children in foster care better understand how the child welfare system works so that they can stay in touch with their children and stay involved in decisions regarding their children's well-being.  The guide offers best practices on how to communicate with social workers, information about federal child welfare laws and where to find additional assistance.
• Educational “tip sheets” to support children of incarcerated parents.  The department-funded and HHS-managed children of incarcerated parents website on youth.gov released yesterday three new “tip sheets” focused on providing easy and practical information to support children who have parents in the criminal justice system.  The tip sheets include:
  • Tips for incarcerated parents.  This resource will provide strategies for parents to help them prepare their child for visiting a prison facility in order to make the experience less intimidating and more positive.  It includes information about child development, ways to prepare in order to reduce possible stress and trauma and suggested family-friendly activities;
  • Tips for correctional staff and volunteers.  This resource provides tips to correctional staff and volunteers about positive child interaction during prison visits.  It includes information on how child development may be impacted by parental incarceration and provides strategies on how to support positive communication to mitigate some of the stress of visiting; and
  • Tips for mentors.  This resource provides mentors working with children of incarcerated parents with information about the unique challenges this population of children may face and how they may be able to better support the mentor-child relationship with this unique context in mind.
• New partnership to develop model family strengthening policies for states and localities.  The Bureau of Justice Assistance, National Institute of Corrections and HHS are partnering to support a $1 million effort to develop family strengthening policies that can be implemented in state and local correctional facilities in order to reduce the traumatic impact of parental incarceration on children.  Model policies may include, but are not limited to: child development training for correctional staff; family-friendly visiting policies and procedures; parenting programming offered in correctional facilities; family reunification and/or reentry planning; and other issues that impact incarcerated parents and their children.

Juvenile Reentry Assistance Program Will Reduce Barriers to Housing, Jobs and Education

In an effort to help young people involved in the justice system find jobs and housing, the U.S. Departments of Justice and Housing and Urban Development (HUD) today announced $1.75 million for Public Housing Authorities (PHAs) and nonprofit legal service organizations to address the challenges justice-involved individuals face when trying to find work and a place to call home.  The grantees are listed below.

Under the Juvenile Reentry Assistance Program (JRAP), funded through the department’s Second Chance Act funds, HUD and the Department of Justice are teaming up to help young Americans who’ve paid their debt to society rehabilitate and reintegrate back into their communities.  JRAP funding was awarded to Public Housing Agencies who have a partnership with a nonprofit legal service organization with experience providing legal services to juveniles.  Read local summaries of the grants.

U.S. Attorney General Loretta Lynch and HUD Secretary Julián Castro announced the funding during a news conference with local leaders in Philadelphia today.

“The future of our nation depends upon the future of our young people – including young people who have become involved with our justice system,” said Attorney General Lynch.  “By helping justice-involved youth find decent jobs and stable housing after they return home, these critical grants provide a foundation for a fresh start and offer a path towards productivity and purpose.  In the months ahead, the Department of Justice will continue helping justice-involved youth enrich their lives and improve our country.”

“Reconnecting young people who've paid their debt to society to decent jobs and housing allows them to turn the page and become active, productive members of their communities,” said Secretary Castro.  “These grants offer a helping hand to those who deserve a second chance so they have a real opportunity to reach their full potential.”

Having a juvenile or a criminal record can severely limit a person’s ability to seek higher education, find good employment or secure affordable housing.  Today, there are nearly 55,000 individuals under age 21 in juvenile justice facilities, and approximately 185,000 young adults aged 18 to 24 in state and federal prisons.  These collateral consequences create unnecessary barriers to economic opportunity and productivity.  President Obama and members of his Cabinet, via the Federal Interagency Reentry Council, continue to take impactful steps to ensure those exiting the justice system become productive, law-abiding citizens.  Today’s announcement is consistent with HUD’s recently released guidance on the application of Fair Housing Act Standards to the use of criminal records by providers of housing and real estate-related transactions, and the recent guidance for public housing authorities and owners of federally-assisted housing on excluding the use of arrest records in housing decisions.

To help alleviate collateral consequences associated with a juvenile or criminal record, JRAP assists young people up to age 24 residing in public housing, or who would be residing in public housing but for their record, by:

• Expunging, sealing, and/or correcting juvenile or adult records; as permitted by state law;
• Assisting targeted youth in mitigating/preventing collateral consequences such as reinstating revoked or suspended drivers’ licenses;
• Counseling regarding legal rights and obligations in searching for employment;
• Providing guidance for readmission to school; and
• Creating or modifying child support orders and other family law services, and more.

# # #

HUD's mission is to create strong, sustainable, inclusive communities and quality affordable homes for all.

More information about HUD and its programs is available on the Internet at www.hud.gov and http://espanol.hud.gov.

You can also connect with HUD on social media and follow Secretary Castro on
Twitter and Facebook or sign up for news alerts on HUD's Email List.

 

                 2016 Juvenile Re-entry Assistance Program Grants

 

State

Recipient

City

Amount

Partner

 

*Matched

  Amount

CA

Housing Authority of the City of Los Angeles

 

Los Angeles

$100,000

Public

Counsel

 

$1,390,650

CT

Housing Authority of the City of Hartford

 

 

Hartford

$100,000

Center for Children's

Advocacy,

Inc.

 

 

 

 

 

$25,000

IL

Chicago Housing Authority

 

 

 

Chicago

$100,000

Bluhm Legal

Clinic,

Northwestern

University

School of Law

 

 

 

 

 

 

$55,216

IL

Housing  Authority of Cook County

Chicago

$100,000

 

LAF

 

$25,000

IN

The City of East Chicago Housing Authority

 

East Chicago

$100,000

Indiana Legal

Services,Inc.

 

 

 

$172,000

LA

Housing Authority of the City of Shreveport

Shreveport

$100,000

Legal Services

of North

Louisiana, Inc.

 

 

 

 

$109,811

LA

Housing Authority of New Orleans

New Orleans

$100,000

Southeast

Louisiana Legal

Services

 

 

 

 

$240,463

MA

Boston Housing Authority

Boston

$100,000

Greater Boston

Legal Services Inc.

 

 

 

$32,549

MO

St. Louis Housing Authority

St. Louis

$100,000

St. Louis School of  

Law Legal Clinic

 

 

 

$99,202

NJ

Housing Authority of the City of Camden

 

 

Camden

$53,464

Rutgers Law School

Reentry Clinic

 

 

 

$35,825

NY

Syracuse Housing Authority

Syracuse

$100,000

Center for

Community

Alternatives

 

 

 

 

$58,744

NY

New York City Housing Authority

 

New York

$100,000

Youth Represent, Inc.    

      $88,412

NY

Albany Housing Authority

 

 

Albany

$100,000

Legal Aid Society

of Northeastern

 New York

 

 

$81,000

OH

Cuyahoga Metropolitan Housing Authority

 

Cleveland

$100,000

Legal Aid Society

of Cleveland

 

 

 

$123,200

OH

Akron Metropolitan Housing Authority

 

Akron

$100,000

University of Akron

School of Law

 

 

 

$174,115

PA

Philadelphia Housing Authority

 

 

Philadelphia

$100,000

Community Legal

Services of

Philadelphia

 

 

$25,000

RI

The Housing Authority of the City of Providence

 

 

Providence

$100,000

Rhode Island Legal

Services, Inc.

 

 

 

$27,161

WI

Housing Authority of the City of Milwaukee

 

 

Milwaukee

$100,000

Legal Action of

Wisconsin

 

 

 

$25,000

 

TOTAL:  $1,753,464

 

 

 Conditions Prohibit Charter from Imposing Restrictions that Impede Online Video Distributor Access to Video Content

The Department of Justice announced today a settlement that permits Charter Communications Inc. to complete its $78 billion proposed acquisition of Time Warner Cable Inc. (TWC) and its related $10.4 billion acquisition of Bright House Networks LLC (BHN) from Advance/Newhouse Partnership.  The settlement forbids the merged company, referred to as “New Charter,” from entering into or enforcing agreements that could make it more difficult for online video distributors (OVDs) to obtain video content from programmers. 

The Justice Department’s Antitrust Division filed a civil antitrust lawsuit today in the U.S. District Court for the District of Columbia to block the merger, along with a proposed settlement that, if approved by the court, would resolve the competitive harm alleged in the lawsuit.  The department’s complaint alleges that, as a result of the proposed merger, New Charter would have greater incentive and ability to impose or broaden contractual restrictions on programmers that limit their ability to distribute their content through OVDs.  According to the complaint, TWC has been an industry leader in seeking such restrictions; with its much larger subscriber base, New Charter would have even more to gain from frustrating OVD competition.

The Chairman of the Federal Communications Commission (FCC) today will circulate an order that would approve the combination of Charter, TWC and BHN subject to conditions.  The department and the FCC consulted extensively to coordinate their reviews of the proposed merger and devise remedies that were both consistent and comprehensive.

“Online video distributors offer consumers greater choices for video services,” said Principal Deputy Assistant Attorney General Renata B. Hesse, head of the Antitrust Division.  “This merger would have threatened competition by increasing the merged company’s leverage to demand that programmers limit their licensing to these online providers.  Together with our counterparts at the FCC, we have secured comprehensive relief and we will work together to closely monitor compliance to ensure that New Charter will not have the power to choke off this important source of disruptive competition and deny consumers the benefits of innovation and new services.”

According to the department’s complaint, the combination of Charter, TWC and BHN into New Charter would create the second-largest cable company and the third-largest multi-channel video programming distributor (MVPD) in the United States, with over 17 million video subscribers.  As the complaint explains, TWC has been the most aggressive MVPD in the industry in securing Alternative Distribution Means (ADM) clauses in its contracts with programmers that either prevent the programmer from distributing its content to OVDs or place certain restrictions on such online distribution.  The complaint alleges that New Charter, which will have almost 60 percent more subscribers than TWC standing alone, would have even more to gain from imposing ADMs and other contractual provisions that make OVDs less competitive.  As a result, the complaint alleges that the merger would likely result in a substantial lessening of competition for video programming distribution services.

Under the terms of the proposed settlement, New Charter will be prohibited from entering into or enforcing any agreement with a programmer that forbids, limits or creates incentives to limit the programmer’s provision of content to one or more OVDs.  The settlement further provides that New Charter will not be able to avail itself of other distributors’ most favored nation (MFN) provisions if they are inconsistent with this prohibition.  The settlement also prohibits New Charter from retaliating against programmers for licensing to OVDs.  The department said that it would continue to closely monitor developments in the industry and would vigorously enforce compliance with the proposed settlement to ensure that New Charter does not use the influence it will have as one of the nation’s largest MVPDs to restrict or discourage programmers from licensing their content to OVDs. 

The department said it also examined whether the merger would allow New Charter to become an unavoidable gatekeeper for internet-based services, including OVDs, that rely on a broadband connection to reach consumers.  The department previously expressed significant concerns about an earlier attempt to acquire TWC by Comcast Corporation, which is significantly larger than Charter, because that transaction would have enabled the combined firm to control access to nearly 60 percent of high-speed broadband subscribers, and would likely have resulted in higher internet interconnection fees that could have limited OVDs’ ability to compete effectively with traditional MVPDs.  The order circulated by the FCC Chairman today would impose an obligation on New Charter to make interconnection available on a non-discriminatory, settlement-free basis to companies that meet basic criteria.  In light of the remedy sought by the FCC Chairman, the department elected not to pursue duplicative relief in its own lawsuit.

Charter is a Delaware corporation headquartered in Stamford, Connecticut.  It is the third-largest cable company in the United States and the sixth-largest MVPD, with over 4.3 million video subscribers across 28 states.  Charter’s reported revenues for 2014 were approximately $9.1 billion.

TWC is a New York corporation with its headquarters in New York City.  With approximately 11 million video subscribers across 30 states, TWC is the second-largest cable company in the United States and the fourth-largest MVPD.  TWC’s 2014 reported revenues were approximately $22.8 billion. 

Advance/Newhouse is a New York partnership with headquarters in East Syracuse, New York, and is the sole owner of BHN, a Delaware limited liability company headquartered in East Syracuse.  BHN is the sixth-largest cable company in the United States and the ninth-largest MVPD.  BHN’s cable systems serve approximately 2 million video subscribers across six states.  BHN’s 2014 revenues were approximately $3.7 billion. 

The department will file a competitive impact statement after the FCC adopts an order allowing the merger to proceed.  As required by the Tunney Act, after the department has filed its competitive impact statement, the proposed settlement will be published in the Federal Register.  At such time, any person may submit written comments concerning the proposed settlement during a 60-day comment period to Scott Scheele, Chief, Telecommunications & Media Enforcement Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 7000, Washington, D.C. 20530.  At the conclusion of the 60-day comment period, the U.S. District Court for the District of Columbia may enter the proposed settlement upon finding that it is in the public interest.

Charter Complaint

Charter PFJ

Charter Explanation

Charter Stipulation

 

 

 

 

Attorney General Lynch Releases Roadmap to Reentry: The Justice Department’s Vision to Reduce Recidivism through Federal Reentry Reforms

As part of National Reentry Week, Attorney General Lynch today in Philadelphia announced the “Roadmap to Reentry,” the Department’s comprehensive vision to reduce recidivism through reentry reforms at the Federal Bureau of Prisons (BOP).  These efforts will help those who have paid their debt to society prepare for substantive opportunities beyond the prison gates, promote family unity, contribute to the health of our economy, advance public safety and sustain the strength of our communities. 

Each year, more than 600,000 citizens return to our neighborhoods after serving time in federal and state prisons.  Another 11.4 million individuals cycle through local jails.  And nearly one in three Americans of working age have had some sort of encounter with the criminal justice system — mostly for relatively minor, non-violent offenses, and sometimes from decades in the past.  The long-term impact of a criminal record prevents many people from obtaining employment, housing, higher education, and credit — and these barriers affect returning individuals even if they have turned their lives around and are unlikely to reoffend. 

The principles outlined in the “Roadmap to Reentry” are aligned with the work of the Federal Interagency Reentry Council which has been working since its creation five years ago to reduce recidivism and improve employment, education, housing, health and child welfare outcomes.

PRINCIPLES TO REDUCE RECIDIVISM THROUGH REENTRY REFORMS AT THE FEDERAL BUREAU OF PRISONS

Principle I

Upon incarceration, every inmate should be provided an individualized reentry plan tailored to his or her risk of recidivism and programmatic needs.

The Department is enhancing BOP’s risk and needs assessment tools to inform development of reentry plans tailored to the specific criminogenic needs of each incarcerated individual.

Principle II

While incarcerated, each inmate should be provided education, employment training, life skills, substance abuse, mental health, and other programs that target their criminogenic needs and maximize their likelihood of success upon release.

The Department, through BOP, has launched an effort to assess its education programs, life skills programs, and job skills programs to ensure these programs are evidence-based and targeted to the criminogenic needs of inmates.

Principle III

While incarcerated, each inmate should be provided the resources and opportunity to build and maintain family relationships, strengthening the support system available to them upon release.

The Department is enhancing the number and types of opportunities available for people in federal prisons to strengthen family relationships during their term of incarceration.

Principle IV

During transition back to the community, halfway houses and supervised release programs should ensure individualized continuity of care for returning citizens.

In order to ensure that Residential Reentry Centers (RRC) are fulfilling their vital role in the reentry process, the Department, with assistance from outside consultants, is undertaking a robust evaluation and assessment of the RRC experience to develop a specific plan for implementing improvements to the existing RRC model that will provide residents enhanced reentry support and reduce recidivism.

Principle V

Before leaving custody, every person should be provided comprehensive reentry-related information and access to resources necessary to succeed in the community.

The Department is developing reentry-specific tools and support services to help returning citizens succeed after leaving federal custody.

As part of the national effort to increase awareness about these challenges, the Attorney General also sent a letter to governors with a request to permit citizens returning to their communities to exchange their Bureau of Prisons inmate identification card and authenticated release documentation for state identification, or for these documents to satisfy the primary identification document requirement for state-issued identification.  Without government-issued identification, men and women leaving correctional facilities face extreme challenges securing employment and housing, registering for school, opening bank accounts as well as accessing other benefits, such as health care, that are critical to successful reintegration.

Leadership from across the Administration will be traveling around the country to make policy announcements in support of National Reentry Week. They will also be encouraging federal partners and grantees to work closely with stakeholders like federal defenders, legal aid providers and other partners across the country to increase the impact of these efforts.  National Reentry Week events are being planned in all 50 states, the District of Columbia, Puerto Rico and the Virgin Islands.  U.S. Attorney’s Offices alone are hosting over 200 events and BOP facilities are holding over 370 events.

Additional Resources:

National Reentry Week Webpage

REPORT: Roadmap to Reentry

INFOGRAPHIC: Roadmap to Reentry

FACT SHEET: BOP Reentry

FACT SHEET: Federal Interagency Reentry Council

FACT SHEET: Fair Chance Business Pledge

REPORT: CEA Report

Sacramento, Calif. – El viernes, 1 de abril de 2016, Álvaro Ríos-Madrid, 57 años de edad, y residente de Guamúchil, Sinaloa, México fue extraditado formalmente a los Estados Unidos por México para enfrentarse a cargos narcóticos federales, anunció el Procurador Federal de los Estados Unidos Benjamín B. Wagner.

El 13 de diciembre de 2012, un gran jurado federal en Sacramento acusó a Ríos-Madrid de un cargo de conspiración para distribuir cocaína y dos cargos por la utilización de teléfonos para facilitar la distribución de narcóticos.

Según documentos del tribunal, el Gobierno alega que Ríos-Madrid exportaba regularmente cantidades grandes de cocaína desde México a los Estados Unidos y que utilizaba organizaciones clandestinas de distribución basadas en los Estados Unidos para mover su cocaína a través de una red nacional de paquetería y mensajería a varios Estados incluyendo Utah, Minnesota, Indiana, Ohio, Massachusetts y California. Se alega que Ríos-Madrid ha podido pasar de contrabando regularmente cantidades en multi-kilogramos a los Estados Unidos a través de varios puertos de entrada incluyendo Nogales, Arizona y San Isidro, California. Los ingresos en efectivo de las ventas de la cocaína de Ríos-Madrid sumaban, por término medio, entre $500.000 dólares y $1.3 millones de dólares cada mes. Se acordaba con operarios dentro de los Estados Unidos para que esos ingresos fueran enviados a Ríos-Madrid en México. Como resultado de una investigación de larga duración, la Administración de Control de Drogas (DEA) y otros organismos estatales y federales incautaron grandes cantidades de cocaína y más de $1 millón de dólares en efectivo.

Este caso es el producto de una investigación llevada a cabo por la Administración de Control de Drogas (DEA); el Servicio del Mariscal de los Estados Unidos, las Investigaciones para la Seguridad Nacional (HSI) de Inmigración y Aduanas de los Estados Unidos (ICE); el Departamento para la Seguridad Nacional; las Patrullas de Aduanas y Fronteras de los Estados Unidos; el Departamento del Sheriff del Condado de Sacramento; el Programa para las Áreas de Tráfico de Drogas de Alta Intensidad (HIDTA) del Valle Central; el Departamento de Policía de Sacramento; el Departamento de Justicia de California (Cal MMET); el Destacamento Especial Anti Narcóticos del Área Metropolitana del Condado de San Joaquín; el Departamento de Policía de Elk Grove; el Departamento del Sheriff del Condado de San Joaquín; el Departamento de Policía de Stockton; el Departamento del Sheriff del Condado de Los Ángeles; el Departamento de Policía de Galt; la Patrulla de Carreteras de California; la Patrulla de Carreteras del Estado de Nevada; la Patrulla de Carreteras de Minnesota; la Patrulla de Carreteras del Estado de Kansas; la Patrulla de Carreteras del Estado de Massachusetts y la Patrulla de Carreteras del Estado de Iowa. La Oficina de Asuntos Internacionales del Departamento de Justicia de los Estados Unidos ha prestado asistencia con la extradición. Los Procuradores Federales Auxiliares Michael M. Beckwith y Paul A. Hemesath están procesando el caso.

Si es encontrado culpable, Ríos-Madrid se enfrentaría a una pena máxima establecida por la ley de 10 años a cadena perpetua en prisión, una multa de $10 millones de dólares y de cinco años a cadena perpetua de libertad supervisada. Si es encontrado culpable de la utilización de un teléfono celular para facilitar una infracción de tráfico de drogas, Ríos-Madrid podría enfrentarse a una pena máxima establecida por la ley de cuatro años en prisión y una multa de $250.000 dólares por cada cargo. Cualquier sentencia, no obstante, sería determinada a discreción del tribunal después de la consideración de cualquier factor aplicable establecido por la ley y las Normas para Sentenciar Federales, que toman en cuenta un número de variables. Los cargos son sólo alegaciones; el demandado es presuntamente inocente hasta y a menos que sea comprobado culpable sin duda razonable.

The owner of several Reno, Nevada landscaping and rock hauling businesses pleaded guilty in federal court today to one count of failure to file over employment taxes, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Daniel G. Bogden of the District of Nevada.  The bookkeeper for the businesses pleaded guilty to one count of willful failure to file taxes.

According to court documents, Kyle Archie, 44, of Reno, was the part owner of Reno Rock Inc., GKPA Inc. and D Rockeries Inc. during the years 2001 through 2010.  As part of his plea, Kyle Archie admitted that he was responsible for the day-to-day operations of the businesses and therefore had a legal duty to collect, truthfully account for and pay over to the Internal Revenue Service (IRS) federal income taxes and Federal Insurance Contribution Act taxes that were withheld from the wages of the businesses’ employees during the years 2003 through 2009.  Kyle Archie further admitted that although he collected these taxes from his employees’ wages and held them in trust, he failed to pay over the employment taxes to the IRS for the third quarter of 2008.     

Linda Archie, 67, of Reno, who is Kyle Archie’s mother, worked as the bookkeeper for Reno Rock Inc., GKPA Inc. and D. Rockeries Inc. during the years 2001 through 2010.  In that capacity, she was responsible for maintaining the books and records of the companies and filing documents with various government agencies.  In her plea agreement, Linda Archie admitted that between 2003 and 2009 she failed to file Employer’s Quarterly Federal Tax Returns (Forms 941) on behalf of these businesses to account for the taxes that were withheld from the employees’ wages. 

U.S. District Judge Miranda M. Du of the District of Nevada set sentencing for Aug. 15.  Kyle Archie faces a statutory maximum sentence of five years in prison and a $250,000 fine.  Linda Archie faces a statutory maximum sentence of one year in prison and a $100,000 fine.  Both defendants have also agreed to pay restitution to the IRS.  In the plea agreement, the government asserts that the tax loss is $1,242,260.  The defendants have admitted that their actions caused a loss to the IRS of at least $545,000.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Bogden commended special agents of IRS-Criminal Investigation, who investigated the case and Assistant U.S. Attorney Carla B. Higginbotham of the District of Nevada and Trial Attorney Kathleen M. Barry 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.

            United States Attorney ALICIA A.G. LIMTIACO, U.S. Attorney for the Districts of Guam and the Northern Mariana Islands (NMI), together with Drug Enforcement Administration (DEA) Resident Agent in Charge Michael Puralewski, announced that the next National Prescription Drug Take Back Day will be on Saturday, April 30, 2016, from 10:00 AM to 2:00 PM.

            The following sites have been designated to receive unused prescription drugs:

•  Naval Base Guam (Navy Exchange Food Court)
• Agana Shopping Center (Across Vitamin World)
• Agat Village Mayor's Office
• Andersen Air Force Base (Exchange & Commissary)
• Dededo Village Mayor’s Office
• Rota Health Center
• Saipan Commonwealth Health Center
• Tinian Health Center

We would like to remind the public that:

• Unused or expired prescription medications are a public safety issue, leading to accidental poisoning, overdose, and abuse.
• Pharmaceutical drugs can be just as dangerous as street drugs when taken without a prescription or a doctor’s supervision.
• The non-medical use of prescription drugs ranks second only to marijuana as the most common form of drug abuse in America.
• The majority of teenagers abusing prescription drugs get them from family and friends – and the home medicine cabinet.
• Unused prescription drugs thrown in the trash can be retrieved and abused or illegally sold. Unused drugs that are flushed contaminate the water supply. Proper disposal of unused drugs saves lives and protects the environment.
• Take-back programs are the best way to dispose of old drugs.

            The first National Prescription Drug Take-Back Day event was held nationwide in September 2010.  Guam and the NMI have participated every year since.  The purpose of the National Drug Take-Back Initiative is to help prevent increased pill abuse and theft, to encourage the public to rid their household of unused prescription drugs that pose a safety hazard and can contribute to prescription drug abuse, and to provide a venue for persons who want to dispose of unwanted and unused prescription drugs for safe disposal by DEA.

 

            For more information on prescription drug abuse, go to:  www.dea.gov, www.getsmartaboutdrugs.com, or www.justthinktwice.com.

In the most recent federal-state coordinated enforcement efforts against oil spills in and around the Gulf of Mexico, ORB Exploration LLC (ORB) has agreed to pay civil penalties and state response costs and to implement corrective measures to resolve alleged violations of the Clean Water Act and state environmental laws stemming from three crude oil spills that occurred in 2013 and 2015 from two of ORB’s Louisiana facilities at Frog Lake and Crocodile Bayou – both located in the Atchafalaya River Basin – as well as violations of Spill Prevention, Control and Countermeasure (SPCC) regulations at ORB’s Frog Lake oil storage barge, announced the Department of Justice, U.S. Coast Guard (USCG) and the Environmental Protection Agency (EPA). 

Under a consent decree lodged today in federal court, ORB will pay $615,000 in federal civil penalties for the spills and other Clean Water Act violations, pay the Louisiana Department of Environmental Quality (LDEQ) $100,000 for civil penalties and response costs and carry out injunctive relief measures to improve spill response preparedness and prevent future oil spills.

“This settlement holds ORB accountable for the harms to the environment caused by its oil spills into threatened, sensitive natural areas and requires the company to take important corrective measures including improving its environmental compliance and preventing future spills from its oil production facilities,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division.  “I am grateful for the close relationship with our federal and state partners that brought such a successful resolution to this case” 

“Discharges of oil into the navigable waters of the United States are an ongoing concern as they pose an obvious and serious risk to the marine environment,” said Rear Admiral Dave Callahan, Eighth Coast Guard District Commander.  “This enforcement action emphasizes our dedication to protecting our natural resources and preventing future pollution from these facilities.”           

“Louisiana’s wetlands are vital to the state’s economy, communities and ecology, providing protection from storm surges and habitat for wildlife,” said Regional Administrator Ron Curry for EPA.  “Companies must be held accountable when their actions threaten these important natural resources.”

“This joint action shows that LDEQ is committed to pursuing anyone who does something to harm our state’s environment,” said Dr. Chuck Carr Brown, LDEQ Secretary.  “Our mission is to protect human health and the environment and those two things are too precious to risk by allowing unscrupulous operators to flout environmental laws in the name of profit.”

As part of a joint action filed with LDEQ, the complaint alleges that ORB spilled over 1,000 barrels of Louisiana crude oil into the Atchafalaya River Basin during the three spills.  The largest occurred at Frog Lake in 2013, after a corroded oil transfer pipeline ruptured in a flooded wetland area.  The cleanup took over a year and a half and required significant state-federal cooperation.  The other two releases occurred in September and October of 2015, from ORB’s Frog Lake and Crocodile Bayou oil production facilities into bayou waters surrounding the facilities. 

In the complaint, the United States asserts penalty and injunctive relief claims for the spills.  It also alleges Clean Water Act violations for ORB’s failure to comply with a USCG order addressing the 2013 cleanup.  The SPCC violations were discovered during a 2015 EPA inspection of ORB’s Frog Lake oil production barge.  For its part, LDEQ asserts state-law claims for civil penalties for the discharges, failure to file a timely report and failure to provide updated notice to the state hotline and for reimbursement of LDEQ’s response costs.

The corrective measures ORB is required to take include improving secondary containment capability at the Frog Lake facility, increasing the frequency of facility inspections and monitoring for oil spills, providing additional advance notice to the USCG before any future oil transfer operation and installation of accurate gauges on production and transfer equipment to allow for and improve accountability and spill detection capabilities.

The Clean Water Act makes it unlawful to discharge oil or hazardous substances into or upon the navigable waters of the United States or adjoining shorelines in quantities that may be harmful to the environment or public health.  EPA’s SPCC regulations establish procedures, methods and equipment requirements and also require facilities to develop and implement SPCC Plans toward the goal of preventing oil from reaching navigable waters and adjoining shorelines.  The penalty paid to the United States will be deposited in the federal Oil Spill Liability Trust Fund managed by the National Pollution Funds Center.  Those funds will be available to pay for federal response activities and to compensate for damages when there is a discharge or substantial threat of discharge of oil or hazardous substances to waters of the United States or adjoining shorelines.

The proposed consent decree, lodged in the Middle District of Louisiana, is subject to a public comment requirements and court review and approval.  A copy of the consent decree is available on the Department of Justice website at https://www.justice.gov/enrd/consent-decrees.