District Not Recorded

The Department of Justice today announced a new publication, Identifying and Preventing Gender Bias in Law Enforcement Response to Sexual Assault and Domestic Violence: A Roundtable Discussion.  The report was released at the International Conference on Sexual Assault, Domestic Violence, and Engaging Men & Boys and is published by the Office of Community Oriented Policing Services (COPS Office).

This publication serves as a companion to the guidance on this topic issued by the department on Dec. 15, 2015, and summarizes a roundtable discussion hosted on Aug. 4, 2015.  The roundtable was hosted by the COPS Office and the Police Executive Research Forum, in partnership with the department’s Office on Violence Against Women and Civil Rights Division.  The roundtable provided an opportunity for stakeholders to share feedback on the department’s guidance.  The final guidance, which includes that feedback, has been embraced by multiple law enforcement and advocacy organizations.  

“As a retired police chief with close to 30 years in the field, I believe the lessons learned from this publication serve as a stark reminder of the need to ensure victims of sexual assault and domestic violence are not further victimized by gender bias – whether intentional or implicit,” said COPS Office Director Ronald Davis.  “I recommend that every law enforcement executive read this report.”

The publication provides recommendations from law enforcement officers and executives, victim advocates, academics, and subject matter experts who attended the August roundtable, and shared insights on improving law enforcement response to victims of sexual assault and domestic violence, particularly amongst vulnerable populations such as the lesbian, gay, bisexual and transgender community; racial, cultural and religious minorities; and immigrants. 

The publication recommends:

• Addressing gender bias in agency culture through officer training and accountability;

• Developing clear policies, resources, and partnerships; and

• Applying a survivor-centered approach.

The COPS Office, headed by Director Ronald Davis, is the federal component of the Department of Justice responsible for advancing community policing nationwide.  Since 1995, the COPS Office has invested more than $14 billion to advance community policing, including grants awarded to more than 13,000 state, local and tribal law enforcement agencies to fund the hiring and redeployment of more than 127,000 officers and provide a variety of knowledge resource products including publications, training and technical assistance.  For additional information about the COPS Office, please visit www.cops.usdoj.gov.

Attorney General Loretta E. Lynch released the following statement regarding the attacks in Brussels this morning: 

“I stand with President Obama and the American people in condemning this morning’s horrific attacks in Brussels.  This was an appalling assault on the people of Belgium, on the European Union and on every nation that stands for peace and the rule of law.  The Department of Justice is in contact with our counterparts in Belgium and we have offered any and all assistance that we can bring to bear.  In the days ahead, we will continue to work with law enforcement abroad in order to help ensure those responsible are brought to justice.  And as we go forward, our thoughts, prayers and deepest condolences will be with the victims and their loved ones. 

“If the intent of this attack's perpetrators was to sow conflict and discord – to stoke mistrust and spread fear – they have failed.  Today and every day, the people of the United States are joined with our friends in Belgium and around the world in love, compassion and resolve.  The words on Belgium’s coat of arms speak for us all: L’Union Fait La Force.  Unity Makes Strength.” 

A civil complaint was filed today in the U.S. District Court for Kansas against Native American Enterprises LLC, of Wichita, Kansas; its Vice President and part-owner, William N. McGreevy and is production manager, Robert C. Conner, to stop the distribution of adulterated food, the Department of Justice announced today. 

Native American Enterprises LLC (NAE), manufactures and distributes food, namely ready-to-eat (RTE) refried beans and sauces.  The complaint alleges that the company’s RTE refried beans and sauces are adulterated in that they have been prepared, packed and/or held under insanitary conditions whereby the food may have become contaminated with filth or have been rendered injurious to health.  According to the complaint, the insanitary conditions include the presence of Listeria Monocytogene (L. mono) in NAE’s facility and insanitary employee practices.  The department filed the complaint at the request of the U.S. Food and Drug Administration (FDA).

“Insanitary conditions at food processing facilities can present significant risks to consumers and food manufacturers must take steps to minimize those risks,” 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 combat and deter conduct that leads to the distribution of adulterated food to consumers.”

According to the complaint, FDA inspected NAE’s facility, located at 230 N. West Street in Wichita, in August 2015 and collected environmental samples and observed numerous insanitary practices, including the defendants’ failure to manufacture and package food under conditions necessary to minimize microorganism growth, take necessary precautions to protect against contamination and maintain buildings in good repair.  Specifically, according to the complaint, FDA observed rain water leaking through the roof in the packaging room, directly above where NAE employees packaged RTE refried beans.  In addition, FDA observed cracks and holes in the walls and floor junctures that allow water and debris to collect, prohibit adequate cleaning and could harbor Listeria, according to the complaint.

FDA inspected NAE’s facility twice in 2014.  As alleged in the complaint, FDA collected environmental samples during RTE refried bean production during each of the 2014 inspections and found Listeria in the facility.  In addition, as alleged in the complaint, FDA also observed a failure to maintain equipment in an acceptable condition through appropriate cleaning and sanitizing. 

As alleged in the complaint, L. mono thrives in moist environments, such as food-manufacturing environments.  Unless proper precautions are taken, L. mono may become established and grow, and it is difficult to eliminate once it becomes established in a food-manufacturing environment.  It is capable of surviving and growing at refrigerated temperatures and in high-salt environments.  The complaint alleges that L. mono is a significant public health risk in RTE refried beans and sauces. 

The government is represented by Trial Attorney Heide L. Herrmann of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Emily Metzger of the U.S. Attorney’s Office for the District of Kansas, with the assistance of Associate Chief Counsel for Enforcement Sonia W. Nath of the Food and Drug Division, Office of General Counsel, Department of Health and Human Services.

A complaint is merely a set of allegations that, if the case were to proceed to trial, the government would need to prove by a preponderance of the evidence.

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 District of Kansas, visit its website at http://www.justice.gov/usao-ks.

A Charlotte, North Carolina, area resident was sentenced to 41 months in prison today for his involvement in a fraudulent tax return scheme, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina.

According to court documents and statements in court, in early 2011, Daniel Heggins, 44, and Joan Clark operated Guarantor Manufactures Inc. (GMI), a business that purported to help individuals who were in debt.  Heggins and his co-conspirators, including Clark, prepared and filed false tax returns on behalf of GMI’s clients claiming fraudulent tax refunds from the Internal Revenue Service (IRS) in the amount of their clients’ debts.  The intended loss of the conspiracy exceeded $4 million.  Heggins also charged GMI’s clients bogus filing fees of $2,500 to $5,000 in order to prepare and file the fraudulent returns.  Heggins and Clark pleaded guilty to conspiracy to defraud the United States in November 2015.

“While taxpayers are ultimately responsible for the information reported on their returns, they also are entitled to honest and accurate assistance from those paid to prepare their returns,” said Acting Assistant Attorney General Ciraolo.  “Heggins and Clark took advantage of clients seeking such assistance, and used their fraudulent scheme to line their own pockets.  The department will continue to work with our partners in the Internal Revenue Service to investigate, prosecute and incarcerate such individuals for their criminal conduct, and seek restitution for the victims.”

“As we are in the midst of the annual tax season, it is important for consumers to be cognizant of fraudsters who charge exorbitant fees to prepare tax returns and engage in the submission of fraudulent tax returns,” said U.S. Attorney Rose.  “Taxpayers are urged to be wary of using tax return preparation businesses which make unusual or extreme promises and to exercise caution when selecting a tax preparation service.”

“During filing season, I’d like to encourage the taxpayers to heed the old warning, ‘Buyer beware,’” said Special Agent in Charge Thomas J. Holloman III of IRS Criminal Investigation Division (IRS-CI), Charlotte Field Office.  “Heggins and Clark perpetrated a scheme in which they offered assistance to clients and then victimized them, through their crimes. While the methods utilized by criminals may change, the constant is that we will be there to make sure they are brought to justice.”

In addition to the prison term, U.S. District Judge District Max O. Cogburn Jr. ordered Heggins to serve three years of supervised release and pay $24,325 in restitution to victims of the fraud, which included former clients and the IRS.  Clark was sentenced in February to 20 months in prison for her involvement in the fraudulent refund scheme and for a separate scheme in which she filed fraudulent tax returns in the name of trusts.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Rose commended special agents of IRS-Criminal Investigation and the FBI, who investigated the case and Assistant U.S. Attorney Mike Savage of the Western District of North Carolina and Trial Attorney Todd Kostyshak of the Tax Division, who prosecuted the case.

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

The Justice Department today revealed new data from its innovative Smart on Crime Initiative that show charging decisions by federal prosecutors in fiscal year 2015 resulted in prosecutors' focusing on more serious drug cases and fewer indictments carrying a mandatory minimum.  Meanwhile, prosecutions of high-level drug defendants have risen and cooperation and plea rates remained effectively the same. 

“The promise of Smart on Crime is showing impressive results,” said Deputy Attorney General Sally Q. Yates.  “Federal prosecutors are consistently using their discretion to focus our federal resources on the most serious cases and to ensure that we reserve harsh mandatory minimum sentence for the most dangerous offenders.  By ensuring fair and proportional sentencing, these policies engender greater trust in our criminal justice system, save federal resources and make our communities more safe. "

As part of the department’s Smart on Crime Initiative – announced in August 2013 – federal prosecutors were instructed to ensure the department’s finite resources are devoted to the most important law enforcement priorities implicating substantial federal interests and to promote fair enforcement of our laws, especially for low-level, non-violent drug offenders.

Since that announcement, prosecutions of serious drug defendants – such as those involving a weapon or leaders of a conspiracy – have increased, and there has been virtually no change in the rates at which defendants cooperate with the government or plead guilty.  During the same time, the department has seen steady reductions in charges that trigger mandatory minimums and fewer federal drug charges for low-level, non-violent offenders.

The FY2015 data, provided by the Sentencing Commission, shows: 

• Federal prosecutors are being more selective in their drug prosecutions.  Even though drug cases are fewer in number, they are more focused on the most serious defendants.  There was a 14 percent drop in drug cases brought between FY2012 and FY2014 and an additional 6 percent drop from FY2014 to FY2015, showing a steady downward trend that resulted in nearly 5,000 fewer drug cases between FY2012 and FY2015. 
• At the same time, the percentage of those drug defendants with a weapon rose (from 15.1 percent of cases in FY2012 to 16.4 percent of cases in FY2014 and then to 17.3 percent of cases in FY2015).  Similarly, the percentage of defendants with an aggravating role steadily increased (from 6.6 percent in FY2012 to 7.1 percent in 2014 and 7.8 percent in 2015).
• ​Just as prosecutors are focusing on the most serious defendants, they are moving away from low-level offenders and letting state prosecutors take those cases, if they so choose.  That fact is clear because prosecutors are charging defendants who qualify for safety valve (by definition, lower-level defendants) less frequently – from 37 percent of cases in 2011 to 32 percent in 2015.
• Federal prosecutors are charging mandatory minimums significantly less frequently.  In FY 2012, 38.5 percent of all drug cases had no mandatory minimum, whereas post-Smart on Crime, that number rose to 48.7 percent in FY2014 – the first full year that Smart on Crime was implemented – and then up again to 53.1 percent in FY2015 – meaning less than half of all drug cases involved charges carrying a mandatory minimum.
• ​Finally, drug defendants are still cooperating with the government to make cases against others.  The percentage of motions denoting substantial assistance, or cooperation, from defendants filed in drug cases have remained the same over time.  They were filed in 23.1 percent of drug cases in FY2012 and in 23.9 percent of drug cases in FY2015.  Guilty plea rates have stayed at roughly 97 percent consistently.

The Justice Department reached a historic settlement agreement today with Barrios Street Realty Inc., a company based in Lockport, Louisiana.  The agreement resolves claims that the company and its agent, Jorge Arturo Guerrero Rodriguez, discriminated against U.S. workers by preferring to hire foreign workers under the H-2B visa program.

The department’s investigation found that in July 2014, Barrios Street Realty and Guerrero Rodriguez failed to consider or improperly rejected 73 U.S. workers who applied for positions as sheet metal roofers or laborers, and then solicited foreign workers to fill these positions.  The department determined that the company’s applications for foreign workers falsely claimed that its earlier efforts to fill the sheet metal and laborer positions failed to identify qualified U.S. workers.  Refusing to consider or hire qualified U.S. workers because of their citizenship violates H-2B regulations and the Immigration and Nationality Act’s (INA) anti-discrimination provision.

Under the settlement, Barrios Street Realty must create a back pay fund of $115,000 to compensate U.S. workers, pay $30,000 in civil penalties and be subject to monitoring for a three-year period.  In addition, Barrios Street Realty acknowledged in the agreement that its misuse of the H-2B visa program constituted valid grounds for debarment from the program and agreed to a voluntary debarment prohibiting it from seeking H-2B visa workers or any other classification of non-immigrant visa workers from the Department of Labor’s Employment and Training Administration for a period of three years.  This represents the first time the department has obtained a voluntary debarment as a remedy for violating the INA’s anti-discrimination provision.

“Federal law prohibits employers from discriminating against U.S. workers in hiring,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division.  “The department is committed to identifying and combating discriminatory hiring preferences that impede the ability of U.S. workers to compete equally for employment.”

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

The Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC), within the Justice Department’s Civil Rights Division, is responsible for enforcing the anti-discrimination provision of the INA.  The statute prohibits employers from discriminating against workers on the basis of citizenship, immigration status and national origin in hiring, firing, recruiting or referring for a fee, and employment eligibility verification.

For more information about protections against employment discrimination under federal immigration law, call OSC’s worker hotline at 1-800-255-7688 (1-800-237-2525, TTY for hearing impaired); call OSC’s employer hotline at 1-800-255-8155 (1-800-237-2525, TTY for hearing impaired) or 202-616-5594; email osccrt@usdoj.gov; or visit the website at www.justice/gov/crt/about/osc. 

Barrios Settlement Agreement

WASHINGTON, D.C. – El Departamento de Justicia llegó a un acuerdo histórico hoy con Barrios Street Realty LLC, una empresa con sede en Lockport, Luisiana. El acuerdo resuelve quejas de que la empresa y su agente, Jorge Arturo Guerrero Rodríguez, hubiesen discriminado a trabajadores estadounidenses al dar preferencia en la contratación a trabajadores extranjeros al amparo del programa de visas H-2B.

La investigación del Departamento halló que en julio del 2014, Barrios Street Realty y Guerrero Rodríguez se negaron a considerar, o bien rechazaron indebidamente, a 73 trabajadores estadounidenses que solicitaron empleo como obreros o techadores de chapas metálicas, y en su lugar reclutaron a trabajadores extranjeros para llenar estas vacantes. El Departamento determinó que las solicitudes que la empresa difundió entre trabajadores extranjeros afirmaron falsamente que en su esfuerzo previo de llenar los puestos para obreros y techadores de chapas metálicas no lograron identificar a trabajadores estadounidenses cualificados. El negarse a considerar o a contratar a trabajadores estadounidenses cualificados por motivos de su ciudadanía representa una violación de los reglamentos H-2B y la disposición antidiscriminatoria de la ley de Inmigración y Nacionalidad (INA, por sus siglas en inglés).

En el marco del acuerdo, Barrios Street Realty deberá establecer un fondo de pagos retroactivos que asciende a 115.000$ para compensar a trabajadores estadounidenses, pagar 30.000$ en sanciones civiles y someterse a supervisión durante un período de tres años. Asimismo, Barrios Street Realty reconoció en el marco del acuerdo que su uso indebido del programa de visas H-2B constituye un motivo fundado para su inhabilitación del programa y acordó participar en un programa de inhabilitación voluntario que prohibirá que reclute a trabajadores con visas H-2B o cualquier otro tipo de trabajador no inmigrante con visa de la Administración de Capacitación y Empleo del Departamento de Trabajo durante un período de tres años. Esta es la primera vez que el Departamento ha logrado la inhabilitación voluntaria como remedio contra una violación de la disposición antidiscriminatoria de la INA.

“Las leyes federales prohíben que los empleadores discriminen a trabajadores estadounidenses en la contratación,” afirmó la Secretaria de Justicia Auxiliar Adjunta Principal, Vanita Gupta, Directora de la División de Derechos Civiles del Departamento de Justicia.  “El Departamento se compromete a identificar y luchar contra preferencias discriminatorias en la contratación que impidan la habilidad de trabajadores estadounidenses de competir, de una forma equitativa, por puestos de trabajo.”

Aquellos postulantes o empleados que creen haber sido sometidos a: requisitos documentales diferentes, basados en su estatus migratorio o de ciudadanía, o bien por su nacionalidad de origen; o discriminación por motivos de su estatus migratorio o de ciudadanía, o por su nacionalidad de origen en los procesos de contratación, despido o reclutamiento o recomendación por comisión deberán comunicarse con la línea directa para trabajadores que aparece a continuación para pedir ayuda.

La Oficina del Consejero Especial para Prácticas Injustas en el Empleo Relacionadas a Inmigración (OSC, por sus siglas en inglés), que corresponde a la División de Derechos Civiles del Departamento de Justicia, es responsable de aplicar la disposición antidiscriminatoria de la INA. Esta ley prohíbe que los empleadores discriminen a sus trabajadores por motivos de su estatus migratorio o de ciudadanía, o bien por su nacionalidad de origen, en los procesos de contratación, despido o reclutamiento o recomendación por comisión; o en el proceso de verificación de la elegibilidad de empleo.

Para más información sobre protecciones contra la discriminación en el empleo en virtud de las leyes migratorias federales, llame a la línea directa de la OSC para trabajadores al 1‑800‑255‑7688 (1‑800-237-2525, TTY para personas con discapacidades auditivas); llame a la línea directa de la OSC para empleadores al 1-800-255-8155 (1-800-237-2525, TTY para personas con discapacidades auditivas) o el 202-616-5594; mande un correo electrónico a osccrt@usdoj.gov o visite la página web en www.justice.gov/crt/about/osc.  

Decision Follows TRO Halting Anticompetitive Sale to Owner of L.A. Times

Today, the Bankruptcy Court for the Central District of California approved Digital First Media as the purchaser of Freedom Communications Inc., publisher of the Register in Orange County and the Press-Enterprise in Riverside County, California.  After Tribune Publishing Company, publisher of the Los Angeles Times, had attempted to emerge as the winning bidder in the bankruptcy proceeding, the Department of Justice filed a civil antitrust lawsuit seeking to block Tribune from acquiring Freedom Communications on March 17, 2016.  The next day, the Honorable André Birotte Jr., a federal judge in Los Angeles, granted the department’s application for a temporary restraining order to prevent Tribune from acquiring Freedom Communications pending further proceedings.

“Many Americans depend on local newspapers even in this age of electronic information,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division.  “As Judge Birotte held in his well-reasoned opinion, newspapers play an important role in our democracy.  Preventing the Los Angeles Times from combining with the Register and the Press-Enterprise will ensure that citizens and advertisers in Southern California continue to benefit from competition and from a diversity of views in their local news coverage.  The Antitrust Division will remain vigilant in protecting competition in this important industry.”  

In his ruling granting the department’s application for a temporary restraining order, Judge Birotte found that “local newspapers continue to serve a unique function in the marketplace: they are the creators of local content.  It further stands to reason that local advertisers in search of print advertising would choose to advertise with local news providers.”             

The Justice Department announced today that the United States has filed a complaint under the False Claims Act in the U.S. District Court for the District of South Carolina against Savannah River Nuclear Solutions LLC (SRNS) and Fluor Federal Services Inc. (FFSI) for allegedly overcharging the Department of Energy under a management and operations contract at the Savannah River Nuclear Site in Aiken, South Carolina.  SRNS is a joint venture of FFSI, Newport News Nuclear Inc. and Honeywell International. 

The case is captioned United States v. Savannah River Nuclear Solutions and Fluor Federal Services, Inc., 1:16-825-JMC (D.S.C).  The claims asserted in the United States’ complaint are allegations only, and there has been no determination of liability.     

Omron Automotive Electronics Co. Ltd has agreed to plead guilty and pay a $4.55 million criminal fine for conspiring to rig bids on power window switches installed in Honda Civics sold to U.S. consumers, the Department of Justice today announced.

“Omron and its co-conspirators targeted the Honda Civic, one of the best-selling cars in the United States, to benefit themselves at the expense of Honda Civic owners,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division.  “Our investigation will continue to hold accountable companies and executives across the auto parts industry who chose to conspire rather than compete.”  

According to the felony charge filed in the U.S. District Court for the Eastern District of Michigan, Omron, based in Komaki, Japan, and another manufacturer conspired from 2003 to 2013 to rig bids on power window switches sold to Honda Motor Co. Ltd.  That conspiracy extended to sales to Honda’s U.S. subsidiaries and affiliates and the switches involved were installed in Honda Civics sold beginning in 2005 and continuing through 2013.  The plea agreement is subject to court approval.

Including Omron, 39 companies and 58 executives have been charged in the division’s ongoing investigation and have agreed to pay a total of more than $2.6 billion in criminal fines.  Omron is being prosecuted by the Antitrust Division’s San Francisco Office and the FBI’s Detroit Division, with assistance from the U.S. Attorney’s Office of the Eastern District of Michigan.

Anyone with information on market allocation, price fixing, bid rigging or other anticompetitive conduct related to products in the automotive industry 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’s Detroit Field Office tip line at 313-965-2323.

Defendant Defrauded Investors in Nigerian Oil Scheme and Veterans Affairs and Failed to File a Federal Income Tax Return

A Las Vegas, Nevada, resident, who served in the U.S. Marines Corps, was convicted by a federal jury yesterday in the District of Nevada of multiple fraud charges after an eight-day trial, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.

Anton Paul Drago, formerly known as Evan Fogarty, 65, was convicted on all 10 counts of the indictment.  The jury found him guilty of one count of conspiracy to commit wire fraud, two counts of wire fraud, three counts of submitting false claims to the U.S. Department of Veterans Affairs, one count of theft of government funds, one count of passing a fictitious financial instrument, one count of making false statements to federal agents and one count of failing to file a federal income tax return.

“Today’s verdict sends a strong message to would-be fraudsters that the Tax Division is committed to not only pursuing defendants who seek to steal from the U.S. Treasury, but also those who take advantage of their fellow citizens through the use of schemes like the one perpetrated by Mr. Drago,” said Acting Assistant Attorney General Ciraolo.  “Mr. Drago lied to investors and to a government agency and he now faces prison and substantial monetary penalties.”

The evidence presented at trial established that Drago orchestrated a large-scale Nigerian oil investment fraud scheme.  From at least 2004 through 2012, Drago told investors that money they invested would be used for legal fees and business expenses to fund the production, refinement and shipment of crude oil from Nigeria to the Bahamas.  Along with co-conspirator Joseph Rizzuti, formerly of Palm City, Florida, Drago also told investors that the money they invested would fund the purchase of an oil refinery in the Bahamas.  Drago lied to investors about his background, falsely claiming that he was an engineer and an expert in the oil industry with over 30 years of experience working worldwide.  He also falsely told some investors that he was the grandson of the Shell Oil founder and heir to a $500 million trust that he had already spent on the Nigerian oil investment deal.  None of these claims were true.

The government also presented evidence to establish that Drago and Rizzuti contracted with investors, promising them a short-term turn around on their investment in just 60 days with a return of up to 400 percent.  Unwitting investors gave the conspirators more than $2 million. Instead of investing in a Nigerian oil deal as promised, Drago and Rizzuti used most of the investors’ money for personal expenses.  Specifically, Drago spent the money on rent, groceries, memberships at the Tournament Players Club Summerlin golf course and an exclusive activity club in Turnberry Towers, both in Las Vegas,  maintenance on his Mercedes Benz, jewelry, travel and luxury purchases at stores such as Louis Vuitton, Nordstrom and Sharper Image.  In addition, nearly $1 million of the investors’ money was transferred to unknown bank accounts in China.  Despite Drago’s receipt of income from this fraudulent scheme, he failed to timely file his 2007 federal income tax return.

After the disgruntled investors’ money was spent, Drago continued to lie to them about other elaborate oil-related schemes that would make them whole.  He attempted to negotiate a fictitious financial instrument purporting to be an International Bill of Exchange worth $10 million at a Wells Fargo Bank branch in Las Vegas.  He also lied to federal agents of the Internal Revenue Service (IRS) who were investigating him when he told them that every penny of investor money went to Nigeria.

“The jury’s ability to see through the wall of lies Mr. Drago built to deceive investors sends a positive message to the victims of his scheme and to other victims of fraud around the country,” said Chief Richard Weber of IRS Criminal Investigation (IRS-CI). “By perpetrating this abusive tax scheme and defrauding the U.S. government and victims of this scheme, Mr. Drago set in motion a chain of events that ultimately led to his downfall.  IRS-CI is proud to be part of the investigative team that brought Mr. Drago to justice.”

 At the same time he was perpetrating the fraudulent Nigerian oil investment scheme, Drago also falsely claimed individual unemployability compensation benefits from the Veterans Affairs (VA).  The evidence at trial established that for decades, Drago falsely claimed to have a debilitating military service-connected knee injury and was totally unable to work in any capacity, when in fact he was self-employed and running several businesses.  The evidence showed that Drago was active and an avid golfer, spending more than $100,000 on golf-related expenses between 2005 and 2008.  Based upon his false claims to the VA, he received thousands of dollars in monthly VA benefits.

U.S. District Court Judge James Mahan set Drago’s sentencing for June 14.  Drago faces a statutory maximum sentence of up to 20 years in prison for the wire fraud conspiracy, 20 years in prison for each count of wire fraud, five years in prison for making or presenting false claims, 25 years in prison for passing a fictitious financial instrument, 10 years in prison for theft of government funds, five years in prison for making false statements to federal agents and one year in prison for failing to file a federal income tax return.  He also faces mandatory restitution and financial penalties, including more than $2 million in fines as well as the costs of prosecution.

Rizzuti pleaded guilty to conspiracy to commit wire fraud for his role in the Nigerian oil investment fraud scheme and an unrelated charge of obstructing the internal revenue laws.  He was sentenced in May 2013 to 80 months in prison.  Rizzuti testified against Drago at trial.

Assistant Attorney General Ciraolo commended the special agents of IRS–Criminal Investigation and the Office of Inspector General at the Department of Veterans Affairs, who investigated the case and Trial Attorneys Charles M. Edgar Jr. and Sean Beaty of the Tax Division, who prosecuted the case.  Assistant Attorney General Ciraolo also thanked litigation technical support specialist John L. Kost, who provided trial support, and the U.S. Attorney’s Office for the District of Nevada who provided invaluable assistance to the Tax Division.

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

The Justice Department and the city of Ferguson, Missouri, today jointly filed an agreement resolving the United States’ pending lawsuit against Ferguson.  The court-enforceable decree, filed in the U.S. District Court for the Eastern District of Missouri, aims to remedy the unconstitutional law enforcement conduct that the Justice Department found during its civil pattern-or-practice investigation into the Ferguson Police Department (FPD) and the Ferguson Municipal Court.  The department’s findings were released in a public report issued March 4, 2015.   

“The American people must be able to trust that their courts and law enforcement will uphold, protect, and defend their constitutional rights,” said Attorney General Loretta E. Lynch.  “The filing of this agreement marks the beginning of a process that the citizens of Ferguson have long awaited – the process of ensuring that they receive the rights and protections guaranteed to every American under the law.”

Under the agreement, Ferguson will implement reforms to bring about constitutional and effective policing, promote officer and public safety, ensure fundamental fairness and equal treatment regardless of race in the municipal court and foster greater trust between police officers and the communities they serve.  The areas covered by the agreement include:

• Community policing and engagement: creating a community engagement strategy that requires meaningful engagement between FPD officers and all segments of the Ferguson community. 
• Bias-free police and court practices: requiring implicit bias-awareness training of all court staff and FPD personnel and ensuring that Ferguson does not discriminate on the basis of race and other characteristics.
• Stops, searches and arrests: ensuring that FPD’s stop, search, citation and arrest practices adhere to the Fourth Amendment and do not discriminate on the basis of race or any other protected characteristic; and prohibiting Ferguson from developing or implementing any law enforcement action in order to generate revenue. 
• First Amendment: protecting all individuals’ First Amendment rights, including their right to record public police activity, lawfully complain about police activity free from retaliation and engage in lawful protest.
• Use of force: reorienting FPD’s use-of-force policies toward de-escalation and avoiding force except where necessary; re-training all officers; and thoroughly, objectively and timely investigating all uses of force. 
• Officer supervision: requiring close and effective supervision of officers; requiring FPD officers and other personnel to wear and use body-worn and in-car cameras; and requiring supervisors to review camera footage as part of misconduct and force investigations.
• Accountability: requiring Ferguson and FPD to fully and fairly investigate all allegations of officer misconduct and take corrective and disciplinary action. 
• Civilian oversight: establishing a Civilian Review Board to review, make findings and recommend disciplinary action for investigations of complaints involving excessive force, abuse of authority, the use of discriminatory slurs and other misconduct; review FPD policies and training plans; serve on officer hiring and promotion panels; and review crime, racial profiling and complaint data.
• Officer assistance and support: ensuring that officers are provided ready access to support services, including physical and mental health services, and requiring Ferguson to develop protocols to ensure that officers are provided relief support during public demonstrations and periods of civil unrest.
• Recruitment: requiring Ferguson to develop a recruitment plan that will assist FPD in attracting and retaining a highly-qualified officer workforce.
• Mental health crisis intervention: requiring that Ferguson and FPD implement and train officers in specialized responses to incidents involving individuals in mental health crisis.
• Data collection, reporting and transparency: requiring FPD to collect the data on its operations needed for it to continue to learn and improve upon its police and court practices;
• School Resource Officers (SROs): ensuring that Ferguson SROs have the skills to work lawfully, productively and fairly with youth; requiring SROs to divert students toward alternatives; and minimizing the use of force in schools.
• Municipal court reform: enacting reforms to ensure that municipal code enforcement is driven by public safety, not a desire to raise revenue; implementing an amnesty program for all open cases and associated warrants initiated prior to Jan. 1, 2014; eliminating unnecessary fees and altering the court’s fine and warrant practices to ensure due process; increasing transparency of court operations; eliminating the use of secured money bond; ensuring that no person will jailed for being poor; and ensuring the independence of the court from the city prosecutor and the impartiality of the municipal judge.   

An independent monitor to be selected by the Justice Department and Ferguson will assess implementation of the consent decree, provide technical assistance to Ferguson and report on Ferguson’s implementation of reforms through periodic public reports.  The consent decree requires two consecutive years of compliance by Ferguson before the agreement can be terminated.

“Ferguson residents and police officers deserve a law enforcement system that serves their entire community fairly, safely and effectively,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division.  “The Department of Justice looks forward to working closely with the city as we implement this landmark agreement to ensure that real reform becomes a reality for all people in Ferguson.”

The Justice Department’s investigation uncovered a pattern or practice of unlawful conduct by the FPD and the Ferguson Municipal Court, including: violating the Fourth Amendment by conducting stops without reasonable suspicion and arrests without probable cause, as well as using excessive force; violating the First Amendment by interfering with the right to free expression and the right to record public police activity; and violating the 14th Amendment by engaging in racial discrimination, in both police and related court activity, as well as violating individuals’ due process and equal protection rights in court.  The civil investigation was conducted by attorneys and staff from the Civil Rights Division’s Special Litigation Section.

Ferguson Consent Decree

Ferguson Joint Motion for Entry

Acquisition Would Monopolize Newspapers in Orange and Riverside Counties in California

The Department of Justice filed a civil antitrust lawsuit today seeking to block the acquisition by Tribune Publishing Company, publisher of the Los Angeles Times, of Freedom Communications Inc., publisher of the Register in Orange County, California, and the Press-Enterprise in Riverside County, California.  Tribune was selected as purchaser of Freedom’s newspapers following a bankruptcy auction and will seek bankruptcy court approval of its acquisition on March 21.  The department is seeking a temporary restraining order to prevent the sale to Tribune from proceeding.

According to the department’s complaint, filed in federal district court in Los Angeles, the Los Angeles Times and the Register together account for 98 percent of newspaper sales in Orange County and the Los Angeles Times and Freedom’s newspapers together account for 81 percent of English-language newspaper sales in Riverside County.  Tribune’s acquisition of its most significant competitor would give it a monopoly over newspaper sales in each county and allow it to increase subscription prices, raise advertising rates and invest less to maintain the quality of its newspapers.

“If this acquisition is allowed to proceed, newspaper competition will be eliminated and readers and advertisers in Orange and Riverside Counties will suffer,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division.  “Newspapers continue to play an important role in the dissemination of news and information to readers and remain an important vehicle for advertisers.  The Antitrust Division is committed to ensuring that competition in this important industry is protected.”   

Tribune Publishing Company is a Delaware corporation headquartered in Chicago.  It publishes 11 major daily newspapers across California, Illinois, Florida, Maryland, Connecticut, Virginia and Pennsylvania.

A federal grand jury sitting in Portland, Oregon, returned a superseding indictment yesterday afternoon charging a Hillsboro, Oregon man with 13 counts of making, presenting and transmitting fictitious financial instruments and six counts of willfully failing to file income tax returns, Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division announced.

According to the superseding indictment, beginning in or about February 2008 and continuing through at least June 2015, Winston Shrout knowingly devised and participated in a scheme to defraud financial institutions and the United States out of monies by making, presenting and transmitting fictitious financial instruments, which he variously called, among other things, “International Bills of Exchange” and “Non-Negotiable Bills of Exchange.”  Shrout claimed that these fictitious financial instruments had monetary value when he knew they were in fact worthless.  It is alleged that during the course of his scheme, Shrout produced and issued more than 300 fictitious financial instruments, purported to be worth more than $100 trillion, on his own behalf and for credit to third parties.  The superseding indictment further alleges that Shrout promoted and marketed the use of fictitious financial instruments as a way to pay off debts, including federal income taxes, through seminars and private client consultations.  Shrout is alleged to have sold recordings of his seminars, templates for fictitious financial instruments, and other materials through his website.

In addition, the superseding indictment alleges that Shrout received income for the years 2009 through 2014 from various sources, including presentations at seminars, licensing fees associated with the sale of products in his name and his business, Winston Shrout Solutions in Commerce, and annual pension payments.  It is alleged that Shrout willfully failed to file income tax returns with the Internal Revenue Service (IRS) for those years to report his income, despite being required to do so.

If convicted, Shrout faces a statutory maximum sentence of 25 years in prison on each count of making, presenting and transmitting a fictitious financial instrument and one year in prison for each count of willful failure to file income tax returns.

An indictment is not a finding of guilt.  Individuals charged in indictments are presumed innocent until proven guilty beyond a reasonable doubt. 

Acting Assistant Attorney General Ciraolo thanked special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorneys Stuart A. Wexler and Ryan R. Raybould of the Tax Division, who are prosecuting the case.

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

A Burlington, North Carolina, man was sentenced today to 24 months in prison for bankruptcy fraud and tax fraud, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Department of the Justice’s Tax Division and U.S. Attorney Ripley Rand of the Middle District of North Carolina. 

“The department, working with our partners within the IRS, is committed to identifying and prosecuting individuals who lie to or mislead the IRS in an effort to obstruct tax administration and evade the assessment or collection of tax due,” said Acting Assistant Attorney General Ciraolo.  “Our system of voluntary compliance only works if individuals like Mr. Blackwell, who abuse the system and cheat their fellow citizens, are held accountable for their criminal conduct.”

“The fraudulent use of bankruptcy and other court proceedings to steal from taxpayers is of grave concern, and the U.S. Attorney’s Office remains vigilant in the effort to hold accountable those who would defraud the government,” said U.S. Attorney Rand.

According to court documents, Faiger Blackwell, 59, owned several businesses, including a funeral home, in North Carolina.  In 2007, Blackwell filed for bankruptcy for himself and his funeral home after accumulating more than $300,000 in outstanding federal taxes and more than $1 million in other debts.  During the bankruptcy proceedings, Blackwell concealed rental income from the bankruptcy court and instead used the money to pay for business and personal expenses.  In July 2009, after the Internal Revenue Service (IRS) levied one of Blackwell’s business bank accounts, he set up another company that was created for banking purposes only and corresponding bank accounts in order to divert funds and circumvent the levy.  Blackwell concealed these funds from the bankruptcy court, the IRS, and other creditors and used them to pay for business and personal expenses, including a cruise.  Blackwell pleaded guilty in November 2015 to one count of concealment of assets from a bankruptcy estate and one count of impeding the due administration of the internal revenue laws.

In addition to the prison term, Chief U.S. District Court Judge William L. Osteen Jr. for the Middle District of North Carolina ordered Blackwell to serve three years of supervised release following his prison term and also ordered him to pay $404,619.29 in restitution.

“Today’s sentencing of Mr. Blackwell for bankruptcy fraud sends a clear signal for those who may be considering similar actions,” said Special Agent in Charge Thomas J. Holloman III of IRS-Criminal Investigation, Charlotte Field Office.  “The bankruptcy system is based on a debtor making a full disclosure of all assets and liabilities. When individuals use this system to evade their debt obligations to the government and their creditors, they are engaging in criminal activity.  IRS-Criminal Investigation is proud to work with our law enforcement partners by lending its expertise in these complex financial investigations.”

Acting Assistant Attorney General Ciraolo and U.S. Attorney Rand commended special agents of IRS-Criminal Investigation, who investigated the case and Assistant U.S. Attorney Frank Chut of the Middle District of North Carolina and Trial Attorney Nathan Brooks of the Tax Division, who prosecuted the case. 

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

The former Chief Executive Officer of a firm that specialized in the treatment and disposal of contaminated soil was convicted in the District of New Jersey of conspiring to pay kickbacks and committing major fraud against the United States in connection with obtaining subcontracts for the treatment and disposal of contaminated soil at a New Jersey Superfund site overseen by the U.S. Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers, the Department of Justice announced today.

John Bennett, of Vancouver, British Columbia, was charged with these crimes in August 2009, extradited from Canada to the United States in November 2014 to face trial, and was convicted today after a three week trial in Newark, New Jersey.  Bennett was also the founder and Chairman of the Board of Bennett Environmental Inc., a firm with offices in Vancouver and Toronto.

“John Bennett corrupted the competitive bidding process by paying kickbacks in order to win a Superfund contract.  He literally stole money from the United States,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division.  “Thanks to the hard work of our law enforcement agents, antitrust prosecutors, and colleagues in Canada who secured his extradition, a jury of his peers has held him accountable for his crimes.”

Beginning in 2001, Bennett conspired with others at Bennett Environmental to pay kickbacks worth over $1 million to the project manager at Federal Creosote, a Superfund site located in Manville, New Jersey, in an effort to guarantee the award of soil treatment contracts to his company.  These kickbacks included money transferred by wire to a co-conspirator’s shell company, lavish trips and entertainment expenses, and personal gifts. 

In exchange for these gifts and cash payments, the project manager at Federal Creosote provided Bennett Environmental employees with “last looks” at their competitors’ confidential bids.  The provision of these last looks allowed Bennett Environmental to submit its own bid at the last minute and outbid its competitors without independently determining its price, thereby guaranteeing an award to the company and undermining the competitive bid process on this federally-funded project.

According to court testimony by two cooperating witnesses who participated in the scheme with Bennett, he authorized and actively participated in the conspiracy by approving the payment of kickbacks in exchange for last looks and by approving the prices at which Bennett Environmental would bid.  This testimony was supported by dozens of emails, memoranda, phone and bank records and other company documents.  As a result of the payment of these kickbacks, Bennett Environmental was fraudulently awarded tens of millions of dollars in soil treatment and disposal contracts at Federal Creosote.  The conspiracy continued until 2004.

Sentencing is scheduled for June 27, 2016 before Judge Susan D. Wigenton.  The fraud conspiracy for which Bennett was found guilty carries a maximum penalty of five years in prison and a $250,000 criminal fine.  The major fraud against the United States conviction carries a maximum of ten years in prison and a $1 million criminal fine for individuals.  The maximum may be increased to twice the gain derived from the crime or twice the loss.

The investigation at Federal Creosote has resulted in the conviction of 10 individuals and three companies of charges including major fraud against the United States, tax fraud, money laundering and obstruction of justice.  Criminal fines and restitution of more than $6 million also have been imposed.

The Federal Creosote investigation was conducted by the Antitrust Division’s New York Office, the EPA’s Office of Inspector General Office and the Internal Revenue Service Criminal Investigation, with the support of the Antitrust Division’s Foreign Commerce Section, the Criminal Division’s Office of International Affairs and with the assistance of  the U.S Customs and Border Protection – Department of Homeland Security, and the Canadian Department of Justice – International Assistance Group and the Royal Canadian Mountain Police.  

The U.S. District Court for the Central District of California has permanently barred Stacy John Sanchez of Orange County, California, from preparing federal tax returns for others, the Justice Department announced today.

The civil injunction order prohibits Sanchez from acting as a federal tax return preparer and from owning, operating, or profiting from tax-return preparation businesses.  Sanchez agreed to the entry of the injunction but did not admit the allegations in the civil complaint against him.

According to the complaint, Sanchez owned and operated 12 Liberty Tax Service franchise locations, primarily in the Los Angeles and Las Vegas areas.  At these locations, Sanchez and his employees prepared federal income tax returns that, among other things, contained bogus Schedules C (Profit or Loss From Business), fake Form W-2 (Wage and Tax Statement) information and falsely claimed dependents, the suit alleged.  These fraudulent returns improperly generated federal income tax refunds and tax credits, such as the Child Tax Credit and Earned Income Credit, for Sanchez’s clients, according to the complaint.

In addition, the complaint alleged that Sanchez and his employees prepared fraudulent income tax returns using stolen names and social security numbers and kept the bogus refunds generated by these identity theft returns.  The estimated loss to the U.S. Treasury from Sanchez and his employees’ misconduct is at least $14 million, according to the complaint.

Return preparer fraud is one of the Internal Revenue Service’s (IRS) Dirty Dozen Tax Scams for 2016.  The IRS has some tips on its website for choosing a tax preparer and has launched a free directory of federal tax preparers.  In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers and tax scheme promoters.  Information about these cases is available on the Justice Department’s website.  An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found 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.

Gregory R. Logan was held in custody today, pending his trial on money laundering charges related to a conspiracy to smuggle narwhal tusks from Canada, through Maine, to customers in the continental United States announced Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division.  Logan, 58, of St. John, New Brunswick, was extradited to the United States on March 11, 2016, to face trial in the U.S. District Court for the District of Maine in Bangor.  Judge John A. Woodcock Jr. ruled today that Logan must remain in custody until his trial which is currently scheduled for May 3, 2016.

Logan, a retired member of the Royal Canadian Mounted Police, was indicted in November 2012 and charged with conspiracy, smuggling and money laundering.  Logan was arrested in Canada, based on a request from the United States, in December 2013.  Logan pleaded guilty to a related wildlife smuggling crime in Canada and the terms of his extradition limit the case against him in the United States to conspiracy to launder money and money laundering.  To prove those counts at trial, the United States must show that Logan committed “specified unlawful activities” or “SUAs,” and that he “laundered” the illegal proceeds of those SUAs.  As alleged in the indictment, Logan’s SUAs were smuggling narwhal tusks into the United States and then selling them to collectors.  Logan then laundered the proceeds by having the money transferred out of the United States in order to further the smuggling conspiracy.

Also charged in the original indictment were Jay G. Conrad of Lakeland, Tennessee, and Andrew J. Zarauskas of Union, New Jersey.   Zarauskas was convicted after a jury trial in Bangor and sentenced to 33 months in prison.  Conrad has pleaded guilty and is awaiting sentencing.

According to the indictment, starting in 2000, Logan smuggled at least 250 narwhal tusks worth more than $2 million by transporting them across the border in false compartments in his vehicle.  Conrad and Zarauskas, and others, bought the narwhal tusks from Logan, knowing the tusks had been illegally imported into the United States and sold or attempted to sell the tusks after their illegal importation.  Logan retired from the Royal Canadian Mounted Police in 2003.

Narwhals are medium-sized toothed whales that are native to the Arctic.  Given the threats to their population, narwhals are protected domestically by the Marine Mammal Protection Act and internationally by the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) – an international treaty to which more than 170 countries, including the United States and Canada, are parties.  It is illegal to import narwhals, or their parts, into the United States without a permit and any such importation must be declared to U.S. Customs and Border Protection and the U.S. Fish and Wildlife Service. 

“As this case shows, wildlife trafficking can involve millions in illegal transactions, compounding the damage it does to the wealth and diversity of life on our planet,” said Assistant Attorney General Cruden.  “By pursuing the criminal financial transactions that flow from trafficking, we are making a less attractive and more costly enterprise.  We are extremely grateful to Canadian law enforcement authorities and all of our international partners who are side by side with us in the fight against such trade.” 

“Modern wildlife crime investigations often track money as much as they track animals,” said Deputy Chief Ed Grace of Law Enforcement for the U.S. Fish and Wildlife Service.  “This case shows the breadth of the illegal wildlife trade, normally associated with elephant ivory and rhino horn.  Even species of the deep polar waters are not safe until we extinguish the market for protected animals and with it, the livelihood of criminal profiteers who benefit from their exploitation.”

“There is a global commitment to erase profits from trade in protected marine mammals,” said Assistant Administrator Eileen Sobeck of the National Oceanic and Atmospheric Administration Fisheries.  “We're grateful for the cooperation that has led to justice being served and will continue to work with our international, federal and state law enforcement partners to ensure marine resources are protected now and into the future.”

The charges against Logan are merely allegations and he is presumed innocent unless and until proven guilty in a court of law.  Money laundering is a felony punishable by a maximum sentence of 20 years in prison and fines of up to $500,000.

The case was investigated by special agents of the National Oceanic and Atmospheric Administration, Office of Law Enforcement; U.S. Fish & Wildlife Service, Office of Law Enforcement; and Wildlife Officers from Environment and Climate Change Canada.  The case is being prosecuted by Senior Trial Attorney James B. Nelson and Trial Attorney Lauren D. Steele of the Justice Department’s Environmental Crimes Section of the Environment and Natural Resources Division.  The Justice Department’s Office of International Affairs provided substantial assistance.

Attorney General Loretta E. Lynch released the following statement regarding the President’s nomination of Chief Judge Merrick Garland to the Supreme Court: 

“I commend President Obama on his nomination of Chief Judge Merrick Garland as an associate justice on the Supreme Court.  In all of his prior work – from his time at the Department of Justice, where he prosecuted terrorists like Ted Kaczynski and Timothy McVeigh, to his 19-year service on the United States Court of Appeals for the District of Columbia Circuit – Judge Garland has earned a reputation for fairness and the respect of colleagues across the ideological spectrum.  His impeccable credentials, steadfast fidelity to the law and firm devotion to the public interest make him an outstanding choice to sit on our nation's highest court, where I am certain he will serve with integrity and wisdom.  I strongly support the President's choice and I urge Congress to approve Judge Garland’s nomination and fill this important position without delay.”

Two Charlotte, North Carolina, area residents have been sentenced to prison for their involvement in a fraudulent trust tax return scheme, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina.

Marlowe Williams, 68, was sentenced today to seven months in prison to be followed by seven months of home confinement as part of his two years of supervised release.  Williams’ co-conspirator, Joan Clark, was sentenced on Feb. 18 to 20 months in prison to be followed by two years of supervised release.  Williams and Clark were jointly ordered to pay restitution to the Internal Revenue Service (IRS) in the amount of $601,780.  In November 2015, both Williams and Clark pleaded guilty to conspiracy to defraud the United States.  Clark also pleaded guilty to an additional conspiracy charge connected to another scheme for which she was indicted in May 2015.

According to court documents and statements in court, in early 2011, Williams and Clark established a trust that purported to be for charitable purposes and then filed tax returns in the name of the trust for tax years 2008, 2009 and 2010.  Each tax return fraudulently requested a tax refund of $300,000.  Williams and Clark established at least two bank accounts in the name of the trust to receive the tax refunds and disburse the funds for personal use.  Williams and Clark received $601,780 in tax refunds from the IRS as a result of filing these false tax returns.

Clark was also sentenced for her participation in a separate conspiracy in which she, along with co-defendant Daniel Heggins of Charlotte, operated Guarantor Manufactures Inc. (GMI), a business that purported to help individuals who were in debt.  Clark and her co-conspirators in that scheme prepared and filed false tax returns on behalf of GMI’s clients claiming fraudulent tax refunds from the IRS in the amount of their clients’ debts.  The intended loss of the conspiracy exceeded $4 million.  Heggins pleaded guilty in November 2015 to conspiracy to defraud the United States and is awaiting sentencing. 

Acting Assistant Attorney General Ciraolo and U.S. Attorney Rose commended special agents of IRS-Criminal Investigation and the FBI, who investigated the case and Assistant U.S. Attorney Mike Savage of the Western District of North Carolina and Trial Attorney Todd Kostyshak of the Tax Division, who prosecuted the case.

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

Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division, released the following statement regarding the Ferguson, Missouri, City Council vote to approve the proposed consent decree with the Department of Justice:

“Tonight, the city of Ferguson, Missouri, took an important step towards guaranteeing all of its citizens the protections of our Constitution.  We are pleased that they have approved the consent decree, a document designed to provide the framework needed to institute constitutional policing in Ferguson, and look forward to filing it in court in the coming days and beginning to work with them towards implementation.”

The German shipping companies Briese Schiffahrts GmbH & Co. KG and Briese Schiffahrts GmbH & Co. KG MS “Extum,” who owned and operated the cargo ship M/V BBC Magellan, pleaded guilty today to failure to maintain an accurate oil record book, in violation of the Act to Prevent Pollution from Ships and tampering with witnesses by persuading them to provide false statements to the U.S. Coast Guard concerning a bypass hose on the vessel that was being used to discharge oil into the sea. 

The two companies were sentenced to pay a total of $1.25 million in fines and a $250,000 community service payment to the National Fish and Wildlife Foundation to fund projects that enhance coastal habitats of the Gulf of Mexico and bolster priority fish and wildlife populations.  In addition, the ship M/V BBC Magellan is banned from doing business in the United States for the next five years.  The pleas and sentences were announced by Assistant Attorney General John C. Cruden for the Justice Department’s Environmental and Natural Resources Division and Acting U.S. Attorney Christopher P. Canova for the Northern District of Florida.

The operation of a marine vessel, such as the M/V BBC Magellan, generates large quantities of waste oil and oil-contaminated waste water.  International and U.S. law requires that these vessels use pollution prevention equipment to preclude the discharge of these materials.  Should any overboard discharges occur, they must be documented in an oil record book, a log that is regularly inspected by the U.S. Coast Guard.

In March 2015, during an inspection at the Port of Pensacola, the U.S. Coast Guard discovered an improperly attached rubber hose.  Officials later determined that, between January and March 2015, the crew of the M/V BBC Magellan, acting on behalf of the vessel’s owner, had installed and illegally used the rubber hose to remove oily wastes from the vessel’s holding tanks and discharged them directly into the ocean.  The crew also failed to make the required entries in the vessel’s oil record book.  When questioned about the hose’s purpose and how oily wastes were discharged from the ship, the chief engineer instructed other crew members to lie to the Coast Guard.

“Shipping companies that transport commerce across open seas must respect the international laws and obligations of their trade, which exist to prevent the spoiling of oceans and marine habitat,” said Assistant Attorney General Cruden.  “This egregious behavior by shipping companies, which included intentional deception and witness tampering, will not be tolerated. We will continue to prosecute companies and their officers for these crimes.”

“Future generations deserve to enjoy clean and safe coastal waters, and we will continue to prosecute environmental crimes to prevent pollution of our natural resources,” said Acting U.S. Attorney Canova.  “Our federal environmental laws rightfully require companies to record their oil waste disposal to keep them accountable and to protect our oceans and marine life.”

“When a company knowingly fails to comply with our nation’s environmental laws, it can have a devastating effect on both public health and wildlife,” said Acting Special Agent in Charge Andy Castro of the Environmental Protection Agency’s (EPA) criminal enforcement program in Florida.  “The defendants in this case falsified entries in their vessel’s log books to hide the true nature of its open water discharges.  Today’s court action should signal to would-be violators that the American people will not allow the flagrant violation of U.S. laws.”

The case was investigated by U.S. Coast Guard Sector Mobile, the U.S. Coast Guard Investigative Service and the EPA.  The case was prosecuted by Assistant U.S. Attorney J. Ryan Love for the Northern District of Florida and Trial Attorney Brandy N. Parker of the Environmental Crimes Section of the Department of Justice Environmental and Natural Resources Division.

Two Deputies Also Sentenced for Obstructing Justice by Covering up a Fellow Officer’s Use of Force

The Justice Department announced today that Elizabeth Croley, 37, a former captain at the Decatur County, Georgia, Sheriff’s Office, was sentenced to 18 months in prison for willfully withholding evidence favorable to a criminal defendant and for writing a false report to cover up another law enforcement officer’s use of force against a civilian.  Robert Wade Umbach, 36, and Christopher Kines, 36, both former deputies at the Decatur County Sheriff’s Office, were also sentenced to 15 months in prison for making false statements to help cover up the use of force.

In June 2015, a federal jury in Albany, Georgia, convicted the defendants after a trial that lasted more than two weeks.  The charges arose from a September 2012 incident in which former Grady County, Georgia, Deputy Sheriff Wiley Griffin IV – who is the son of Decatur County Sheriff Wiley Griffin III – used force against Aaron Parrish during an arrest at the Bainbridge BikeFest.  The jury found that Croley, Kines and Umbach obstructed justice when they later helped cover up Griffin’s actions.  Specifically, the jury convicted Croley of obstructing justice by writing a false report and convicted Kines and Umbach of engaging in misleading conduct by lying to an FBI agent about the incident.  Croley was also convicted of violating Aaron Parrish’s constitutionally protected right to a fair trial by intentionally withholding material exculpatory evidence from the district attorney’s office, and in turn, from Aaron Parrish’s criminal defense attorney during a criminal prosecution of Parrish.

During the trial, the jury heard evidence that Griffin struck Parrish in the eye with a metal flashlight while Parrish was being restrained on the ground by other deputies, including defendants Kines and Umbach.  The government also presented evidence that, after Parrish complained to the Decatur County Sheriff’s Office about the abuse he had suffered at BikeFest, the sheriff’s office opened a criminal investigation led by Croley that eventually resulted in felony criminal charges against Parrish.  During that investigation, Croley took a witness statement from a civilian eyewitness who provided information that would have been materially helpful to Parrish’s defense.  However, rather than providing that statement to the district attorney so that it could then be provided to Parrish’s defense attorney for use at trial, Croley intentionally removed the exculpatory statement from the case file.  This conduct formed the basis of the civil rights charge on which Croley was convicted.

“When law enforcement officers break the laws they swear to uphold and harm the people they promise to protect, it undermines public trust in our government,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division.  “If officers try to lie or withhold evidence, we will vigorously protect the integrity of our justice system by holding them accountable for their actions and safeguarding the civil rights of all Americans.”

“The public rightfully depends on law enforcement officers to uphold the law faithfully,” said Acting U.S. Attorney G.F. “Pete” Peterman of the Middle District of Georgia.  “When these defendants withheld important facts and provided false information in this investigation, they subverted the entire process and damaged the public's faith in the integrity of their former fellow officers.  They fully deserve the sentences meted out to them today.”

This case was investigated by the FBI’s Atlanta Field Office, and was prosecuted by Trial Attorneys Christine M. Siscaretti and Risa Berkower of the Civil Rights Division’s Criminal Section, with support from the U.S. Attorney’s Office of the Middle District of Georgia.

A New York tax return preparer pleaded guilty today in the U.S. District Court for the Eastern District of New York in Central Islip, New York, to one count of aiding and assisting in the preparation of a false tax return, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.

According to court documents, Thelma Rodriguez-Garden, 54, owned and operated a tax preparation business called Garden Insurance Agency Corporation, which was located in Bay Shore, New York.  Rodriguez-Garden prepared false individual income tax returns for clients of Garden Insurance Agency for tax years 2008 through 2011.  On the tax returns, Rodriguez-Garden included grossly inflated or wholly fictitious itemized deductions for unreimbursed employee expenses.  The information to which Rodriguez-Garden pleaded guilty alleges that she filed 47 false tax returns that caused a loss to the government of more than $100,000. 

“Today’s plea is a reminder that tax return preparers who knowingly include false items on their clients’ returns face criminal investigation, prosecution and incarceration,” said Acting Assistant Attorney General Ciraolo.  “Working with its partners within the Internal Revenue Service (IRS), the Tax Division remains committed to pursuing these offenders and holding them accountable for their fraudulent conduct.”

Rodriguez-Garden faces a statutory maximum sentence of three years in prison and a $250,000 fine.  As part of her plea agreement, Rodriguez-Garden agreed to pay restitution to the IRS in the amount of $107,459.  U.S. District Judge Joseph F. Bianco set sentencing for July 11.          

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

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

A Los Angeles man was sentenced today to 150 years in prison for sexually abusing three minor girls during trips to Russia over a two-year period, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division.

In November 2015, a jury convicted Yusef Yunosovich Abramov, 58, of five felony counts of engaging in illicit sexual conduct in foreign places.  U.S. District Judge Otis D. Wright II of the Central District of California also imposed a lifetime term of supervised release.   

According to the evidence introduced at trial, in June 2009, Abramov, a dual Russian and U.S. citizen, flew from Los Angeles to Russia, and shortly after his arrival, he raped a 12-year-old girl and threatened to sever her head and play soccer with it if she told anyone about the abuse.  The trial evidence showed that in November 2009, Abramov again traveled to Russia and engaged in further sexual abuse of minor girls.  

Trial evidence additionally demonstrated that in March 2010, believing that local schoolgirls had contacted the police, Abramov and two accomplices cornered three minor girls.  Abramov threatened all three girls while wielding a knife and each man then raped one of the girls.  The evidence showed that after threatening the girls’ lives, Abramov continued to rape at least two of the girls during that trip and subsequent trips to Russia.

U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, in cooperation with The Investigative Committee of the Russian Federation and the Moscow City Police, investigated this case.  Trial Attorneys Maureen C. Cain and Ravi Sinha of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) prosecuted the case.  The Criminal Division’s Office of International Affairs also provided assistance.

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

           ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that defendant LADDIE LEON GUERRERO AGUIGUI, age 27, was sentenced on March 9, 2016, in the District Court of Guam to three (3) months imprisonment and, upon release, three (3) years of supervised release to include three (3) months home detention.

           On or about June 2, 2014, while in the outside kitchen of his residence, Defendant AGUIGUI possessed commercial electric blasting caps.  Defendant AGUIGUI had removed the leg wires from three (3) commercial electric blasting caps by making close cuts to the base of the caps.  Defendant AGUIGUI had cut through the cap of the fourth (4) commercial electric blasting cap, which detonated and caused Defendant to be injured.  Defendant was then transported to the Emergency Room at Guam Memorial Hospital where he was treated for his injuries.  Federal and local law enforcement conducted a scene check of the outside kitchen at Defendant AGUIGUI’s residence and noted, among other things, nine (9) Commercial Electric Blasting Caps.  At that time, Defendant AGUIGUI did not possess a federal explosives license within the Federal Licensing System.

           U.S. Attorney Alicia A.G. Limtiaco stated, “This case unfortunately demonstrated the serious consequences of misusing explosive materials.  Federal licensing requirements help ensure the safe and appropriate use of destructive devices.  Our office will continue to support the enforcement of these laws and regulations to protect public safety.”

           This case was investigated by Special Agents of the Federal Bureau of Investigation and the Bureau of Alcohol, Tobacco, Firearms and Explosives and prosecuted by Assistant U.S. Attorney Stephen F. Leon Guerrero.

The Department of Justice today announced a package of resources to assist state and local efforts to reform harmful and unlawful practices in certain jurisdictions related to the assessment and enforcement of fines and fees.  The resources are meant to support the ongoing work of state judges, court administrators, policymakers and advocates in ensuring equal justice for all people, regardless of financial circumstance.

“The consequences of the criminalization of poverty are not only harmful – they are far-reaching,” said Attorney General Loretta E. Lynch.  “They not only affect an individual’s ability to support their family, but also contribute to an erosion of our faith in government.  One of my top priorities as Attorney General is to help repair community trust where it has frayed, and a key part of that effort includes ensuring that our legal system serves every American faithfully and fairly, regardless of their economic status.”

The package, which was sent to state chief justices and state court administrators throughout the country, includes the following elements:

• Dear Colleague Letter from the Civil Rights Division and the Office for Access to Justice to provide greater clarity to state and local courts regarding their legal obligations with respect to the enforcement of court fines and fees.  The letter addresses some of the most common practices that run afoul of the U.S. Constitution and/or other federal laws, such as incarcerating individuals for nonpayment without determining their ability to pay.  The letter also discusses the importance of due process protections such as notice and, in appropriate cases, the right to counsel; the need to avoid unconstitutional bail practices; and due process concerns raised by certain private probation arrangements.
• $2.5 million in competitive grants through the Bureau of Justice Assistance (BJA) to state, local or tribal jurisdictions that, together with community partners, want to test strategies to restructure the assessment and enforcement of fines and fees.  The grant program, titled The Price of Justice: Rethinking the Consequences of Justice Fines and Fees, will provide four grants of $500,000 to agencies and their collaborative partners to develop strategies that promote appropriate justice system responses, including reducing unnecessary confinement, for individuals who are unable to pay fines and fees.  BJA will award an additional grant of $500,000 to a technical assistance provider.  For agencies interested in applying for this funding opportunity, BJA will host an informational webinar on March 28, 2016, at 11:30 a.m. EDT to describe the background, key concepts and requirements of the solicitation.  To register, please follow this link.
• Support for the National Task Force on Fines, Fees and Bail Practices, which is led by the Conference of Chief Justices and the Conference of State Court Administrators.  The task force is being funded by BJA and is also supported by the State Justice Institute.  It is comprised of leaders from the judiciary, state and local government, the advocacy community and the academy.  The task force will draft model statutes, court rules and procedures, and will develop an online clearinghouse of best practices.  Department officials will also serve as ex officio members of the task force.
• Resource Guide that assembles issue studies and other publications related to the assessment and enforcement of court fines and fees.  The resource guide, compiled by the Office of Justice Programs Diagnostic Center, helps leaders make informed policy decisions and pursue sound strategies at the state, local and tribal levels.

Today’s announcement follows a seminal two-day convening held by the Justice Department and the White House in Washington, D.C., on Dec. 2 and 3, 2015.  Judges, court administrators, researchers, advocates, prosecutors, defense attorneys and impacted individuals came together to discuss challenges surrounding fines and fees.  The convening made plain the existence of unlawful and harmful practices in some jurisdictions and highlighted a number of promising reform efforts already underway.  At the meeting, participants and department officials also discussed ways in which the Justice Department could assist courts in their efforts to make needed changes.  Participants specifically asked the department to provide legal guidance to state and local actors; to highlight and help develop model practices; and to provide resources for local reform efforts.

The Justice Department is committed to reforming justice-system practices that perpetuate poverty and result in unnecessary deprivations of liberty.  The department discussed many of these practices in its March 2015 report on the investigation of the Ferguson, Missouri, police department and municipal court.  As discussed at the December 2015 convening, however, these practices can be found throughout the nation.  And their effects are particularly severe for the most vulnerable members of our communities, often with a disproportionate impact on racial minorities.  The resources released today are aimed at reforming these practices and mitigating their harmful effects.

Fines and Fees Cover Letter

FALLS CHURCH, VA – The Executive Office for Immigration Review (EOIR) today announced the investiture of eight immigration judges. Acting Chief Immigration Judge Print Maggard presided over the investiture during a ceremony held March 11, 2016, at the U.S. Court of Appeals for the Armed Forces in Washington, D.C.

After a thorough application process, Attorney General Loretta E. Lynch appointed Raisa Cohen, Evalyn P. Douchy, D’Anna H. Freeman, Rebecca B. Jamil, Elise M. Manuel, R. Reid McKee, Vernon B. Miles, and Morris I. Onyewuchi to their new positions.

“We are pleased to welcome these appointees to the immigration judge corps,” said Maggard. “We look forward to continuing to hire more qualified people to fill these important positions in public service.”

Biographical information follows.

Raisa Cohen, Immigration Judge, New York City Immigration Court

Attorney General Loretta E. Lynch appointed Judge Raisa Cohen to begin hearing cases in March 2016. Judge Cohen earned a Bachelor of Business Administration in 2002 from Baruch College, City University of New York Zicklin School of Business, and a Juris Doctor in 2007 from St. John’s University School of Law. From September 2015 to February 2016, and previously from April 2009 to September 2014, Judge Cohen served as assistant chief counsel for U.S. Immigration and Customs Enforcement, U.S. Department of Homeland Security, in New York. From October 2014 to September 2015, Judge Cohen was an attorney at Cohen & Cohen Law Group PC, in New York. From 2007 through 2009, Judge Cohen was an immigration attorney at the Law Firm of Ted Sofer, in New York. Judge Cohen is a member of the New York State Bar.

Evalyn P. Douchy, Immigration Judge, New York City Immigration Court

Attorney General Loretta E. Lynch appointed Judge Evalyn P. Douchy to begin hearing cases in March 2016. Judge Douchy earned a Bachelor of Arts degree in 1992 from Binghamton University and a Juris Doctor in 1995 from New York Law School. From 1997 to February 2016, she served as assistant chief counsel for U.S. Immigration and Customs Enforcement, U.S. Department of Homeland Security, in New York. From 1996 through 1997, she was an associate at the Law Offices of Anil Jethmalani & Timothy Herrick, in New York. From 1995 through 1996, she was a lawyer at the Law Office of Mark S. Drucker in Jackson Heights, N.Y. Judge Douchy is a member of the New York State Bar.

D’Anna H. Freeman, Immigration Judge, Pearsall Immigration Court

Attorney General Loretta E. Lynch appointed Judge D’Anna H. Freeman to begin hearing cases in March 2016. Judge Freeman earned a Bachelor of Science degree in 1988 from Baylor University, a Master of Public Health in 1995 from the University of Texas Health Science Center, and Juris Doctor in 2004 from the University of Houston Law Center. From 2007 to February 2016, Judge Freeman served in various capacities for U.S. Immigration and Customs Enforcement, U.S. Department of Homeland Security, including: as assistant chief counsel from 2013 to 2016, in Dallas; as senior attorney from 2010 through 2013, in Livingston, Texas; and as assistant chief counsel from 2007 through 2010, in Eloy, Ariz. From 2006 through 2007, she was a partner at Forrest & Harrison LLC, in Houston. From 2005 through 2006, she served as an attorney at Dunbar, Harden & Benson LLP, in Houston. From 2004 through 2005, she operated the Law Office of D’Anna Harrison, in Houston. Judge Freeman is a member of the State Bar of Texas.

Rebecca B. Jamil, Immigration Judge, San Francisco Immigration Court

Attorney General Loretta E. Lynch appointed Judge Rebecca B. Jamil to begin hearing cases in March 2016. Judge Jamil earned a Bachelor of Arts degree in 1998 from Stanford University and a Juris Doctor in 2006 from the University of Washington Law School. From 2011 to February 2016, Judge Jamil served as assistant chief counsel for U.S. Immigration and Customs Enforcement, U.S. Department of Homeland Security, in San Francisco. From 2006 to 2011, she served as staff attorney in the Research Unit, Ninth Circuit Court of Appeals, in San Francisco. Judge Jamil is a member of the Washington State Bar.

Elise M. Manuel, Immigration Judge, Newark Immigration Court

Attorney General Loretta E. Lynch appointed Judge Elise M. Manuel to begin hearing cases in March 2016. Judge Manuel earned a Bachelor of Arts degree in 1983 from Northwestern University and a Juris Doctor in 1987 from Georgetown University Law Center. From 1991 to February 2016, Judge Manuel served in various capacities on the Board of Immigration Appeals, Executive Office for Immigration Review, U.S. Department of Justice, including: as a temporary board member from 2012 to 2016; as an attorney-advisor from 2008 through 2012, from 1998 through 2005, and 1991 through 1995; as a team leader from 2005 through 2008; and as a senior panel attorney from 1995 through 1998. From 1987 through 1991, she was a staff attorney for the Legal Assistance Foundation of Chicago. Judge Manuel is a member of the Illinois State Bar.

R. Reid McKee, Immigration Judge, Pearsall Immigration Court

Attorney General Loretta E. Lynch appointed Judge R. Reid McKee to begin hearing cases in March 2016. Judge McKee earned a Bachelor of Arts degree in 1997 from the University of Alabama, a Master of Arts in Social Sciences in 1998 from the University of Chicago, and a Juris Doctor in 2003 from the University of Mississippi School of Law. From 2010 to February 2016, Judge McKee served as assistant chief counsel for U.S. Immigration and Customs Enforcement, U.S. Department of Homeland Security. From 2009 through 2010, he was the manager of R. Reid McKee PLLC, in Madison, Miss. From 2003 through 2009, he was an associate at Watkins and Eager PLLC, in Jackson, Miss. Judge McKee is a member of the Mississippi and Tennessee Bars.

Vernon B. Miles, Immigration Judge, San Antonio Immigration Court

Attorney General Loretta E. Lynch appointed Judge Vernon B. Miles to begin hearing cases in March 2016. Judge Miles earned a Bachelor of Arts degree in 1980 from the University of Mississippi, a Juris Doctor in 1983 from Howard University School of Law, and a Master of Laws degree in 1992 from the U.S. Army Judge Advocate General’s School. From 1995 to February 2016, Judge Miles served in various capacities for the U.S. Department of Justice, including: as a trial attorney in the Narcotic and Dangerous Drug Section, Criminal Division, from 2014 to February 2016, in Washington, D.C.; as an assistant U.S. attorney in the Office of the U.S. Attorney from 2003 through 2014, in San Juan, Puerto Rico; as an assistant U.S. attorney in the Office of the U.S. Attorney from 1998 through 2003, in Oxford, Miss.; and as a civil appellate trial attorney in the Office of Immigration Litigation from 1995 through 1998, in Washington, D.C. From 1985 through 1994, he served in various capacities in the U.S. Marine Corps, including: as assistant officer-in-charge, defense attorney and prosecuting attorney in the Naval Legal Service Office Detachment from 1992 through 1994, in Roosevelt Roads, Puerto Rico; as deputy staff judge advocate, chief defense counsel and chief legal assistance officer in the 3d Force Service Support Group from 1989 through 1991, in Okinawa, Japan; and as prosecuting attorney, defense attorney and chief legal assistance attorney in the 2d Force Service Support Group from 1985 through 1989, in Cherry Point, N.C. From 1983 to 1985, he served in various capacities for the North Mississippi Rural Legal Services, including as managing attorney and staff attorney. Judge Miles is a member of the Mississippi Bar.

Morris I. Onyewuchi, Immigration Judge, Port Isabel Immigration Court

Attorney General Loretta E. Lynch appointed Judge Morris I. Onyewuchi to begin hearing cases in March 2016. Judge Onyewuchi earned a Bachelor of Arts degree in 1990 from Georgia State University, a Juris Doctor in 2002 from the Thurgood Marshall School of Law, Texas Southern University, and a Master of Studies in International Human Rights Law in 2010 from the University of Oxford in Oxford, U.K. From 2002 to February 2016, Judge Onyewuchi served as assistant chief counsel and trial attorney for U.S. Immigration and Customs Enforcement, U.S. Department of Homeland Security. Judge Onyewuchi is a member of the State Bar of Texas.

- EOIR -

The Executive Office for Immigration Review (EOIR) is an agency within the Department of Justice. Under delegated authority from the Attorney General, immigration judges and the Board of Immigration Appeals interpret and adjudicate immigration cases according to United States immigration laws. EOIR's immigration judges conduct administrative court proceedings in immigration courts located throughout the nation. They determine whether foreign-born individuals—whom the Department of Homeland Security charges with violating immigration law—should be ordered removed from the United States or should be granted relief from removal and be permitted to remain in this country. The Board of Immigration Appeals primarily reviews appeals of decisions by immigration judges. EOIR's Office of the Chief Administrative Hearing Officer adjudicates immigration-related employment cases. EOIR is committed to ensuring fairness in all of the cases it adjudicates.

The Department of Justice’s Office of Community Oriented Policing Services (COPS Office) today announced the release of a new publication addressing officer safety.

Understanding Firearms Assaults against Law Enforcement Officers, produced by the Justice Department’s Officer Safety and Wellness Group, addresses two primary safety concerns in law enforcement, injuries and deaths among officers and premeditated and unprovoked ambushes of officers.  It examines the differential risks thought to influence the use of deadly force against police officers in the United States through a literature review and survey analysis.

This publication is a joint COPS Office, Bureau of Justice Assistance and Major Cities Chiefs Association publication, and was informed with input from the Justice Department’s Officer Safety and Wellness Group.

“Every day, law enforcement officers courageously serve this nation by protecting our values and keeping our communities safe,” said Attorney General Loretta E. Lynch.  “This report will serve as a critical resource as we honor their service and sacrifice and take the necessary steps to improve officer safety.”

The Department of Justice established the Officer Safety and Wellness Group in 2011 to encourage the adoption of cultures of safety and wellness among the nation’s law enforcement agencies.  The working group includes more than 40 participants representing federal, state and local law enforcement; national associations; unions; and researchers who discuss and develop the research.

The COPS Office is a federal agency responsible for advancing community policing nationwide.  Since 1995, the COPS Office has invested more than $14 billion to advance community policing, including grants awarded to more than 13,000 state, local and tribal law enforcement agencies to fund the hiring and redeployment of more than 127,000 officers and provide a variety of knowledge resource products including publications, training and technical assistance.  For additional information about the COPS Office, please visit www.cops.usdoj.gov.

Attorney General Loretta E. Lynch released the following statement regarding yesterday’s shooting at Prince George’s County Police Department:

“The attack on the Prince George’s County Police Department last night was a heinous act of violence and a cowardly crime.  The Department of Justice stands in solidarity with our brothers and sisters in law enforcement around the country to condemn this horrific attack, to support the Prince George’s County community, and to grieve the loss of Officer Jacai Colson.

“Officer Colson was a consummate public servant and a proud defender of the law – a young guardian raised in the tradition of service to his community.  His tragic loss is a reminder of the threats that public safety officers face every day, and the dangers that they bravely confront, in every jurisdiction across the country.  The Department of Justice will offer any possible aid to the Prince George’s County community as they investigate this terrible crime, and we will continue to do all that we can to protect and support our officers and hold wrongdoers accountable.”

Two Subway franchise managers and a gas station manager, all residents of Virginia, pleaded guilty today to aiding and assisting in the filing of false tax returns, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Dana J. Boente of the Eastern District of Virginia.

According to court documents, Mohammed Ali, 54, of Herndon, Virginia, owned and operated multiple Subway restaurant franchises in Washington, D.C. and Arlington, Virginia, with Obdayel Hoque, 49, of Alexandria, Virginia.  Ali ran the day-to-day operations of the Subway franchises located on 10th Street North, Arlington, and Pennsylvania Avenue, SE, Washington, D.C.  These franchises were operated under the name Subway Sandwich & Salad, Inc.  Mohammed Rahman, 43, of Alexandria and Arlington, was a working partner with Ali and Hoque and the day-to-day manager of a Subway franchise located on 7th Street, NW, Washington, D.C.  This Subway franchise was operated under the name 7th Street Sub Shop LLC.  Mohammed Siddique, 53, of Alexandria, was a working partner with Hoque and the day-to-day manager of a gas station in Alexandria called Skyhill Shell.

“Today’s guilty pleas send a clear message that business owners and operators who seek to evade their tax obligations and avoid paying their fair share will be held accountable,” said Acting Assistant Attorney General Ciraolo.  “Individuals engaged in this criminal conduct will face prosecution and substantial penalties, including incarceration.”

“Individuals who provide false information for the preparation of fraudulent corporate tax returns will be caught and held responsible,” said U.S. Attorney Boente. “The guilty pleas today represent exactly that. My thanks to our partners at IRS-Criminal Investigations for their efforts on this case.”

As part of their guilty pleas, Ali, Rahman and Siddique admitted that at Hoque’s direction they did not deposit all of the Subway franchises’ or the gas station’s gross receipts into the corporate or partnership bank accounts.  Instead, Hoque, Ali, Rahman and Siddique retained a portion of the gross receipts for their personal benefit.  Ali, Rahman and Siddique maintained detailed records of the Subway franchises’ and gas station’s total sales, the amounts deposited into the bank accounts and the amounts distributed to each of them for their personal benefit.  Ali and Rahman admitted that, at Hoque’s direction, they destroyed these records.

Ali, Rhaman and Siddique further admitted that they were directed by Hoque to provide false information about the Subway franchises’ and gas station’s gross receipts to the accounting firm that prepared corporate and partnership tax returns for the businesses.    For the period of 2008 through 2013, point of sales records for the Subway Sandwich and Salad franchises reflected total sales of $6,439,832.  However, Ali provided false monthly sales figures to the accounting firm to prepare Subway Sandwich and Salad’s corporate tax returns.  As a result, Ali caused false corporate tax returns to be filed with the Internal Revenue Service (IRS) for Subway Sandwich and Salad, which reported sales of only $3,749,142.  For the period of 2008 through 2013, point of sales records for the 7th Street Sub Shop franchise reflected total sales of $4,949,266.  However, Rahman provided false monthly sales figures to the accounting firm to prepare 7th Street Sub Shop’s partnership tax returns.  As a result, Rahman caused false partnership tax returns to be filed for 7th Street Sub Shop, which reported sales of only $3,193,212.  For the period 2008 through 2012, Siddique provided false monthly sales figures to the accounting firm to prepare Skyhill Shell’s corporate tax returns.   As a result, Siddique caused false corporate tax returns to be filed for Skyhill Shell for 2008 and 2009, which failed to report at least $572,000 of net income from the business.  Skyhill Shell failed to file corporate tax returns for 2010, 2011, and 2012.  

Ali, Rahman and Siddique admitted that they failed to report to the IRS on their individual income tax returns their receipt of unreported gross receipts.  Ali admitted that his conduct caused a tax loss of more than $550,000 but less than $1.5 million.  Rahman admitted that his conduct caused a tax loss of more than $250,000 but less than $550,000.  Siddique admitted that his conduct caused a tax loss of more than $100,000 but less than $250,000. 

Hoque pleaded guilty on Jan. 27 to conspiracy to defraud the United States and admitted that his conduct caused a tax loss to the IRS of between $1.5 million and $3.5 million.  Hoque is scheduled to be sentenced on May 13.

Rahman, Ali and Siddique each face a statutory maximum sentence of three years in prison and a $250,000 fine.  As part of their plea agreements, Rahman, Ali and Siddique agreed to pay restitution to the IRS for their personal tax liabilities.  U.S. District Judge Liam O’Grady set sentencing for July 15.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Boente thanked special agents of IRS-Criminal Investigation, who investigated the case and Assistant Chief Caryn Finley and Trial Attorney Kimberly Shartar of the Tax Division, and Assistant U.S. Attorney Uzo Asonye of the Eastern District of Virginia, 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 filed a civil complaint in the U.S. District Court for the Central District of California, to halt a telemarketing campaign that allegedly resulted in over a million illegal phone calls to consumers who had placed their phone numbers on the Do Not Call Registry, the Department of Justice announced today.

The complaint charges that KFJ Marketing, Sunlight Solar Leads LLC, Go Green Education and the owner of those companies, Francisco Salvat, violated the Telemarketing Sales Rule by operating a telemarketing campaign that delivered pre-recorded “robocall” messages warning consumers about a purported looming “14 percent increase” in their energy bill. The calls invited consumers to “press one” to lower their electric bill. Consumers who did were connected with one of the defendants’ employees, who asked about the consumer’s interest in solar panels.

If the consumer expressed interest in solar panels, the telemarketer scheduled an appointment with a private solar installation company and sold the consumer’s information to that company as a customer lead. When consumers asked the defendants not to call them again, the complaint alleges their requests were often ignored.

The complaint alleges that the defendants violated federal law by placing 1.3 million calls to phone numbers on the Do Not Call Registry and by failing to transmit accurate caller ID information.   

“Federal law protects the privacy interests of American consumers by prohibiting calls made to numbers on the national Do Not Call Registry and otherwise limiting calls made by telemarketers,” 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 with the Federal Trade Commission (FTC) to ensure entities like those named in today’s lawsuit are penalized when they make unwanted and unlawful phone calls.”

“Mr. Salvat’s companies ignored the Do Not Call Registry and made illegal robocalls,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “Breaking the law isn’t a great way for a company to introduce itself to potential customers.”

The matter was investigated by the FTC and referred to the Department of Justice’s Consumer Protection Branch after the FTC determined it had reason to believe the defendants’ conduct was violating the law and that a proceeding would be in the public interest.  The complaint seeks civil penalties as well as injunctive relief.

The matter is being handled by Trial Attorney Jacqueline Blaesi-Freed of the Civil Division’s Consumer Protection Branch, with assistance from Sarah Schroeder and Sylvia Kundig from the FTC.

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

A complaint is merely a set of allegations that, if the case were to proceed to trial, the government would need to prove by preponderance of the evidence.

Two former derivatives traders at Rabobank Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank) – including the bank’s former global head of liquidity and  finance in London – were sentenced to prison today for manipulating the London Interbank Offered Rates (LIBOR) for the U.S. Dollar (USD) and Japanese Yen (JPY), benchmark interest rates to which trillions of dollars in interest rate contracts were tied. 

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

Anthony Allen, 44, of Hertsfordshire, England, the bank’s former global head of liquidity and finance in London, was sentenced to 24 months in prison by U.S. District Judge Jed S. Rakoff of the Southern District of New York.  Anthony Conti, 46, of Essex, England, a former senior trader on the bank’s money markets desk in London, was sentenced to 12 months and one day in prison.  A federal jury convicted the defendants on Nov. 5, 2015, after a four-week trial.  Allen was found guilty of one count of conspiracy to commit wire fraud and bank fraud and 18 counts of wire fraud.  Conti was found guilty of one count of conspiracy to commit wire fraud and bank fraud and eight counts of wire fraud.

“Allen and Conti were entrusted to set LIBOR, a critically important interest rate benchmark,” said Assistant Attorney General Caldwell.  “Their scheme to manipulate this rate to increase their bank's profits undermined the integrity of our financial markets and the public's confidence in the fairness of the financial system.  This case demonstrates our commitment to work with domestic and foreign law enforcement authorities and regulators to hold financial criminals responsible for their crimes and ensure the integrity of the marketplace for investors worldwide.”

“Large banks, like other companies, only conspire and commit fraud through their executives,” said Assistant Attorney General Baer.  “The Department of Justice will continue to hold those executives accountable for their role in corporate wrongdoing.  Working with our partners at the Criminal Division and FBI, the Antitrust Division will continue to target fraud and collusion to ensure that markets function as they should – freely, fairly and competitively.”

“The prison sentences imposed today underscore the serious nature and extent of manipulation that Conti and Allen undertook as part of their scheme to defraud financial institutions and investors,” said Assistant Director in Charge Abbate.  “The investigative and prosecutorial team that investigated and tried this case in court are to be commended for their dedicated and tireless work in furtherance of uncovering the LIBOR-related fraud and holding accountable those who committed these crimes.”

LIBOR is the primary benchmark for short term interest rates for several currencies around the world and is used as a reference rate for many financial products, including interest rate contracts, mortgages, credit cards and student loans.  At the time relevant to the charges, LIBOR was calculated for 10 currencies at 15 maturities, ranging from overnight to one year, and was published by the British Bankers’ Association (BBA), a London-based trade association, based on submissions from a panel of 16 banks, including Rabobank.

The evidence at trial showed that the defendants actively participated in a scheme to rig the USD and JPY LIBORs to benefit their own trading positions, as well as those of their colleagues.  Specifically, between 2005 and 2009, the evidence showed that Allen oversaw a system in which Rabobank employees who traded LIBOR-linked derivatives made improper requests to the employees who submitted Rabobank’s LIBOR contributions to the BBA.  Conti was the primary USD LIBOR submitter and Paul Robson, who previously pleaded guilty to the conspiracy charge, was the primary JPY LIBOR submitter.

In addition to Allen, Conti and Robson, two other former Rabobank employees have been convicted in the Rabobank LIBOR investigation.  Lee Stewart and Takayuki Yagami each pleaded guilty to one count of conspiracy in connection with their roles in the scheme.  Two other former Rabobank employees, Tetsuya Motomura, 43, of Tokyo, and Paul Thompson, 50, of Dalkeith, Australia, have also been charged and are awaiting trial.  All defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

Rabobank entered into a deferred prosecution agreement with the department on Oct. 29, 2013, and agreed to pay a $325 million penalty to resolve violations arising from Rabobank’s LIBOR submissions.

The FBI investigated the case.  Senior Litigation Counsel Carol Sipperly and Assistant Chief Brian Young of the Criminal Division’s Fraud Section and Trial Attorney Michael T. Koenig of the Antitrust Division prosecuted the case.  The Criminal Division’s Office of International Affairs and Deputy Chief Daniel Braun and Assistant Chief Brent Wible of the Criminal Division’s Fraud Section are thanked for their substantial assistance in this matter.

The Justice Department expresses its appreciation for the assistance provided by various enforcement agencies in the United States and abroad.  The Commodity Futures Trading Commission’s Division of Enforcement referred this matter to the department and, along with the U.K. Financial Conduct Authority, played a major role in the LIBOR investigation.  The Securities and Exchange Commission also played a significant role in the LIBOR series of investigations, and the department expresses its appreciation to the United Kingdom’s Serious Fraud Office for its assistance and ongoing cooperation.   The department has worked closely with the Dutch Public Prosecution Service and the Dutch Central Bank in the investigation of Rabobank.  Various agencies and enforcement authorities from other nations are also participating in different aspects of the broader investigation relating to LIBOR and other benchmark rates, and the department is grateful for their cooperation and assistance.

Today’s conviction is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations.  Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants, including more than 2,700 mortgage fraud defendants.  For more information on the task force, visit www.stopfraud.gov.

Two tax return preparers pleaded guilty to one count of conspiracy to defraud the United States and one count of aiding and assisting in the preparation of a false tax return, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Dana Boente of the Eastern District of Virginia.

According to court documents, Jeremy Blanchard, 35, and Erik Pittman, 35, both of Memphis, Tennessee, and others prepared numerous false tax returns for the 2011 tax year for customers of their tax return preparation business.  Blanchard, who pleaded guilty yesterday, and Pittman, who pleaded guilty today, were preparers in Mo Money Taxes, which operated three locations in the Richmond, Virginia area.  Blanchard and Pittman admitted that they created and inflated fictitious and fraudulent tax credits, including the Earned Income Credit and the American Opportunity credit, to claim tax refunds that customers were not entitled to receive.  As part of their guilty pleas, Blanchard and Pittman admitted that their conduct caused a loss to the Internal Revenue (IRS) of more than $250,000, but less than $550,000.

“Fraudulent tax return preparers, like Mr. Blanchard and Mr. Pittman, are facilitating the theft of funds from the American people by preparing false tax returns for customers,” said Acting Assistant Attorney General Ciraolo.  “The department will continue to pursue and prosecute these offenders to the fullest extent of the law.”

Blanchard and Pittman each face a statutory maximum sentence of five years in prison and a $250,000 fine on the conspiracy charge and three years in prison and a $250,000 fine on the charge of aiding and assisting in the preparation of false tax returns.  U.S. District Judge John A. Gibney for the Eastern District of Virginia set sentencing for June 8, 2016. 

Another participant in this scheme, Corey Taylor, 25, of Richmond, pleaded guilty in October 2015 to one count of conspiracy to defraud the United States and one count of aiding and assisting in the preparation of a false tax return.  He is awaiting sentencing.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Boente thanked special agents of IRS-Criminal Investigation, the FBI, and the U.S. Postal Inspection Service, who investigated the case and Trial Attorneys Kevin F. Sweeney and Todd Kostyshak of the Tax Division and Assistant U.S. Attorney Stephen Miller of the Eastern District of Virginia, who are prosecuting the case.

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

A Montgomery, Alabama resident self-surrendered earlier today after she was indicted March 3 on one count of multi-object conspiracy to commit identity theft and wire fraud, two counts of possessing 15 or more unauthorized access devices, two counts of aggravated identity theft and one count of wrongful disclosure of personally identifiable health information, 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.

According to court documents, Alana Wells worked at a healthcare company from June 2011 through August 2013, where she had access to patient information protected from disclosure under the Health Insurance Portability and Accountability Act of 1996.  She is alleged to have stolen the names, dates of birth and social security numbers of patients from her employer’s database and provided these identities to Fredrick Hill. Hill then provided the stolen personal identification information to Christopher Davis, who, along with others, used it to file fraudulent federal tax returns with the Internal Revenue Service (IRS) requesting tax refunds. 

If convicted, Wells faces a statutory maximum sentence of five years in prison on the conspiracy charge, 10 years in prison for each count of access device fraud, one year in prison for the charge of wrongful disclosure of personally identifiable health information, and a mandatory minimum sentence of two years in prison for each count of aggravated identity theft, which will be in addition to any other term of imprisonment she receives.  She also faces substantial monetary penalties and restitution.

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

Acting Assistant Attorney General Ciraolo and U.S. Attorney Beck commended special agents of IRS-Criminal Investigation, who investigated the case and Trial Attorneys Jason H. Poole, Kathryn A. Kimball and Michael C. Boteler of the Tax Division and Assistant U.S. Attorney Jonathan S. Ross of the Middle District of Alabama, who are prosecuting this case.

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

          ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands (NMI), announced that on March 7, 2016, Defendant SEAN ANTHONY LIZAMA was sentenced by the Honorable Frances Tydingco-Gatewood, Chief Judge, District Court of Guam.  Defendant was sentenced to serve 96 months incarceration followed by three years of supervised release, with credit for time served.

          Defendant LIZAMA pled guilty on January 15, 2015, to Attempted Possession of Methamphetamine with Intent to Distribute, in violation of Title 21 U.S.C. Section 846(a)(1) and (b)(1)(C).   Defendant LIZAMA attempted to receive 214.9 grams of methamphetamine hydrochloride on October 16, 2013.  The Drug Enforcement Administration Forensic Laboratory determined that the methamphetamine had a purity level of 100%.

          The investigation was conducted by U.S. Postal Inspectors and Special Agents from the Department of Homeland Security, Homeland Security Investigations.

          U.S. Attorney Limtiaco notes that this prosecution is part of the U.S. Department of Justice’s Project Safe Neighborhood (PSN) Initiative, a nationwide commitment to aggressively prosecute defendants who illegally possess firearms, engage in violent crimes, drug distribution and gang involvement.

          The case was handled by Assistant U.S. Attorney Rosetta San Nicolas.

A British man living in Las Vegas, Nevada, was indicted by a Nevada grand jury for withdrawing money from the bank accounts of hundreds of thousands of victims without authorization, Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division and Acting Inspector in Charge Daniel Brubaker of the U.S. Postal Inspection Service– Criminal Investigations announced today. 

Gareth David Long, 37, is charged in a 39-count indictment with wire fraud, aggravated identity theft and money laundering.  The indictment alleges that Long, operating through his company, V Internet Corp LLC, deposited unsigned remotely created checks (RCCs aka demand drafts) drawn on the accounts of hundreds of thousands of unwitting account holders.  Although Long had no authorization to charge the accounts, he represented to his victims’ banks that the victims had authorized the debits.  Long used the proceeds of his fraud scheme to purchase airplanes, vehicles, farm equipment and other property.

“Gareth David Long abused the sensitive personal and financial information of hundreds of thousands of Americans in a brazen scheme to steal millions of dollars from unwitting account holders,” said Principal Deputy Assistant Attorney General Mizer.  “As this case makes clear, we will investigate and pursue charges against individuals who abuse the financial information of American consumers.”

“American consumers expect e-commerce providers will protect their sensitive financial information,” said Acting Inspector in Charge Brubaker.  “Mr. Long betrayed that trust for his own self-interest.  With this case, Postal Inspectors continue their long history of protecting consumers by demonstrating our protection of e-commerce transitions extend beyond the stamp.”  

According to the indictment, from 2008 through 2013, Long operated a third-party payment processing company, V Internet Corp, which also did business as “Altcharge” and “Check Process.”  As a payment processor, Long specialized in the creation and deposit of RCCs.  A RCC is a check created not by the account holder but by the third-party payee.  In place of a signature, a RCC contains a typed statement claiming that the check was authorized by the account holder.  On behalf of his merchant clients, Long created and deposited RCCs drawn on the bank accounts of American consumers.  Because of this payment processing activity, Long possessed the personal and financial information of hundreds of thousands of consumers whose accounts had been debited by Long’s merchants.

In January 2013, Long allegedly created the facade that he was operating an Internet merchant business matching consumers with online payday loans.  He registered the websites www.fastloanfast.com, www.loan4utoday.com and www.fastloan4me.com, which purported to help consumers find online payday loans.  From January through July 2013, Long allegedly deposited hundreds of thousands of RCCs, each for $30 and each of which stated that the account holder had authorized a payment to Long’s company.   

The indictment alleges that, in reality, Long simply debited the accounts of victims who had never visited his websites, never requested any service and never authorized any payment.  Long obtained the personal and financial information of his victims from two sources.  First, he allegedly purchased large spreadsheets, referred to as “lead lists,” each of which contained detailed personal and financial information of thousands of American consumers.  Second, Long used the data stored in his payment processing system to debit more than a hundred thousand accounts that had previously been debited by Long’s prior merchants.  When he ran out of unique accounts to charge, Long allegedly created and deposited hundreds of thousands of additional, repeat charges against accounts he had already charged.   

By the time Long’s scheme ended in July 2013, he allegedly had created and deposited more than 750,000 RCCs totaling more than $22 million.  Approximately 50 percent of the RCCs were returned by account holders’ banks.  Many RCCs were returned because the account holder saw the debit and realized that an unauthorized charge was being imposed on his or her account.  Other RCCs were returned because they were drawn on accounts that were nonexistent, closed or did not contain sufficient funds to cover the debit.  As alleged in the indictment, many victims did not notice the charge and therefore did not dispute it.   

The Department of Justice’s Consumer Protection Branch uncovered Long’s fraudulent activity in connection with an investigation of Long’s bank, CommerceWest Bank.  Based upon its conduct in processing unauthorized transactions for Long, CommerceWest Bank entered into a civil and criminal settlement with the Department of Justice.

The U.S. Postal Inspection Service seized more than $2.9 million from V Internet’s accounts at CommerceWest Bank.  Postal Inspectors also seized property that Long purchased with the proceeds of his fraudulent activity, including five airplanes, a Land Rover, a Dodge Charger, multiple tractors, five all-terrain vehicles and a fire truck.  In addition, the criminal indictment seeks forfeiture of a house and other property Long purchased in Cedar Hill, Texas.

The case is being handled by Trial Attorney John W. Burke and Ehren Reynolds of the Civil Division’s Consumer Protection Branch in coordination with Assistant U.S. Attorneys Crane M. Pomerantz and Daniel D. Hollingsworth of the U.S. Attorney’s Office for the District of Nevada and with substantial investigative support from the U.S. Postal Inspection Service.

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

Cayman Companies Admit to Helping U.S. Taxpayer-Clients Hide Assets in Offshore Accounts, and Agree to Produce Account Files of Non-Compliant U.S. Taxpayers

First Conviction of Non-Swiss Financial Institution For Tax Evasion Conspiracy

U.S. Attorney Preet Bharara for the Southern District of New York, Acting Deputy Assistant Attorney General Stuart Goldberg of the Justice Department’s Tax Division, and Chief Richard Weber for the Internal Revenue Service – Criminal Investigation, (IRS-CI), announced today the guilty pleas of Cayman National Securities Ltd. (CNS) and Cayman National Trust Co. Ltd. (CNT), two Cayman Island affiliates of Cayman National Corporation, which provided investment brokerage and trust management services to individuals and entities within and outside the Cayman Islands, including citizens and residents of the United States (U.S. taxpayers).  CNS and CNT pleaded guilty to a criminal Information charging them with conspiring with many of their U.S. taxpayer-clients to hide more than $130 million in offshore accounts from the U.S. Internal Revenue Service (IRS) and to evade U.S. taxes on the income earned in those accounts.  CNS and CNT entered their guilty pleas pursuant to plea agreements requiring the companies to, among other things, produce through the treaty process account files of non-compliant U.S. taxpayers who maintained accounts at CNS and CNT, and pay a total of $6 million in financial penalties.  The plea proceeding took place today before the Honorable U.S. District Judge Thomas P. Griesa for the Southern District of New York.

“The guilty pleas of these two Cayman Island companies today represent the first convictions of financial institutions outside Switzerland for conspiring with U.S. taxpayers to evade their lawful and legitimate taxes,” said U.S. Attorney Bharara. “The plea agreements require these Cayman entities to provide this office with the client files, because we are committed to finding and prosecuting not only banks that help U.S. taxpayers evade taxes, but also individual taxpayers who find criminal ways not to pay their fair share.  We will follow them no matter how far they go to hide their accounts, whether it is Switzerland, the Cayman Islands, or some other tax haven.”

“Today’s convictions make clear that our focus is not on any one bank, insurance company or asset management firm, or even any one country,” said Acting Deputy Assistant Attorney General Goldberg of the Justice Department’s Tax Division. “The Department and IRS are following the money across the globe – there are no safe havens for U.S. citizens engaged in tax evasion or those actively assisting them.”

“The veil of secrecy has been lifted from what was once a common place for criminals to hide their money offshore,” said Chief Weber. “The IRS and DOJ work aggressively to require banks to follow the laws and not turn a blind eye to criminal activity. When individuals and entities hide behind shell corporations and numbered bank accounts, they are not only cheating the U.S. government, they are cheating the honest taxpaying citizens who are obeying the law and doing the right thing.”

According to the information, statements made during the proceedings today and other documents filed in Manhattan federal court, including the statement of facts to the plea agreements:

From at least 2001 through 2011, CNS and CNT, which are both located in Grand Cayman and organized under the laws of the Cayman Islands, assisted certain U.S. taxpayers in evading their U.S. tax obligations to the IRS and otherwise hiding accounts held at CNS and CNT from the IRS (hereinafter, undeclared accounts).  CNS and CNT did so by knowingly opening and maintaining undeclared accounts for U.S. taxpayers at CNS and CNT.  Specifically, and among other things, in furtherance of a scheme to help U.S. taxpayers hide assets from the IRS and evade taxes:

• CNS and CNT opened, and/or encouraged many U.S. taxpayer-clients to open accounts held in the name of sham Caymanian companies and trusts (collectively, structures), thereby helping U.S. taxpayers conceal their beneficial ownership of the accounts.
• CNS and CNT treated these sham Caymanian structures as the account holders and allowed the U.S. beneficial owners of the accounts to trade in U.S. securities.
   
• CNS failed to disclose to the IRS the identities of the U.S. beneficial owners who were trading in U.S. securities, in contravention of CNS’s obligations under its Qualified Intermediary Agreement (QI) with the IRS.
   
• After learning about the investigation of Swiss bank UBS AG (UBS), in or about 2008, for assisting U.S. taxpayers to evade their U.S. tax obligations, CNS and CNT continued to knowingly maintain undeclared accounts for U.S. taxpayer-clients and did not begin to engage in any significant remedial efforts with respect to those accounts until 2011 and 2012.

The sham Caymanian structures that CNT set up for U.S. taxpayer-clients included trusts, which were nominally controlled by CNT trust officers, but which in fact were controlled by the U.S. taxpayer-clients; managed companies, for which CNT ostensibly provided direction and management services, but which in truth were shell companies that served only to hold the assets of the U.S. taxpayer-clients; and registered office companies, which were shell companies for which CNT simply supplied a Caymanian mailing address.  CNS treated these sham Caymanian structures as the account holders and then permitted the U.S. taxpayer-clients to trade in U.S. securities, without requiring them to submit Form W-9s, which are IRS forms that identify individuals as U.S. taxpayers, as CNS was obligated to do under its QI obligations for accounts held by U.S. persons that held U.S. securities.  CNS and CNT agreed to maintain these structures for U.S. taxpayer-clients after many of them expressed concern that their accounts would be detected by the IRS.

In or about April 2008, it became publicly known that the U.S. Department of Justice was investigating UBS for assisting U.S. taxpayers to evade their U.S. tax obligations.  Thereafter, despite the public disclosure of the UBS case, and CNS’s awareness of it, CNS continued to assist U.S. taxpayer-clients in concealing their accounts from the IRS by, among other things, failing to require them to complete Form W-9s.  Likewise, up through at least 2010, CNT continued to rely on account opening documentation that, rather than barring the creation of non-tax compliant structures, simply assigned higher “risk” points to such structures.  In or about June 2011, CNT hired a new president, who spearheaded a review of CNT’s files.  In the course of that review, not a single file was found to be complete and without tax or other issues.  Moreover, with respect to the structures that had U.S. beneficial owners, CNT’s files contained little, if any, evidence of tax compliance.

At their high-water mark in 2009, CNS and CNT had approximately $137 million in assets under management relating to undeclared accounts held by U.S. taxpayer-clients.  From 2001 through 2011, CNS and CNT earned more than $3.4 million in gross revenues from the undeclared U.S. taxpayer accounts that they maintained. 

As part of their plea agreements with the U.S. Attorney’s Office for the Southern District of New York (the office), CNS and CNT have agreed to cooperate fully with the office’s investigation of the companies’ criminal conduct.  To date, CNS and CNT have already made substantial efforts to cooperate with that investigation, including by: (1) facilitating interviews that the office conducted of CNS and CNT employees, including top level executives; (2) voluntarily producing documents in response to the office’s requests; (3) providing, in response to a treaty request, unredacted client files for approximately 20 percent of the U.S. taxpayer-clients who maintained accounts at CNS and CNT; and (4) committing to assist in responding to a treaty request that is expected to result in the production of unredacted client files for approximately 90 to 95 percent of the U.S. taxpayer-clients who maintained accounts at CNS and CNT.

In connection with their guilty pleas, CNS and CNT have agreed to pay the United States a total of $6 million, which consists of the forfeiture of gross proceeds of their illegal conduct, restitution of the outstanding unpaid taxes from U.S. taxpayers who held undeclared accounts at CNS and CNT, and a fine.

U.S. Attorney Bharara praised the outstanding investigative work of IRS-CI and thanked the Justice Department’s Tax Division for their assistance in the investigation. 

This case is being handled by the office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Sarah E. Paul and Niketh Velamoor for the Southern District of New York are in charge of the prosecution.  

Joseph Chait, the senior auction administrator of a Beverly Hills, California, gallery and auction house, pleaded guilty to conspiring to smuggle wildlife products made from rhinoceros horn, elephant ivory and coral with a market value of at least approximately $1 million, announced Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division, U.S. Attorney Preet Bharara for the Southern District of New York  and Director Dan Ashe for the U.S. Fish & Wildlife Service (FWS).  Chait, 38, of Beverly Hills, pleaded guilty to a two-count information before U.S. District Judge J. Paul Oetken for the Southern District of New York.

“Rhinos and elephants have been on earth for millennia but are now at grave risk due to the illegal wildlife trade,” said John C. Cruden, Assistant Attorney General for the Environment and Natural Resources Division.  “The United States and other destination markets have a special responsibility to help save these beloved creatures from extinction. Those in the auction industry need to be responsible and not turn a blind eye to the fact that trade in protected animal parts is highly regulated.  Illegal wildlife trafficking takes many forms and those who deliberately break the rules and engage in smuggling will be prosecuted to the full extent of the law.”

“Joseph Chait and his co-conspirators trafficked in wildlife worth a market value of at least $1 million, deliberately flouting laws put in place to protect endangered species such as rhinoceros,” said U.S. Attorney Bharara. “We are grateful for the outstanding work of the FWS in this investigation, which is ongoing.”

“This case demonstrates the insidious nature of wildlife trafficking, showing how these activities permeate our society in many social, economic and cultural areas,” said Director Ashe.  “One criminal at a time.  One guilty plea at a time.  Federal prosecutors, our devoted team of law enforcement officers, and their colleagues around the globe are helping reduce trade in illegal wildlife products that is decimating populations of some of our most cherished species.”

According to allegations contained in the Information and statements made in court filings and proceedings: 

Chait and his co-conspirators engaged in illegal trafficking of wildlife with a market value of at least $1 million.  Chait personally falsified customs forms by stating that rhinoceros horn and elephant ivory items were made of bone, wood or plastic.  For example, during Asia Week in New York City in or about March 2011, Chait was approached about the potential sale of a carving of Guanyin, an East Asian spiritual figure made from rhinoceros horn (the Rhino Carving).  Despite knowing that it was not a genuine antique, Chait and his co-conspirators accepted the Rhino Carving for consignment, advertised the sale to foreign clients in China and put the Rhino Carving on the cover of Auction House-1’s catalogue in connection with an auction of Asian art and antiques.  After the Rhino Carving sold at auction for $230,000, Chait offered to make a false document for the buyer to help the buyer smuggle the item out of the country.  The fake invoice falsely stated that the item cost $108.75 and was made of plastic.

Chait and his co-conspirators also sold ivory carvings to another foreign customer and provided those carvings to that customer’s courier, even after learning that the customer had been arrested in China for smuggling ivory purchased from Chait’s auction house.

In addition to falsifying customs forms by stating that rhinoceros horn and elephant ivory items were made of bone, wood or plastic, Chait and his co-conspirators conspired to aid smuggling in other ways:

• Wildlife items were shipped to or picked up by third party shippers, who then re-shipped the items out of the country to foreign buyers without the required declaration or permits. 
   
• Members of the conspiracy provided packing materials to foreign wildlife buyers to assist them in hand carrying the wildlife out of the country. 
   
• Foreign wildlife buyers where not charged a state sales tax if they showed a foreign passport and itinerary for an international flight as proof the item would be leaving the country which Chait and his co-conspirators knew was insufficient time to obtain an export permit.
   
• Protected wildlife was smuggled into the United States without declaration or permits and then sold at auction.

Rhinoceros are an herbivore species of prehistoric origin and one of the largest remaining mega-fauna on earth. They have no known predators other than humans.  The trade in rhinoceros horn and elephant ivory has been restricted since 1976 under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), a treaty signed by over 170 countries around the world.  Trade in protected wildlife such as rhinoceros horn and elephant ivory has been significantly restricted in the last two years as the result of a Presidential Executive Order except for those instances where sellers can prove that the item is a genuine antique that is more than 100 years of age.

*                      *                      *

Chait faces a maximum of five years in prison for conspiring to smuggle wildlife products and a maximum of five years in prison for violating the Lacey Act.  These statutory maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentence imposed on the defendant will be determined by the judge.

Chait’s sentencing is scheduled for June 22, 2016, in front of Judge Oetken.

This matter is part of Operation Crash, a continuing investigation by the Department of the Interior’s Fish and Wildlife Service, in coordination with the Department of Justice.  A “crash” is the term for a herd of rhinoceros.  Operation Crash is an ongoing effort to detect, deter, and prosecute those engaged in the illegal killing of rhinoceros and the unlawful trafficking of rhinoceros horns.

Assistant Attorney General Cruden and U.S. Attorney Bharara thanked the U.S. Fish and Wildlife Service for its outstanding work in this investigation as well as the U.S. Attorney’s Office for the District of New Jersey for its assistance on this matter.  This case is being prosecuted by the U.S. Attorney Office’s Complex Frauds and Cybercrime Unit and the Environmental Crimes Section of the Department of Justice.  Assistant U.S. Attorneys Jennifer Gachiri and Elizabeth Hanft and Senior Litigation Counsel Richard A. Udell with the Environmental Crimes Section are in charge of the prosecution.

21st Century Oncology Inc., the nation’s largest physician led integrated cancer care provider and its wholly owned subsidiary South Florida Radiation Oncology LLC, have agreed to settle allegations that they performed and billed for procedures that were not medically necessary, the Department of Justice announced today.  21st Century is headquartered in Fort Myers, Florida, and has offices in 16 states.

The settlement relates to defendants use of a medical procedure – called the Gamma function – to measure the exit dose of radiation from a patient after receiving radiation treatment.  The United States alleged that the defendants knowingly and improperly billed for this procedure under circumstances where the procedure served no medically appropriate purpose.  For example, the government alleged that the procedure was performed by physicians and physicists at 21st Century Oncology locations who were not properly trained to interpret and utilize the Gamma function results.  The government also alleged that the defendants billed for this procedure when no physician reviewed the Gamma function results until seven or more days after the last day patients received radiation treatment therapy.  Finally, the government alleged that the defendants billed for the procedure when no Gamma result was available due to technical failures in the imaging equipment. 

“Today’s settlement demonstrates our unwavering commitment to protect the Medicare trust fund against unscrupulous providers,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “Providers who waste taxpayer dollars by billing for unnecessary services, including services that are not used or improperly performed, will face serious consequences.”

“The U.S. Attorney’s Office is committed to taking the steps necessary to protect Medicare, TRICARE, and other federal health care programs from fraud,” said U.S. Attorney A. Lee Bentley III for the Middle District of Florida.  “Healthcare providers may bill for new technologies only when they have been proven to be useful and when individual physicians and staff have been trained to use them properly.”

 This lawsuit was originally filed under the qui tam or whistleblower provisions of the False Claims Act by Joseph Ting, a former physicist at South Florida Radiation Oncology.  Under those provisions, a private party, known as a relator, can file an action on behalf of the United States and receive a portion of the recovery.  Ting will receive more than $7 million. 

“The waste of health care program dollars will not be tolerated,” said Special Agent in Charge Shimon R. Richmond for the Health and Human Services (HHS) Office of the Inspector General.  “Providers at 21st Century Oncology have agreed to settle claims that in some instances they performed tests that were not only medically unnecessary, but that no one had been trained to properly interpret, thereby allegedly causing the taxpayers to pay for useless tests.”

This past December, 21st Century Oncology LLC, a wholly owned subsidiary of 21st Century Oncology Inc., paid $19.75 million to settle allegations that it violated the False Claims Act by billing for medically unnecessary laboratory urine tests and for encouraging physicians to order these tests by offering bonuses based in part on the number of tests the physicians referred to its laboratory. 

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 Attorney General Eric Holder and Secretary of Health and Human Services Kathleen Sebelius.  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 $27.4 billion through False Claims Act cases, with more than $17.4 billion of that amount recovered in cases involving fraud against federal health care programs.

“This settlement highlights the commitment of the Defense Criminal Investigative Service (DCIS) and its law enforcement partners to protect the integrity of TRICARE, the Department of Defense health care program that serves our warfighters, their family members, and military retirees,” said Special Agent in Charge John F. Khin of DCIS Southeast Field Office.  “With DoD’s limited resources and budgets, DCIS must continue to aggressively investigate fraud, waste and abuse to preserve and recover precious taxpayer dollars for our most vulnerable programs.”

This matter was handled by the U.S. Attorney’s Office for the Middle District of Florida, with assistance from the Civil Division’s Commercial Litigation Branch, the Department of Health and Human Services Office of Inspector General (HHS/OIG) and the Defense Criminal Investigative Service (DCIS). 

The claims resolved by this settlement are allegations only, and there has been no determination of liability.  The lawsuit against the defendants was filed in the U.S. District Court for the Middle District of Florida and is captioned United States ex rel. Ting v. 21st Century Oncology and South Florida Radiation Oncology.

The Justice Department announced the launch of “Combating Religious Discrimination Today,” a new interagency community engagement initiative designed to promote religious freedom, challenge religious discrimination and enhance enforcement of religion-based hate crimes.  The Justice Department’s Civil Rights Division, in partnership with other federal agencies, will host a series of community roundtables across the country that focus on protecting people and places of worship from religion-based hate crimes; combating religious discrimination, including bullying, in education and employment; and addressing unlawful barriers that interfere with the construction of places of worship.

The inaugural roundtable, which is taking place today in Newark, New Jersey, will focus on addressing bullying and religious discrimination in schools.  It will examine how students encounter bullying and harassment based on their actual or perceived religion, as well as discrimination based on religious clothing, holidays and expression.

Subsequent roundtables will focus on a variety of related topics, including a discussion in Dallas that will center on preventing and prosecuting religion-based hate crimes targeting individuals and houses of worship; a meeting in Birmingham, Alabama, that will examine religious discrimination in employment; and a convening in Detroit that will address discrimination by local zoning officials against congregants seeking to build places of worship.  The final roundtable will also concentrate on bullying and religious discrimination in schools and will take place in Palo Alto, California.

“Hate-motivated violence, harassment and discrimination violate America’s laws and threaten our founding vision of a free and tolerant society that welcomes people from every creed and walk of life,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division.  “Robust community engagement and meaningful dialogue can help our country fulfill its promise of religious freedom, and we look forward to tackling this challenging work with creative solutions in the months ahead.”

Agencies participating in the new initiative include the Departments of Education, Homeland Security (DHS) and Labor (DOL); the Equal Employment Opportunity Commission (EEOC); and within the Justice Department, the Civil Rights Division, FBI, Office of Justice Programs, Executive Office for U.S. Attorneys and Community Relations Service.  Agency officials will facilitate the roundtable discussions to help identify key priorities and lead robust dialogue with community members and civil rights advocates.

“We are eager to continue partnering with our federal colleagues to address bias and discrimination in our nation’s schools, and to continue our strong enforcement of federal civil rights laws to ensure that all students can learn in safe school environments,” said Catherine E. Lhamon, Assistant Secretary for Civil Rights at the Department of Education.

“Since DHS was established, we have worked closely with communities across the country to combat intolerance and ensure safety at houses of worship,” said Officer Megan H. Mack of the DHS Office for Civil Rights and Civil Liberties.  “Ensuring the protection of uniquely American rights and liberties is a fundamental part of DHS’s mission to build safe and resilient communities.  We look forward to expanding our already extensive engagement with communities by working closely with our federal partners on this effort.”

“A diverse and inclusive workplace reflects the strength and richness of America and its history,” said Director Patricia Shiu of the DOL Office of Federal Contract Compliance Programs.  “Built by immigrants from every corner of the world, our nation’s greatness must not be diminished by unlawful religious discrimination.  The Department of Labor welcomes the opportunity to collaborate with our federal partners on this important issue.”

“Our nation was founded on the principles of freedom and equality,” said Jenny R. Yang, EEOC Chair.  “Working with our federal and community partners enables EEOC to better understand and address religious discrimination in the workplace, and to inform affected communities of protections under federal law.”

The new initiative supplements the department’s long-standing criminal and civil enforcement efforts to prevent religious discrimination and religion-motivated hate crimes.  Since the 9/11 terrorists attacks, the department has investigated more than 1,000 incidents involving acts of violence, threats, assaults, vandalism and arson targeting diverse religious and ethnic groups, prosecuting dozens of these cases to the fullest extent of the law.  The Civil Rights Division, often in close partnership with other federal agencies, also utilizes civil enforcement to combat religious discrimination and protect religious freedom.  This includes preventing religious discrimination in education, through Title IV of the Civil Rights Act of 1964, and in employment, through Title VII of the Civil Rights Act of 1964.  In addition, the division enforces the Religious Land Use and Institutionalized Persons Act, which protects individuals, houses of worship and other religious institutions from discrimination in zoning and landmarking laws.  For more information about the new initiative, please email CombatingReligiousDiscrimination@usdoj.gov.  Additionally, EEOC is posting a ‘What You Should Know’ document today on its homepage, www.eeoc.gov, compiling EEOC’s resources regarding religious and national origin-based discrimination.  

As part of National Consumer Protection Week, Attorney General Loretta E. Lynch recorded a video to talk about the department’s work protecting the health and safety of consumers from unsafe dietary supplements.

“At the Department of Justice, we are committed to working with our partners across the federal government to protect the health and safety of all Americans,” said Attorney General Lynch.  “Recently, we announced a nationwide operation targeting unlawful dietary supplements.  We are bringing civil and criminal cases against more than 100 makers and marketers of supplements who were violating federal law by misrepresenting ingredients; by making unsupported health claims; or even by lacing products with undeclared substances.”

The complete text of the Attorney General’s video message is below: 

“Hello.  As part of National Consumer Protection Week, I want to take a moment to talk to you about dietary supplements, which are used by millions of Americans every day.  What many Americans don’t know is that dietary supplements are not subject to testing by the Food and Drug Administration before they reach store shelves – meaning that every day, millions of Americans are ingesting substances whose safety and efficacy are not guaranteed. 

“Some of these supplements are simply a waste of money, promising results they can’t deliver or advertising ingredients that they don’t contain.  And too often, these supplements don’t just abuse consumer trust – they also endanger public health.  Some contain harmful ingredients, causing consumers to fall ill.  Others falsely claim to cure illness and disease, leading patients to use them as a substitute for the proven therapies they need.  But whether these supplements are deceptive or dangerous, the fact remains that too many companies are making a profit by misleading – and in some cases harming – American consumers.

“At the Department of Justice, we are committed to working with our partners across the federal government to protect the health and safety of all Americans.  Recently, we announced a nationwide operation targeting unlawful dietary supplements.  We are bringing civil and criminal cases against more than 100 makers and marketers of supplements who were violating federal law by misrepresenting ingredients; by making unsupported health claims; or even by lacing products with undeclared substances.

“In one case, for example, the Justice Department brought criminal charges against high-ranking executives at USPlabs, a company that sold workout and weight loss supplements.  As we alleged, they claimed that their products were made from natural plant extracts, when in fact, they were made from untested synthetic chemicals from China.  In several cases, consumers suffered severe liver damage.  And although the company was allegedly aware of the risks their product posed, they continued to sell it to consumers, compromising the health and well-being of thousands of Americans.

“The Justice Department is determined to hold bad actors in the dietary supplement industry accountable for their actions.  But consumers need to do their part to protect themselves.  I urge consumers to be cautious when choosing to take dietary supplements.  Visit the FDA and the Federal Trade Commission websites, where you can find useful information about dietary supplements.  Use tools developed by the Department of Defense and the U.S. Anti-Doping Agency, including a smartphone app, to help you make informed choices.  And above all, if you are considering taking a dietary supplement, talk to a doctor first.  Should you and your health care provider decide that dietary supplements are right for you, know that the Department of Justice is working tirelessly to ensure that the products you choose are safely manufactured, accurately labeled, and honestly marketed – because the American people deserve nothing less.” 

The full video of the Attorney General’s message is available at https://www.justice.gov/opa/video/national-consumer-protection-week.

For more information about the department’s Consumer Protection Branch, visit http://www.justice.gov/civil/consumer-protection-branch.

Worked With Others to Seek Over $1.5 Million in Fraudulent Refunds

A federal district court judge accepted a Virginia man’s plea of guilty today for his involvement in a far-reaching stolen identity refund fraud scheme in which he conspired with others to seek over $1.5 million in income tax refunds through the filing of fraudulent federal income tax returns, 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 the 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.

Bradley King, 35, of Fredericksburg, Virginia, is among approximately 19 participants in this scheme who have pleaded guilty to charges in the U.S. District Court for the District of Columbia.  According to court documents, the overall case involves the filing of at least 12,000 fraudulent federal income tax returns that sought refunds of at least $42 million. King pleaded guilty to one count of conspiracy to defraud the United States with respect to claims, one count of theft of public money and one count of aiding and abetting in fraud and related activity in connection with identification documents.

The charges carry a total statutory maximum prison term of 35 years.  As part of the plea agreement, King agreed to pay $493,436 in restitution to the IRS.  King also is subject to a forfeiture money judgment in the amount of $5,400.  Sentencing is set for May 18 before U.S. District Judge Ellen S. Huvelle.

According to the government’s evidence, King participated in a massive and sophisticated stolen identity refund fraud scheme that involved an extensive network of more than 130 people, many of whom were receiving public assistance.  The refunds were sought for tax years 2005 through 2013, often in the names of individuals whose identities had been stolen, including the elderly, residents of assisted living facilities, drug addicts and incarcerated prisoners.  Returns were also filed in the names of and refunds were issued 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, King’s involvement in the scheme began in 2008 and continued through July 2015.  Initially, he permitted co-conspirators to use his name, social security number and residential address for the creation and submission of fraudulent income tax returns.  From March 2010 through July 2015, he recruited others to provide him with means of identification for use in preparing and filing fraudulent returns.  He also recruited others to permit the use of their residential addresses on fraudulent returns that he prepared and filed.  King split the proceeds of the fraudulently obtained U.S. Treasury checks with his co-conspirators.  In addition, he and others used bank accounts for the negotiation of refund checks that were issued in the names of other persons.  Finally, according to the court documents, King sold fraudulently obtained refund checks to another individual in June 2015.

Taking together the losses generated by the use of residential addresses and bank accounts under his control, including checks associated with his co-conspirators, King was responsible for the filing of approximately 444 fraudulent returns that sought more than $1.5 million in tax refunds.  King’s actions led to a total actual loss of approximately $493,436 to the U.S. Treasury, based on the negotiation of 153 U.S. Treasury checks listing addresses under his control and/or negotiated by his recruits.

In announcing the plea, 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 of the District of Columbia, including former Assistant U.S. Attorney Sherri L. Schornstein and Paralegal Specialists Donna Galindo and Julie Dailey.  Finally, they expressed appreciation for the work of 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 U.S. Supreme Court today denied Apple’s petition for certiorari in United States v. Apple Inc., making final lower court decisions that Apple orchestrated a price-fixing conspiracy with five major e-book publishers and substantially raised e-book prices.

The Supreme Court’s action triggers Apple’s obligation to pay $400 million to e-book purchasers under Apple’s July 2014 agreement to settle damages actions brought by the attorneys general of 33 states and territories and a private class of e-book purchasers.  Most e-book purchasers will receive reimbursement for the higher prices Apple’s conduct caused them to pay through automatic credits at their e-book retailers.  They will be able to apply these credits to future purchases.  With the $166 million previously paid by the conspiring publishers to settle claims against them, Apple’s payment will bring to $566 million the amount repaid to e-book purchasers overcharged as a result of Apple’s and the publishers’ illegal conspiracy.

“Apple’s liability for knowingly conspiring with book publishers to raise the prices of e-books is settled once and for all,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division.  “And consumers will be made whole.  The outstanding work of the Department of Justice team – working with our steadfast state attorney general partners – exposed this cynical misconduct by Apple and its book publisher co-conspirators and ensured that justice was done.”

On April 11, 2012, the department filed its civil antitrust lawsuit challenging Apple’s orchestration of a price-fixing conspiracy with five e-book publishers: Hachette Book Group (USA), HarperCollins Publishers L.L.C., Holtzbrinck Publishers LLC (which does business as Macmillan), Penguin Group (USA) Inc. and Simon & Schuster Inc.  The lawsuit, brought in the U.S. District Court for the Southern District of New York, alleged that Apple and the defendant publishers conspired to fix prices and end e-book retailers’ freedom to compete on price, and that they succeeded in substantially increasing the prices that consumers paid for e-books.  The department reached settlements with the defendant publishers before trial and, along with the plaintiff states, proceeded to trial against Apple before U.S. District Judge Denise L. Cote of the Southern District of New York on June 3, 2013.  Judge Cote issued her opinion and order on July 10, 2013, finding Apple liable for orchestrating a conspiracy with the publishers.  On June 30, 2015, the U.S. Court of Appeals for the Second Circuit affirmed Judge Cote’s decision.

A federal jury in Phoenix returned a verdict today finding that the towns of Colorado City, Arizona, and Hildale, Utah, and their joint water company systematically discriminated against individuals who are not members of the Fundamentalist Church of Jesus Christ of Latter-day Saints (FLDS) in the provision of housing, utility and policing services in violation of the Fair Housing Act.  Prior to the jury verdict, the parties reached an agreement that the defendants will pay $1.6 million to resolve the monetary claim under the Fair Housing Act.

The jury also issued an advisory verdict on the Department of Justice’s claims under Section 14141 of the Violent Crime Control and Law Enforcement Act.  Because this statute (in contrast to the Fair Housing Act) does not include a right to a jury trial, the jury’s verdict as to the Section 14141 claim is advisory and may be considered by the court, but is not binding.  In its advisory verdict, the jury found that the Colorado City Marshal’s Office, the cities’ joint police department, operated as an arm of the FLDS church in violation of the establishment clause of the First Amendment; engaged in discriminatory policing in violation of the equal protection clause of the 14th Amendment and the establishment clause; and subjected individuals to unlawful stops, seizures and arrests in violation of the Fourth Amendment.  Because these advisory findings are not binding, the Department of Justice’s Section 14141 claim remains under consideration by the district court judge, who will issue a ruling on whether the defendants engaged in these constitutional violations, and if so, what relief is appropriate.

“Today’s verdict reaffirms that America guarantees all people equal protection and fair treatment, regardless of their religious beliefs,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division.  “When communities deny their residents critical services simply because of where they worship, they violate our laws and threaten the defining values of religious freedom and tolerance that are the foundation of our country.”

This was the department’s first lawsuit to include claims under both the Fair Housing Act and Section 14141, the federal statute that allows the Attorney General to address patterns or practices of police misconduct.

This matter was litigated by attorneys from the Civil Rights Division’s Housing and Civil Enforcement Section and the Special Litigation Section.  More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt. 

Philip Joseph Rivkin, aka Felipe Poitan Arriaga, was sentenced today in Houston, Texas, to 121 months in prison, three years of supervised release and to pay more than $87 million in restitution and was ordered to forfeit $51 million for generating and selling fraudulent biodiesel credits in the federal renewable fuel program, the Justice Department’s Environment and Natural Resources Division announced. 

In June 2015, Rivkin pleaded guilty to one count of mail fraud and one count of making a false statement under the Clean Air Act. 

"Rivkin’s abuse of the biodiesel program, a program designed to further our nation’s energy independence and combat climate change, was an abuse against the American people,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division.  “This sentence should send a strong message that those committing fraud in the bio-diesel program will be vigorously prosecuted and sent to prison.”

“Today we take another big step toward upholding the integrity of an important program that reduces greenhouse gas emissions and promotes energy independence,” said Assistant Administrator Cynthia Giles for the Environmental Protection Agency’s (EPA) for Enforcement and Compliance Assurance.  “After years of persistence by EPA and our partners, we’ve brought a serious offender to justice for environmental crimes.  This sentence deters would-be violators and helps protect responsible companies that follow the rules.”

The Energy Independence and Security Act of 2007 created or extended several federally-funded programs that created monetary incentives for the production of renewable fuels, including biodiesel and to encourage the use of such fuels in the United States.  Authorized biodiesel producers and importers could generate and attach credits—known as renewable identification numbers (RINs)—to biodiesel they produced or imported.   Because certain companies need RINs to comply with regulatory obligations, RINs have significant market value.

As admitted in the plea agreement, beginning around February of 2009, Rivkin operated and controlled several companies in the fuel and biodiesel industries, including Green Diesel LLC, Fuel Streamers Inc. and Petro Constructors LLC, all based in Houston.  Rivkin claimed to produce millions of gallons of biodiesel at the Green Diesel’s Houston facility and then generated and sold RINs based upon this claim.  In reality, no biodiesel was ever produced at the Green Diesel facility.  This scheme allowed the defendant to generate over 60 million RINs that were fraudulent, which were then sold to companies that needed to obtain them and resulted in millions of dollars in sales.  Rivkin created false records and made false statements to conceal his fraudulent claims of biodiesel production, importation and RIN generation. 

The collaborative investigation that led to today’s sentence was the result of work by Environmental Protection Agency’s Criminal Investigation Division, the United States Secret Service, Internal Revenue Service-Criminal Investigation, Homeland Security Investigations and the Guatemalan Special Investigations Unit, which worked with federal investigators to uncover the fraudulent nature of Rivkin’s Guatemalan citizenship, which led to his deportation back to the United States.

The case is being prosecuted by Trial Attorney Leslie E. Lehnert of the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division.

ArmorSource, LLC has agreed to pay $3 million to resolve False Claims Act allegations in connection with a contract to provide combat helmets to the U.S. Army, the Department of Justice announced today.  ArmorSource, a Delaware Limited Liability Company headquartered in Hebron, Ohio, designs, develops and manufactures ballistic helmets for military and law enforcement personnel worldwide.

In 2006, the Army contracted with ArmorSource to manufacture the Advanced Combat Helmet or ACH for use by soldiers in combat.  ACH helmets are made of Kevlar, an armored material, and are worn to provide ballistic protection for the soldier.  The United States alleged that from 2006 to 2009, ArmorSource delivered ACH helmets to the Army that were manufactured and tested using methods that did not conform to contract requirements and that failed to meet contract performance standards.  In May 2010, the Army began recalling the helmets after several lots failed ballistic safety tests.    

“The U.S. government relies on contractors to manufacture equipment that is critical to the safety of our men and women in uniform, and equipment that fails to meet performance standards not only cheats taxpayers, but can put lives at risk,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “Today’s settlement demonstrates our commitment to ensuring our military receives products that meet its requirements and for which it has paid.”

“Today’s settlement in this important case is a reminder to all government contractors that they must deliver on their promises, especially when the safety and security of our troops is on the line,” said Special Agent in Charge Monte A. Cason of the Department of Justice Office of the Inspector General’s Dallas Field Office.

“Not conforming to contract requirements, failing to meet performance standards, and failing to pass ballistic safety tests for the helmets that protect the very heads and lives of our young men and women who serve this nation is incredibly unconscionable,” said Director Frank Robey of the U.S. Army Criminal Investigation Commands Major Procurement.  “Thanks to the efforts of our special agents and our other law enforcement partners, today’s settlement is possible.”

ArmorSource subcontracted the manufacturing to Federal Prison Industries, Inc., which operates under the trade name UNICOR.  This settlement resolves a lawsuit filed by whistleblowers Melessa Ponzio and Sharon Clubb, FPI employees, under the qui tam or whistleblower provisions of the False Claims Act.  The Act permits private individuals to sue on behalf of the government those who falsely claim federal funds and to receive a share of any recovery.  Ms. Ponzio and Ms. Clubb will receive $450,000.

This settlement was the result of a coordinated effort among the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the Eastern District of Texas. The investigation was conducted by the Department of Justice Office of the Inspector General, the Department of Defense Office of Inspector General’s Defense Criminal Investigative Service and the U.S. Army Criminal Investigation Command, Major Procurement Fraud Unit. 

The case is captioned U.S. ex rel. Ponzio, et al. v. Rabintex Industries Ltd., et al., Case No. 1:10-CV-588 (E.D. Tex.).  The claims resolved by the settlement are allegations only; there has been no determination of liability.  

The business manager and secretary-treasurer of Local 201 of the International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers Union AFL-CIO (Iron Workers) based in Washington, D.C., was charged with taking kickbacks from public works employees at the Blue Plains Wastewater Treatment Plant of the District of Columbia Water and Sewer Authority (Blue Plains). 

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting Special Agent in Charge John J. Dolce of the Department of Labor Office of Inspector General’s Office of Labor Racketeering and Fraud Investigations Washington, D.C., Regional Office and District Director Mark Wheeler of the Department of Labor’s Office of Labor Management Standards Washington, D.C., District Office made the announcement.  

Juan Carlos Recinos, 40, of Upper Marlboro, Maryland, the business manager and secretary-treasurer of Iron Workers Local 201, was charged by a grand jury in the District of Columbia with seven counts of taking kickbacks from public works employees.  Recinos is scheduled to have his initial appearance at 1:30 p.m. EST before U.S. Magistrate Judge G. Michael Harvey of the District of Columbia.

The Iron Workers Local 201 represents workers known as “rodmen” who set rebar into concrete forms at construction sites in Washington, D.C., and adjacent counties.  Prior to being elected business manager and secretary-treasurer of Local 201 in 2014, Recinos served as an organizer for Local 201.

The indictment alleges that, on seven instances between April and September 2013, Recinos knowingly induced rodmen who had received back pay awards from their employment at Blue Plains to give him part of their award, ranging from $500 to $3,800 in cash, by falsely representing that the rodmen owed money to an unnamed attorney.  Recinos allegedly pocketed the money, in violation of the Copeland Anti-Kickback Act, which ensures that employees on public works projects receive all the wages to which they are entitled.

The charges and allegations contained in an indictment are merely accusations.  The defendant is presumed innocent until and unless proven guilty.

The U.S. Department of Labor is investigating the case.  Trial Attorney Vincent Falvo of the Criminal Division’s Organized Crime and Gang Section is prosecuting the case.

A federal grand jury in the Southern District of Georgia indicted a woman for impersonating an FBI special agent in connection with an international lottery fraud scheme based in Jamaica, the Department of Justice announced today. 

Vania Lee Allen, 30, was charged with one count of conspiracy to commit wire fraud and falsely impersonating an employee of the United States, one count of wire fraud and one count of falsely impersonating an employee of the United States. 

According to the indictment, Allen and a co-conspirator in Jamaica sought to unlawfully enrich themselves through a fraudulent lottery scheme targeting an elderly resident of Evans, Georgia.  Allen’s co-conspirator falsely informed the victim by phone that the victim had won money in a lottery and instructed the victim to make payments to various people in order to collect the purported lottery winnings.  As alleged in the indictment, in order to gain the trust of the victim and induce him to continue to make payments, Allen traveled from Jamaica to the United States and falsely portrayed herself to the victim as an FBI agent. 

“Fraud schemes operating from other countries and targeting Americans often cannot fully succeed without assistance from a co-conspirator in the United States,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “Scammers use many different tactics in an effort to gain the trust of their victims.  The Justice Department will actively pursue and charge those who participate in such criminal activity.”

“The U.S. Attorney’s Office for the Southern District of Georgia is committed to vigorously prosecuting fraud schemes of all kinds,” said U.S. Attorney Edward J. Tarver of the Southern District of Georgia. “Those who perpetrate scams upon the vulnerable should know that federal law enforcement will work tirelessly to shut down fraud schemes and prosecute those responsible.”

According to the indictment, Allen traveled from Jamaica to the United States in early May 2015.  The indictment alleges that Allen sent a number of text messages to her co-conspirator in Jamaica discussing the plan to impersonate an FBI agent, including a text that attached an image of a law enforcement style badge with an “FBI” logo and the words “Federal Bureau of Investigation” on the face of the badge.  The indictment further alleges that on May 7, 2015, Allen traveled to the victim’s home in Evans, Georgia, falsely portrayed herself to the victim as a FBI special agent and provided the victim with a cellphone and directed him to speak with the person on the line, who was her co-conspirator in Jamaica. 

“These lottery scammers prey on elderly Americans, and convince them to send significant amounts of money based on false promises,” said U.S. Postal Inspector in Charge David W. Bosch of the Philadelphia Division. “The Postal Inspection Service is committed to investigating and combating these international lottery schemes.” 

This prosecution is part of the Department of Justice’s effort to work with federal and local law enforcement to combat fraudulent lottery schemes in Jamaica that prey on American citizens.  According to the U.S. Postal Inspection Service, Americans have lost tens of millions of dollars to fraudulent foreign lotteries.

If convicted, Allen faces a statutory maximum sentence of up to 20 years in prison for the wire fraud count, as well as up to five years for the conspiracy count and up to three years for the false impersonation count. 

The case is being prosecuted by Trial Attorney Clint Narver of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney C. Troy Clark of the Southern District of Georgia.  The case was investigated by the U.S. Postal Inspection Service and the Columbia County Georgia Sherriff’s Office.

An indictment is merely an allegation and every defendant is presumed innocent until proven guilty beyond a reasonable doubt.

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 Southern District of Georgia, visit its website at http://www.justice.gov/usao-sdga.

A federal grand jury in the Middle District of North Carolina returned an indictment March 1 charging a Greensboro, North Carolina couple, who operated an online sales business with tax fraud as well as bank and wire fraud, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Ripley Rand of the Middle District of North Carolina. The defendants were arrested earlier today and had their initial court appearances this afternoon.

Daniel Balson and Renee Balson were charged with one count of conspiracy to defraud the United States and to commit bank fraud, one count of bank fraud and five counts of wire fraud.  Daniel Balson was additionally charged with three counts of filing false tax returns for 2009 through 2011 and Renee Balson was charged with one count of filing a false tax return for 2009.   

According to the indictment, Daniel Balson owned and operated Southern Sales Online (SSO), an online retail business that sold a variety of merchandise through eBay and Amazon, including scrapbooking and art materials, books, inspirational DVDs, pet supplies and tools.  It is alleged that although SSO earned more than $1 million in gross receipts during 2005 through 2011, the Balsons failed to report gross receipts for SSO on their tax returns filed with the Internal Revenue Service (IRS).  The Balsons also failed to report income from SSO on a bank application for a mortgage loan modification in 2011.  The indictment also alleges that the Balsons stole merchandise from LifeWay Christian Stores and Hobby Lobby and then knowingly sold the stolen merchandise through SSO at prices less than retail value.

If convicted, Daniel Balson and Renee Balson each face a statutory maximum sentence of five years in prison for the conspiracy count, 30 years in prison for the bank fraud count, 20 years in prison for each wire fraud count and three years in prison for each false tax return count.  The Balsons also face substantial monetary penalties and restitution. 

An indictment is not a finding of guilt.  An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceeding.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Rand commended special agents of IRS-Criminal Investigation, who investigated the case, and Assistant Chief Todd A. Ellinwood and Trial Attorney Mara Strier of the Tax Division, who are prosecuting the case.  Acting Assistant Attorney General Ciraolo also thanked the U.S. Attorney’s Office of the Middle District of North Carolina for their assistance.