District Not Recorded

Department of Justice Spokesman Kevin Lewis released the following statement on the department’s measures to increases access to counsel for individuals facing removal proceedings in immigration court: 

“As the Justice Department works to safeguard American security, we are equally committed to upholding American values, including the protection of vulnerable populations.

“The Department of Justice recognizes that immigration court proceedings are more effective and efficient when individuals are represented.  To that end, the department has taken a number of measures to increase access to counsel for individuals facing removal proceedings, and children in particular.  For example, in 2014 the Justice Department and the Corporation for National and Community Service (CNCS) announced justice AmeriCorps, a strategic partnership, now in its second year, to enhance the effective and efficient adjudication of immigration proceedings involving certain unaccompanied children.

“The Administration continues to urge Congress to help improve the efficiency of our immigration court system by supporting needed Immigration Judge Teams and Board of Immigration Appeals attorneys, by supporting the successful Legal Orientation Program, and by supporting legal representation for unaccompanied children.

“The Assistant Chief Immigration Judge was speaking in a personal capacity when he made that statement.  The assistant chief judge’s statement does not necessarily represent the views of the Department of Justice.”

A federal judge in Colorado has ordered a tax return preparer to be held in custody until he closes his tax preparation business.  At the conclusion of a hearing today,  Senior District Court Judge John L. Kane for the District of Colorado found Gerardo Herrera in contempt for violating an earlier order that permanently barred him from the tax preparation business and immediately remanded him to the U.S. Marshal’s Service. 

The United States filed a complaint on Sept. 1, 2015, alleging that for at least three years, Herrera and his firm had systematically and repeatedly submitted false income tax returns by reporting extra dependents, claiming bogus deductions, and using improper tactics to understate tax liability.  On Jan. 7, Judge Kane issued an order of permanent injunction against Herrera prohibiting him from preparing tax returns.

The injunction also directed Herrera to provide a list of his customers to the United States, notify his customers of the injunction and file a sworn statement attesting that he had complied within 45 days of the injunction.  The United States asked the court to hold Herrera in contempt for his failure to comply with these provisions and alleged that he continued to operate two tax preparation offices and/or assist others in operating the offices.  After hearing testimony from two Internal Revenue Service (IRS) witnesses who had visited Herrera’s offices, Judge Kane found Herrera in contempt and ordered that he be held in custody until he purges his contempt by, among other things, notifying all his prior customers of the permanent injunction, providing a list of his customers to the United States, surrendering his Preparer Tax Identification Number (PTIN) and posting a copy of the injunction in his place of business.

Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division thanks the revenue agents and revenue officers for their assistance in this civil case.

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

The Presidential Task Force on Wildlife Trafficking released today, World Wildlife Day, its first Annual Progress Assessment.  The report details accomplishments of the Task Force in implementing the U.S. National Strategy for Combating Wildlife Trafficking, as well as future efforts in the fight against this pernicious trade.

Last year was a turning point in the global effort to counter wildlife trafficking.  Task Force agencies vigorously carried out the three main objectives of the National Strategy: strengthening enforcement, reducing demand and expanding international cooperation.  One multi-year initiative known as “Operation Crash” has led to prosecutions against more than 30 individuals and businesses in U.S. courts, leading to prison terms as long as 70 months and forfeitures as high as $4.5 million. 

“The Department of Justice is firmly committed to vigorously prosecuting illegal wildlife trafficking, one of my personal goals,” said Assistant Attorney General John C. Cruden of the Department of Justice’s Environment and Natural Resources Division.  “Each illegally-traded horn or tusk represents not simply an object but a dead animal.  We must take the profit out of wildlife trafficking to stop the criminals who are robbing from our children and grandchildren the great diversity of life on our planet.”

Task Force agencies last year trained more than 2,000 enforcement officials around the globe.  In countering demand, Task Force campaigns in 2015 reached tens of millions of people in the United States and major markets throughout Asia to dissuade consumers from buying illegal wildlife or wildlife products.  A major accomplishment in international cooperation was the September commitment by President Obama and Chinese President Xi Jinping to take timely and significant steps to halt the domestic commercial trade of ivory.

President Obama created the Task Force in 2013, bringing together 17 federal departments and offices in a whole-of-government approach to halt illegal activities that threaten the survival of elephants, rhinos and other iconic species.  The Task Force is co-chaired by the Secretaries of State and the Interior and the Attorney General and it is charged with implementing the national strategy issued by President Obama in 2014 and detailed in an implementation plan in 2015.

For a copy of the 2015 Progress Assessment, click here.

FRESNO, Calif. – Un gran jurado federal dictó una acusación formal de 10 cargos hoy contra Martín Carranza-Sánchez, 45 años de edad, y residente de México, acusándolo de secuestrar ciudadanos mexicanos que solicitaban asistencia para entrar en los Estados Unidos sin la documentación necesaria, y que además tenía planeado defraudar a las familias de las personas que buscaban entrar en el país, anunció el Procurador Federal Benjamín B. Wagner. Carranza-Sánchez está acusado de conspiración en la toma de rehenes, de conspiración para cometer el fraude de telegrama y fraude de telegrama, de comunicaciones interestatales para obtener un rescate o una recompensa, y de llevar un arma de fuego durante un crimen violento. Fue arrestado en la frontera el 21 de enero de 2016 y actualmente está bajo custodia federal en Fresno debido a una denuncia previa emitida en este caso. 

En la acusación formal se alega que Carranza-Sánchez y otros individuos conspiraron para obtener retribuciones de personas que residen en los Estados Unidos a través de varios medios, incluso el de tomar como rehenes a inmigrantes indocumentados miembros de sus familias y amigos que estaban buscando entrar en los Estados Unidos, y de manifestar falsamente a los residentes americanos que sus parientes habían sido pasados de contrabando a los Estados Unidos. En cinco instancias entre las fechas de diciembre de 2010 y noviembre de 2015, e implicando a seis víctimas, la acusación formal alega que Carranza-Sánchez sostuvo de rehén a los inmigrantes indocumentados en México, que les amenazó de hacerles daño y que en alguna ocasión les hizo daño. Él, presuntamente, les dijo a los residentes americanos que si no le pagaban inmediatamente, les haría daño o mataría a los inmigrantes. Además se le acusa de fraude a Carranza-Sánchez por manifestar falsamente a los residentes americanos que liberaría a los inmigrantes indocumentados y los entregaría en los Estados Unidos después de recibir el pago por parte de los residentes americanos.

“El secuestro y el fraude son crímenes federales serios a pesar del estado legal de las víctimas en este país,” declaró el Procurador Federal Wagner. “El abuso y la explotación de inmigrantes indocumentados es inaceptable y continuaremos a investigar y a procesar a aquellos que se inmiscuyan en tales conductas criminales.”

Este caso fue el producto de una investigación por parte de los Servicios del Orden Público de Inmigración y Aduanas de los Estados Unidos (ICE) y de las Investigaciones para la Seguridad Nacional (HSI). La Procuradora Federal Auxiliar Ángela L. Scott está procesando el caso. La investigación sigue pendiente.

En la actualidad, Carranza-Sánchez está siendo detenido en el Distrito Este de California. Si es condenado, Carranza-Sánchez se enfrenta a una pena máxima establecida por la ley de cadena perpetua. No obstante, cualquier sentencia sería determinada a la discreción del tribunal después de la consideración de cualquier factor establecido por la ley aplicable y de las Normas Federales para Sentenciar que toman en cuenta un número de variables. Los cargos son solo alegaciones, el demandado es presunto inocente hasta y a menos que sea comprobado culpable sin duda razonable.  

The U.S. District Court for the Eastern District of Virginia entered a consent decree of permanent injunction against Henry’s Farm Inc., of Woodford, Virginia, and its owner, Soo C. Park, to prevent the distribution of adulterated food, the Department of Justice announced today.  Henry’s Farm manufactured and distributed a variety of soybean sprouts and repackaged and distributed mungbean sprouts.

The department filed a complaint in the U.S. District Court for the Eastern District of Virginia at the request of the U.S. Food and Drug Administration (FDA), alleging that the company and its owner have a history of processing food products under insanitary conditions.

In conjunction with the filing of the complaint, the defendants agreed to settle the litigation and be bound by a consent decree of permanent injunction.  Under the consent decree, defendants cannot process or distribute food until they report to FDA the actions they have taken to bring their operations into compliance with the federal Food, Drug and Cosmetic Act (FDCA), including cleaning and sanitizing the facility and equipment therein, and FDA notifies the defendants that they appear to be in compliance with specific remedial actions set forth in the decree and the FDCA.

“Insanitary conditions at food processing facilities can pose well-known risks to consumers, but such risks can be effectively mitigated if companies handling food take proper precautions,” 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.”

“It’s the FDA’s responsibility to protect consumers from potentially harmful food entering the food supply,” said FDA’s Associate Commissioner Melinda K. Plaisier for regulatory affairs.  “When a company continues to produce food that presents a risk for consumers, the FDA will take whatever steps necessary to protect public health.”

According to the complaint, in December 2014, FDA investigators inspected Henry’s Farm’s manufacturing facility at 5500 Fair Oaks Lane in Woodford and found numerous insanitary conditions, including: standing water in the sprout production room; sprout debris at various places along the packaging line and floor; three dead insects and a live spider on packing material in the processing room and three dead insects in the seed storage area.

As alleged in the complaint, FDA investigators discovered the presence of L. mono at the facility, including samples taken from food contact surfaces and a sample of finished sprout product collected in May 2012.  L. mono is food-borne bacteria that can cause serious illness or even death in consumers.  Eating food contaminated with L. mono poses the greatest risk to populations with impaired or weaker immune systems, including pregnant women, infants and the elderly.  

According to the complaint, the FDA inspected Henry’s Farm’s facility three times before the December 2014 inspection — in June 2014, December 2013 and May 2012.  As alleged in the complaint, in each prior inspection, FDA investigators found inadequate sanitation practices including: standing water in sprout production areas; sprout debris on food contact surfaces; failure to maintain cleaning logs; rodent activity in the sprout production area and failure to use any antimicrobial treatment to reduce the hazard of pathogens that may be present on seed for sprouting.  As alleged in the complaint, FDA repeatedly warned defendants that further action could be taken if the insanitary conditions persisted.

The government is represented by Trial Attorney Arturo DeCastro of the Civil Division’s Consumer Protection Branch, with the assistance of Associate Chief Counsel Tara Boland of the Department of Health and Human Services’ Office of General Counsel – Food and Drug Division.

Henry's Farm Consent Decree of Permanent Injunction

Attorney General Loretta E. Lynch announced a new Award for Distinguished Service in Community Policing at a roundtable during her Community Policing Tour stop in Portland, Oregon.

The Attorney General’s Award recognizes individual state, local or tribal sworn police officers and deputies for exceptional efforts in community policing.  The winning officer(s) or deputy and/or deputies will have demonstrated active engagement with the community in one of three areas: criminal investigations, field operations or innovations in community policing.

“I have made building trust between law enforcement officers and the communities we serve a top priority for the Department of Justice,” said Attorney General Lynch.  “Honoring the outstanding work of our rank and file is a significant part of that effort.  This award will represent and uplift the often unsung work being done every day by law enforcement officers throughout the nation.”

Within each category an award will be given to law enforcement agencies serving small, medium and large jurisdictions including:

• Agencies serving populations fewer than 50,000
• Agencies serving populations 50,000 to 250,000
• Agencies serving populations over 250,000

By distinguishing and rewarding these efforts, the Department of Justice strives to promote and sustain its national commitment to community policing and to advance policing practices that are fair, impartial and procedurally just.

With the Attorney General’s Award for Distinguished Service in Community Policing, the Office of the Attorney General recognizes that within and across the various law enforcement agencies that make up the more than 18,000 units across the country, individual officers can have a transformational impact on their agencies and the communities they serve by embracing the philosophy of community policing and incorporating it into their daily work.  

The application for nominees will be posted next week at https://www.justice.gov/ag/community-policing-award.

U.S. District Court Also Issues Permanent Injunction Against Company and Two Principals

Roos Foods Inc., a Delaware company, pleaded guilty to a misdemeanor violation of the Federal Food, Drug and Cosmetic Act (FDCA), in the U.S. District Court for the District of Delaware, the Department of Justice announced today.  U.S. Magistrate Judge Sherry R. Fallon accepted the company’s guilty plea and sentenced Roos Foods to pay a fine of $100,000.

In addition to the company’s guilty plea, Roos, and its principals, Ana A. Roos and Virginia Mejia, agreed to a consent decree of permanent injunction.  The consent decree of permanent injunction was entered by U.S. District Court Judge Richard G. Andrews on Jan. 26. 

Roos Foods distributed several varieties of ready-to-eat cheese, including ricotta, queso fresco and fresh cheese curd and sold and distributed its products to wholesale customers in Maryland, New Jersey, Virginia and Washington D.C., according to the criminal information filed on Jan. 22.  A civil complaint along with the proposed consent decree was also filed on that same date.  The criminal charge and civil complaint allege that Roos distributed cheese connected to a 2014 outbreak of Listeria monocytogenes (L. mono). 

“The Department of Justice will use all of the tools available to us – criminal and civil – to ensure that the food we buy is free from dangerous bacteria and is safe to eat,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “We will continue to work aggressively with the Food and Drug Administration (FDA) to combat and deter conduct leading to the distribution of adulterated food to consumers.” 

“The criminal and civil cases demonstrate the need for the government to protect consumers from adulterated food,” said U.S. Attorney Charles M. Oberly III for the District of Delaware.  “Manufacturers of our nation’s food supplies, such as Roos, must comply with the law and when violators are found they should expect to be prosecuted and, if necessary, put out of business.”

The criminal information alleged that on Feb. 21, 2014, the Centers for Disease Control and Prevention (CDC) reported that a total of eight people (five adults and three newborns) in Maryland and California were infected with L. mono.  According to the CDC, several of the Maryland patients reported having eaten soft or semi-soft cheeses in the month before becoming ill. 

L. mono is the bacterium that causes the disease listeriosis.  Listeriosis is most commonly contracted by eating food contaminated with L. mono.  Listeriosis can be serious, even fatal, for high-risk groups such as unborn babies, newborns and those with impaired immune systems. 

Unlike many other foodborne microbes, L. mono bacteria are capable of adapting and growing even at refrigerator temperatures.  Thus, the presence of L. mono in ready-to-eat foods is a particularly significant public health risk.

As alleged in the information, following a report that L. mono had been isolated from cheese manufactured by Roos Foods, the FDA inspected the firm’s Kenton, Delaware facility and established that ready-to-eat cheese products were adulterated in that they had been prepared, packed or held under insanitary conditions whereby they may have become contaminated with filth or rendered injurious to health.  As alleged, FDA found numerous failures to implement effective monitoring and sanitation controls in accordance with current Good Manufacturing Practices.

The information alleged that the FDA inspection revealed significant sanitation deficiencies, such as widespread roof leaks in the manufacturing area, including over open manufacturing equipment; rust flakes on the manufacturing equipment from corroded roof trusses and metal roofing; un-cleanable surfaces on walls, floors and ceilings and product residue on equipment that had purportedly been cleaned.  In addition, as alleged in the information, FDA collected environmental samples and found L. mono on 12 surfaces in the facility.

On March 11, 2014, the FDA suspended the food facility registration of Roos Foods after determining there was a reasonable probability that food manufactured, processed, packed, or held by Roos Foods would cause serious adverse health consequences or death to humans.  A company without a food facility registration cannot distribute any food products.  Roos Foods has not reopened.

“Consumers rely on the FDA to help ensure that their food is safe and wholesome,” said Deputy Commissioner Howard Sklamberg of FDA’s Global Regulatory Operations and Policy. “When companies put themselves above the law and produce food that puts the public's health at risk, we will see that they are brought to justice.”

The civil complaint alleged that Roos Foods and the two individual defendants violated the FDCA by, among other things, introducing or delivering for introduction into interstate commerce articles of food that were adulterated in that the food was prepared, packed or held under insanitary conditions whereby it may have become contaminated with filth or rendered injurious to health. 

As part of the consent decree, defendants represented to the court that, at the time of entry of the consent decree, they were not engaged in receiving, preparing, processing, packing,   holding, or distributing any type of food at or from any location.  The permanent injunction requires the defendants to notify the FDA if they intend to resume such operations.  In addition, the defendants must take a series of safety related steps under the permanent injunction before they can resume such operations. 

Principal Deputy Assistant Attorney General Mizer and U.S. Attorney Oberly commended the investigative efforts of the FDA’s Office of Criminal Investigation.  The criminal case is being prosecuted by Trial Attorney Heide L. Herrmann of the Justice Department’s Consumer Protection Branch and Assistant U.S. Attorneys Jennifer Welsh and Edmond Falgowski of the District of Delaware.  They were assisted by Associate Chief Counsel Laura Pawloski of the Food and Drug Division, Office of General Counsel, Department of Health and Human Services. 

The government is represented in the civil case by Trial Attorney Megan Englehart of the Justice Department’s Consumer Protection Branch and Assistant U.S. Attorney Patricia Hannigan of the District of Delaware, with the assistance of Associate Chief Counsel Shannon M. Singleton of the Food and Drug Division, Office of General Counsel, Department of Health and Human Services.

For more information about the Consumer Protection Branch, visit its website at http://www.justice.gov/civil/consumer-protection-branch.  For more information about the U.S. Attorney’s Office for the District of Delaware, visit its website at https://www.justice.gov/usao-de.

A federal grand jury sitting in Chicago, Illinois returned an indictment on Feb. 11 against a resident of a Chicago suburb, charging him with 10 counts of wire fraud, 10 counts of aggravated identity theft and one count of access device fraud, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Zachary T. Fardon of the Northern District of Illinois. The defendant had his initial court appearance earlier today.

Jonathan Herring aka Byron Taylor, Marco Brown and Quang Dang of Harvey, Illinois, participated in a stolen identity refund fraud scheme, according to allegations in the indictment.  Herring obtained the means of identification of actual individuals, including their names and social security numbers and used this information to prepare false tax returns.  Herring is alleged to have obtained stolen identities of members of the U.S. Air Force, among others.  Herring used the stolen identities to electronically file false income tax returns seeking tax refunds with the Internal Revenue Service (IRS).  Herring is alleged to have received the fraudulently obtained tax refunds in the form of direct deposits into various bank accounts that he controlled. 

If convicted, Herring faces a statutory maximum sentence of 20 years in prison for each count of wire fraud, 10 years in prison for one count of access device fraud and a mandatory sentence of two years in prison for aggravated identity theft, which will run consecutive to any other prison term he receives.  Herring also faces substantial monetary penalties, supervised release, and restitution.

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

Acting Assistant Attorney General Ciraolo commended special agents of IRS Criminal Investigation, who investigated the case and Trial Attorneys Michael C. Boteler and Timothy M. Russo of the Tax Division, who are prosecuting this case.

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

Mark T. Conklin, the former owner, operator and sole shareholder of Recovery Home Care Inc. and Recovery Home Care Services Inc. (collectively RHC) has agreed to pay $1.75 million to resolve a lawsuit alleging that he violated the False Claims Act by causing RHC to pay illegal kickbacks to doctors who agreed to refer Medicare patients to RHC for home health care services, the Department of Justice announced today.  Conklin sold the RHC companies to National Home Care Holdings LLC, on Oct. 9, 2012. 

“Individuals who seek to increase their profits by providing physicians with illegal inducements will be held personally accountable,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “We will continue to identify, investigate and, where appropriate, sue individuals and corporations that misuse funds meant to provide critical medical services for beneficiaries of federal health care programs.”

From 2009 through 2012, Conklin spearheaded a scheme whereby RHC, headquartered in West Palm Beach, Florida, allegedly paid dozens of physicians thousands of dollars per month to serve as sham medical directors who supposedly conducted quality reviews of RHC patient charts.  According to the government’s lawsuit, the physicians in many instances performed little or no work, but nevertheless received thousands of dollars from RHC.  The government’s complaint contended that these payments were, in fact, kickbacks intended to induce the physicians to refer their patients to RHC, in violation of the Anti-Kickback Statute and the Stark Law.

These laws are intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives.  The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by federal health care programs, including Medicare.  The Stark Law forbids a home health care provider from billing Medicare for certain services referred by physicians who have a financial relationship with the entity.   A person who knowingly submits, or causes the submission, to Medicare of claims that violate either the Anti-Kickback Statute or the Stark Law is also liable for treble damages and penalties under the False Claims Act.

“Inducements of the type at issue in this case are designed to improperly influence a physician’s independent medical judgment,” said U.S. Attorney A. Lee Bentley, III for the Middle District of Florida.  “This lawsuit and today’s settlement evidence our office’s ongoing efforts to safeguard federal health care program beneficiaries from the effects of such illegal conduct.”

“Home health agency owners who seek to boost profits by paying kickbacks to physicians in exchange for patient referrals will instead pay for their improper conduct at the settlement table,” said Special Agent in Charge Shimon R. Richmond of U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG).  “We will continue to crack down on such illegal, wasteful kickback schemes, which can undermine impartial medical judgment and corrode the public’s trust in the health care system.”

The United States previously reached a settlement with RHC’s purchaser, National Home Care Holdings, on March 9, 2015, for $1.1 million.      

The settlement with Conklin, which is subject to approval by the Bankruptcy Court for the Southern District of Florida, concludes a lawsuit originally filed by Gregory Simony, a former RHC employee, under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery.  The act also allows the government to intervene and take over the action, as it did in part in this case.  Simony will receive up to $315,000 of the proceeds of the Conklin settlement.   

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

The settlement was the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, the U.S. Attorneys’ Offices for the Middle District of Florida and the Southern District of Florida and the HHS-OIG. 

The case is captioned United States ex rel. Simony v. Recovery Home Care, et al., Case No. 8-12-cv-2495-T-36TBM (M.D. Fla.).  The claims resolved by the settlement are allegations only and there has been no determination of liability.

The principal of a series of dietary ingredient companies in New Jersey pleaded guilty today in connection with the sale of methamphetamine precursor chemicals, a separate scheme to defraud purchasers of dietary supplements and money laundering, the Department of Justice announced. 

“The Department of Justice has increased its enforcement efforts against unlawful dietary supplements in recent years,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “This case underlines the need for both consumers and the government to be vigilant in investigating what the American public is ingesting in the guise of weight loss or health enhancement supplements.”

David Romeo, 46, of Washington Township, New Jersey, pleaded guilty to a four-count Information charging him with conspiracy to distribute three kilograms or more of meth precursors, money laundering, mail fraud and introduction of misbranded food into interstate commerce with intent to defraud or mislead.  As part of his plea agreement, Romeo has agreed to forfeit more than $1.2 million in money derived from his crimes.

In pleading guilty, Romeo admitted that he was a principal of Global Nutrients, Stella Labs and Nutraceuticals, all of which were New Jersey-based entities engaged in the sale of dietary ingredients intended for use in dietary supplements sold to consumers.  Starting at least as early as 2003, Romeo directed his employees to use cheaper substitutes in place of the dietary ingredients that had actually been ordered by customers, most of whom were companies engaged in production of dietary supplements.  These substitutes were sent in many instances without the customer’s consent or knowledge.  As alleged in charging documents, Romeo and his associates referred to the substitution of cheaper ingredients as “SOP,” meaning “standard operating procedure.” 

Romeo admitted that, as part of the scheme, his businesses purported to sell a weight-loss ingredient called “hoodia.”  Stella Labs and Nutraceuticals represented to consumers that they were selling hoodia that had been sourced from a rare South African plant, Hoodia gordonii.  As alleged in the charging document, the substance being sold by Romeo’s business entities was manufactured at a facility in China.  As part of his plea agreement, Romeo agreed that the fraud scheme caused a loss of more than $7 million.

Special agents of the Food & Drug Administration (FDA)’s Office of Criminal Investigations investigated the false supplement allegations of the case. 

“Manufacturing and selling misbranded dietary supplements puts American consumers at risk,” said Director George M. Karavetsos of FDA Office of Criminal Investigations.  “Our office is fully committed to working with the Department of Justice to protect consumers from public health risks and fraud.”                   

The mail fraud charge carries a statutory maximum sentence of 20 years in prison and a maximum $250,000 fine, or twice the gain or loss caused by the offense.  The misbranding charge carries a statutory maximum sentence of three years in prison.  Sentencing is scheduled for May 18, 2016.

Romeo and his companies were the subject of a prior action by the Federal Trade Commission (FTC) seeking a court order to prevent the sale of bogus dietary ingredients.  The case was resolved by a court order barring Romeo from making weight loss claims about supplements he sold.  FTC v. Stella Labs, 09-cv-1262 (D.N.J.).

Acting Principal Deputy Assistant Attorney General Mizer thanked the FDA’s Office of Criminal Investigations and Office of Chief Counsel, the Drug Enforcement Agency and the U.S. Postal Inspection Service for their investigative support of the case.  The case is being prosecuted by Trial Attorney Patrick Runkle of the Civil Division’s Consumer Protection Branch, Paul Laymon of the Justice Department’s Narcotics and Dangerous Drugs Section and Assistant U.S. Attorney Zach Intrater of the U.S. Attorney’s Office for the District of New Jersey. 

For more information about the Consumer Protection Branch, visit its website at http://www.justice.gov/civil/consumer-protection-branch. For more information about the U.S. Attorney’s Office for the District of New Jersey, visit its website at http://www.justice.gov/usao-nj.

Deputy Attorney General Sally Q. Yates and Assistant Attorney General Karol V. Mason of the Office of Justice Programs (OJP) today announced that New Orleans, Louisiana, St. Louis, Missouri, and Milwaukee, Wisconsin, will join 10 existing sites which have adopted crime-fighting strategies as part of the Violence Reduction Network (VRN). The initiative is a comprehensive approach to reducing violent crime that complements the Attorney General’s Smart on Crime Initiative and leverages existing Justice Department resources in communities around the country.

“It has been only a year-and-a-half since we launched the first Violence Reduction Network,” said Deputy Attorney General Yates.  “In just that short period of time, the partnerships we have built through VRN have helped to reduce crime rates.  These results could only have happened through the kind of creative collaboration promoted through the VRN.”

Today’s announcement was made before an audience of U.S. Attorneys, police chiefs, local leaders from the new and existing VRN sites and department officials. Through VRN, the Justice Department enlists tactical and operational expertise available from the Bureau of Justice Assistance, the Federal Bureau of Investigation, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the United States Marshals Service, the Drug Enforcement Administration, the Executive Office of the United States Attorneys, the Office of Community Oriented Policing Services and the Office on Violence Against Women. 

In addition to the announcement about the three new VRN sites, the Deputy Attorney General also announced the Police-Prosecutor Partnership, which is soliciting proposals to encourage out-of-the-box collaborations between law enforcement agencies and prosecutors’ offices.  This grant solicitation encourages proposals that build on evidence-based crime-fighting models – focusing on reducing violence, sharing intelligence, and engaging the community –by merging and maximizing the expertise of law enforcement officers and prosecutors. The new solicitation is posted at www.bja.gov/funding.aspx.

In 2014, VRN was launched in Camden, Chicago, Detroit, Wilmington, and Oakland and Richmond, California.  In September 2015, VRN was expanded to Compton, California; Flint, Michigan; Little Rock and West Memphis, Arkansas; and Newark, New Jersey. 

VRN’s core components include customized training and technical assistance; a strategic site liaison to guide the coordination of Justice Department resources; tools to enhance information sharing, including peer-to-peer exchanges; community practice collaboration among existing sites and an annual summit in September.

Olympus Corp. of the Americas, Nation’s Largest Distributor of Endoscopes, Also Agrees to Reforms and Subsidiary Admits to Foreign Bribery

The United States’ largest distributor of endoscopes and related equipment will pay $623.2 million to resolve criminal charges and civil claims relating to a scheme to pay kickbacks to doctors and hospitals, U.S. Attorney Paul J. Fishman of the District of New Jersey and Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division announced today.  U.S. Attorney Fishman and Principal Deputy Assistant Attorney General David Bitkower of the Justice Department’s Criminal Division also announced that a subsidiary of the distributor will pay $22.8 million to resolve criminal charges relating to the Foreign Corrupt Practices Act (FCPA) in Latin America.

Anti-Kickback Statute Violations

Olympus Corp. of the Americas (OCA) was charged in a criminal complaint filed today in Newark, New Jersey, federal court with conspiracy to violate the Anti-Kickback Statute (AKS), which prohibits payments to induce purchases paid for by federal health care programs.  OCA has entered into a three-year deferred prosecution agreement (DPA) that will allow it to avoid conviction if it complies with the reform and compliance requirements outlined in the agreement. 

“For years, Olympus Corporation of the Americas and Olympus Latin America dropped the compliance ball and failed to have in place policies and practices that would have prevented the substantial kickbacks and bribes they paid,” said U.S. Attorney Fishman. “It is appropriate that they be punished for that.  At the same time, the deferred prosecution agreement takes into account the companies’ cooperation and commitment to fully functional corporate compliance.”

As a result of the conduct outlined in the government’s criminal complaint and DPA, OCA has agreed to pay a $312.4 million criminal penalty and an additional $310.8 million to settle civil claims under the federal and various state False Claims Acts, the largest total amount paid in U.S. history for violations involving the AKS by a medical device company.

“The Department of Justice has longstanding concerns about improper financial relationships between medical device manufacturers and the health care providers who prescribe or use their products,” said Principal Deputy Assistant Attorney General Mizer.  “Such relationships can improperly influence a provider’s judgment about a patient’s health care needs, result in the use of inferior or overpriced equipment, and drive up health care costs for everybody.  In addition to yielding a substantial recovery for taxpayers, this settlement should send a clear message that we will not tolerate these types of abusive arrangements, and the pernicious effects they can have on our health care system.” 

In a separate DPA, Olympus Latin America Inc. (OLA), a subsidiary of OCA, will pay a $22.8 million criminal penalty for violations of the FCPA.

The criminal complaint against OCA, which OCA agrees is true, charges that OCA won new business and rewarded sales by giving doctors and hospitals kickbacks, including consulting payments, foreign travel, lavish meals, millions of dollars in grants and free endoscopes.  For example:

• OCA gave a hospital a $5,000 grant to facilitate a $750,000 sale;

• OCA held up a $50,000 research grant until a second hospital signed a deal to purchase Olympus equipment;

• OCA paid for a trip for three doctors to travel to Japan in 2007 as a quid pro quo for their hospital’s decision to switch from a competitor to Olympus; and

• a doctor with a major role in a New York medical center’s buying decisions received free use of $400,000 in equipment for his private practice.

These and other kickbacks helped OCA obtain more than $600 million in sales and realize gross profits of more than $230 million. 

The criminal complaint alleges that the improper payments happened while Olympus lacked training and compliance programs.  Unlike other medical and surgical products companies, Olympus did not create the position of compliance officer until 2009 and did not hire an experienced compliance professional until August 2010. 

The DPA requires OCA to adopt several compliance measures to remedy its problems:

• OCA must enhance its compliance training and maintain an effective compliance program;

• OCA must maintain a confidential hotline and website for OCA employees and customers to report wrongdoing;

• OCA’s chief executive officer and board of directors must certify annually that the program is effective; and

• OCA must adopt an executive financial recoupment program requiring executives who engage in misconduct or fail to promote compliance to forfeit up to three years of performance pay.

Larry Mackey, a former federal prosecutor best known for trying the Oklahoma City bombing cases, has been selected as an independent monitor to evaluate and oversee Olympus’ compliance with the DPA.  He was selected by U.S. Attorney Fishman under department guidelines and approved by the Deputy Attorney General.  The DPA and monitor will remain in place for three years and can be extended for another two years if Olympus violates the DPA. 

In the civil settlement, Olympus agrees to pay $310.8 million to the federal government and the states to resolve claims that Olympus’s payment of kickbacks caused false claims to be submitted to federal health care programs Medicare, Medicaid and TRICARE, and thus violated not only the AKS but also the federal and various state False Claims Acts.  The federal share of the civil settlement is $267,288,323, and Olympus will pay $43,512,053 million to participating states that contributed to the falsely claimed Medicaid payments at issue.

The civil settlement resolves a lawsuit filed by John Slowik, the former chief compliance officer of OCA, in the District of New Jersey, under the federal and various state False Claims Acts.  The acts permit whistleblowers to file suit for false claims against the government entities and to share in any recovery.  Mr. Slowik will receive $44,102, 573 million from the federal share and $7 million from the state share of the civil settlement amount.

FCPA Violations

In a separate criminal complaint filed today in Newark federal court, OCA’s Miami-based subsidiary OLA was charged with FCPA violations in connection with improper payments to health officials in Central and South America, and OLA entered into a separate three-year DPA.  According to court documents, from 2006 until August 2011, OLA implemented a plan to increase medical equipment sales in Central and South America by providing payments to health care practitioners at government-owned health care facilities.  These payments included cash, money transfers, personal grants, personal travel and free or heavily discounted equipment.  The primary method to deliver these illicit benefits was through “training centers,” nominally set up to educate and train doctors, but which OLA used to provide benefits to pre-selected practitioners.  OLA and its conspirators paid nearly $3 million to practitioners to induce the purchase of Olympus products and recognized more than $7.5 million in profits as a result.

“Olympus Latin America admitted to bribing publicly employed health care providers and hospital officials across Central and South America so that it could illegally win business and sell its products,” said Principal Deputy Assistant Attorney General Bitkower.  “OLA’s illegal tactics in Central and South America mirrored Olympus’s conduct in the United States.  The FCPA resolution announced today demonstrates the department’s commitment to ensuring the integrity of the health-care equipment market, regardless whether the illegal bribes occur in the U.S. or abroad.” 

OLA entered into the DPA with the Criminal Division’s Fraud Section and the U.S. Attorney’s Office of the District of New Jersey.  The agreement requires OLA to pay a criminal penalty of $22.8 million, retain the same compliance monitor as for OLA (Mr. Mackey) for a period of three years and implement a number of compliance measures.  The department reached this resolution based on a number of factors, including that OLA did not voluntarily disclose the misconduct in a timely manner, but OLA did receive credit of a 20 percent reduction on its penalty for its cooperation, including its extensive internal investigation, translation of numerous foreign language documents and collecting, analyzing and organizing voluminous evidence.

Corporate Integrity Agreement

In addition to the criminal and civil resolutions, Olympus executed a corporate integrity agreement (CIA) with the Department of Health and Human Services-Office of Inspector General (HHS-OIG).  The CIA details the compliance program OCA must maintain, which must include:

• compliance responsibilities for OCA management and the board of directors;

• a health care compliance code of conduct that includes certain standards;

• training and education that includes specified standards;

• requirements for consulting arrangements, grants and charitable contributions, management of field assets and review of travel expenses;

• risk assessment and mitigation process; and

• review procedures for testing the compliance program.

“Olympus Corp. of the Americas’ and its subsidiaries’ greed-fueled kickback scheme threatened the impartiality of medical decision-making and the financial integrity of Medicare and Medicaid,” said Special Agent in Charge Scott J. Lampert of the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG).  “Working with our law enforcement partners, we remain vigilant and committed to protecting beneficiaries and taxpayers from those seeking to unlawfully enrich themselves.”

* * *

The U.S. Attorney’s Office of the District of New Jersey prosecuted the criminal case under the AKS against Olympus and, with the Civil Division’s Commercial Litigation Branch, reached the civil settlement.  The U.S. Attorney’s Office of the District of New Jersey and the Criminal Division’s Fraud Section prosecuted the criminal case under the FCPA against OLA.  The HHS Office of Counsel to the Inspector General, the FBI, HHS-OIG Office of Criminal Investigations and the National Association of Medicaid Fraud Control Units provided assistance.

The FBI’s Newark Field Office, HHS-OIG and the FBI Allentown, Pennsylvania, Field Office investigated the case.

Assistant U.S. Attorneys R. David Walk Jr. and Deborah J. Gannett of the District of New Jersey’s Health Care and Government Fraud Unit in Newark represented the government in the AKS criminal prosecution.  Assistant U.S. Attorney David E. Dauenheimer of the District of New Jersey and Senior Trial Counsel David T. Cohen of the Civil Division’s Commercial Litigation Branch represented the government in the prosecution of the civil case.  Mary Riordan and Nicole Caucci of the HHS-OIG negotiated the CIA.  

Fraud Section Trial Attorney James P. McDonald and Assistant U.S. Attorneys Walk and Gannett prosecuted the FCPA case.  The Criminal Division’s Office of International Affairs provided significant assistance in this matter. 

U.S. Attorney Fishman reorganized the health care fraud practice at the U.S. Attorney’s Office of the District of New Jersey, including creating a stand-alone Health Care and Government Fraud Unit, which handles both criminal and civil investigations and prosecutions of health care fraud offenses.  Since 2010, the office has recovered more than $1.29 billion in health care fraud and government fraud settlements, judgments, fines, restitution and forfeiture under the False Claims Act, the Food, Drug and Cosmetic Act and other statutes.

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

Aubrey K. McClendon has been charged by a federal grand jury with conspiring to rig bids for the purchase of oil and natural gas leases in northwest Oklahoma, the Department of Justice announced today.

The indictment alleges that McClendon orchestrated a conspiracy between two large oil and gas companies to not bid against each other for the purchase of certain oil and natural gas leases in northwest Oklahoma.  During this conspiracy, which ran from December 2007 to March 2012, the conspirators would decide ahead of time who would win the leases.  The winning bidder would then allocate an interest in the leases to the other company.  McClendon instructed his subordinates to execute the conspiratorial agreement, which included, among other things, withdrawing bids for certain leases and agreeing on the allocation of interests in the leases between the conspiring companies.

“While serving as CEO of a major oil and gas company, the defendant formed and led a conspiracy to suppress prices paid to leaseholders in northwest Oklahoma,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division.  “His actions put company profits ahead of the interests of leaseholders entitled to competitive bids for oil and gas rights on their land.  Executives who abuse their positions as leaders of major corporations to organize criminal activity must be held accountable for their actions.”    

“The FBI is committed to investigating individuals who engage in corrupt criminal conduct,” said Special Agent in Charge Scott L. Cruse of the FBI’s Oklahoma City Division.  “We will continue to work with the DOJ Antitrust Division to target those who devise schemes which create an unfair competitive advantage by way of bid rigging or other illegal means.”  

The indictment, filed today in the U.S. District Court for the Western District of Oklahoma, alleges that McClendon’s conspiracy affected certain bids for leasehold interests and producing properties in northwest Oklahoma.  Leasehold interests give a lessee the right to develop the land and to extract oil and natural gas from the land for a time period typically lasting three to five years.  Producing properties are tracts of land where the existing lessee has drilled wells on the land and the wells are producing a stream of oil and/or natural gas.  Purchasing a producing property includes not just the underlying leasehold interests to drill on the land, but also the producing wells and infrastructure already on the land.

Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals.   

The charges contained in the indictment are allegations and not evidence of guilt.  The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

This is the first case resulting from an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the oil and natural gas industry.  This investigation is being conducted by the Antitrust Division’s Chicago Office and the FBI’s Oklahoma City Field Office, with assistance from the U.S. Attorney’s Office of the Western District of Oklahoma.  Anyone with information in connection with this investigation is urged to call the Antitrust Division’s Chicago Office at 312-984-7200, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Oklahoma City Field Office at 405-290-7770.

PDF version of the brief recently filed in United States v. State of Texas.

The Justice Department announced today that U.S. District Judge Carlton Reeves of the Southern District of Mississippi ordered restitution in the amount of $840,000 to be paid the estate of James Craig Anderson in the cases of defendants Deryl Paul Dedmon, 23; John Aaron Rice, 23; Dylan Wade Butler, 24; and William Kirk Montgomery, 26.

In 2012, Dedmon, Rice, Butler and Montgomery were convicted of violating the Matthew Shepard and James Byrd Jr. Hate Crimes Prevention Act for their participation in the conspiracy and racially-motivated attack on Anderson that resulted in his death.  The assault of Anderson was the last in a series of violent attacks by the defendants and their six co-conspirators, in which they physically assaulted vulnerable African-Americans in and around Jackson, Mississippi.  The defendants and six other co-conspirators specifically targeted African Americans they believed to be homeless or under the influence of alcohol because they believed that such individuals would be less resistant and less likely to report an assault. 

On June 26, 2011, Dedmon, Rice, Butler, Montgomery and three of their co-conspirators targeted Anderson, who was alone and defenseless in the parking lot of the Metro Inn Motel in Jackson.  Rice and Dedmon beat Anderson, and then Dedmon used his Ford F-250 truck to fatally strike Anderson.

Judge Reeves previously sentenced Dedmon to serve 50 years in prison, Montgomery to serve over 19 years in prison, Rice to serve over 18 years in prison and Butler to serve seven years in prison.  The amount of restitution imposed accounts for the estimated lost future wages that Anderson would have accumulated and used to support his family had he not been killed in 2011. 

“When these defendants committed this brutal hate crime they not only took a man’s life, they also hurt a family,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division.  “Although no amount of money will ever be able to account for the true value of James Craig Anderson’s life, we hope that this restitution will help ease the burden on his family.”

This case was investigated by the FBI’s Jackson Division.  It is being prosecuted by Trial Attorney Sheldon L. Beer and Acting Chief Paige Fitzgerald of the Civil Rights Division’s Criminal Section and Assistant U.S. Attorney Glenda R. Haynes of the Southern District of Mississippi.

Lockheed Martin Corporation and subsidiaries Lockheed Martin Energy Systems and Lockheed Martin Utility Services (collectively, Lockheed Martin) have agreed to pay the United States $5 million to resolve allegations that they violated the Resource Conservation and Recovery Act (RCRA) and, in misrepresenting their compliance with RCRA to the Department of Energy (DOE), knowingly submitted false claims for payment under their contracts with DOE to operate the Paducah Gaseous Diffusion Plant in Paducah, Kentucky, the Justice Department announced today.  Headquartered in Bethesda, Maryland, Lockheed Martin is a global security, aerospace, and information technology company that provides energy, environmental, and other services to government and commercial customers.

“We depend on the private sector to provide services critical to the government’s energy needs and to provide those services by means that are environmentally sound,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “As the settlement announced today demonstrates, the department will vigorously pursue all appropriate remedies to ensure that those who provide these vital services do so honestly and safely and in accordance with the law.”

“This settlement reflects our commitment to pursuing companies that violate the hazardous waste laws, and to securing a fair recovery of civil penalties for the people of the United States,” said Assistant Attorney General John Cruden, head of the Justice Department’s Environment and Natural Resources Division.  “The $1 million in RCRA civil penalties that the defendants are paying under this settlement is significant and is appropriate for the violations the United States has alleged.”

The government’s lawsuit alleged that Lockheed Martin violated RCRA, the statute that establishes how hazardous wastes must be managed, by failing to identify and report hazardous waste produced and stored at the facility, and failing to properly handle and dispose of the waste.  The government further alleged that this conduct resulted in false claims for payment under Lockheed Martin’s contracts with the Department of Energy.       

Of the $5 million settlement amount, Lockheed Martin will pay $4 million to resolve the government’s False Claims Act allegations and its subsidiaries (Lockheed Martin Energy Systems and Lockheed Martin Utility Services) will each pay $500,000 – $1 million total – in RCRA civil penalties.

“Government contractors are required to follow the same federal laws that apply to everyone else,” said U.S. Attorney John E. Kuhn, Jr. for the Western District of Kentucky.  “These companies do not get a pass on compliance, especially when their responsibilities include managing and disposing of hazardous waste.  Today’s settlement should serve as a reminder that my office and the Department of Justice will pursue all credible allegations of false claims and of environmental regulatory violations.”

“Managing hazardous waste is important, and this case makes clear EPA’s commitment to upholding laws that protect communities where waste is disposed,” said EPA Regional Administrator Heather McTeer Toney of EPA Region 4, the Southeast region.

Lockheed Martin operated the Paducah Gaseous Diffusion Plant under contracts with the Department of Energy and a government corporation, the U.S. Enrichment Corporation, from 1984 to 1999.  During that time, Lockheed Martin was responsible for the facility’s uranium enrichment operations.  Enriching uranium increases the proportion of uranium atoms that can be used to produce nuclear fuel for weapons and civilian energy production.  As the name of the plant suggests, the process used was called “gaseous diffusion.” 

In addition to uranium enrichment, Lockheed Martin was responsible for environmental restoration, waste management, and custodial care at the site, which occupies 3,500 acres in McCracken County, Kentucky.  Uranium enrichment operations ceased at the plant in 2013.  The government is working with other contractors to remediate contamination at and near the site consistent with the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). 

The settlement resolves two lawsuits filed under the qui tam, or whistleblower, provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and obtain a portion of the government’s recovery.  The lawsuits were filed by the Natural Resources Defense Council, Inc. and several former employees of Lockheed Martin who worked at the Paducah facility.  The United States partially intervened in the lawsuits, which were then consolidated into one action.  The whistleblowers will collectively receive $920,000 from the United States’ portion of the settlement.  

The case was a coordinated effort of the U.S. Attorney’s Office for the Western District of Kentucky, the Civil Division’s Commercial Litigation Branch, the Environment and Natural Resources Division’s Environmental Enforcement Section, the U.S. Environmental Protection Agency, the Department of Energy, and the Department of Energy Office of Inspector General.  

The case is captioned United States, ex rel. John David Tillson, Natural Resources Defense Council, Inc., et al. v. Lockheed Martin Corp., et al., Civil Action No. 5:99CV00170-GNS (W.D. Ky.).  The claims resolved by this settlement are allegations only; there has been no determination of liability. 

Saipan, CNMI - ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced the successful forfeiture of $2,500,000 from Hong Kong Entertainment (Overseas) Investments Ltd., d/b/a Tinian Dynasty Hotel & Casino (“TDHC”).  The forfeiture comes months after the United States Attorney’s Office and TDHC entered into a Non Prosecution Agreement which required the casino to forfeit millions in proceeds traceable to criminal violations.  Specifically, the agreement required THDC to administratively forfeit $536,969.12 as well as the $2,500,000.00 contemplated in the U.S. District Court’s Final Order of Forfeiture.  Together, these sums represent the largest forfeiture by the United States in NMI history.  The Agreement also obligates TDHC to fully cooperate with the United States in ongoing criminal investigations and to comply with federal reporting and other regulatory requirements.  The United States — in its sole discretion — can rescind the Agreement and initiate criminal proceedings should the Government determine that TDHC has failed to comply with any provision of the Agreement.

            In her Final Order of Forfeiture, U.S. District Court Chief Judge Ramona V. Manglona ordered that the casino’s rights, title, and interest in the $2,500,000 are now vested with the United States of America.  U.S. Attorney Limtiaco stated, “This forfeiture is the culmination of a year-long investigation.  The persistent and dedicated efforts of IRS Criminal Investigators were instrumental in recovering these funds.  The IRS Criminal Investigation, the U.S. Attorney’s Office, and the Department of Justice will continue to partner together to ensure casinos, financial institutions, and businesses comply with the requirements of federal law and other financial regulations.” 

            “The Bank Secrecy laws were enacted to curtail the movement of ill-gotten gains through our financial institutions.  When one of those entities shirks their duty and fails to comply with the law requiring the examining and reporting of certain financial transactions, it creates an entry point for would-be criminals to circumvent rules intended to frustrate and detect their criminal enterprises.  Together with the U.S. Attorney’s Office, we will continue to monitor the gaming industry to ensure the integrity of our financial markets,” stated Special Agent in Charge Teri Alexander of IRS Criminal Investigation.

            Federal law known as the Bank Secrecy Act (BSA) requires that financial institutions and certain businesses, including casinos with annual gaming revenue in excess of $1 million, be vigilant in detecting and reporting activity that may indicate that money laundering, or other financial crimes, are being committed, and that the casino implement and maintain an effective anti-money laundering program.  The BSA requires casinos to file a “Currency Transaction Report for Casinos” (CTR-C) for transactions that involve more than $10,000 in cash.  Cash includes the coins and currency of the United States and foreign countries. The law requires that casinos and businesses report transactions when customers use cash in a single transaction or a related transaction occurring within a 24-hour period. 

            On November 20, 2014, a federal grand jury returned a Second Superseding Indictment that charged TDHC with one count of conspiracy to fail to file CTRs in violation of 18 U.S.C. § 371 and 31 U.S.C. §§ 5313(a), 5322(b) and 5324(a)(1) and (d)(2); 155 counts of failure to file CTRs in violation of  31 U.S.C. §§ 5313(a) and 5322(b); one count of failure to file a SAR in violation of 31 U.S.C. §§ 5313(a), and 5322(b); and one count of failure to maintain an effective anti-money laundering program in violation of 31 U.S.C. §§ 5318(h) and 5322(b).

            According to filings with the Court, TDHC did not fully identify and disclose all individuals whose gambling activities should have legally triggered a BSA report.  From October 1, 2009 through April 25, 2013, TDHC failed to document over $138 million in reportable cash transactions.  It is estimated that TDHC failed to report 3,640 separate cash transactions during this same time period.

West Palm Beach Return Preparer Allegedly Overstated Refunds through Fabricated and Inflated Deductions and Credits

The United States has asked a federal court in West Palm Beach, Florida, to stop Renel Herard and his companies, Herard Tax Services aka Herard Security & Training and Herard Multi Services Inc., from preparing federal income tax returns for others, the Justice Department announced today.

The complaint alleges that Herard has been preparing tax returns since approximately 2009 and has prepared more than 4,000 tax returns for customers since 2011.  The complaint alleges also that Herard prepares returns that unlawfully understate income tax liabilities and overstate refunds by fabricating and/or exaggerating deductions and tax credits his clients are not eligible to take.  Herard’s practices include fabricating Schedule C losses for non-existent businesses, and falsely claiming fuel tax, child care and education credits for ineligible taxpayers who did not incur qualified expenses according to the complaint. 

The complaint further alleges that beginning with returns he prepared for the 2014 tax year, Herard falsely claimed the Premium Tax Credit, a refundable tax credit designed to help eligible individuals and families with low or moderate income afford health insurance purchased through the Health Insurance Marketplace, also known as the Exchange, by claiming it for customers who did not purchase health insurance through the Exchange. 

Altogether, the government complaint alleges that loss to the U.S. Treasury from the defendants’ activities may be in the millions of dollars.

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

A federal court in Spokane, Washington has ordered that James Hood, a dentist, and Karen Hood, his wife, ensure that their businesses timely file payroll tax returns and pay payroll taxes, the Department of Justice announced today.

U.S. District Court Judge Rosanna Malouf Peterson for the Eastern District of Washington entered a permanent injunction requiring Dental Care Associates of Spokane Valley, P.S.; Dr. James G. Hood Family Dentistry, aka Spokane Valley Dental Care, aka James G. Hood Family Dentistry, P.S.; Dr. James G. Hood, D.D.S., M.A., P.S., aka James G. Hood D.D.S., P.S., aka James G. Hood D.D.S., M.A., P.S.; Dr. James G. Hood, D.D.S., P.S.; Karen Jean Matsko Hood as Trustee of the Hood Family Trust; Whispering Pine Press, Inc.; James G. Hood and Karen J. Hood, to timely file payroll tax returns and pay any payroll taxes that accrue. Additionally, James and Karen Hood must notify the Internal Revenue Service (IRS) if they start to operate a new business.

According to the United States’ amended civil complaint, the various entities have repeatedly failed to timely file payroll tax returns or pay payroll taxes.  Moreover, James and Karen Hood have frustrated payroll tax enforcement by continually abandoning old entities and creating new ones.  The district court held that James and Karen Hood had admitted the facts in the complaint by failing to file an answer after the court ordered them to do so.  The permanent injunction entered by the court requires the defendants to stay current on their federal employment tax obligations.

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

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

The Affordable Care Act Has Helped the Government Fight Fraud, Strengthen Health Insurance Programs, Protect Consumers, and Save Taxpayer Dollars

The Obama Administration is committed to reducing fraud, waste, and abuse across the government.  Since 2010, the U.S. Department of Health & Human Services, Office of Inspector General (HHS OIG), the Centers for Medicare & Medicaid Services (CMS), and the U.S. Department of Justice (DOJ) have been using powerful, new anti-fraud tools to protect Medicare and Medicaid by shifting from a “pay and chase” approach toward fraud prevention. Through the groundbreaking Healthcare Fraud Prevention Partnership, stronger relationships have been built between the government and the private sector to help protect all consumers.

These focused efforts are successful.  In Fiscal Year (FY) 2015, the government recovered $2.4 billion as a result of health care fraud judgements, settlements and additional administrative impositions in health care fraud cases and proceedings.  Since its inception in 1997, the Health Care Fraud and Abuse Control (HCFAC) Program has returned more than $29.4 billion to the Medicare Trust Funds.  In this past fiscal year, the HCFAC program has returned $6.10 for each dollar invested. 

The Health Care Fraud Prevention and Enforcement Action Team (HEAT), a joint initiative between HHS, OIG, and DOJ, has played a critical role in the fight against  health care fraud.  

A key component of HEAT is the Medicare Fraud Strike Force – an interagency task force teams comprised of OIG and DOJ analysts, investigators, and prosecutors who target emerging or migrating fraud schemes, including fraud by criminals masquerading as health care providers or suppliers.

Since 2007, the Medicare Fraud Strike Force has charged over 2,536 individuals involved in more than $8 billion in fraud.  Many of these charges have resulted from coordinated, multi-district national takedowns. In June 2015, the Medicare Fraud Strike Force conducted its largest ever nationwide health care fraud takedown, which, for the first time, involved non-Strike Force participants and resulted in charges against a record 243 individuals for approximately $712 million in false Medicare and Medicaid billing.  Since its inception, the Medicare Fraud Strike Force has maintained a conviction rate of approximately 95 percent and an average term of incarceration of more than four years.

Another powerful tool in the effort to combat health care fraud is the federal False Claims Act.  In 2015, DOJ obtained over $1.9 billion in settlements and judgments from civil cases involving fraud and false claims against federal health care programs such as Medicare and Medicaid.  Since January 2009, DOJ has recovered more than $17.1 billion for the federal government in cases involving health care fraud.  In many of these cases, the department was instrumental in recovering additional billions of dollars for state health care programs.

Other steps the administration has taken to fight fraud include:

State-of-the-Art Fraud Detection Technology:  HCFAC funding also supported HHS OIG’s continued enhancement of data analysis capabilities for detecting health care fraud.  HHS OIG continues to use data analysis, predictive analytics, trend evaluation, and modeling approaches to better analyze and target oversight of HHS programs.  Analysis teams use data to examine Medicare claims for known fraud patterns, identify suspected fraud trends, and calculate ratios of allowed services as compared to national averages; new analytic tools and methods are being developed to perform more innovative and complex data analytics.  Combining the expertise of HHS OIG agents, auditors, and evaluators, as well as our HEAT partners, with data analytics and traditional investigative skills has fostered a highly effective model for fighting health care fraud.

Since June 2011, CMS uses the Fraud Prevention System (FPS) on all Medicare fee-for-service claims on a streaming, national basis.  Similar to the fraud detection technology used by credit card companies, FPS applies predictive analytics to claims before making payments in order to identify aberrant and suspicious billing patterns.  CMS uses leads generated by FPS to trigger actions that can be implemented swiftly.  Early results from FPS show significant promise.  Since 2011 the FPS identified savings (certified by HHS OIG) associated with these prevention and detection actions were $820 million.[1]  This resulted in more than a 10-to-1 return on investment for the first three years of implementation.  

Enhanced Provider Screening and Enrollment Requirements:  Provider enrollment is the gateway to billing the Medicare program, and CMS implemented new critical safeguards in efforts to better screen providers enrolling in the Medicare program.  The Affordable Care Act required CMS to revalidate all existing 1.6 million Medicare suppliers and providers under new risk-based screening requirements.  As a result of revalidation and other proactive initiatives, CMS deactivated more than 500,000 enrollments meaning,  billing privileges were stopped for these providers but may be restored upon the submission and approval of an updated enrollment application. CMS also revoked more than 34,000 enrollments meaning, these providers were barred from re-entering the Medicare program for one to three years.  These enhanced screening and enrollment requirements have led to more than $2.4 billion in estimated Medicare savings since 2010. 

In May 2014, CMS issued a final rule that requires prescribers of Part D drugs to enroll in Medicare and undergo screening.  In December 2014, CMS issued a final rule that provides additional authority to remove bad actors from the Medicare program, including providers affiliated with outstanding Medicare debts and providers that have a pattern or practice of abusive billing.

Health Care Fraud Prevention Partnership (HFPP):  The Obama Administration has joined with private insurers, states, and associations in the HFPP to prevent health care fraud on a national scale.  To detect and prevent payment of fraudulent billings, HFPP participants exchange information and best practices across the public and private sectors.  Since 2013, the HFPP has conducted eight studies that enabled partners, including DOJ, HHS-OIG, FBI, and CMS, states, private plans, and associations to take substantive actions, such as payment system edits, revocations, and payment suspensions to stop fraudulent payments and improve the government’s collective forces against fraud, waste, and abuse.

Senior Medicare Patrols:  The Obama Administration has expanded funding for Senior Medicare Patrols (SMP) – groups of  volunteers who educate and empower their peers to identify, prevent, and report health care fraud.  In 2014, the  SMP projects had a total of 5,249 active volunteers.  These volunteers conducted 202,862 one-on-one counseling sessions and 14,692 group education sessions.  In total, 452,714 beneficiaries attended these group education sessions.  The projects also reported conducting 110,615 media airings (e.g., print, radio, television, or electronic) to provide education about fraud and the services of the project.  Additionally, the projects reported conducting 12,417 community outreach education events.  Local SMP offices provide assistance when issues are identified, ensuring that mistakes are corrected and suspected fraud is referred to the appropriate authorities.  Since the program’s inception 18 years ago, $122 million in total estimated savings to Medicare and Medicaid is attributable to SMP projects.

[1] Note that a portion of the total FPS savings is comprised of payments prevented due to provider revocations. This amount is a subset of the $2.4 billion total prevented payments from revocations reported in section 'Enhanced Provider Screening and Enrollment Requirements' of this report.  Therefore, comparison of these two metrics may result in double-counting.

The U.S. District Court for the Middle District of Florida entered a consent decree of permanent injunction against James R. Hill, of Ocala, Florida, to prevent the distribution of unapproved drugs masquerading as a cure for the herpes virus, the Department of Justice announced today.

The department filed a complaint in the U.S. District Court for the Middle District of Florida alleging that Hill sold a product, Viruxo Immune Support (Viruxo), that he marketed as a “natural herpes medicine” that can “Stop Herpes Outbreaks.”  Although labeled as a dietary supplement, Viruxo qualifies as an unapproved and misbranded drug, according to the complaint, because of Hill’s claims that it could treat the herpes virus despite the absence of approval from the Food and Drug Administration (FDA) that it was safe and effective for such a use. 

The complaint further alleged that Hill defrauded consumers by promoting Viruxo to cure, mitigate, treat, or prevent a disease despite the absence of well-controlled clinical studies or other credible scientific substantiation to support those claims.  Hill made his misleading claims about Viruxo despite having received a warning letter from FDA and the Federal Trade Commission advising him that his product is an unapproved drug and was misbranded. 

“Unfortunately, many dietary supplements cannot do what their sellers claim they can do,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “In some instances, consumers might be choosing supplements over other proven therapies for serious conditions under the mistaken belief that these products can help.  The Department of Justice will continue to work aggressively with FDA to prevent the distribution of unapproved drugs.”

“Consumers should exercise extreme caution when purchasing supplements online,” warned U.S. Attorney A. Lee Bentley, III for the Middle District of Florida. “Viruxo was marketed to consumers as a ‘medicine’ for herpes, even though this product was not approved by the FDA and there were no well-controlled clinical studies to support the therapeutic claims.”

“Products being sold as treatments for which they have not been studied or approved defrauds consumers and can cause harm if proper treatment is delayed,” said Associate Commissioner Melinda Plaisier for FDA regulatory affairs. “When a company refuses to comply with regulations, we will take enforcement action to protect the public.”

Hill agreed to settle the case and be bound by a consent decree of permanent injunction.  Although he has ceased selling Viruxo, the consent decree requires him to notify FDA and receive its permission before resuming sale of Viruxo or distribution of any food, including a dietary supplement, or drug.  To obtain permission from FDA, FDA must first determine that Hill’s practices comply with the Federal Food, Drug and Cosmetic Act.

The government is represented by Trial Attorney Daniel E. Zytnick of the Civil Division’s Consumer Protection Branch and Lacy R. Harwell Jr. of the U.S. Attorney’s Office for the Middle District of Florida, with the assistance of Senior Counsel Claudia J. Zuckerman of the Department of Health and Human Services’ Office of General Counsel – Food and Drug Division.

For more information about the Consumer Protection Branch, visit its website at http://www.justice.gov/civil/consumer-protection-branch.  For more information about the U.S. Attorney’s Office for the Middle District of Florida, visit its website at http://www.justice.gov/usao-mdfl.

FALLS CHURCH, Va. – The Executive Office for Immigration Review (EOIR) today announced that Attorney General Loretta E. Lynch has appointed Molly Kendall Clark, Ellen Liebowitz, and Blair T. O’Connor as board members to the Board of Immigration Appeals (BIA). The BIA is responsible for hearing appeals from certain decisions rendered by immigration judges and by district directors of the Department of Homeland Security. It is the highest administrative body for interpreting and applying federal immigration laws.

Biographical information follows.

Molly Kendall Clark, Board Member

Attorney General Loretta E. Lynch appointed Board Member Kendall Clark to begin hearing cases in February 2016. Board Member Kendall Clark received a Bachelor of Arts degree in 1974 from Colorado College and a Juris Doctor in 1978 from Suffolk University. From 1995 to 2016, she has served as a senior legal advisor to the chairman, Board of Immigration Appeals (BIA). From 1983 to 1991, and previously from 1978 to 1981, she was an attorney advisor for the BIA. From 1981 to 1982, Board Member Kendall Clark worked in the General Counsel’s Office of the former Immigration and Naturalization Service. Board Member Kendall Clark is a member of the District of Columbia Bar.

Ellen Liebowitz, Board Member

Attorney General Loretta E. Lynch appointed Board Member Liebowitz to begin hearing cases in February 2016. Board Member Liebowitz received a Bachelor of Arts degree in 1987 from the University of Delaware and a Juris Doctor in 1990 from the University of Maryland. From 2008 to January 2016, Board Member Liebowitz served as a senior legal advisor to the chairman, Board of Immigration Appeals (BIA). From 2007 to 2008, she was a senior counsel to the chairman, BIA, and from 1991 to 2007, as an attorney advisor for the BIA. Prior to joining the board, she clerked for the Circuit Court for Harford County, Maryland. Board Member Liebowitz is a member of the Maryland Bar.

Blair T. O’Connor, Board Member

Attorney General Loretta E. Lynch appointed Board Member O’Connor to begin hearing cases in February 2016. Board Member O’Connor received a Bachelor of Business Administration degree in 1992 from the University of Notre Dame and a Juris Doctor in 1995 from the Valparaiso University School of Law. From 2002 to 2016, he served as an assistant director, senior litigation counsel, and trial attorney at the Office of Immigration Litigation, Civil Division, Department of Justice. From 1996 to 2002, he served on active duty in various capacities in the Army’s Judge Advocate General Corps including as legal assistance and claims attorney, prosecutor, appellate defense attorney, and as a law clerk to the U.S. Army Court of Criminal Appeals. Board Member O’Connor is a member of the Illinois Bar.

- 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.

A Houston, Texas, income tax return preparer was indicted by a federal grand jury today in the Southern District of Texas on 18 counts of aiding and assisting in the preparation of false federal income tax returns, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.

The indictment alleges that Felix Martin prepared false and fraudulent individual income tax returns for others for the tax years 2009 and 2010.  It is alleged that these tax returns included false education and American Opportunity credits, as well as false statements regarding business income.

If convicted, Martin faces a statutory maximum sentence of three years in prison for each count of aiding and assisting in the preparation of false tax returns, as well as potential fines and restitution to the Internal Revenue Service (IRS).

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

Acting Assistant Attorney General Ciraolo commended special agents of IRS-Criminal Investigation, who investigated the case and Trial Attorneys Michael Hatzimichalis and Mara Strier of the Tax Division, who are prosecuting the case.

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

Attorney General Loretta E. Lynch released the following statement on the departure of Kelly T. Currie of the Eastern District of New York:

“Kelly Currie is a consummate public servant: dedicated, selfless, and fair.  As a senior advisor to former U.S. Senator George Mitchell, Kelly played a crucial role in achieving the Good Friday Agreement, which brought lasting peace to the people of Northern Ireland and the United Kingdom.  During two stints as an attorney in the Eastern District of New York – including his tenure as my Chief Assistant during my time there as U.S. Attorney – he was instrumental to the office’s prosecution of cases involving corruption, securities fraud and terrorism.  And when I became Attorney General last April, Kelly graciously served as Acting U.S. Attorney – a role he filled with characteristic skill, energy and integrity.  Through these and many other contributions, Kelly has helped to make our country – and our world – safer and more just.  I want to thank him for his outstanding work, and I wish him the best as he begins a new chapter in his career.”

The Justice Department reached a settlement agreement today with the Arlington-Mansfield Area YMCA, a local Texas affiliate of the YMCA, to resolve allegations that it violated the Americans with Disabilities Act (ADA) by denying a child the opportunity to participate in a summer day camp program because of his diabetes.  YMCA refused to provide daily insulin injections to the child, which left him unable to attend the summer day camp program.

Title III of the ADA prohibits discrimination on the basis of disability by private camps and child care programs.  Under the ADA, such entities must make reasonable modifications to their policies, practices or procedures when necessary to provide equal access to a child with a disability, unless a modification would fundamentally alter the nature of the goods and services.  Absent a showing of fundamental alteration, where a parent and a child’s physician determine that it is appropriate for a non-nurse to assist a child with diabetes care, allowing a trained layperson to do so is a reasonable modification under the ADA. 

“After-school and camp programs provide a critical place for all children to socialize with their friends and learn from their peers,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division.  “The Department of Justice will continue to aggressively fight all forms of discrimination that seek to deny children with disabilities the protections the ADA guarantees and the opportunities they deserve.”

Under the terms of the two-year agreement, the YMCA will designate an ADA compliance officer who will be responsible for monitoring compliance with the terms of the agreement.  The ADA compliance officer will also be responsible for ensuring that the YMCA updates its application materials and implements the policies and procedures required by the agreement, including a non-discrimination policy.  The YMCA will designate an individual at each branch who is authorized to receive and review requests for reasonable modifications; inform parents and guardians about how to request reasonable modifications; and train its staff on the ADA, including information on diabetes management.  The ADA compliance officer will also review all denials of reasonable modification requests and any decision to exclude a child with a disability from enrollment. 

The YMCA will also pay $10,000 to the family to compensate them for the denial of an opportunity to participate in the YMCA program.  The department will actively monitor the YMCA’s compliance with terms of the agreement.

One of the largest childcare providers of school-aged children in the region, the Arlington-Mansfield Area YMCA serves the Arlington and Mansfield communities near Dallas and Ft. Worth, Texas.  Nearly 900 children participate in the local YMCA’s before and after-school programs and nearly 450 children participate in its summer camp program.

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

A Fayetteville, Arkansas, man was sentenced to 14 months in prison today following his plea of guilty to four counts of willfully failing to file individual income tax returns, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and Acting U.S. Attorney Kenneth Elser of the Western District of Arkansas. 

According to court documents, Randall Acton West, a former real estate appraiser, failed to file federal income tax returns with the Internal Revenue Service (IRS) for the years 2007 through 2010 despite earning gross income in excess of the tax return filing threshold.  According to court documents, West’s conduct resulted in a tax loss to the government of $95,825.56. 

In addition to the prison term, U.S. District Judge Timothy L. Brooks of the Western District of Arkansas ordered West to serve one year of supervised release and pay restitution to the IRS in the amount of $95,825.56.

Acting Assistant Attorney General Ciraolo and Acting U.S. Attorney Elser commended special agents of IRS-Criminal Investigation, who investigated the case and Trial Attorneys Robert Kemins and David Zisserson, of the Tax Division and Assistant U.S. Attorney Kimberly Davis of the Western District of Arkansas, who prosecuted the case.

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

Stole Identities of Individuals on Her Mail Route for Use in Filing False Tax Returns

A Seale, Alabama, resident and former U.S. Postal Service employee was sentenced today to serve more than five years in prison for her role in a stolen identity refund fraud (SIRF) conspiracy, 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 announced.

According to court documents and evidence presented at the sentencing hearing, between June 2012 and December 2013, Elizabeth Grant aka Elizabeth Williams Grant and Ann Grant, 52, conspired with others, including Tracy Mitchell of Phenix City, Alabama, and Keshia Lanier of Seale to obtain fraudulent income tax refunds by filing false federal income tax returns using stolen identities.  For a fee, Grant provided co-conspirators with addresses along her mail delivery route to use in filing false tax returns.  Grant then retrieved the fraudulent tax refund checks from the mail and delivered the checks to her co-conspirators.  The scheme resulted in the filing of more than 700 false returns claiming more than $1.5 million in tax refunds.

Grant pleaded guilty in November 2015 to conspiracy to defraud the United States with respect to claims, aggravated identity theft and embezzling mail.  Several co-conspirators, including Mitchell and Lanier, have already pleaded guilty and were sentenced for their roles in this scheme.  On Aug. 7, 2015, Mitchell was sentenced to 159 months in prison.  On Sept. 25, 2015, Lanier was sentenced to 180 months in prison.  In addition to the term of imprisonment, Grant was also ordered to serve three years of supervised release and pay restitution in the amount of $978,468.

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

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

Conspired with Others, Including Her Son, to Claim Fraudulent Tax Returns Claiming More Than $4 Million in Tax Refunds Using Stolen Names and Social Security Numbers

An Alabama woman was sentenced today to serve 51 months in prison for her role in a stolen identity refund fraud (SIRF) conspiracy, 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 announced.

According to court documents and evidence presented at the sentencing hearing, between 2007 and 2012, Pamela Ann Smith, 56, of Lanett, Alabama, led a large-scale SIRF scheme from her tax preparation business, Jaycal Tax Service, in Phenix City, Alabama.  Smith recruited her son, Calvin Perry and his friend, Ernest Simmons Jr., to participate in the scheme.  As part of the conspiracy, Smith, Perry and Simmons opened multiple bank accounts and post office boxes.  They filed more than 1,200 federal income tax returns using the stolen personal identification information of actual individuals, which included their names and social security numbers.  The tax returns filed by Smith and her co-conspirators sought more than $4 million in fraudulent refunds from the Internal Revenue Service (IRS).  U.S. Treasury checks were mailed to physical addresses and post office boxes under Smith’s control and subsequently deposited into multiple bank accounts controlled by Smith, Perry and Simmons.  Smith personally received more than $300,000 from this scheme.

Smith pleaded guilty in November 2015 to one count of conspiracy to defraud the government with respect to filing false income tax refund claims and one count of aggravated identity theft.  Perry and Simmons also pleaded guilty in December 2015 for their involvement in this SIRF scheme and are scheduled to be sentenced in April.

In addition to the prison term, U.S. District Judge John Antoon, II ordered Smith to serve three years of supervised release and pay restitution in the amount of $340,057.

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

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

An Ashland, Virginia, man who operated two masonry contractor construction companies pleaded guilty today in the U.S. District Court for the Eastern District of Virginia to one count of failing to collect, account for and pay over employment taxes to the Internal Revenue Service (IRS), announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Dana J. Boente of the Eastern District of Virginia.

According to court documents, Michael Manning, 52, was the President of Manning Construction and Manning-Carhen Construction.  Manning controlled the businesses’ finances and was responsible for filing the Employer’s Quarterly Federal Tax Returns, Forms 941 and paying over to the IRS the federal income, social security and Medicare taxes withheld from the wages of the businesses’ employees.  For the third and fourth quarters of 2014, Manning willfully failed to comply with these legal obligations by failing to pay over more than $800,000 in withheld taxes to the IRS.  Additionally, as part of his plea, Manning admitted that Manning Construction, regularly and deliberately created false financial statements for submission to financial institutions in order to comply with that business’s existing loan covenants, to encourage banks to lend new funds to the company, or to enable the renewal of existing loans. 

Manning faces a statutory maximum sentence of five years in prison and a fine of $250,000.  As part of his plea agreement, Manning also agreed to pay restitution to the IRS.  The sentencing hearing is set for May 31. 

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

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

A Wendell, North Carolina, man was sentenced to 20 months in prison today following his plea of guilty to commit theft of government funds, Acting Assistant Attorney General Caroline D. Ciraolo of the Department of the Justice’s Tax Division and Acting U.S. Attorney John Stuart Bruce of the Eastern District of North Carolina announced. 

According to court documents, Jose Alfonso Rodriguez Collado, 54, operated two grocery stores in Middlesex and Siler City, North Carolina.  In 2012, co-conspirators brought Rodriguez fraudulently obtained U.S. Treasury checks, which Rodriguez cashed without receiving identification for the individuals listed on the checks, or any other source of authority for the co-conspirators to cash the checks.  Rodriguez initially was not a licensed check casher, but one co-conspirator gave him $50,000 to qualify for a check-cashing license.  In exchange for cashing the fraudulently obtained U.S. Treasury checks, Rodriguez was paid a fee for cashing the checks in excess of that allowed for under North Carolina law.  In addition, Rodriguez cashed checks in excess of $10,000 and failed to file Currency Transaction Reports as required by law.  The conspiracy caused a loss to the government of $2,502,348.

In addition to the prison term, U.S. District Court Judge Louise W. Flanagan of the Eastern District of North Carolina ordered Rodriguez to serve three years of supervised release following his prison term, and pay restitution to the IRS in the amount of $2,502,348.

Acting Assistant Attorney General Ciraolo and Acting U.S. Attorney Bruce commended special agents of Internal Revenue Service Criminal Investigation who investigated the case and Trial Attorneys Lauren Castaldi and 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 owner of a St. Louis, Missouri, tax return preparation business was arrested today after a federal grand jury sitting in St. Louis  returned an indictment on February 18 charging two counts of tax evasion, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.

According to the indictment, from 2005 to 2011, Semere Tsehaye, 38, was the owner and operator of at least 20 Instant Tax Service (ITS) franchise locations operating in and around East Saint Louis, Illinois; Kansas City, Kansas; Kansas City and Saint Louis, Missouri.  ITS was a brand name of ITS Financial LLC, a nationwide tax preparation business headquartered in Dayton, Ohio.  Tsehaye owned and operated his ITS franchise locations using two entities named A&S Tax Service LLC (A&S) and ERI Enterprises, LLC (ERI).

During the years 2010 and 2011, Tsehaye generated fraudulent financial summaries that understated the gross receipts generated by A&S and ERI and provided them to his tax return preparer.  Tsehaye’s tax return preparer used these financial summaries to prepare Tsehaye’s individual income tax returns, which Tsehaye then filed with the Internal Revenue Service (IRS).  These tax returns were false in that they underreported A&S and ERI’s gross receipts by a total of approximately $506,000 in 2010 and $1.03 million in 2011.

If convicted, Tsehaye faces a statutory maximum sentence of five years in prison and a $250,000 fine on each count of tax evasion.

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

Acting Assistant Attorney Ciraolo commended special agents of IRS-Criminal Investigation, who investigated the case and Senior Litigation Counsel Corey Smith and Trial Attorney Mark McDonald of the Tax Division, who are prosecuting the case.  Acting Assistant Attorney Ciraolo also thanked the U.S. Attorney’s Office for the Eastern District of Missouri for their assistance.

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

Attorney General Loretta E. Lynch announced today that Alfredo Beltran Leyva, also known as Mochomo, one of the leaders of the Beltran Leyva Organization, a Mexican drug-trafficking cartel responsible for importing multi-ton quantities of cocaine and methamphetamine into the United States, pleaded guilty to participating in an international narcotics trafficking conspiracy. 

Assistant Director Joseph S. Campbell of the FBI’s Criminal Investigative Division, Acting Administrator Chuck Rosenberg of the Drug Enforcement Administration (DEA) and Executive Associate Director Peter T. Edge of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI) joined the Attorney General in making the announcement.

“For decades, Alfredo Beltran Leyva helped to lead one of the world’s most notorious drug cartels, causing widespread violence and disrupting lives,” said Attorney General Lynch.  “With this guilty plea, justice has been done, and Beltran Leyva will be held accountable for his crimes.  This conviction is the result of our close partnership with the Mexican government, and it should serve as a reminder that our countries will not rest in the fight against drug trafficking and violent crime.”

“This plea is the result of the unwavering commitment to aggressively investigate the leaders of transnational criminal organizations throughout world,” said Assistant Director Campbell.  “The significant and constant cooperation between our domestic and international law enforcement partners aided significantly in this successful outcome.”

“Alfredo Beltran Leyva and his criminal network destroyed families and communities,” said Acting Administrator Rosenberg.  “He oversaw a violent organization responsible for pushing dangerous drugs like cocaine and methamphetamine onto the streets of America and his guilty plea marks the end of his criminal reign and the beginning of his life behind bars.”

“Today’s guilty plea sends the strongest possible message to drug traffickers,” said Executive Associate Director Edge.  “HSI and our law enforcement partners, both in the United States and around the world, will continue to work tirelessly to disrupt and dismantle international drug trafficking organizations and bring them to justice.”

Leyva, 45, was indicted on Aug. 24, 2012, for conspiracy to distribute cocaine and methamphetamine for importation into the United States.  The defendant was extradited from Mexico to the United States on Nov. 15, 2014, and pleaded guilty before U.S. District Judge Richard J. Leon of the District of Columbia.

In court, the defendant admitted that he was part of a conspiracy to import large quantities of drugs into the United States.  At the hearing, the government proffered evidence that from 1990 until his arrest in January 2008, the defendant was a leader of the Beltran Leyva Organization, a global criminal enterprise that was responsible for importing multi-ton quantities of cocaine and methamphetamine into the United States.  Beltran Leyva admitted that he and his organization obtained tonnage quantities of cocaine from South American suppliers, which the defendant and his organization helped finance and which were transported to Mexico via air, land and sea.  Once the cocaine reached Mexico, the defendant’s organization transported it to central key points in Mexico, including to Culiacan, Sinaloa, which was also the central point for the collection of billions of dollars from drug trafficking proceeds in the United States.  Additionally, the government’s evidence would have shown that the organization carried out acts of violence, including murders, kidnappings, tortures and violent collections of drug debts, in order to sustain the drug importation operation.  Further, the government’s evidence would have shown that the organization made payments to public officials to ensure that the organization’s drug shipments passed through Mexico uninhibited. 

On May 30, 2008, the president added the Beltran Leyva Organization to the Department of Treasury’s Office of Foreign Asset Control’s Specially Designated Nationals and Blocked Persons list pursuant to the Foreign Narcotics Kingpin Designation Act.  On Aug. 20, 2009, the president specifically designated Beltran Leyva as a specially designated drug trafficker under the same Kingpin Act.

The FBI’s El Paso Office led the investigation in partnership with the DEA’s New York Field Division and HSI’s New York Office as part of the Organized Crime Drug Enforcement Task Force.  Deputy Chief Andrea Goldbarg, Assistant Deputy Chief Amanda Liskamm and Trial Attorney Adrian Rosales of the Criminal Division’s Narcotic and Dangerous Drugs Section and Assistant U.S. Attorney Marcia M. Henry of the Eastern District of New York are prosecuting the case.  The Criminal Division’s Office of International Affairs and the U.S. Attorneys’ Offices of the Eastern District of New York, the Southern District of Florida, the Southern District of Texas, the Northern District of Georgia and the Northern District of Illinois provided substantial assistance.  The Justice Department thanks the government of Mexico for their assistance in this matter.

Before Incarceration, Defendants Used False Art Appraisals to Purportedly Reduce Customers’ Liabilities

The United States has filed a lawsuit asking a federal district court in Houston, Texas, to permanently bar two men from preparing false tax returns, the Justice Department announced today.  The defendants named in the lawsuit are John E. Carter, individually and doing business as Midwestern Financial Group Inc., and Sulayman Mamadou Jarra, individually and doing business as African Art Appraisal Services.

According to the complaint, Carter promoted a tax evasion scheme to his clients, telling them they could reduce their federal tax liability by supposedly donating African tribal art to an educational institution or museum.  The complaint states that Carter provided his clients with an appraisal by Jarra that substantially overvalued the art, and that for many of the returns, the signature was forged on the Internal Revenue Service (IRS) form where the institution purportedly acknowledged receipt of the art.  Carter then used the false appraisal to prepare tax returns for his customers, claiming false deductions for charitable donations, according to the complaint. 

Carter was convicted in 2014 of five counts of willfully aiding and assisting in the preparation and presentation of false tax returns.  He was sentenced to 41 months in prison.  In 2013, Jarra pleaded guilty to one count of aiding and assisting in the preparation and presentation of false tax returns; he received a sentence of probation.

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

Corporation Pleads Guilty to Criminal Charges and Sentenced

The Department of Justice announced today that three importers and their owners – Ameri-Source International Inc., Ameri-Source Specialty Products Inc., Ameri-Source Holdings Inc., Ajay Goel and Thomas Diener – and a related importer, SMC Machining LLC, incorporated at Goel’s direction and formerly owned by his wife, have agreed to pay $3 million to resolve a lawsuit brought by the United States under the False Claims Act.  The lawsuit alleged that the defendants had engaged in a scheme to evade customs duties on imports of small-diameter graphite electrodes from the People’s Republic of China (PRC).  Small-diameter graphite electrodes are columns of synthetic graphite with diameters of around 16 inches or less that are used as fuel in electric arc and ladle furnaces, such as those used in steel manufacturing.  The companies are all based in Pennsylvania.    

“The nation’s customs laws are designed to protect domestic manufacturers from foreign products that enter the country at below-market prices due to unfair practices abroad,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “This settlement shows that the Department of Justice is committed to pursuing claims against anyone involved in a scheme to seek an unfair advantage in U.S. markets by evading duties on imported goods, including the individuals who run the companies and knowingly participate in such schemes.”  

The Department of Commerce assesses and the U.S. Department of Homeland Security’s Customs and Border Protection (CBP) collects duties to protect U.S. manufacturers from unfair competition abroad by leveling the playing field for domestic products.  The particular duties at issue in this case are antidumping duties, which protect domestic manufacturers against foreign companies’ “dumping” products on U.S. markets at prices below cost.  Imports of PRC-manufactured small-diameter graphite electrodes have been subject to antidumping duties since Aug. 21, 2008. 

The settlement announced today resolves claims that Ameri-Source International Inc. evaded antidumping duties on 15 shipments of small-diameter graphite electrodes from the PRC from December 2009 to March 2012.  The United States contended that Ameri-Source International misclassified the size of the electrodes to avoid paying the duties.  There are no antidumping duties on larger diameter graphite electrodes.  The United States also alleged that Goel, Diener and the other companies caused and conspired in the misrepresentation to evade duties.  Ameri-Source International also waived indictment and pleaded guilty today to two counts of smuggling goods into the United States.   In U.S. District Court in the Western District of Pennsylvania, Ameri-Source International admitted that on April 27, 2011 and June 9, 2011, the company falsely declared imported cargo from the PRC as being graphite rods greater than 16 inches in diameter.  Chief Judge Joy Flowers Conti immediately sentenced the corporation to pay a $250,000 criminal fine within 10 days and applied the payment of the $3 million to the loss of antidumping duties of $2,137,420.00.

“We are committed to protecting U.S. jobs and industries from those who seek an unfair advantage in the U.S. marketplace,” said U.S. Attorney David J. Hickton for the Western District of Pennsylvania.  “This office’s aggressive criminal and civil enforcement efforts to combat and prosecute the evasive practices of both the corporations and individuals who perpetrated this scheme demonstrate our resolve to ensure a level playing field for all.”

“Antidumping duties level the playing field for U.S. manufacturers,” said CBP Commissioner R. Gil Kerlikowske.  “This is a prime example of how U.S. Customs and Border Protection partners with the Department of Justice, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE HSI) and the U.S. Department of Commerce to enforce antidumping duty laws.”

“This settlement underscores one of HSI’s primary efforts, which is to ensure a level playing field for companies engaged in legitimate trade and commerce with the United States,” said Special Agent in Charge John Kelleghan of Homeland Security Investigations (HSI) Philadelphia. “HSI special agents will continue to protect the revenue of the United States and aggressively investigate individuals and companies who attempt to operate outside our laws and regulations.”

“The Department of Commerce Office of Inspector General is dedicated to supporting bureaus such as the International Trade Administration in protecting the U.S. economy from the type of criminal activity disclosed in this case,” said Special Agent in Charge Duane E. Townsend of the U.S. Department of Commerce Office of Inspector General.  “We greatly appreciate the cooperation and efforts of HSI and the U.S. Attorney’s Office that resulted in this agreement.”

The allegations resolved by the settlement were originally brought by whistleblower Graphite Electrode Sales Inc. under the qui tam provisions of the False Claims Act.  The act permits private parties to sue on behalf of the government those who falsely claim federal funds or, as in this case, those who avoid paying funds owed to the government or cause or conspire in such conduct.  The United States may intervene in and take over the lawsuit, as it has done here.  The act also allows the whistleblower to receive a share of any funds recovered through the lawsuit.  Graphite Electrode Sales Inc. will receive approximately $480,000 as its share of today’s settlement.

The case was handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Western District of Pennsylvania, CBP, ICE HSI and the Department of Commerce’s International Trade Administration and Office of Inspector General. 

The lawsuit is captioned United States ex rel. Graphite Electrode Sales, Inc. v. Ameri-Source Holdings, Inc., et al., Case No. 13-cv-0474 (W.D. Pa.).  The claims resolved by this settlement are allegations only; there has been no determination of liability except as admitted in the criminal proceedings. 

Saipan, CNMI – ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that U.S. District Court Chief Judge Ramona V. Manglona sentenced Richard Sullivan Benavente, age 45, today, to the statutory maximum of 360 months in prison followed by three years of supervised release for sexual exploitation of a child.  The Court also ordered him to pay restitution to the two minor victims.

          In July 2013, the CNMI Department of Public Safety received a video file from an anonymous source depicting Benavente and a minor female engaging in sexually explicit conduct.  The minor was later identified.  The same video file was found on Defendant’s cell phone pursuant to a search warrant.  Benavente was arrested on a complaint on August 14, 2013.   On August 22, 2013, a federal grand jury returned an indictment against Benavente charging him with two counts of sexual exploitation of a child and one count of attempted sexual exploitation of a child in violation of 18 U.S.C. § 2251(a).   He pleaded guilty to count one of the indictment on February 10, 2014, pursuant to a plea agreement requiring him to cooperate with the United States and provide truthful information about his criminal conduct, as well as the conduct of others.  However, on October 9, 2015, the Court ruled that Benavente breached his plea agreement by committing perjury at the trial of another defendant at which Benavente testified, when he claimed to own a cell phone the prosecution argued was used by that other defendant to contact minors for purposes of prostitution.

          Following the sentencing, United States Attorney for the Districts of Guam and the Northern Mariana Islands, Alicia A.G. Limtiaco, stated, “Consistent with the Department of Justice’s efforts to combat child sexual exploitation, the United States Attorney’s Office, together with its federal and local law enforcement partners, will vigorously investigate and prosecute individuals who prey on children, and strive to rid our islands of this unconscionable crime.  We encourage and urge members of our community to report to authorities any and all forms of abuse, exploitation and violence; and remind ourselves, that it is all of our responsibility to protect others, especially the most vulnerable such as our children and minors, from those who perpetrate these heinous crimes.”

          This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse.  For more information about Project Safe Childhood, please visit www.justice.gov/psc.

          The case was investigated by the Federal Bureau of Investigation and prosecuted by Assistant U.S. Attorneys Rami S. Badawy, Ross K. Naughton, and Garth R. Backe.

Two water treatment chemicals executives were indicted in Newark, New Jersey, for their roles in a conspiracy to eliminate competition among suppliers of liquid aluminum sulfate to municipalities and pulp and paper companies in the United States, the Department of Justice announced today.

Vincent J. Opalewski, former president, vice president and general manager of a water treatment chemicals manufacturer headquartered in Parsippany, New Jersey, and Brian C. Steppig, director of sales and marketing of a water treatment chemicals manufacturer headquartered in Lafayette, Indiana, are the second and third executives charged in connection with the conspiracy, which sought to eliminate competition for contracts to supply liquid aluminum sulfate.  Liquid aluminum sulfate is a coagulant used by municipalities to treat drinking and waste water and by pulp and paper companies in their manufacturing processes. 

“Municipalities and pulp and paper companies deserve competitive prices for water treatment chemicals,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division.  “These charges reflect our ongoing efforts to hold accountable those who conspire to cheat their customers responsible for their crimes.”

“These charges send a message that anyone intent on corrupting the free market will be identified and brought to justice,” said Acting Special Agent in Charge Andrew Campi of the FBI’s Newark Division.  “Our mission is to protect victims who don't see these crimes occurring, but who always end up paying the price.”

The indictment, returned by a grand jury in the U.S. District Court for the District of New Jersey, alleges that Opalewski, from 2005 to 2011, and Steppig, from 1998 until 2011, and their co-conspirators participated in the conspiracy by meeting to discuss each other’s liquid aluminum sulfate business, agreeing to stay away from each other’s historical customers, submitting intentionally losing bids to favor the intended winner of the business, withdrawing inadvertently winning bids and discussing with each other prices to be quoted to municipalities and pulp and paper companies.

The charges contained in the indictment are allegations and not evidence of guilt.  The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.    

The investigation into collusion in the liquid aluminum sulfate industry is being conducted by the New York Office of the Antitrust Division and the FBI’s Newark Division.  Anyone with information regarding price fixing, bid rigging or customer allocation in the sale and marketing of liquid aluminum sulfate should contact the Antitrust Division’s New York Office at 212-335-8000, call the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258, or visit www.justice.gov/atr/contact/newcase.htm.

Opalewski Steppig Indictment (313.51 KB)

A Filipino citizen and the captain of the tanker ship, T/V Green Sky, pleaded guilty today to one felony count in federal court in Charleston, South Carolina, for obstructing a U.S. Coast Guard investigation into pollution crimes aboard the vessel.

Genaro Anciano, 52, who was the highest ranking officer aboard the ship, pleaded guilty to one count of Obstruction of an Agency Proceeding.  The charge stems from a Coast Guard investigation in late August 2015 into the bypass of pollution prevention equipment, including the use of a “magic device,” on the Green Sky.  In court papers, the defendant stated that members of the ship’s engine room, including a senior officer, admitted to illegally discharging overboard.  These admissions occurred prior to the August 2015 Coast Guard inspection at the Port of North Charleston.  During the investigation, Anciano made several false and misleading statements to the Coast Guard to cover up the illegal conduct.

The T/V Green Sky is a 30,263 gross ton, ocean-going vessel that operates as a petroleum and chemical tanker.  The vessel is approximately 600 feet in length and is registered in Liberia.  The vessel is owned by an entity incorporated in the Marshall Islands.  Over the course of several days, the normal operation of the Green Sky generates thousands of gallons of bilge wastes that are contaminated with petroleum products and oil residues.  These bilge wastes must be removed for the vessel to operate safely.

Both the United States and Liberia are parties to the MARPOL treaty, which regulates the overboard discharge of bilge waste.  It was prohibited to discharge bilge wastes from the T/V Green Sky without first running that effluent through the ship’s oily water separator.  According to the MARPOL treaty, all overboard discharges from the vessel’s bilges had to be recorded in the T/V Green Sky’s oil record book.  A bypass of the oily water separator, which is not recorded in the oil record book, jeopardizes the accuracy and integrity of that document.  It is a separate federal crime for oceangoing vessels to enter a U.S. port with a false oil record nook.

Anciano’s sentencing has not been scheduled.

The case was investigated by the U.S. Coast Guard Investigative Service with assistance from inspectors from Sector Charleston as well as Legal from U.S. Coast Guard in Miami.  The case is being prosecuted by Christopher L. Hale of the Justice Department’s Environmental Crimes Section of the Environment and Natural Resources Division and Assistant U.S. Attorney Matt Austin of the U.S. Attorney’s Office for the District of South Carolina in Charleston.

An Oregon husband and wife pleaded guilty today to crimes related to filing false retaliatory liens against two federal judges, a clerk of court and a federal prosecutor for performing their official duties, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.

Ronald D. Joling, 72, formerly of Coquille, Oregon, pleaded guilty to one count of conspiracy to file false retaliatory liens against government officials.  His wife, Dorothea J. Joling, 73, also formerly of Coquille, pleaded guilty to one count of filing a false retaliatory lien.  In October 2014, the Jolings were convicted on various criminal charges related to their federal income taxes.  As part of their guilty pleas today, the Jolings admitted that while they were on pretrial release in the criminal tax case they filed false retaliatory liens claiming that multiple federal officials each owed the Jolings $100.003 million. 

Ronald Joling admitted that between August 2013 and February 2014 he conspired with his wife to file and cause the filing of false liens against the real and personal property of two federal judges assigned to the criminal tax case, the Clerk of Court for the U.S. District Court for the District of Oregon and the Assistant U.S. Attorney who prosecuted the tax case.  These liens were filed in the public records of the State of California.  He also admitted to filing false liens against a former federal judge and the former U.S. Attorney for the District of Oregon.  As part of her guilty plea, Dorothea Joling admitted to filing and causing the filing of a false lien against the judge who presided over the Jolings’ criminal tax case.

The Jolings were scheduled to be sentenced in the tax case on April 22, 2015, but did not appear in court.  They were fugitives until they were arrested on Oct. 5, 2015 in Arizona.  On Dec. 11, 2015, the Jolings were sentenced in the criminal tax case; Ronald Joling was sentenced to 97 months in prison and Dorothea Joling was sentenced to 48 months in prison. 

The Jolings each face a statutory maximum sentence of 10 years in prison and a $250,000 fine on the retaliatory lien charges.  U.S. District Judge Michael J. McShane set sentencing for June 22.

Acting Assistant Attorney General Ciraolo thanked special agents of the Internal Revenue Service – Criminal Investigation, who investigated the case and Senior Litigation Counsel Jen Ihlo and Trial Attorney Thomas Agnello, who are prosecuting the case.

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

A Smithfield, North Carolina, man pleaded guilty today to one count of a dual object conspiracy to defraud the United States and commit theft of public money, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and Acting U.S. Attorney John Stuart Bruce of the Eastern District of North Carolina. 

According to court documents, Oscar Barahona Fiallos, 52, owned and operated a tax preparation business in Smithfield.  In 2011 and 2012, Fiallos cashed large numbers of U.S. Treasury checks issued as a result of fraudulent tax returns filed with the Internal Revenue Service (IRS) in the names of third parties.  The checks were provided to Fiallos by co-conspirators and Fiallos never met the third-party payees, who purportedly lived in New York, New Jersey and North Carolina.  Fiallos deposited the checks into his bank account and then provided co-conspirators with cash equal to the value of the check, less a check cashing fee.  After a bank account was closed, Fiallos obtained a check cashing license so that he could continue cashing checks for his co-conspirators.  He also prepared Individual Taxpayer Identification Number applications and false tax returns for third parties he did not meet and who did not sign the documents.

Fiallos faces a statutory maximum sentence of five years in prison.  In his plea agreement, he has agreed to pay restitution to the United States in the amount of $2,802,496.  The sentencing hearing is set for June. 

Acting Assistant Attorney General Ciraolo and Acting U.S. Attorney Bruce commended special agents of IRS-Criminal Investigation, who investigated the case and Trial Attorneys Lauren M. Castaldi and Nathan P. Brooks of the Tax Division, who are prosecuting this case.   

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

A Raleigh, North Carolina, man pleaded guilty today to one count of conspiracy to commit theft of public money and one count of theft of public money, Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and Acting U.S. Attorney John Stuart Bruce for the Eastern District of North Carolina announced. 

According to court documents, in 2011 and 2012 Wilfredo Acosta Hidalgo, 47, conspired with check cashers to cash U.S. Treasury refund checks issued as a result of fraudulently-filed income tax returns.  Hidalgo provided the check cashers with U.S. Treasury checks issued to third-parties in whose name the fraudulent returns were filed.  The check cashers deposited the U.S. Treasury checks into their business bank accounts and provided Hidalgo with cash equal to the value of the U.S. Treasury checks, less a check-cashing fee.  The third-party payees were not present when the Treasury checks were cashed. 

Hidalgo faces a statutory maximum sentence of five years in prison for the conspiracy charge and 10 years in prison for the charge of theft of public funds.  In his plea agreement, he has agreed to pay restitution to the United States in the amount of $4,280,871.  Hidalgo’s sentencing has not been scheduled.

Acting Assistant Attorney General Ciraolo and Acting U.S. Attorney Bruce commended special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorneys Lauren Castaldi and Nathan Brooks of the Tax Division, who are prosecuting the case. 

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

Agencies Submit Joint Statement Regarding Proposed Legislation Addressing Glaucoma Care by Optometrists in Massachusetts

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

The joint statement is in response to a request by Massachusetts State Representative Bradley H. Jones for views on the possible competitive effects of Massachusetts House Bill 1973 (HB 1973), which would expand the scope of practice for optometrists in Massachusetts and permit them to treat glaucoma and other optical diseases.

“Patients suffering from glaucoma – which affects 2.7 million Americans nation-wide – deserve safe, effective and affordable treatment options,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division.  “As our statement explains, increasing competition among glaucoma care providers in Massachusetts, consistent with patient safety, can help provide greater access to care that is also more timely and cost competitive.” 

The agencies’ comments are limited to HB 1973’s effect on glaucoma care.  Glaucoma is the second leading cause of blindness worldwide, but early diagnosis and managed treatment offer protection against the risk of vision loss or blindness.  With respect to glaucoma care, HB 1973 would allow optometrists in Massachusetts – like optometrists in other states – to treat glaucoma patients using medications, subject to certain training and referral requirements.  Providing optometrists a role in glaucoma care, with conditions the legislature finds appropriate to ensure patient safety, has the potential benefit to bring the benefits of competition to Massachusetts health care consumers.

Recognizing the continuing challenges to the security of our peoples and our countries, and that a collective approach is required to address these challenges, on February 16-17, 2016 United States Attorney General Loretta Lynch and United States Secretary of Homeland Security Jeh Johnson jointly hosted the Five Country Ministerial and the Quintet of Attorneys General meetings with their counterparts: Australian Attorney-General George Brandis; Australian Minister for Immigration and Border Protection Peter Dutton; Canadian Public Safety Minister Ralph Goodale; Minister of Justice and Attorney General of Canada Jody Wilson-Raybould; Canadian Minister of Immigration, Refugees and Citizenship John McCallum; New Zealand Attorney General Christopher Finlayson; United Kingdom Home Secretary Theresa May; and United Kingdom Attorney General Jeremy Wright.

On the first day, the Attorneys General and Ministers jointly discussed a range of topics including: information sharing for counterterrorism purposes while respecting privacy; countering violent extremism; cybercrime; encryption; and foreign investment in critical infrastructure. They agreed on the importance of expanding efforts to counter the threat of Daesh, al-Qaeda and their affiliates particularly by strengthening border and aviation security. They also agreed that violent extremism poses a critical threat for all five countries and decided to coordinate activity to counter violent extremism, including by engaging with communities and with social media and other high-tech industries. They further agreed to share best practices and evaluation of the impact of this work. They also agreed that while Government engagement is important, government itself cannot and should not be the only actor to counter violent extremism, and needs to partner with communities to reach isolated and vulnerable individuals and address the drivers of extremism in our societies. While recognizing the value of strong encryption and  the need to protect civil liberties and privacy rights, Attorneys General and Ministers shared concerns about the challenges encryption presents to law enforcement agencies seeking to fight terrorism and serious and organized crime.

On the second day, the Attorneys General of the Quintet met separately to discuss cybercrime, criminal justice reform, and the need to uphold the rule of law and individual liberties in the face of national security threats. They shared their countries’ experiences concerning reforms to national security laws and reaffirmed the critical importance of meeting security imperatives while protecting civil liberties. The Attorneys General agreed to continue to discuss the application of the international law requirements for self-defense, including imminence. 

On the same day, immigration and national security Ministers met separately and recognized the benefits of legitimate travelers and migrants and discussed ways to address challenges posed by mass migration and refugee flows, information sharing to facilitate travel and to enhance each country’s ability to identify and prevent the travel of criminals and terrorists across borders, and ways to enhance visa processes for certain travelers. The Ministers also recognized the value of trusted traveler programs.

The Attorneys General and Ministers agreed to continue discussions on enhancing cooperation on screening of refugees and asylum seekers. They agreed to explore opportunities for greater sharing of security and law enforcement information amongst the five countries. 

The Attorneys General and Ministers reaffirmed the importance of working collaboratively on law enforcement and national security issues. They agreed to continue to coordinate efforts to more effectively address issues of mutual concern, and to ensure the security and prosperity of our citizens consistent with respect for individual rights and freedoms.

The Department of Justice has reached settlements with 51 hospitals in 15 states for more than $23 million related to cardiac devices that were implanted in Medicare patients in violation of Medicare coverage requirements, the Department of Justice announced today.  These settlements represent the final stage of a nationwide investigation into the practices of hundreds of hospitals improperly billing Medicare for these devices.  With these additional agreements, the Justice Department’s investigation has now yielded settlements with more than 500 hospitals totaling more than $280 million. 

“These settlements demonstrate the Department’s continued vigilance in pursuing hospitals and health systems that violate Medicare’s national coverage rules,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “We will hold accountable those who do not abide by the government’s rules in order to protect the federal fisc and, more importantly, patient health.”  

An implantable cardioverter defibrillator, or ICD, is an electronic device that is implanted near and connected to the heart.  It detects and treats chaotic, extremely fast, life-threatening heart rhythms, called fibrillations, by delivering a shock to the heart, restoring the heart’s normal rhythm.  It is similar in function to an external defibrillator (often found in offices and other buildings) except that it is small enough to be implanted in a patient’s chest.  Only patients with certain clinical characteristics and risk factors qualify for an ICD covered by Medicare. 

Medicare coverage for the device, which costs approximately $25,000, is governed by a National Coverage Determination (NCD).  The Centers for Medicare and Medicaid Services implemented the NCD based on clinical trials and the guidance and testimony of cardiologists and other health care providers, professional cardiology societies, cardiac device manufacturers and patient advocates.  The NCD provides that ICDs generally should not be implanted in patients who have recently suffered a heart attack or recently had heart bypass surgery or angioplasty.  The medical purpose of a waiting period - 40 days for a heart attack and 90 days for bypass/angioplasty - is to give the heart an opportunity to improve function on its own to the point that an ICD may not be necessary.  The NCD expressly prohibits implantation of ICDs during these waiting periods, with certain exceptions.  The Department of Justice alleged that from 2003 to 2010, each of the settling hospitals implanted ICDs during the periods prohibited by the NCD.  

“The settlements announced last October and today demonstrate the Department of Justice’s commitment to protect Medicare dollars and federal health benefits,” said U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida.  “Guided by a panel of leading cardiologists and the review of thousands of patients’ charts, the extensive investigation behind the settlements was heavily influenced by evidence-based medicine.  In terms of the number of defendants, this is one of the largest whistleblower lawsuits in the United States and represents one of this office’s most significant recoveries to date.   Our office will continue to vigilantly protect the Medicare program from potential false billing claims.”

“We will not stand idly by while Medicare coverage rules are ignored,” said Inspector General Daniel R. Levinson of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG).  “OIG worked closely with the Department of Justice to ensure such violators made substantial payments to settle these false billing claims.”

The department previously settled with 457 hospitals for more than $250 million. 

The settlements announced today involve 51 hospitals, which are listed on the attached chart.  Most of the settling defendants were named in a qui tam, or whistleblower, lawsuit brought under the False Claims Act, which permits private citizens to bring lawsuits on behalf of the United States and receive a portion of the proceeds of any settlement or judgment awarded against a defendant.  The lawsuit was filed in federal district court in the Southern District of Florida by Leatrice Ford Richards, a cardiac nurse and Thomas Schuhmann, a health care reimbursement consultant.  The whistleblowers have received more than $3.5 million from the settlements announced today. 

The settlements were the result of a coordinated effort among the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office of the Southern District of Florida and HHS-OIG’s Office of Investigations and Office of Counsel to the Inspector General. 

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

The claims resolved by these settlements are allegations only and there has been no determination of liability. 

This lawsuit is captioned U.S. ex rel. Ford et al. v. Abbott Northwestern et al. No. 08-cv-20071 (S.D. Fla.)

Concealed Receipt of Approximately $2 Million in Kickbacks from IRS

 An Enterprise, Alabama, resident was sentenced today in the Southern District of Florida to 48 months in prison to be followed by three years of supervised release for accepting unlawful kickbacks and tax evasion, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.

According to court documents and statements made in open court, Victor Villalobos, 47, worked for a federal prime contractor at Fort Rucker, Alabama.  In 2009, Villalobos approached Maxim Silinsky, a Florida-based subcontractor for this company, and solicited illegal kickbacks on the federal subcontracts that Silinsky held in connection with the federal prime contractor.  Villalobos agreed that in exchange for kickback payments he would refrain from conduct that would unfavorably affect Silinsky’s business relationship with the federal prime contractor and help ensure that he obtained additional business.

As part of his plea, Villalobos admitted that from June 2009 to December 2014, he received approximately 57 separate wire transfers totaling more than $1.9 million in kickback payments from various foreign and domestic bank accounts controlled by Silinsky.  At two separate meetings in 2015, Villalobos accepted envelopes from Silinsky containing cash kickbacks totaling $60,000.  Between June 2009 and February 2015, Villalobos attempted to conceal his receipt of the kickbacks by forming nominee entities and opening nominee bank accounts.  Villalobos also admitted that he evaded paying income taxes on the kickback payments by causing false federal income tax returns to be filed with the Internal Revenue Service (IRS).

In addition to his prison sentence, U.S. District Judge Daniel T.K. Hurley ordered Villalobos to pay $542,562 in restitution to the IRS.  As part of his plea agreement, Villalobos also agreed to be permanently debarred from federal government contracting. 

Silinsky pleaded guilty to filing a false tax return in November 2015 and cooperated in the investigation and prosecution of Villalobos.  Silinsky was sentenced to one year and one day in prison on Feb. 2.  Silinsky also cooperated in the investigation and prosecution of Trevor Smith, a retired U.S. Air Force Master Sergeant who pleaded guilty in October 2015 to unlawfully disclosing confidential procurement information and filing a false tax return.  On Jan. 28, Smith was sentenced to 18 months in prison.

Acting Assistant Attorney General Ciraolo commended special agents of IRS Criminal Investigation, the U.S. Air Force’s Office of Special Investigations, the Department of Defense’s Office of the Inspector General and the U.S. Army’s Criminal Investigation Division, who investigated this case and Trial Attorneys Charles M. Edgar Jr. and Jason H. Poole of the Tax Division, who prosecuted this case.  Acting Assistant Attorney General Ciraolo also thanked the U.S. Attorney’s Office of the Southern District of Florida for their substantial assistance.

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

Un tribunal federal en Chicago ordenó a Servicios Latinos Inc. cerrar su empresa de preparación de declaraciones de impuestos en todo el país, anunció hoy el Departamento de Justicia.  La orden surge después de que el Departamento de Justicia entablara una demanda civil contra la empresa y sus propietarios, Georgina Lopez, Pamela Miranda y Jorge A. Miranda, en la que alegaba que los demandados falsamente declararon obligaciones tributarias inferiores de sus clientes y exageraron el derecho de sus clientes a reembolsos tributarios.  El interdicto también prohíbe a Lopez, Pamela Miranda y Jorge Miranda actuar como preparadores de declaraciones de impuestos federales, ser propietarios u ocuparse de las operaciones de empresas de preparación de declaraciones de impuestos y emplear a preparadores de declaraciones de impuestos.  Los demandados aceptaron la presentación del interdicto, pero no admitieron los alegatos en la demanda.

De acuerdo con la demanda, Servicios Latinos atendía en alrededor de 84 locales en hasta 30 estados, con ubicaciones que incluían Kennet Square, Pensilvania; Kansas City, Misuri, y Las Vegas, Nevada.  La demandaba alegaba que los empleados de los acusados prepararon declaraciones de impuestos a la renta que:

• Falsamente alegaban tener derecho a créditos tributarios por hijo;

• Falsamente alegaban tener derecho al Crédito Tributario por Ingresos del Trabajo;

• Declaraban categorías de contribuyentes falsas; y

• Declaraban cifras de ingresos y gastos incorrectas.

La demanda alega que Servicios Latinos ha preparado más de 42.000 declaraciones de impuestos a la renta federales desde 2012.  El Servicio de Impuestos Internos [Internal Revenue Service (IRS)] estima que la pérdida sufrida por el Tesoro de EE.UU. debido a la conducta de los demandados supera los 4.7 millones de dólares solo para 2014, de acuerdo con la demanda.

El fraude de preparador de declaraciones de impuestos ha sido nombrado uno de los Doce ardides tributarios sucios del Servicio de Impuestos Internos [Internal Revenue Service (IRS)].  El IRS tiene en su portal  algunos consejos para elegir un preparador de impuestos y ha lanzado un directorio sin cargo de preparadores de declaraciones de impuestos federales.  En la última década, la División de Impuestos ha obtenido interdictos contra cientos de preparadores de impuestos inescrupulosos.  Existe información sobre estos casos disponible en el portal del Departamento de Justicia.  Se encuentra una lista alfabética de personas prohibidas de preparar declaraciones de impuestos y promover ardides tributarios en esta página.  Si usted cree que una de las personas o empresas bajo prohibición puede estar violando un interdicto, por favor comuníquese con la División de Impuestos con detalles.

Two subsidiaries of Massachusetts software company PTC Inc. entered into a non-prosecution agreement and agreed to pay a $14.54 million penalty today to resolve the government’s investigation into whether the companies improperly provided recreational travel to Chinese government officials in violation of the Foreign Corrupt Practices Act (FCPA), announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division. 

According to admissions made in the resolution documents, Parametric Technology (Shanghai) Software Company Ltd. and Parametric Technology (Hong Kong) Ltd. (collectively, PTC China), through local business partners, arranged and paid for employees of various Chinese state-owned enterprises to travel to the United States, ostensibly for training at PTC Inc.’s headquarters in Massachusetts, but primarily for recreational travel to other parts of the United States, including New York, Los Angeles, Las Vegas and Hawaii.  PTC China paid a total of more than $1 million through its business partners to fund these trips, while during the same time period, PTC China entered into more than $13 million in contracts with the Chinese state-owned entities.  Company employees typically accompanied the Chinese officials on these trips.  PTC China admitted that the cost of these recreational trips was routinely hidden within the price of PTC China’s software sales to the Chinese state-owned entities whose employees went on the trips.  

As part of the non-prosecution agreement, PTC China agreed to pay the criminal penalty, to continue to cooperate with the department, to enhance its compliance program and to periodically report to the department on the implementation of its enhanced compliance program.  The department reached this resolution based on a number of factors.  Among other factors, PTC China did not receive voluntary disclosure credit or full cooperation credit because, at the time of its initial disclosure, it failed to disclose relevant facts that it had learned in connection with a prior internal investigation and did not disclose those facts until the department uncovered additional information independently and brought them to PTC China’s attention.  By the conclusion of the investigation, however, the companies had provided to the department all relevant facts known to them, including information about individuals involved in the FCPA misconduct.

In a related matter, PTC Inc. reached a settlement today with the U.S. Securities and Exchange Commission (SEC) under which it agreed to pay $11,858,000 in disgorgement plus $1.764 million in prejudgment interest.  Thus, the approximately $28 million in combined penalty and disgorgement far exceeds the $13 million in contracts associated with the improper payments.

The FBI’s Boston Field Office investigated the case.  Trial Attorney Aisling O’Shea of the Criminal Division’s Fraud Section prosecuted the case.  The U.S. Attorney’s Office of the District of Massachusetts and the SEC also provided assistance during the investigation.

The Department of Justice announced today that it has reached a settlement agreement with the city of Chicago to resolve allegations that the Chicago Police Department (CPD) discriminated against entry-level police officer applicants on the basis of national origin, in violation of Title VII of the Civil Rights Act of 1964.

In a joint motion filed today in the U.S. District Court for the Northern District of Illinois, the Justice Department and the city requested that the court enter a provisional order that sets forth the terms of the settlement agreement, including more than $2 million in back pay, a number of priority hires and pension benefits.  The motion also asks the court to schedule a fairness hearing, an opportunity provided by Title VII for those affected by the proposed agreement to comment on the settlement.

The proposed settlement, once approved by the district court, will resolve the complaint filed on Feb. 5, 2016.  In that complaint, the Justice Department alleged that during its 2006 hiring cycle, the city used a 10-year continuous U.S. residency requirement to screen entry-level police officer applicants.  The department further alleged that the residency requirement disproportionately removed applicants born outside of the United States from consideration in the hiring process and was not related to the job.  Title VII prohibits discrimination in employment on the basis of race, color, sex, national origin or religion, whether the discrimination is intentional or involves the use of employment practices that have a disparate impact and are not job related and consistent with business necessity.  This settlement is distinct from the department’s investigation into allegations concerning the Chicago Police Department’s methods of policing and its practices with respect to the use of force; that investigation remains ongoing.

“When brave men and women aspire to serve their communities as police officers, hiring procedures must evaluate the skills they need on the job, not where they come from or what they look like,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division.  “This agreement avoids costly litigation, provides relief for job applicants who suffered from discrimination and helps the Chicago Police Department refocus on fair hiring practices going forward.”

“Removing unlawful barriers to employment continues to be a top priority of the EEOC,” said Director Julianne Bowman of the EEOC’s Chicago District.  “We are pleased that the successful collaboration between the Justice Department and the EEOC removed one such barrier and produced positive results for those who were unjustly denied police officer positions in the Chicago Police Department.”

Chicago no longer uses the 10-year continuous U.S. residency requirement challenged by the department.  In addition to back pay and priority hiring relief for some applicants, the settlement agreement would require the city to evaluate whether its current five-year continuous U.S. residency requirement complies with Title VII and to provide Title VII compliance training to personnel involved in Chicago Police Department hiring.  All priority hires must meet the city’s lawful selection criteria for qualified entry level police officers.

The case was brought by Trial Attorneys Valerie Meyer, Kathleen Lawrence and Carol Wong of the Civil Rights Division’s Employment Litigation Section.  Enforcement of federal employment discrimination laws is a top priority for the Justice Department.  Additional information about Title VII and other federal employment laws is available on the Civil Rights Division’s website at www.justice.gov/crt.

Chicago Proposed Consent Judgment

A Poplar Grove, Illinois resident was indicted by a federal grand jury today on six counts of mail fraud, six counts of aggravated identity theft and one count of access device fraud, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Zachary T. Fardon of the Northern District of Illinois.

According to the indictment, Shameka Carr filed fraudulent tax returns with the Internal Revenue Service (IRS) in the names of individuals whose identities she had stolen.  Carr is alleged to have directed the IRS to issue the tax refunds requested on these fraudulent returns in the form of prepaid debit cards and U.S. Treasury checks, both of which were mailed to addresses she had access to in Rockford, Illinois, and surrounding areas.  It is further alleged that Carr used the debit cards and U.S. Treasury checks for her personal benefit.

If convicted, Carr faces a statutory maximum sentence of 20 years in prison for each mail fraud count, 15 years in prison for the charge of access device fraud and a mandatory sentence of two years in prison for each count of aggravated identity theft, which would be in addition to any other term of imprisonment she receives.  Carr also faces potential fines 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 commended the U.S. Postal Inspection Service, IRS Criminal Investigation and the Boone County Sheriff’s Department, who investigated the case and Trial Attorneys Michael C. Boteler and John T. Mulcahy of the Tax Division, who are prosecuting the case.

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

A federal court in Chicago has ordered Servicios Latinos Inc. to close its nationwide tax preparation business, the Justice Department announced today.  The order comes after the Justice Department filed a civil lawsuit against the business and its owners, Georgina Lopez, Pamela Miranda and Jorge A. Miranda, alleging that the defendants falsely understated their customers’ tax liabilities or overstated their customers’ entitlement to a tax refund.  The injunction also prohibits Lopez, Pamela Miranda and Jorge Miranda from acting as federal tax preparers, owning or operating tax preparation businesses and employing tax preparers.  The defendants agreed to entry of the injunction, but did not admit the allegations in the complaint.

According to the complaint, Servicios Latinos operated out of approximately 84 stores in as many as 30 states, with locations including Kennet Square, Pennsylvania; Kansas City, Missouri; and Las Vegas, Nevada.  The complaint alleged that the defendants’ employees prepared income tax returns that:

• Falsely claim child tax credits;
• Falsely claim the Earned Income Tax Credit;
• Claim incorrect filing statuses; and
• Report incorrect income and expense figures.

The complaint alleges that Servicios Latinos has prepared more than 42,000 federal income tax returns since 2012.  The Internal Revenue Service (IRS) has estimated that the loss to the U.S. Treasury from the defendants’ conduct exceeds $4.7 million for 2014 alone, according to the complaint.

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

          ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that JON MICHAEL MAPOTE VILLENA, age 29, of Mangilao, and ANNALIN MARIE PEREZ ALDAN, age 20, of Dededo, were sentenced on February 12, 2016, before District Judge Alex R. Munson, in the U.S. District Court of Guam.  VILLENA received 34 months imprisonment with a three year supervised release term.  ALDAN received 12 months and one day imprisonment with a three year supervised release term.  The pair were also ordered to pay over $12,000 in restitution to their victims and ordered to forfeit proceeds of their crimes.  Their sentences follow convictions for access device fraud and aggravated identity theft.

          In June and July 2015, VILLENA and ALDAN, engaged in a crime spree, burgling several United States Post Offices in Guam.  The defendants stole undelivered United States Mail from over
30 different post office boxes.  A First Hawaiian Bank MasterCard debit card belonging to a postal customer was among the items of stolen United States Mail.  VILLENA and ALDAN then used that debit card to purchase goods, including Apple electronics, at local and national retailers all over Guam.

          U.S. Attorney Alicia A.G. Limtiaco stated, “The United States Attorney’s Office, along with our law enforcement partners, will vigorously pursue those who vandalize and obstruct the operations of the United States Postal Service.  We will also aggressively pursue and prosecute those who would victimize the residents of Guam through identity theft.”

          This incident was investigated by the United States Postal Inspection Service.  The case was prosecuted by Assistant United States Attorney Mohammad Khatib.