District Not Recorded

WASHINGTON – El Departamento de Justicia anunció hoy que había llegado a un acuerdo con McDonald’s USA LLC y sus filiales y subsidiarios (McDonald’s) que resuelve las acusaciones de que McDonald’s hubiese discriminado a inmigrantes que son empleados de restaurantes que son propiedad de McDonald’s.

La Oficina del Consejero Especial para Prácticas Injustas en el Empleo Relacionadas a Inmigración (OSC, por sus siglas en inglés) del Departamento de Justicia abrió su investigación con base en la información que recibió a través de su línea directa para trabajadores.  La investigación encontró que McDonald’s tenía una práctica de mucho tiempo de obligar a los residentes permanentes legales a mostrar una nueva tarjeta de residencia permanente al vencerse el documento original, a pesar de que la Ley prohíba dicha práctica.  Más aún, la investigación encontró que la compañía no pidió lo mismo de sus empleados que sí eran ciudadanos estadounidenses y que habían presentado documentos que luego vencieron y que a aquellos residentes permanentes legales a los que se les pidió que mostraran una nueva tarjeta y que no pudieron hacerlo no se les permitió trabajar; como resultado, algunos perdieron sus trabajos.  Esta investigación y el acuerdo de hoy solamente abordan acciones tomadas por McDonald’s y no por ninguna de sus franquicias.

“Los empleadores no pueden establecer estándares más estrictos para residentes permanentes legales al imponerles mayores requisitos documentales durante el proceso de verificación de la elegibilidad de empleo,” declaró la Subprocuradora General Interina, Vanita Gupta, la Jefa de la División de Derechos Civiles.  “Requerir documentos innecesarios de ciertos individuos por motivos de su estatus migratorio o de ciudadanía es un acto de discriminación, y el Departamento De Justicia no dudará en ejecutar la ley y proteger los derechos de inmigrantes con autorización para trabajar.  Aplaudimos a McDonald’s por su cooperación a lo largo de esta investigación y por comprometerse a indemnizar a sus empleados actuales y previos que perdieron sueldos debido a estas prácticas.”

Los residentes permanentes legales están autorizados para vivir y trabajar en los Estados Unidos de forma permanente.  Para probar este estatus, los residentes permanentes legales reciben una tarjeta de residencia permanente, a la que se suele llamar “Tarjeta Verde” o “Green Card,” pero los residentes permanentes legales son elegibles para varios documentos distintos que les sirven para demostrar su elegibilidad para trabajar.

Los residentes permanentes legales no tienen ninguna obligación de presentar sus tarjetas de residencia permanente al comenzar a trabajar.  Mientras que la mayoría de las tarjetas de residencia permanente contienen una fecha de vencimiento, por lo general, los titularlos de tales cartas cuentan con autorización permanente para trabajar, por lo que el vencimiento de la tarjeta no implica la pérdida de su estatus o derecho a trabajar.  Los residentes permanentes legales que deciden enseñar una tarjeta de residencia permanente vigente no tienen ninguna obligación de presentar documentos adicionales al vencerse su tarjeta, y los empleadores no pueden solicitarles documentos adicionales.  Asimismo, la disposición antidiscriminatoria de la ley de Inmigración y Nacionalidad (INA, por sus siglas en inglés) prohíbe que los empleadores soliciten documentos adicionales a sus empleados con autorización para trabajar durante el proceso de verificación de elegibilidad de empleo por motivo de su estatus migratorio o de ciudadanía.

Conforme al acuerdo, McDonald’s pagará 355.000 $ en sanciones civiles a los Estados Unidos, se someterá a 20 meses de supervisión y capacitará a sus empleados en cuanto a la disposición antidiscriminatoria de la INA.

El acuerdo también requiere que McDonald’s indemnice a aquellos residentes permanentes legales que son empleados de restaurantes que son propiedad de McDonald’s y que perdieron horas laborales o sus trabajos debido a estas prácticas documentales.  Es posible que los residentes permanentes legales que trabajaron para un local de McDonald’s que es propiedad de la empresa (es decir, no es franquicia) entre el 23 de septiembre del 2012 y el 1 de marzo del 2015 sean elegibles para recibir dicha indemnización si fueron despedidos o se vieron obligados a faltar en el trabajo porque no pudieron mostrar una nueva tarjeta cuando su tarjeta de residencia permanente original venció.  Para más información sobre el proceso de obtener pagos retroactivos, véase el procedimiento para reclamaciones del acuerdo http://www.justice.gov/crt/united-states-department-justice-settlement-mcdonald-s-usa-llc.

Los empleados actuales y previos de McDonald’s que tengan preguntas en cuanto a este asunto deberán llamar al 1-844-401-3737 o bien mandar un correo electrónico a OSC.McDonalds@usdoj.gov.    

La OSC es responsable de aplicar la disposición antidiscriminatoria de la INA.  Entre otras cosas, esta ley prohíbe la discriminación por motivos de estatus de ciudadanía y nacionalidad de origen en la contratación, el despido o el reclutamiento o la recomendación por comisión; la discriminación en el proceso de verificación de la elegibilidad de empleo; las represalias o la intimidación.  Las Abogadas Litigantes Jennifer Deines y Silvia Dominguez-Reese y la Especialista en la Igualdad de Oportunidades Joann Sazama de la División de Derechos Civiles trabajaron en este caso.

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

The government announced today that it has joined a lawsuit alleging that Inchcape Shipping Services Holdings Limited and certain of its subsidiaries (collectively, Inchcape) violated the False Claims Act by knowingly overbilling the U.S. Navy for ship husbanding services from years 2005 to 2014.  Inchcape is a marine services contractor headquartered in the United Kingdom.

As a ship husbanding services provider, Inchcape arranged for the provision of goods and services to Navy ships at ports in several regions throughout the world, including southwest Asia, Africa, Panama, North America, South America and Mexico.  Inchcape’s services typically included the provision of food and other subsistence items, arrangement of local transportation, waste removal, telephone services, ship-to-shore transportation and force protection services.  The lawsuit, which was unsealed today, alleges that Inchcape knowingly overbilled the Navy by submitting invoices that overstated the quantity of goods and services provided, billed at rates in excess of applicable contract rates and double-billed for certain goods and services.

“Those who contract with the federal government and accept taxpayer dollars must follow the rules,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “The Department of Justice will not tolerate contractors who submit false claims to defraud the armed forces or any other agency of the United States.”

“Ensuring that federal contractors deliver the goods and services at the agreed upon prices in return for receiving the taxpayers’ money is a priority for the U.S. Attorney’s Office,” said U.S. Attorney Channing D. Phillips of the District of Columbia.  “This lawsuit reflects our commitment to combat fraud against federal government agencies.”

“The Department of the Navy continues to hold contractors accountable for the agreements they have made to supply our fleet,” said Captain Amy Derrick, a senior spokeswoman for the Department of the Navy. “We also continue to expect strict adherence to higher standards within the Department and expect the same from industry.”

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

The case is being handled jointly by the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office of the District of Columbia, with assistance from the Department of the Navy and the Naval Criminal Investigative Service.

The case is captioned United States ex rel. Rudolph v. Inchcape Shipping Services Holdings Limited, et al., No. 1:10-cv-01109 (D.D.C).  The claims alleged in the case are allegations only, and there has been no determination of liability.

A federal grand jury sitting in Portland, Oregon, returned an indictment yesterday charging a resident of Lake Oswego, Oregon, with 10 counts of willfully failing to collect, truthfully account for and pay over federal employment taxes to the United States, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.

According to the allegations in the indictment, Gary B. Bertoni, had the responsibility to collect, truthfully account for and pay over to the Internal Revenue Service (IRS) federal employment taxes withheld from the wages of the employees of his law firm, Bertoni & Associates LLC.  Beginning in approximately the first quarter of 2009 and continuing through 2011, Bertoni failed to pay over to the IRS employment taxes withheld from his employees’ wages as they became due.  The indictment further alleges that Bertoni failed to remit monies withheld from employees’ wages for various employee benefits, including health insurance and retirement account contributions.  Instead, Bertoni caused his law firm to make thousands of dollars of expenditures for his personal benefit during the 2009 through 2011 calendar years, including payments to his personal bank account totaling more than $300,000.

If convicted, Bertoni faces a statutory maximum sentence of 50 years in prison, a maximum fine of $2.5 million and restitution to the IRS.

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

Acting Assistant Attorney General Ciraolo thanked agents of IRS-Criminal Investigation, who are investigating the case and Trial Attorneys Stuart A. Wexler and Quinn P. Harrington of the Tax Division, who are prosecuting the case.

Two owners of a Metairie, Louisiana, business each pleaded guilty to one count of willfully filing false 2011 income tax returns today, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Kenneth A. Polite of the Eastern District of Louisiana.

Rommel Cordova, 35, of Luling, Louisiana, and Saul Ramirez, 43, of Kenner, Louisiana, pleaded guilty before U.S. District Court Judge Mary Ann Vial Lemmon. They were both charged on Nov. 4, in a single Bill of Information with willfully filing false 2011 individual income tax returns.  According to court documents, Cordova and Ramirez owned and operated Skill Labor Provider Inc. a Metairie labor services business.  Cordova and Ramirez each owned 50 percent of the business and shared equally in its net income.

As part of their guilty pleas, Cordova and Ramirez admitted that during calendar years 2010 and 2011, they cashed and caused to be cashed, checks made payable to Skill Labor Provider Inc. and other business checks at a check cashing business in Kenner. Cordova and Ramirez caused false corporate income tax returns for Skill Labor Provider Inc. for the years 2010, 2011 and 2012 to be prepared that did not accurately report the gross receipts, labor expenses deductions, or net income of the business.  During this period, the corporate tax returns underreported the business’s gross receipts by more than $6 million.  Cordova and Ramirez also separately filed their respective individual income tax returns for tax years 2010, 2011 and 2012, on which they failed to accurately report the amounts of business income they received from Skill Labor Provider Inc.

At sentencing, each defendant faces a statutory maximum sentence of three years in prison, one year of supervised release, a fine of $250,000, or twice the gross gain or loss caused by the offense, a $100 special assessment and restitution to the Internal Revenue Service (IRS).

Acting Assistant Attorney General Ciraolo and U. S. Attorney Polite commended special agents of the IRS—Criminal Investigations and Homeland Security Investigations, who investigated the case and Assistant U.S. Attorney Hayden Brockett and Tax Division Trial Attorney Michael P. Hatzimichalis, who are prosecuting the case.

A former executive of a large Taiwan-based color display tube (CDT) manufacturing company pleaded guilty late yesterday for his participation in a global conspiracy to fix prices of CDTs, a type of cathode ray tube (CRT) used in computer monitors and other specialized applications.

Chun-Cheng (Alex) Yeh, a resident of Taiwan, agreed to plead guilty to conspiring to fix prices, reduce output and allocate market shares of CDTs beginning as early as May 1999 until at least March 2005.  Yeh was indicted by a federal grand jury in the Northern District of California on March 30, 2010.  The plea agreement is subject to court approval.

“Our pursuit of those whose anticompetitive conduct abroad harms U.S. consumers does not stop with indictment,” said Deputy Assistant Attorney General Brent Snyder of the Antitrust Division’s Criminal Enforcement Program.  “We will use all of the tools available to us to ensure that those whose conduct results in criminal charges will be brought to justice should they choose to become fugitives.” 

According to the indictment, Yeh, a former director of sales, and co-conspirators agreed to fix CDT prices and reduce output by shutting down CDT production lines for periods of time.  Yeh and co-conspirators also agreed to allocate shares for the CDT market overall and for certain customers.  The conspirators exchanged sales, production, market share and pricing information for the purposes of implementing, monitoring and enforcing their agreements.

Yeh is the first individual to plead guilty in connection with the CDT investigation.  On May 17, 2011, Samsung SDI Company Ltd. pleaded guilty and paid a $32 million criminal fine for its role in the CDT conspiracy.  Four other indicted individuals remain fugitives.  On Aug. 18, 2009, Wen Jun (Tony) Cheng was indicted for his participation in the CDT conspiracy.  On Nov. 9, 2010, Seung-Kyu (Simon) Lee, Yeong-Ug (Albert) Yang and Jae-Sik (J.S.) Kim were also indicted for their participation in the CDT conspiracy.

Yeh is charged with violating the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million fine for individuals.  The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims if either amount is greater than the maximum fine. 

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

Yeh Plea Agreement (1.64 MB)

On November 17, 2015, Director of the Federal Bureau of Investigation James B. Comey administered the oath of office for new Interpol Washington Director Geoffrey S. Shank. The installation ceremony was held in the Great Hall of the Robert F. Kennedy Department of Justice Building. Director Comey provided remarks that highlighted the values of partnership and cooperation, underlining both the domestic and international work of Interpol Washington. He also congratulated the members of Director Shank’s family, who were in attendance at the ceremony.

Other guest speakers at the event included Acting Director of the U.S. Marshals Service, Director Shank’s home agency, David L. Harlow; Assistant Secretary for International Affairs at the U.S. Department of Homeland Security Alan D. Bersin; and Deputy Assistant Attorney General and Controller and recently elected Interpol Executive Committee Delegate, Jolene A. Lauria.

After taking the oath of office, Director Shank addressed the audience by acknowledging the challenges that law enforcement faces in the future and Interpol Washington’s commitment to adopting the methods necessary to bring international criminals to justice. “In order to continue to be effective in this world, law enforcement must evolve as our enemies do,” said Director Shank. “By continuing to grow the information nexus that is Interpol Washington, we improve our nation’s effective counterweight to the criminal and terrorist networks of the Information Age.”

Among those in attendance were Associate Deputy Attorney General Armando Bonilla; representatives from domestic federal, state, and local law enforcement agencies; representatives of international partners and embassies such as Mexico, Montenegro, and Turkey; and the staff of Interpol Washington, who the Director thanked profusely for their dedication to the agency, justice, and public service.

Criminal Charges Brought against Bestselling Supplement Manufacturer

As part of a nationwide sweep, the Department of Justice and its federal partners have pursued civil and criminal cases against more than 100 makers and marketers of dietary supplements.  The actions discussed today resulted from a year-long effort, beginning in November 2014, to focus enforcement resources in an area of the dietary supplement market that is causing increasing concern among health officials nationwide.  In each case, the department or one of its federal partners allege the sale of supplements that contain ingredients other than those listed on the product label or the sale of products that make health or disease treatment claims that are unsupported by adequate scientific evidence.

Among the cases announced today is a criminal case charging USPlabs LLC and several of its corporate officers.  USPlabs was known for its widely popular workout and weight loss supplements, which it sold under names such as Jack3d and OxyElite Pro.

The sweep includes federal court cases in 18 states and was announced today by Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division; Deputy Commissioner for Global Regulatory Operations and Policy Howard Sklamberg J.D. of the Food and Drug Administration (FDA); Acting Deputy Director J. Reilly Dolan of the Federal Trade Commission (FTC)’s Bureau of Consumer Protection; Acting Deputy Chief Inspector Gary Barksdale of the U.S. Postal Inspection Service (USPIS); and Chief Richard Weber of the Internal Revenue Service’s (IRS) Criminal Investigation (CI) Division.  The Department of Defense (DoD) and the U.S. Anti-Doping Agency (USADA) are also participating in the sweep to unveil new tools to increase awareness of the risks unlawful dietary supplements pose to consumers and, in particular, to assist service members targeted by illegitimate athletic performance supplements.

“The Justice Department and its federal partners have joined forces to bringing to justice companies and individuals who profit from products that threaten consumer health,” said Principal Deputy Assistant Attorney General Mizer.  “The USPlabs case and others brought as part of this sweep illustrate alarming practices the department found—practices that must be brought to the public’s attention so consumers know the serious health risks of untested products.”

During the period of the sweep, 117 individuals and entities were pursued through criminal and civil enforcement actions.  Of these, 89 were the subject of cases filed since November 2014.

Criminal Matters

An 11-count indictment was unsealed earlier today against USPlabs LLC, a Dallas firm, which formerly manufactured highly popular workout and weight loss supplements.  The indictment charges USPlabs, S.K. Laboratories Inc., based in Anaheim, California, and their operators with a variety of charges related to the sale of those products.  Jacobo Geissler, 39, of University Park, Texas, the CEO of  USPlabs; Jonathan Doyle, 37, of Dallas, the president of  USPlabs; Matthew Hebert, 37, of Dallas, responsible for product packaging design at USPlabs; Kenneth Miles, 69, of Panama City, Florida, the quality assurance executive in charge of compliance at USPlabs; S.K. Laboratories Inc.; Sitesh Patel, 32, of Irvine, California, the vice president of  S.K. Laboratories; and Cyril Willson, 34, of Gretna, Nebraska, a consultant to USPlabs, are charged with various counts associated with the unlawful sale of dietary supplements.  Additionally, USPlabs, Geissler, Doyle and Hebert are charged with obstruction of an FDA proceeding and conspiracy to commit money laundering.

Four of the defendants were arrested earlier today and the other two will self-surrender.  Along with the arrests, FDA and IRS-CI special agents seized assets in dozens of investment accounts, real estate in Texas and a number of luxury and sports cars.

The indictment alleges that USPlabs engaged in a conspiracy to import ingredients from China using false certificates of analysis and false labeling and then lied about the source and nature of those ingredients after it put them in its products.  According to the indictment, USPlabs told some of its retailers and wholesalers that it used natural plant extracts in products called Jack3d and OxyElite Pro, when in fact it was using a synthetic stimulant manufactured in a Chinese chemical factory.

The indictment also alleges that the defendants sold some of their products without determining whether they would be safe to use.  In fact, as the indictment notes, the defendants knew of studies that linked the products to liver toxicity.

The indictment also alleges that in October 2013, USPlabs and its principals told the FDA that it would stop distribution of OxyElite Pro after the product had been implicated in an outbreak of liver injuries.  The indictment alleges that, despite this promise, USPlabs engaged in a surreptitious, all-hands-on-deck effort to sell as much OxyElite Pro as it could as quickly as possible.  It was sold at dietary supplement stores across the nation.

“This joint agency effort is a testament to our commitment to protecting consumers from potentially unsafe dietary supplements and products falsely marketed as dietary supplements,” said Deputy Commissioner Sklamberg.  “The criminal charges against USPlabs should serve as notice to industry that if products are a threat to public health, the FDA will exercise its full authority under the law to bring justice.”

Today’s criminal charges are among 14 criminal cases prosecuted by the Civil Division’s Consumer Protection Branch and U.S. Attorney’s Offices across the country from November 2014 to November 2015.  See this chart.  Of the 14 criminal cases prosecuted during this timeframe, 11 cases against 29 individuals and entities have been filed since November 2014.

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

Civil Cases

The Department of Justice also filed in the past week five civil cases seeking injunctive relief against a number of businesses and individuals that allegedly sold supplements as disease cures or that were otherwise in violation of the law.  These matters, investigated by USPIS and the FDA, include the following:

• United States v. Clifford Woods LLC, doing business as Vibrant Life, and Clifford Woods.  A complaint, filed in the U.S. District Court for the Central District of California, alleges that the defendants unlawfully sold Taheebo Life Tea, Life Glow Plus, Germanium and Organic Sulfur (identified as methyl sulfonyl methane) as treatments for various diseases including Alzheimer’s disease and cancer.  The complaint alleges that the defendants’ conduct defrauded consumers through the sale of unapproved new and misbranded drugs.
• United States v. James R. Hill, doing business as Viruxo.  A complaint, filed in the U.S. District Court for the Middle District of Florida, alleges that the defendants unlawfully sold a dietary supplement called Viruxo as a treatment for herpes.  The complaint alleges that the defendants’ conduct defrauded consumers through the sale of unapproved new and misbranded drugs.
• United States v. Lehan Enterprises, Inc., doing business as Optimum Health, and Lesa Sverid.  A complaint, filed in the U.S. District Court for the District of Massachusetts, alleges that the defendants unlawfully sold products called DMSO Cream, DMSO Cream with Aloe and DMSO Roll On as treatments for conditions and diseases including arthritis and cancer.  The complaint alleges that defendants sold unapproved new and misbranded drugs.

• United States v. Bethel Nutritional Consulting, Felix Ramirez, and Kariny Ramirez.  A complaint, filed in U.S. District Court for the District of New Jersey, alleges that the defendants distribute dietary supplements in a manner that does not conform to current good manufacturing practice for dietary supplements and that they are making claims about the uses for many of the products that render them unapproved and misbranded drugs.  Furthermore, FDA testing has revealed that some of defendants’ products contain active pharmaceutical ingredients that are not listed on the products’ labels, including one ingredient that was withdrawn from the market in 2010 because of safety concerns.  The defendants in this matter have agreed to be bound by a consent decree of permanent injunction banning them from selling dietary supplements until they come into compliance with the law.

• United States v.  VivaCeuticals, Inc., doing business as Regeneca Worldwide, and Matthew Nicosia.  A complaint filed in U.S. District Court for the Central District of California alleges that dietary supplements sold by the defendants are adulterated because they are not manufactured in accordance with the FDA’s current good manufacturing practice regulations.  One of the dietary supplements, a product called RegeneSlim Appetite Control (RegeneSlim), contains the ingredient 1, 3 dimethylamylamine (DMAA), an unsafe food additive under the federal Food, Drug and Cosmetic Act, but does not declare DMAA as an ingredient.  In addition, the defendants market RegeneSlim to be used as a disease cure.

“Postal Inspectors have a long history of effectively enforcing the mail fraud statute to halt snake oil salesmen and medical quacks from using the mails to purvey their wares upon unsuspecting citizens,” said Acting Deputy Chief Postal Inspector Barksdale.  “We look at these latest misrepresentations and frauds as ‘old wine in a new bottle.’  Working with our law enforcement and regulatory partners, we hope to protect American consumers by keeping these scams ‘bottled up’.”

Civil actions brought by the FTC as part of the sweep to combat unsubstantiated supplement claims include the following:

• Sunrise Nutraceuticals, LLC.  According to the FTC’s complaint, Sunrise, based in Boca Raton, Florida, deceptively claims that its dietary supplement Elimidrol, a “proprietary blend” of herbs and other compounds, alleviates opiate withdrawal symptoms and increases a user’s likelihood of overcoming opiate addiction.  The FTC’s complaint alleges, however, that Sunrise’s ads for Elimidrol are deceptive because they are false or unsubstantiated.
• Health Nutrition Products.  The FTC’s complaint charged Crystal Ewing, five other individuals and five companies with making false and misleading health and efficacy claims in direct mail ads and on a website owned by Ewing.  In ads for W8-B-Gone, CITRI-SLIM 4 and Quick & Easy diet pills, the defendants featured bogus weight-loss experts.  Citing fake scientific studies, the defendants also deceptively claimed to have clinical proof that consumers would experience a “RAPID FAT meltdown diet program” that lets them shed five pounds in four days with one pill, or up to 20 pounds in 16 days with four pills.  The proposed court orders announced today will settle the FTC’s charges against three defendants involved in the scheme.  The order against repeat offender Ewing and her company Classic Productions LLC requires them to admit liability in the case, bans them from selling weight-loss programs, products and services, and imposes a non-suspended judgment of $2.7 million.
• NPB Advertising, Inc.  According to the FTC’s complaint filed in the U.S. District Court for the Middle District of Florida’s Tampa Division, Florida-based NPB and others capitalized on the green coffee bean diet fad by using false weight-loss claims and fake news websites to market a dietary supplement called Pure Green Coffee.  The proposed court order announced today settles the FTC’s charges, bars the defendants from the deceptive acts and practices described in the complaint and imposes a $30 million judgment that will be suspended upon the sale of certain assets, payment of $160,800, and the collection and turnover of an additional $155,760 that was lent to a third party.

“People looking for a dietary supplement to improve their health have to wade through a swamp of misleading ads,” said Director Jessica Rich of the FTC’s Bureau of Consumer Protection.  “Be skeptical of ads for supplements that claim to cure diseases, reverse the signs of aging or cause weight loss without diet or exercise.”

Today’s cases are among 25 civil actions pursued by the Civil Division’s Consumer Protection Branch, U.S. Attorney’s Offices and the FTC from November 2014 to November 2015.  Of the 25 actions, 22 civil cases against 60 individuals and entities have been filed since November 2014.  To date, courts have entered judicial orders in 11 cases, requiring dietary supplement makers to change their business practices to ensure that they are selling their products in compliance with the law.

Educational materials

As part of today’s sweep, the Uniformed Services University of the Health Sciences’ Consortium for Health and Military Performance partnered, through its Human Performance Resource Center (HPRC), with the USADA to develop educational resources for service members to protect them from risky dietary supplements.  Through this partnership, the organizations will jointly launch an online interactive educational module called “Get the Scoop on Supplements: Realize, Recognize, and Reduce Your Risk.”  Also launching today are two mobile applications: the HPRC’s Operation Supplement Safety (OPSS) High-Risk Supplement List mobile application for Service members and USADA’s Supplement 411 mobile application for athletes (both accessible via the Google Play and Apple App stores and available to the general public).

These educational products will augment the important information available on USADA’s Supplement411.org website and the OPSS website, including the OPSS High-Risk Supplement List which was launched in February 2015.  To access more information available to service members, consult the OPSS website and a recently released video at http://hprc-online.org/blog/decoding-the-dietary-supplement-industry.  To access the educational resources USADA provides for athletes and general consumers to help realize, recognize and reduce the risks associated with using supplement products visit USADA’s website http://www.supplement411.org.

 “Ensuring readiness of the force is one of the Department of Defense’s top goals,” said Deputy Assistant Secretary of Defense for Health Affairs Dr. Dave Smith of DoD’s Military Health System.  “Unsafe dietary supplements are a threat to readiness in DoD.”

“A combined effort like this is vitally important to protecting the health and safety of athletes at every level,” said USADA CEO Travis T. Tygart.  “We work to educate athletes on the risks associated with choosing to use supplements, and we will continue to support further action at a national level to prevent dangerous substances and products from being allowed in the marketplace where they can easily be attained by unsuspecting athletes and other consumers.”

To promote today’s joint sweep, the FTC created an infographic to help consumers understand the range of dietary supplement products and claims, the potential risks of taking supplements and questions to ask a health professional before taking any supplements.  The FTC also published blogs for consumers and businesses, and has articles and videos with more information at ftc.gov/dietary supplements.

The FDA continues to warn consumers about the risks associated with some over-the-counter products, falsely marketed as dietary supplements, which contain hidden active ingredients that could be harmful.  In the last year, the agency has warned of more than 100 products found to contain hidden active ingredients. These products are most frequently marketed for sexual enhancement, weight loss and body building.

Within the last year, the FDA also sent warning letters to manufacturers selling dietary supplements that contain BMPEA and DMBA, two ingredients that do not meet the statutory definition of a dietary ingredient as well as to several companies selling pure powdered caffeine products that the agency determined to be dangerous and present a significant or unreasonable risk of illness or injury to consumers.

The Justice Department announced today an agreement with McLennan County, Texas, to improve access to all aspects of civic life for people with disabilities.  McLennan County and the Department of Justice reached an agreement under Project Civic Access (PCA), the department’s wide-ranging initiative to ensure that cities, towns and counties throughout the country comply with the Americans with Disabilities Act (ADA).  Under the agreement, the county is required to ensure that people with disabilities can take full advantage of the county’s services, programs and activities.  This year, as we celebrate the 25th anniversary of the ADA, it is an ideal time to highlight the impact that the enforcement of this statute has made in the lives of people with disabilities.

“Twenty-five years after the passage of the ADA, we have seen tremendous strides in accessibility nationwide,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division.  “Because of the ADA, local governments like McLennan County are taking responsibility to provide citizens with access to programs, services and activities.  Agreements such as this one will have a remarkable impact on the everyday lives of individuals with disabilities and allow them to fully participate as citizens of McLennan County.”   

Under the agreement, McLennan County will develop and implement a new county website that is compliant with the web content accessibility guidelines (WCAG) version 2.0; the county will also designate a web accessibility coordinator who will be responsible for coordinating the county’s web accessibility compliance.  The county will also ensure that its polling locations are accessible to persons with disabilities.  In addition, the county will modify its emergency operations plan to ensure that it is accessible to all persons with disabilities in the event of an emergency.  McLennan County will also adopt and implement its Sheriff’s Department Effective Communication Policy for People Who are Deaf or Hard of Hearing.  Finally, the agreement requires the county to ensure that its courthouses, buildings, parking lots, parks and toilet rooms are accessible to persons with disabilities.

This agreement was reached under Title II of the ADA, which prohibits discrimination against individuals with disabilities by state and local governments.  The three-year agreement will remain in effect until Nov. 16, 2018.  The department will actively monitor compliance with the agreement.       

For more information about the ADA, today’s agreement, the Project Civic Access initiative or the ADA Best Practices Tool Kit for state and local governments, individuals may access the ADA Web page at http://www.ada.gov/civicac.htm or call the toll-free ADA Information Line at (800) 514-0301 or (800) 514-0383 (TTY).

McLennan County Settlement Agreement 

The Department of Justice announced today that Maerki Baumann & Co. AG (Maerki Baumann) reached a resolution under the department’s Swiss Bank Program.  Maerki Baumann will pay a penalty of more than $23 million.

“Maerki Baumann willfully and actively helped U.S. taxpayers evade their tax obligations and cheat the American public,” said Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.  “Today’s agreement reveals the extent of such conduct and holds Maerki Baumann accountable, requiring the bank to make a detailed disclosure of its cross-border activities, pay an appropriate penalty, and provide continuing and extensive cooperation against its representatives, accountholders and other institutions.”

The Swiss Bank Program, which was announced on Aug. 29, 2013, provides a path for Swiss banks to resolve potential criminal liabilities in the United States.  Swiss banks eligible to enter the program were required to advise the department by Dec. 31, 2013, that they had reason to believe that they had committed tax-related criminal offenses in connection with undeclared U.S.-related accounts.  Banks already under criminal investigation related to their Swiss-banking activities and all individuals were expressly excluded from the program.

Under the program, banks are required to:

• Make a complete disclosure of their cross-border activities;

• Provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest;

• Cooperate in treaty requests for account information;

• Provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed;

• Agree to close accounts of accountholders who fail to come into compliance with U.S. reporting obligations; and

Pay appropriate penalties.

Swiss banks meeting all of the above requirements are eligible for a non-prosecution agreement.

According to the terms of the non-prosecution agreement signed today, Maerki Baumann agrees to cooperate in any related criminal or civil proceedings, demonstrate its implementation of controls to stop misconduct involving undeclared U.S. accounts and pay a penalty in return for the department’s agreement not to prosecute this bank for tax-related criminal offenses.

Maerki Baumann is a family-owned private bank organized under the laws of Switzerland.  It is headquartered in Zurich, Switzerland, and has a branch office in Lugano, Switzerland.  In the 1990s, Maerki Baumann developed a relationship with a Swiss referral source that introduced clients to Maerki Baumann primarily from the United States.  This source was affiliated with an insurance company that also deposited with Maerki Baumann pooled assets from its insurance customers.  Maerki Baumann understood that most were U.S. persons.  At some point in the late 1990s or early 2000s, Maerki Baumann also began receiving referrals of U.S. clients from an external asset manager based in the United States.  These referrals included clients with undeclared accounts. 

Although Maerki Baumann had long had U.S. clients, it had no formal U.S. desk or team until 2001, when it consolidated responsibility for U.S. clients into what had been the “Swiss team” and renamed it the “Swiss/U.S. team.”  Maerki Baumann increased its focus on its U.S. cross-border business from 2003 to 2005.  In 2003, Maerki Baumann hired a relationship manager (RM-1) from the U.S./Canada desk at another bank. 

RM-1 introduced Maerki Baumann to another relationship manager (RM-2), with whom RM-1 had previously worked at another bank and who had significant experience servicing U.S. accounts.  Maerki Baumann hired RM-2 in 2005 with the expectation that RM-2 would provide expertise to the U.S. side of Maerki Baumann’s Swiss/U.S. team and actively recruit additional U.S. clients.  By the end of 2005, in addition to the head of the Swiss/U.S. team, the U.S. component of Maerki Baumann’s Swiss/U.S. team consisted of three relationship managers, including RM-1 and RM-2.  The client base of these relationship managers consisted largely of U.S. clients.  Later, these relationship managers were assisted by three junior members of the Swiss/U.S. team.   On approximately 35 occasions, relationship managers traveled to the United States to meet with U.S. clients for the purpose of building and maintaining relationships with these clients.

Maerki Baumann terminated RM-2’s employment in 2008.  In 2011, RM-2 was charged in a federal court in the United States with conspiring to impede and impair the Internal Revenue Service (IRS) in the ascertainment, computation, assessment and collection of U.S. income taxes, in connection with RM-2’s activities at a bank other than Maerki Baumann. 

Maerki Baumann opened, maintained and serviced accounts for U.S. persons that it knew or had reason to know were likely not declared as required by U.S. law.  Maerki Baumann also offered a variety of traditional Swiss banking services, including hold mail instructions and numbered accounts, that it knew could assist, and did in fact assist, U.S. clients in the concealment of assets and income from the IRS.  The combination of hold mail instructions and numbered accounts on undeclared accounts significantly reduced the ability of the IRS to learn the identities of the U.S. persons.

Maerki Baumann also allowed U.S. persons to maintain accounts held in the name of non-operating non-U.S. corporations or other legal entities that were beneficially owned by these U.S. persons.  The jurisdictions in which the entities were incorporated or formed included Liechtenstein, Panama and the British Virgin Islands.  On at least two occasions, relationship managers met directly with the beneficial owners of the Maerki Baumann accounts held by the entities.

Between 2004 and 2008, on approximately a monthly basis (but sometimes more often), RM-1 received from U.S. clients checks ranging from just under $10,000 to $85,000, which were drawn on U.S. company accounts in California, for deposit into accounts beneficially owned by those U.S. clients or their designees.  The correspondence accompanying the checks stated that the checks were for “materials purchased” and instructed the relationship manager to “process the purchase orders as needed,” and many of the checks themselves bore the notation “see purchase order.”  However, there were no purchase orders attached, and Maerki Baumann was never provided with any purchase orders.  Additionally, RM-1’s notes state that certain checks were for under $10,000 “in order to avoid any unnecessary attention.”  Likewise, with respect to at least two U.S.-related accounts, relationship managers knew between 2003 and 2005 that the client was structuring the transactions to avoid currency transaction reporting requirements.

Relationship managers communicated or discussed communicating with U.S. clients by confidential means.  For example, in October 2006, one relationship manager advised a client that if there was a need for urgent contact, he would send the client a card stating “Greetings from [relationship manager].”  In another instance, in June 2009, a client’s correspondence to a relationship manager stated, “If there are any questions, please phone me on my cell phone or email me with our usual confidentiality.”  In some instances, the accountholders had disclosed to relationship managers that their accounts were undeclared.

Maerki Baumann and its relationship managers also:

• Permitted assets in an account held by a known U.S. person to be transferred in 2006 to a new account held by a life insurance company, known as an “insurance wrapper”;

• Processed requests from U.S. taxpayers for cash or precious metal withdrawals, thus not triggering any transaction reporting requirements;

• Permitted a withdrawal of approximately one million Swiss francs from a U.S. client’s account after the client refused to declare money in the account in the United States;

• Delivered cash withdrawals to U.S. clients in Switzerland; and

• Offered credit, debit or travel cash cards, which facilitated the access to or use of undeclared funds on deposit at Maerki Baumann.

By participating in the Swiss Bank Program, Maerki Baumann has committed to cooperate with the U.S. government in its efforts to identify U.S. persons who engaged in tax evasion and/or fraud.  Among other actions, Maerki Baumann has provided full cooperation to allow the United States to be able to request and obtain from Switzerland through the 1996 Convention and the 2009 Protocol, once ratified, the bank files of non-tax compliant U.S. persons.  This will result in the United States receiving files identifying U.S. persons who previously held undeclared accounts at Maerki Baumann, directly or through entities.

Since Aug. 1, 2008, Maerki Baumann had 571 U.S.-related accounts, comprising maximum assets under management of approximately $790 million, including assets of declared accounts.  Maerki Baumann will pay a penalty of $23.92 million.       

In accordance with the terms of the Swiss Bank Program, Maerki Baumann mitigated its penalty by encouraging U.S. accountholders to come into compliance with their U.S. tax and disclosure obligations.  While U.S. accountholders at Maerki Baumann who have not yet declared their accounts to the IRS may still be eligible to participate in the IRS Offshore Voluntary Disclosure Program, the price of such disclosure has increased.

Most U.S. taxpayers who enter the IRS Offshore Voluntary Disclosure Program to resolve undeclared offshore accounts will pay a penalty equal to 27.5 percent of the high value of the accounts.  On Aug. 4, 2014, the IRS increased the penalty to 50 percent if, at the time the taxpayer initiated their disclosure, either a foreign financial institution at which the taxpayer had an account or a facilitator who helped the taxpayer establish or maintain an offshore arrangement had been publicly identified as being under investigation, the recipient of a John Doe summons or cooperating with a government investigation, including the execution of a deferred prosecution agreement or non-prosecution agreement.  With today’s announcement of this non-prosecution agreement, noncompliant U.S. accountholders at Maerki Baumann must now pay that 50 percent penalty to the IRS if they wish to enter the IRS Offshore Voluntary Disclosure Program.

“Today’s resolution with Maerki Baumann & Co. continues our effort to turn the corner on undisclosed offshore accounts,” said acting Deputy Commissioner International David Horton of the IRS Large Business & International Division. “U.S. taxpayers cannot evade their taxes by hiding their assets in offshore accounts. In partnership with the Department of Justice, we continue to track these taxpayers and their hidden accounts down.”

Acting Assistant Attorney General Ciraolo thanked the IRS and in particular, IRS-Criminal Investigation and the IRS Large Business & International Division for their substantial assistance.  Acting Assistant Attorney General Ciraolo also thanked Tracy L. Gostyla and Kimberly M. Shartar, who served as counsel on this matter, as well as Senior Counsel for International Tax Matters and Coordinator of the Swiss Bank Program Thomas J. Sawyer, Senior Litigation Counsel Nanette L. Davis and Attorney Kimberle E. Dodd of the Tax Division.

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

A Houston, Texas, man was arrested Friday after a federal grand jury sitting in Houston indicted him for three counts of wire fraud, four counts of theft of public money and seven counts of aggravated identity theft, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Department of Justice’s Tax Division and U.S. Attorney Kenneth Magidson of the Southern District of Texas.

According to the allegations in the indictment, during 2015, Denzel Roberts was part of a stolen identity refund fraud (SIRF) scheme that used stolen personal identification information, including names and social security numbers, to file false federal income tax returns for tax year 2014.  Roberts and others used this stolen information to access the Internal Revenue Service’s (IRS) “Get Transcript” web application to obtain tax information of their identity theft victims and filed fraudulent tax returns in those names.  Roberts also opened several bank accounts using a fraudulent passport, directed that the fraudulent tax refunds be deposited into those accounts and withdrew the illicit proceeds.

If convicted, Roberts faces a statutory maximum sentence of 20 years in prison for each count of wire fraud, 10 years in prison for each count of theft of public money and a mandatory sentence of two years in prison for aggravated identity theft.  He also faces substantial monetary penalties and restitution.

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

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

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

The United States has reached a landmark global settlement with Education Management Corp. (EDMC), the second-largest for-profit education company in the country, the Department of Justice announced today.  The $95.5 million settlement resolves allegations that EDMC violated federal and state False Claims Act (FCA) provisions by falsely certifying that it was in compliance with Title IV of the Higher Education Act (HEA) and parallel state statutes.

“This historic resolution exemplifies the Justice Department’s deep commitment to protecting precious public resources; to defending American consumers; and to standing up for those who are vulnerable to mistreatment, abuse, and exploitation,” said Attorney General Loretta E. Lynch.  “Operating essentially as a recruitment mill, EDMC’s actions were not only a violation of federal law but also a violation of the trust placed in them by their students - including veterans and working parents - all at taxpayer expense.  In the days ahead, we will continue working with our invaluable partners at the U.S. Department of Education, through initiatives like the inter-agency task force on for-profit education, to ensure that our nation’s aspiring learners are finding and gaining access to educational opportunities that are right for them.”

The primary allegation was that EDMC unlawfully recruited students, in contravention of the HEA’s Incentive Compensation Ban (ICB), by running a high pressure boiler room where admissions personnel were paid based purely on the number of students they enrolled.  In addition to resolving these and other FCA claims, the global settlement also encompasses an investigation by a consortium of state Attorneys General, of consumer-fraud allegations involving deceptive and misleading recruiting practices.

“Now more than ever, a college degree is the best path to the middle class, but that path has to be safe for students,” said U.S. Education Secretary Arne Duncan.  “This settlement should be a warning to other career colleges out there: We will not stand by while you profit illegally off of students and taxpayers.  The federal government will continue to work tirelessly with state attorneys general to ensure that all colleges follow the law.”

EDMC, which is headquartered in Pittsburgh, Pennsylvania, operates nationwide under four post-secondary school brands: the Art Institutes, South University, Argosy University and Brown-Mackie College.  Student enrollment across EDMC’s school brands exceeds 100,000 students.  

“Companies cannot enrich their corporate coffers at the expense of students seeking a quality education, or on the backs of taxpayers who are funding our critical financial aid programs,” said U.S. Attorney David J. Hickton of the Western District of Pennsylvania.  “Today’s global settlement sends an unmistakable message to all for-profit education companies: the United States will aggressively ferret out fraud and protect innocent students and taxpayer dollars from this kind of egregious abuse.”

The settlement resolves four separate FCA lawsuits filed in federal court in Pittsburgh, Pennsylvania, and Nashville, Tennessee, under the qui tam, or whistleblower, provisions of the act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery.   

The United States and five states intervened and actively litigated one of those four whistleblower lawsuits, United States ex rel. Washington, in the Western District of Pennsylvania.  The United States’ complaint in intervention alleged systemic violations of Title IV of the HEA’s ICB and parallel state provisions, which prohibit schools from paying recruiters based on their success in securing enrollments.  Specifically, the United States and the plaintiff states claimed that from 2003 to the present, EDMC falsely certified to the U.S. Department of Education and various state offices of higher education that it was complying with the ICB, in order to be eligible to receive the federal grant and loan dollars that compose the majority of EDMC’s revenue.  In reality, according to the United States’ complaint in intervention, EDMC was running a high pressure sales business and paid its recruiters based only on the number of students they enrolled.  As a result of these allegedly false certifications, EDMC improperly enriched itself for more than 10 years with federal and state grant and loan dollars.  More broadly, EDMC’s alleged conduct resulted in exactly the problems that Congress sought to curtail when it enacted the ICB:  the enrollment of students in programs for which they lacked the necessary skills and qualifications, unsustainable student debt and default rates and schools’ pursuit of profits ahead of a legitimate educational mission.

“Improper incentives to admissions recruiters result in harm to students and financial losses to the taxpayers,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “This settlement shows that by partnering productively, the federal government and the states’ Attorneys General can put a stop to this type of behavior.”

The global settlement with EDMC also resolves three additional federal FCA lawsuits in which the government did not intervene, all involving various violations of Title IV of the HEA by EDMC.

Finally, the global settlement resolves a consumer fraud investigation by a consortium of 40 state Attorneys General, into EDMC’s deceptive and misleading recruiting practices.  The consumer fraud settlement requires EDMC to undertake various compliance obligations, including detailed disclosure obligations to students; prohibitions on deceptive or misleading recruiting practices and oversight by an administrator to ensure compliance.

“This civil enforcement action holds EDMC accountable for what we allege were unfair and deceptive recruitment and enrollment practices,” said Iowa Attorney General Tom Miller.  “EDMC’s practices were unfair to our state’s students, and they were also unfair to our nation’s taxpayers who backed many of these federal student loans that were destined to fail.  This is a rigorous agreement that not only provides some relief to a large number of former students through loan forgiveness, but helps ensure that the company will make substantial changes to its business practices for future students.”

The global settlement amount of $95.5 million reflects EDMC’s financial condition and current ability to pay.  The settlement proceeds will be shared among the United States, the co-plaintiff states and the whistleblowers and their counsel in the four FCA cases, and includes funds allocated for the compliance expenses of the state consumer fraud settlement, including the costs of the administrator and the acquisition and use of a sophisticated voice analytics system to record and analyze recruiters’ calls with students.  The United States will receive $52.62 million from the settlement, and will pay $11.3 million collectively to the relators in the four qui tam cases.

The FCA lawsuits were handled by Assistant U.S. Attorneys Michael A. Comber, Christy C. Wiegand, Paul E. Skirtich and Colin J. Callahan of the U.S. Attorney’s Office of  the Western District of Pennsylvania, Assistant U.S. Attorney Christopher Sabis of the U.S. Attorney’s Office of the Middle District of Tennessee, and Trial Attorney Jay D. Majors of the Commercial Litigation Branch of the Civil Division of the Department of Justice, with assistance from the U.S. Department of Education’s Office of General Counsel and Office of Inspector General.

The cases are captioned United States ex rel. Washington et al. v. Education Management Corp., et al., Civ. No. 07-461 (WDPA); United States ex rel. Sobek v. Education Management Corp., et al., Civ. No. 10-0131 (WDPA); United States ex rel. Laukaitis et al. v. Education Management Corp., et al., Civ. No. 11-601 (WDPA); and United States ex rel. Rainwater v. Education Management Corp., et al., Case No. 3:12-CV-01008 (MDTN).  The claims resolved by the settlement are allegations only, and there has been no determination of liability.

The U.S. District Court for the Eastern District of Michigan has permanently barred a Liberty Tax Service franchise owner and his companies from preparing federal tax returns for others, the Justice Department announced today.

The civil injunction order prohibits Syed N. Ahmed and his companies from acting as federal tax return preparers and from owning, operating, or profiting from tax-return preparation businesses.  Ahmed and his companies agreed to the entry of the injunction but did not admit the allegations in the civil complaint against them.

According to the complaint, Ahmed and his businesses operated at least 10 Liberty Tax Service franchise locations in the Detroit, Michigan, and Chicago, Illinois, areas.  The complaint alleged that the defendants’ employees prepared federal income tax returns containing false information in order to illegally generate higher tax refunds or higher refundable credits for their customers.  The government alleged that defendants improperly obtained inflated tax refunds and refundable credits for customers by preparing tax returns that included, among other things, false or inflated Schedule C (Profit or Loss From Business) income and expenses, bogus dependents, false filing statuses, improper education credits and false itemized deductions. 

The lawsuit further alleged that the defendants’ Liberty Tax franchises prepared 17,759 federal income tax returns between 2010 and 2013.  According to the complaint, defendants’ conduct cost the U.S. Treasury $2.8 million, based on audit adjustments the Internal Revenue Service (IRS) made to tax returns for 2010 to 2013 prepared and filed by Ahmed’s Liberty Tax Service franchises.  The total harm to the government could be much higher, the complaint states.

Return preparer fraud is one of the IRS’s Dirty Dozen Tax Scams for 2015.  The IRS has some tips on its website for choosing a tax preparer and has launched a free directory of federal tax preparers.  In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers and tax scheme promoters. Information about these cases is available on the Justice Department’s website.  An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page.  If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.

          ALICIA A.G. LIMTIACO, U.S. Attorney for the Districts of Guam and the Northern Mariana Islands (NMI), was invited to participate as a panel member at the 2015 National Asian Pacific American Bar Association (NAPABA) Convention which was held on November 3-6, 2015 in New Orleans.  U.S. Attorney Florence Nakakuni for the District of Hawaii and U.S. Attorney Carter Stewart for the Southern District of Ohio were also invited as panel members. The panel was entitled, “U.S. Attorney Roundtable:  Understanding The Federal Prosecutor,” and described as follows:  Post-financial crisis, government regulators have placed renewed focus on criminal and civil enforcement.  Federal prosecutions and regulatory actions are among the most challenging matters affecting your company or law firm.  Successful resolution of these cases requires an understanding of the thinking and motivation of the federal regulator prosecuting your case.  In an inaugural panel for NAPABA, U.S. Attorneys Carter Stewart (S.D. Ohio), Florence Nakakuni (D. Hawaii) and Alicia Limtiaco (D. Guam, D. NMI) will discuss the process, and the factors they consider, in initiating and resolving cases handled in their district.  The panelists will also discuss their backgrounds, management policies, and developments at the Department of Justice.

          NAPABA is the national voice for the Asian Pacific American legal profession.  They promote justice, equity, and opportunity for Asian Pacific Americans.  They foster professional development, legal scholarship, advocacy and community involvement.  Since its inception in 1988, NAPABA has been at the forefront of national and local activities in the areas of civil rights, combating anti-immigrant backlash and hate crimes, increasing the diversity of the federal and state judiciaries, and professional development.   

          NAPABA represents the interests of over 40,000 attorneys and approximately 70 national, state, and local bar associations.  Its members include solo practitioners, large firm lawyers, corporate counsel, legal services and non-profit attorneys, and lawyers serving at all levels of government.  NAPABA engages in legislative and policy advocacy, promotes APA political leadership and political appointments, and builds coalitions within the legal profession and the community at large.  NAPABA also serves as a resource for government agencies, members of Congress, and public service organizations about APAs in the legal profession, civil rights, and diversity in the courts.

 

Photos taken at the Convention:         

U.S. Attorney Alicia Limtiaco with U.S. Attorney Carter Stewart from the Southern District of Ohio and U.S. Attorney Florence Nakakuni from the District of Hawaii U.S. Attorney Alicia Limtiaco with NAPABA 2015 President Jin Y. Hwang U.S. Attorney Alicia Limtiaco with U.S. Department of Justice Community Relations Service Director Grand H. Lum

 

Manager of North Carolina Tax Preparation Business Underreported Net Profits

A Fulshear, Texas, woman was convicted yesterday in the U.S. District Court for the Southern District of Texas, after a four-day trial, of three counts of filing false federal tax returns and one count of corruptly endeavoring to obstruct the Internal Revenue Service (IRS), announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.

According to the evidence presented at trial, Tamny Denise Westbrooks, 52, was the day-to-day manager of JATS Tax Service, a tax preparation business located in Charlotte, North Carolina.  Westbrooks, who worked for JATS as an independent contractor, underreported her net profits by inflating her business expenses for tax years 2007, 2008 and 2009.  She also obstructed and impeded the IRS by filing false tax returns for herself and others and by paying workers in cash while failing to file the required W-2 or 1099 forms reporting their compensation. 

U.S. District Judge Ewing Werlein Jr. of the Southern District of Texas set Westbrooks’ sentencing for March 18, 2016.  Westbrooks faces a statutory maximum sentence of three years in prison and a fine of up to $250,000 for each count of conviction. 

Acting Assistant Attorney General Ciraolo commended special agents of IRS-Criminal Investigation, who investigated the case and Trial Attorneys Sean P. Beaty and Mara A. Strier of the Justice Department’s Tax Division, who are prosecuting the case.  Acting Assistant Attorney General Ciraolo also thanked the U.S. Attorney’s Office of the Southern District of Texas for their substantial assistance.

A federal court in San Diego, California, has permanently barred Lawrence Preston Siegel from preparing federal tax returns for others, providing tax advice for compensation or any promise of compensation and working for any business that provides tax advice or prepares tax returns, the Justice Department announced.  Siegel is also a fugitive from the State of California, wanted on a 20-count criminal complaint, filed in 2014, charging him with Medi-Cal fraud, grand theft, forgery, identity theft, financial dependent adult abuse and tax evasion. 

Judge Gonzalo P. Curiel of the U.S. District Court for the Southern District of California entered the permanent injunction on Nov. 9, after Siegel failed to appear to defend the civil case. 

The civil complaint alleges that Siegel impersonated licensed California attorneys and used multiple aliases, including Larry Lave and Yehuda Lave, to falsely represent that he is a licensed attorney and CPA in order to recruit customers and implement his tax fraud schemes.  According to the complaint, Siegel resigned from the California bar in 1994 and lost his CPA license in 1997 after he was convicted of federal crimes, including tax evasion.  Siegel allegedly never regained either accreditation. 

The complaint alleges that among his tax fraud schemes, Siegel falsely advised his customers, typically high earners who own profitable businesses, that they can establish companies in another state, usually Nevada, then treat their California home as an out-of-state corporate office.  Siegel claimed that doing so would transform a vast array of non-deductible personal expenses into tax deductible business expenses, according to the complaint.  The complaint details how Siegel boasted about this tax fraud scheme in e-mails, including one where Siegel falsely claimed that his customers are entitled to free housing as tax-free compensation from their out-of-state companies and that “[t]he housing can [b]e luxurious and cost thousands a month” because “[t]here is an assumption that corporations don’t waste money.”

In conjunction with his tax fraud schemes, Siegel allegedly prepared customer tax returns.  In some instances, Siegel filed tax returns without reviewing them with his customers or obtaining their permission to file them, according to the complaint.  Siegel is alleged to have fraudulently claimed customers’ personal purchases as deductible business expenses on tax returns he prepared.  For example, the complaint states that Siegel deducted on one couple’s tax returns purchases at Tiffany & Company, Royal Caribbean Cruise Lines, Louis Vuitton and Princess Cruise Lines.  Siegel allegedly attempted to conceal these fraudulent deductions from the Internal Revenue Service (IRS) by lumping them together and reporting them as large expenses for “supplies” or “medical records and supplies.”

According to the complaint, Siegel also attempted to delay and obstruct IRS examinations of his customers who entered into Siegel’s tax fraud schemes.  Siegel allegedly provided false corporate documents to the IRS in order to deceive auditors, produced bogus contracts to IRS auditors and lied to IRS officials during U.S. Tax Court litigation when asked to confirm information on behalf of his customers.

Return preparer fraud is one of the IRS’s Dirty Dozen Tax Scams for 2014.  The IRS has some tips on their website for choosing a tax preparer.  In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers and tax scheme promoters. Information about these cases is available on the Justice Department 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 Department of Justice announced today that it will require Springleaf Holdings, Inc. (Springleaf) to divest 127 branches with over $600 million in loan receivables in order for Springleaf to proceed with its proposed $4.25 billion acquisition of OneMain Financial Holdings, LLC (OneMain) from CitiFinancial Credit Company, a wholly owned subsidiary of Citigroup, Inc.

The Antitrust Division, along with the offices of seven state attorneys general, filed a civil antitrust lawsuit today in the U.S. District Court for the District of Columbia to block the proposed transaction.  At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the competitive concerns alleged in the lawsuit.  The participating state attorneys general offices represent Colorado, Idaho, Pennsylvania, Texas, Virginia, Washington and West Virginia.

“Personal installment loans are often a critical lifeline for borrowers with limited credit options, allowing them to pay for unexpected expenses or to consolidate debts,” said Assistant Attorney General Bill Baer, of the Justice Department’s Antitrust Division.  “Today’s proposed settlement will ensure that subprime borrowers in over 100 local markets across the United States continue to enjoy the benefits of competition when they seek these important loan products.”

Without the divestiture, subprime borrowers seeking personal installment loans would face fewer choices for these important loan products in local markets located in Arizona, California, Colorado, Idaho, North Carolina, Ohio, Pennsylvania, Texas, Virginia, Washington and West Virginia.

Personal installment loans to subprime borrowers are fixed-rate, fixed-term and fully amortized loan products that are marketed to consumers who have limited access to credit from traditional banking institutions.  According to the complaint, Springleaf and OneMain are the two largest providers of personal installment loans to subprime borrowers in the United States.  Springleaf and OneMain specialize in the same products (large installment loans typically ranging from $3,000 to $6,000), target the same customer base, and have a large degree of geographic overlap between their branch networks.

Specifically, the complaint alleges that in local markets within and around 126 towns and municipalities in eleven states, Springleaf and OneMain operate branches in close proximity to one another – often within five miles – and face few, if any, other competitors.  According to the complaint, the loss of head-to-head competition between Springleaf and OneMain would result in a reduction of consumer choice that likely would drive subprime borrowers to much more expensive forms of credit or leave them with no reasonable alternative. 

Under the terms of the proposed consent decree, Springleaf must divest 127 branches in eleven states to Lendmark Financial Services or to an alternative buyer approved by the United States.  The divestiture includes all active loans originated or serviced at the divested branches and other assets associated with the branches.  Divestiture of the branches to Lendmark will create a new competitor in the provision of personal installment loans to subprime borrowers in Arizona, California, Colorado, Idaho, Ohio, Texas, and Washington.  In North Carolina, Pennsylvania, Virginia, and West Virginia, the divestiture will establish Lendmark as a new competitor in some local areas and enhance its competitive presence in others.  Taken together, the divestitures will remedy the loss of competition alleged in the department’s complaint.

Springleaf is a Delaware corporation with its headquarters in Evansville, Indiana.  Springleaf operates approximately 830 branches in 27 states.  Springleaf has a consumer loan portfolio that totals $4 billion.

OneMain is a Delaware limited liability company with its headquarters in Baltimore.  OneMain operates approximately 1,139 branches in 43 states.  OneMain is a subsidiary of CitiFinancial Credit Company, a holding company that is a wholly-owned subsidiary of Citigroup.  OneMain has a consumer loan portfolio that totals $8.4 billion.

As required by the Tunney Act, the proposed consent decree, along with the department’s competitive impact statement, will be published in the Federal Register.  Any person may submit written comments concerning the proposed settlement within 60 days of its publication to Maribeth Petrizzi, Chief, Litigation II Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 8700, Washington, D.C. 20530.  At the conclusion of the 60-day comment period, the court may enter the final judgment upon a finding that it serves the public interest.

Springleaf Complaint (596.89 KB)

Springleaf APSO (352.74 KB)

Springleaf CIS (634.75 KB)

Springleaf PFJ (735.57 KB)

The Department of Justice announced today that Standard Chartered Bank (Switzerland) SA, en liquidation (SCB Switzerland), reached a resolution under the department’s Swiss Bank Program. 

The Swiss Bank Program, which was announced on Aug. 29, 2013, provides a path for Swiss banks to resolve potential criminal liabilities in the United States.  Swiss banks eligible to enter the program were required to advise the department by Dec. 31, 2013, that they had reason to believe that they had committed tax-related criminal offenses in connection with undeclared U.S.-related accounts.  Banks already under criminal investigation related to their Swiss-banking activities and all individuals were expressly excluded from the program.

Under the program, banks are required to:

• Make a complete disclosure of their cross-border activities;

• Provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest;

• Cooperate in treaty requests for account information;

• Provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed;

• Agree to close accounts of accountholders who fail to come into compliance with U.S. reporting obligations; and

• Pay appropriate penalties.

Swiss banks meeting all of the above requirements are eligible for a non-prosecution agreement.

According to the terms of the non-prosecution agreement signed today, SCB Switzerland agrees to cooperate in any related criminal or civil proceedings, demonstrate its implementation of controls to stop misconduct involving undeclared U.S. accounts and pay penalties in return for the department’s agreement not to prosecute this bank for tax-related criminal offenses.

SCB Switzerland is a private bank with a single office located in Geneva, Switzerland.  It is a wholly owned subsidiary of Standard Chartered PLC, a British multinational banking and financial services company headquartered in London. SCB Switzerland joined the Standard Chartered group of entities (the Standard Chartered Group) in May 2008 when Standard Chartered PLC acquired American Express Bank Ltd. As part of that acquisition, Standard Chartered Group acquired American Express Bank (Switzerland) SA, a private bank incorporated in Switzerland in 1987, which thereafter operated under the name SCB (Switzerland) SA.

In early 2014, the Standard Chartered Group decided to cease its Swiss private banking operations for commercial reasons. SCB Switzerland is now in voluntary formal liquidation. Subject to Swiss regulatory approval, SCB Switzerland expects to return its banking license at the end of 2015, and then the entity will continue to exist as a corporation in liquidation until at least the end of 2018, without banking status or supervision by Swiss Financial Market Supervisory Authority FINMA and with no operations other than completing the wind down.

Through its employees and others, SCB Switzerland knew or should have known that some of the U.S. persons who opened or maintained accounts at SCB Switzerland may not have complied with their U.S. income tax and reporting obligations.  By establishing and maintaining such accounts, SCB Switzerland provided assistance to certain U.S. persons in evading their U.S. tax obligations. Among other things, SCB Switzerland:
 

• Agreed to hold account statements and other mail relating to some U.S.-related accounts;

• Provided account statements and other documentation to the accountholder which contained only the account number in order to further insure the secrecy of the identity of the accountholder; and

• Accepted and included in its account records Internal Revenue Service (IRS) Forms W-8BEN (or equivalent documents) provided by the directors of the offshore companies that falsely represented that such companies were the beneficial owners of the assets in those accounts for U.S. federal income tax purposes.

SCB Switzerland opened and maintained accounts for certain U.S. persons in the name of structures, including trusts created by American Express and inherited and maintained by affiliates of SCB Switzerland, which served as the nominal accountholders of bank accounts that held assets that, in reality, belonged to U.S. persons.  SCB Switzerland adopted the Advisory Center/Booking Center Model from American Express Bank. This method allowed clients to book and hold accounts in any of Standard Chartered Group’s booking centers, including Geneva, while working with relationship managers at other locations throughout the world. The Group also acquired a trust center from American Express Bank. Trust services were available to eligible clients who wished to set up trusts or private investment companies. The trust centers were located in Guernsey, Singapore and the Cayman Islands. A client could create a trust structure in any one of the trust centers while opening an account in another booking center and working with a relationship manager in another advisory center.

SCB Switzerland maintained one account held by a British Virgin Islands private investment company, of which the beneficial owner was a U.S. citizen. The beneficial owner had provided SCB Switzerland with a false W-8BEN, and SCB Switzerland was unaware of the U.S. citizenship of the beneficial owner until 2010.  In 2010, a compliance officer discovered the beneficial owner’s U.S. citizenship through a periodic review of the account that included an Internet search.  Nevertheless, SCB Switzerland maintained the account for approximately two years after discovering that the beneficial owner was a U.S. citizen.

Since Aug. 1, 2008, SCB Switzerland held 22 U.S.-related accounts, comprising a peak of aggregated assets under management of $33.1 million. SCB Switzerland will pay a penalty of $6.337 million.

In accordance with the terms of the Swiss Bank Program, SCB Switzerland mitigated its penalty by encouraging U.S. accountholders to come into compliance with their U.S. tax and disclosure obligations.  While U.S. accountholders at SCB Switzerland who have not yet declared their accounts to the IRS may still be eligible to participate in the IRS Offshore Voluntary Disclosure Program, the price of such disclosure has increased.

Most U.S. taxpayers who enter the IRS Offshore Voluntary Disclosure Program to resolve undeclared offshore accounts will pay a penalty equal to 27.5 percent of the high value of the accounts.  On Aug. 4, 2014, the IRS increased the penalty to 50 percent if, at the time the taxpayer initiated their disclosure, either a foreign financial institution at which the taxpayer had an account or a facilitator who helped the taxpayer establish or maintain an offshore arrangement had been publicly identified as being under investigation, the recipient of a John Doe summons or cooperating with a government investigation, including the execution of a deferred prosecution agreement or non-prosecution agreement.  With today’s announcement of this non-prosecution agreement, noncompliant U.S. accountholders at SCB Switzerland must now pay that 50 percent penalty to the IRS if they wish to enter the IRS Offshore Voluntary Disclosure Program.

Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division thanked the IRS and in particular, IRS-Criminal Investigation and the IRS Large Business & International Division for their substantial assistance.  Ciraolo also thanked Lisa L. Bellamy, who served as counsel on this matter, as well as Senior Counsel for International Tax Matters and Coordinator of the Swiss Bank Program Thomas J. Sawyer, Senior Litigation Counsel Nanette L. Davis and Attorney Kimberle E. Dodd of the Tax Division.

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

Judge Wood Recognized for Her Lifetime Contributions to the Development of Antitrust Law and Policy

Assistant Attorney General Bill Baer presented the 2015 John S. Sherman Award – the department’s highest antitrust honor – to Chief Judge Diane P. Wood of the U.S. Court of Appeals for the Seventh Circuit.  Judge Wood is a leading antitrust scholar and served as a Deputy Assistant Attorney General in the department’s Antitrust Division between 1993 and 1995. 

The John Sherman Award is named after Senator John Sherman, who authored our nation’s first antitrust law – the Sherman Act – in 1890.  Established in 1994, the Sherman Award recognizes individuals whose commitment to sound antitrust enforcement and policy have made “substantial contributions to the protection of American consumers and the preservation of economic liberty.”

The award was presented to Judge Wood during a ceremony in the Great Hall of the Robert F. Kennedy Department of Justice building.  “I cannot think of a more deserving recipient of the department’s highest antitrust honor,” said Deputy Attorney General Sally Quillian Yates. “Chief Judge Wood has consistently demonstrated her commitment to the legal profession and she has been a trailblazer throughout her career for those who aspire to protect economic freedom and opportunity by promoting free and fair competition in the marketplace.”

In presenting the award, Assistant Attorney General Baer said:  “Judge Wood has deepened our understanding of antitrust law and competition policy – from the bench, from the halls of academia and here, as part of the Antitrust Division.”  He also said that Judge Wood “is the author of a number of influential antitrust opinions,” a “noted scholar” who co-authors “one of the seminal casebooks in antitrust,” and, while at the Antitrust Division, “was the predominate force” behind the revised Enforcement Guidelines for International Operations that to this day “serve as a central tool for [the Division’s] international enforcement efforts.”

Judge Wood is the eleventh person to receive the Sherman Award and the first female recipient.  Judge Wood was also one of the first women to clerk on the U.S. Supreme Court when she clerked for Justice Harry Blackman in 1976, and in 1990 she was the first woman to be honored with an endowed chair at the University of Chicago Law School.

This year’s ceremony marked the 125th anniversary of the passage of the Sherman Act, which, as the Supreme Court has observed, is the “Magna Carta of free enterprise” and “as important to the preservation of economic freedom and our free-enterprise system as the Bill of Rights is to the protection of our fundamental personal freedom.”

Previous recipients of the Sherman Award include James F. Rill (2012), Robert Pitofsky (2010), Herbert Hovenkamp (2008), Robert H. Bork (2005), Richard A. Posner (2003), Milton Handler (1998), Thomas Kauper and William Baxter (1996), Phillip Areeda (1995), and Howard Metzenbaum (1994).

Attorney General Loretta E. Lynch released the following statement on today’s attacks in Paris:

“We stand in solidarity with France, as it has stood with us so often in the past. This is a devastating attack on our shared values and we at the Department of Justice will do everything within our power to assist and work in partnership with our French law enforcement colleagues.”

Linxun Liao, 35, a citizen of Canada, was sentenced yesterday in Manhattan federal court to two years in prison for his role in a wildlife trafficking scheme in which he purchased and smuggled 16 “libation cups” carved from rhinoceros horns and worth more than $1 million from the United States to China, announced Assistant Attorney General John C. Cruden for the Environment and Natural Resources Division of the Department of Justice, U.S. Attorney Preet Bharara of the Southern District of New York and Director Dan Ashe of the U.S. Fish and Wildlife Service.  Liao pleaded guilty on June 30, 2015, to a two-count information, admitting to illegally smuggling rhinoceros horn objects from the United States. 

“This prosecution is the result of a vigorous and ongoing investigation into traffickers profiting from endangered and precious wildlife species,” said Assistant Attorney General Cruden.  “We must ensure that the market for antiques and alleged antiques does not also contribute to the extinction of these iconic animals, which could disappear in our lifetimes if we do not act now to stop this illegal trade.”

“This defendant flouted the laws established to protect endangered wildlife,” said U.S. Attorney Bharara.  “Willfully failing to declare the nature of the shipments or obtain required permits, Liao broke laws that protect rhinoceros and other magnificent species threatened with extinction.  He has learned the cost of his illegal conduct.”

“Each of the ceremonial cups that Liao trafficked represents one step closer to extinction for the rhinoceros, which are steadily being wiped out by poachers for the illegal rhino horn market,” said Director Ashe.  “The seriousness of this crime and others like it and their consequences for the world’s most imperiled species are what drives our efforts to root out and shut down illegal operators like Mr. Liao.  This sentence will serve as a strong warning that we are going to find, arrest and prosecute anyone engaged in this sort of activity and make sure they are no longer able to deprive our children and grandchildren of their wildlife inheritance.”

According to the information, other documents filed in federal court in Manhattan and statements made at various proceedings in this case, including today’s sentencing:

Liao was arrested in February 2015 as part of “Operation Crash,” a nationwide crackdown on illegal trafficking in rhinoceros horns.  Liao was a partner in an Asian art and antiques business located in China.  Liao’s role was to purchase items, including wildlife items, in the United States and arrange for their export to China.  Between in or about March 2012 and May 2013, Liao made online purchases of 16 rhinoceros horn products, more specifically libation cups, from auction houses in the United States, including in Manhattan, which he then smuggled to China without the required declarations and permits.  In order to make these purchases, Liao used an address of his family members in New Jersey, the New Jersey location, because he knew that absent a domestic address, the auction houses would not ship him the rhinoceros horn as well as ivory that Liao had acquired.  Liao then utilized a Manhattan-based courier service to illegally export the merchandise to China.  Liao did not declare the rhinoceros exports to the U.S. Fish and Wildlife Service or obtain the required permits despite his knowledge of the need to do so.  Liao closely coordinated his efforts with co-conspirators who sold the items for a profit at their antique business in China.  The market value of the rhinoceros libation cups in this case is more than $1 million.    

The rhinoceros is an herbivore species of prehistoric origin and one of the largest remaining mega-fauna on earth.  They have no known predators other than humans.  All species of rhinoceros are protected under U.S. and international law.  Since 1976, trade in rhinoceros horn has been regulated under CITES, a treaty signed by over 170 countries around the world to protect fish, wildlife and plants that are or may become imperiled due to the demands of international markets.  Rhinoceros are also protected under the U.S. Endangered Species Act, which further regulates trade and transport.

In addition to his prison term, Liao was also ordered two years of supervised release, to forfeit $1 million and 304 pieces of carved ivory found during a search of the New Jersey location.  Liao was also banned from future involvement in the wildlife trade.

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

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

In addition to his prison term, Liao was also ordered two years of supervised release, to forfeit $1 million and 304 pieces of carved ivory found during a search of the New Jersey location.  Liao was also banned from future involvement in the wildlife trade.

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

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

Represents Largest-Ever Criminal Foreign Bribery Fine

Alstom S.A., a French power and transportation company, was sentenced today to pay a $772,290,000 fine to resolve criminal charges related to a widespread corruption scheme involving at least $75 million in secret bribes paid to government officials in countries around the world, including Indonesia, Saudi Arabia, Egypt, the Bahamas and Taiwan.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, First Assistant U.S. Attorney Michael J. Gustafson the District of Connecticut and Assistant Director in Charge Paul M. Abbate of the FBI’s Washington Field Office made the announcement.

Alstom was sentenced by U.S. District Judge Janet Bond Arterton of the District of Connecticut.  Alstom pleaded guilty on Dec. 22, 2014, to a two-count criminal information charging the company with violating the Foreign Corrupt Practices Act (FCPA) by falsifying its books and records and failing to implement adequate internal controls.

In addition, Alstom Network Schweiz AG, formerly Alstom Prom AG (Alstom Prom), Alstom’s Swiss subsidiary, which pleaded guilty on Dec. 22, 2014, to a criminal information charging the company with conspiracy to violate the anti-bribery provisions of the FCPA, was also sentenced today pursuant to its plea agreement.  Alstom Power Inc. and Alstom Grid Inc., formerly Alstom T&D Inc., two U.S. subsidiaries, both entered into deferred prosecution agreements on Dec. 22, 2014, admitting that they conspired to violate the anti-bribery provisions of the FCPA.

According to the companies’ admissions, Alstom, Alstom Prom, Alstom Power and Alstom T&D, through various executives and employees, paid bribes to government officials and falsified books and records in connection with power, grid and transportation projects for state-owned entities around the world, including in Indonesia, Egypt, Saudi Arabia, the Bahamas and Taiwan.  In Indonesia, for example, Alstom, Alstom Prom and Alstom Power paid bribes to government officials—including a high-ranking member of the Indonesian Parliament and high-ranking members of Perusahaan Listrik Negara, the state-owned electricity company in Indonesia—in exchange for assistance in securing several contracts to provide power-related services valued at approximately $375 million.  In total, Alstom paid more than $75 million to secure more than $4 billion in projects around the world, with a profit to the company of approximately $300 million.  

Alstom and its subsidiaries also attempted to conceal the bribery scheme by retaining consultants who purportedly provided consulting services on behalf of the companies, but who actually served as conduits for corrupt payments to the government officials.  Internal Alstom documents refer to some of the consultants in code, including “Mr. Geneva,” “Mr. Paris,” “London,” “Quiet Man” and “Old Friend.”

The sentence, which is the largest criminal fine ever imposed in an FCPA case, reflects a number of factors, including: Alstom’s failure to voluntarily disclose the misconduct, even though it was aware of related misconduct at a U.S. subsidiary that previously resolved corruption charges with the department in connection with a power project in Italy; Alstom’s refusal to fully cooperate with the department’s investigation for several years; the breadth of the companies’ misconduct, which spanned many years, occurred in countries around the globe and in several business lines, and involved sophisticated schemes to bribe high-level government officials; Alstom’s lack of an effective compliance and ethics program at the time of the conduct; and Alstom’s prior criminal misconduct, including conduct that led to resolutions with various other governments and the World Bank.

After the department publicly charged several Alstom executives, however, Alstom began providing thorough cooperation, including assisting the department’s prosecution of other companies and individuals.

To date, the department has announced charges against five corporate executives for alleged corrupt conduct involving Alstom.  Frederic Pierucci, Alstom’s former vice president of global boiler sales, pleaded guilty on July 29, 2013, to conspiring to violate the FCPA and a charge of violating the FCPA for his role in the Indonesia bribery scheme.  David Rothschild, Alstom Power’s former vice president of regional sales, pleaded guilty on Nov. 2, 2012, to conspiracy to violate the FCPA.  William Pomponi, Alstom Power’s former vice president of regional sales, pleaded guilty on July 17, 2014, to conspiracy to violate the FCPA.  Lawrence Hoskins, Alstom’s former senior vice president for the Asia region, was charged in an indictment in connection with the Indonesia bribery scheme, and is pending trial in the District of Connecticut in April 2016.  The charges against Hoskins are merely allegations, and he is presumed innocent unless and until proven guilty.  The high-ranking member of Indonesian Parliament was also convicted in Indonesia of accepting bribes from Alstom, and is currently serving a three-year prison term.  In addition, Marubeni Corporation, which partnered with Alstom on the Indonesia project, pleaded guilty on March 19, 2014 to a criminal information charging conspiracy to violate the FCPA and seven counts of violating the FCPA, and was sentenced on May 15, 2014, to pay an $88 million criminal fine.  

In connection with a corrupt scheme in Egypt, Asem Elgawhary, the general manager of an entity working on behalf of the Egyptian Electricity Holding Company, a state-owned electricity company, was the fifth individual charge and pleaded guilty on Dec. 4, 2014, in the District of Maryland to mail fraud, conspiring to launder money and tax fraud for accepting kickbacks from Alstom and other companies, and was sentenced on March 23, 2015, to serve 42 months in prison and forfeit approximately $5.2 million in proceeds.

This case is being investigated by the FBI’s Washington Field Office, with assistance from the FBI’s Meriden, Connecticut, Resident Agency.  The department appreciates the significant cooperation provided by its law enforcement colleagues in Indonesia at the Komisi Pemberantasan Korupsi (Corruption Eradication Commission), the Switzerland Office of the Attorney General and the United Kingdom’s Serious Fraud Office, as well as authorities in France, Germany, Italy, Singapore and Taiwan.

The case is being prosecuted by Assistant Chief Daniel S. Kahn of the Criminal Division’s Fraud Section and Assistant U.S. Attorney David E. Novick of the District of Connecticut, together with Assistant U.S. Attorney Zach Intrater of the District of New Jersey on the investigation of Alstom T&D, and Assistant U.S. Attorney David I. Salem of the District of Maryland on the investigation of Asem Elgawhary.  The Criminal Division’s Office of International Affairs also provided substantial assistance.        

Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.

KNOXVILLE, Tenn. – On Nov. 12, 2015, Naomi Jean Justice, 23, of Seymour, Tenn., pleaded guilty in U.S. District Court for the Eastern District of Tennessee, Knoxville, to using a pre-pubescent minor to produce child pornography.  Sentencing has been set for 1:00 p.m., Mar. 31, 2016.

Justice faces a minimum of 15 years in prison and a maximum of up to 30 years prison, as well as supervised release following incarceration, restitution, and fines.  She will also be required to register as a sex offender in any state in which she resides, works, or attends school.

In the plea agreement on file with the U.S. District Court Clerk, Justice admitted that in July 2014 she used a pre-pubescent minor to engage in sexually explicit conduct for the purpose of producing a picture of the conduct with her cellular telephone.  She then sent the picture to someone in North Carolina.

This investigation was conducted by the Federal Bureau of Investigation.  Assistant U.S. Attorney Matthew Morris represented the United States.

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

###

The Department of Justice announced today that Banque Internationale à Luxembourg (Suisse) SA (BIL Switzerland) and Zuger Kantonalbank (ZGKB) have reached resolutions under the department’s Swiss Bank Program.  These banks will collectively pay penalties totaling more than $13 million and continue to cooperate with the department.

“The agreements reached today reflect the department’s continued commitment to reaching resolutions with those Swiss banks that satisfy the requirements of the Program, including detailed disclosures of their illegal conduct in connection with U.S.-related accounts,” said Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.  “Taxpayers are on notice that attempting to hide their foreign accounts in insurance wrappers and other such vehicles in order to evade their U.S. tax obligations is criminal conduct, and we are vigorously pursuing these cases.”

The Swiss Bank Program, which was announced on Aug. 29, 2013, provides a path for Swiss banks to resolve potential criminal liabilities in the United States.  Swiss banks eligible to enter the program were required to advise the department by Dec. 31, 2013, that they had reason to believe that they had committed tax-related criminal offenses in connection with undeclared U.S.-related accounts.  Banks already under criminal investigation related to their Swiss-banking activities and all individuals were expressly excluded from the program.

Under the program, banks are required to:

• Make a complete disclosure of their cross-border activities;

• Provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest;

• Cooperate in treaty requests for account information;

• Provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed;

• Agree to close accounts of accountholders who fail to come into compliance with U.S. reporting obligations; and

• Pay appropriate penalties.

Swiss banks meeting all of the above requirements are eligible for a non-prosecution agreement.

According to the terms of the non-prosecution agreements signed today, each bank agrees to cooperate in any related criminal or civil proceedings, demonstrate its implementation of controls to stop misconduct involving undeclared U.S. accounts and pay penalties in return for the department’s agreement not to prosecute these banks for tax-related criminal offenses.

BIL Switzerland is a Swiss private bank with offices in Zurich and Geneva.  BIL Switzerland is wholly owned by Banque Internationale à Luxembourg, a Luxembourg bank founded in 1856.  In 1996, BIL Switzerland’s ultimate parent underwent a merger to form the Dexia Group, headquartered in Belgium.  In connection with this merger, BIL Switzerland was renamed Dexia Privatbank (Schweiz) AG.  In 2011, the Dexia Group dissolved, and BIL Switzerland came under new ownership, at which time it reverted to the BIL Switzerland name.  BIL Switzerland provided private banking and asset management services principally through private bankers based in Zurich, Geneva and Lugano, Switzerland.

BIL Switzerland opened, maintained, serviced and profited from accounts that were held or beneficially owned by U.S. taxpayer clients.  BIL Switzerland opened several accounts for U.S. taxpayers who were leaving other Swiss banks that were being investigated by the department, including UBS and Credit Suisse.

BIL Switzerland offered a variety of traditional Swiss banking services – including hold mail and numbered accounts – that assisted and enabled certain of its U.S. taxpayer clients to conceal their assets and income, file false federal tax returns with the Internal Revenue Service (IRS) and evade their U.S. tax obligations.  BIL Switzerland also provided Swiss travel cash cards to U.S. clients, enabling them to access and spend funds from undeclared accounts in the United States.

In the period since Aug. 1, 2008, BIL Switzerland maintained at least 145 accounts, comprising an aggregate value of more than $64 million, that were owned by insurance companies and which held assets relating to insurance products that were issued to U.S. taxpayer clients of the respective insurance companies.  Such accounts, known commonly as insurance-wrappers, were titled in the names of insurance companies, but were funded with assets that were transferred to the accounts for the beneficial owners of the insurance products (the policy holders).  The assets in these accounts, while titled in the names of insurance companies, were managed by external asset managers for the ultimate benefit of the policy holders, through powers of investment that were given by the insurance companies to the external asset managers.

The assets of some insurance-wrapper accounts originated from undeclared accounts at BIL Switzerland.  These undeclared accounts were closed, and their assets were transferred to newly-opened accounts at BIL Switzerland in the name of an insurance company and managed by various external asset managers.  At account opening, the new accounts held the same assets that the U.S. taxpayer clients had previously held directly at BIL Switzerland.  One of the undeclared accounts did not hold U.S. securities, but the recipient insurance-wrapper account acquired U.S. securities at a later date.

In addition to the 145 insurance-wrapped accounts, BIL Switzerland also acted as a custodian to more than 30 U.S.-related accounts, comprising an aggregate value of approximately $83 million, that were maintained by external asset managers for U.S. taxpayers.

BIL Switzerland closed U.S.-related accounts in ways that concealed the U.S. beneficial owners of those accounts.  Upon request of the accountholders, BIL Switzerland removed the names of its U.S. taxpayer clients from joint accounts, leaving only non-U.S. persons as accountholders, or moved their assets into new BIL Switzerland accounts that were held in the names of non-U.S. persons, including non-U.S. relatives.  BIL Switzerland thereafter treated the recipient accounts as non-U.S.-related accounts, despite some relationship managers continuing to take and execute instructions given directly from the U.S. taxpayers formerly associated with the accounts, or the U.S. taxpayer clients retaining effective beneficial ownership over the transferred funds.

BIL Switzerland maintained three accounts, beneficially owned by two different U.S. taxpayers, that held U.S. securities in the names of three offshore entities.  The U.S. taxpayer’s interest in each of these accounts was not reported to the IRS even though BIL Switzerland knew or had reason to know that such offshore entity accounts were operated without strict adherence to corporate formalities.  Two of the offshore entities were organized in the British Virgin Islands, and the third was organized in the United Arab Emirates.  In effect, these offshore entities were used by the U.S. taxpayer beneficial owners as sham, conduit or nominee entities.  BIL Switzerland relationship managers associated with these accounts, while outside the United States:

• Met with or took instructions from the U.S. taxpayer beneficial owners of these offshore entity accounts, instead of the directors or other authorized parties of the account;

• Acted on instructions from an external asset manager, who received them directly from a U.S. taxpayer, without first knowing whether corporate formalities were observed;

• Followed instructions that allowed a U.S. taxpayer to withdraw cash directly from the account, despite such withdrawals being contrary to the corporate purposes of the entity that owned the account; and

• Executed transactions that allowed a U.S. taxpayer to make several significant wire transfers to unaffiliated Swiss banks for the U.S. taxpayer’s personal use or benefit, without first knowing or inquiring whether corporate formalities were satisfied.

BIL Switzerland accepted certifications from the directors of these entities that falsely declared that the entity was the beneficial owner of the assets deposited in the accounts.

From 2001 through February 2010, BIL Switzerland had a wholly-owned subsidiary, Experta AG, a Swiss company.  Experta AG provided a number of services, including accounting services, legal and tax advice, as well as the creation and management of entities such as offshore corporations, trusts and foundations.  During the time that Expert AG was affiliated with BIL Switzerland, Experta AG provided services that assisted and enabled certain U.S. taxpayers in the concealment of their assets and income and in the evasion of their U.S. tax obligations.

BIL Switzerland has fully cooperated with the department in relation to the Swiss Bank Program.  Among other things, BIL Switzerland required its relationship managers to submit declarations setting forth their knowledge concerning the U.S. taxpayer status of each account that they managed. BIL Switzerland also reviewed leaver lists from other banks to identify additional U.S.-related accounts.

Since Aug. 1, 2008, BIL Switzerland maintained 267 U.S.-related accounts having a maximum aggregate dollar value in excess of $182 million.  BIL Switzerland will pay a penalty of $9.71 million.

ZGKB was founded in 1892 and is headquartered in Zug, Switzerland.  Organized under the laws of the canton of Zug, all of ZGKB’s 14 branches are located within the canton.  The canton owns 51 percent of ZGKB and guarantees its deposits.

From at least 2001 to 2012, ZGKB opened and maintained accounts for certain of its U.S. clients while aware of the risk that such clients were not declaring income earned in these accounts or the existence of such accounts.  In doing so, ZGKB ignored red flags of wrongful intent on the part of U.S. clients who sought to open such accounts.  ZGKB offered a variety of traditional Swiss banking services – including hold mail and numbered accounts – that it knew could assist, and did assist, U.S. taxpayers in concealing their identity from the IRS by minimizing the paper trail associated with their undeclared assets and income.  ZGKB also accepted funds from a small number of UBS accountholders who had likely been forced to close their UBS accounts because of a U.S. tax-fraud investigation of UBS.

ZGKB assisted its U.S. clients in sending money to themselves, relatives, business partners, or other businesses in the United States by issuing checks drawn on a ZGKB account at a bank in New York.  In one case, the accountholder requested and received checks in excess of $90,000 on several occasions.  ZGKB cashed out the balances of U.S. residents’ accounts in substantial amounts.  In one instance, at the request of the U.S. client, ZGKB permitted the client to withdraw the entire account balance of approximately $665,000 in cash.  For several U.S. accountholders, ZGKB transferred funds from their accounts in multiple withdrawals – for example, 12 in one month – of amounts just under $10,000.  In at least one case, ZGKB was instructed to do so in order to evade a report to the IRS.

Since Aug. 1, 2008, ZGKB maintained and serviced 434 U.S.-related accounts having a maximum aggregate dollar value of $220 million.  ZGKB will pay a penalty of $3.798 million.

In accordance with the terms of the Swiss Bank Program, each bank mitigated its penalty by encouraging U.S. accountholders to come into compliance with their U.S. tax and disclosure obligations.  While U.S. accountholders at these banks who have not yet declared their accounts to the IRS may still be eligible to participate in the IRS Offshore Voluntary Disclosure Program, the price of such disclosure has increased.

Most U.S. taxpayers who enter the IRS Offshore Voluntary Disclosure Program to resolve undeclared offshore accounts will pay a penalty equal to 27.5 percent of the high value of the accounts.  On Aug. 4, 2014, the IRS increased the penalty to 50 percent if, at the time the taxpayer initiated their disclosure, either a foreign financial institution at which the taxpayer had an account or a facilitator who helped the taxpayer establish or maintain an offshore arrangement had been publicly identified as being under investigation, the recipient of a John Doe summons or cooperating with a government investigation, including the execution of a deferred prosecution agreement or non-prosecution agreement.  With today’s announcement of these non-prosecution agreements, noncompliant U.S. accountholders at these banks must now pay that 50 percent penalty to the IRS if they wish to enter the IRS Offshore Voluntary Disclosure Program.

“Today’s resolutions with Banque Internationale á Luxembourg (Suisse) SA and Zuger Kantonalbank under the Swiss Bank Program send a clear message,” said acting Deputy Commissioner International David Horton of the IRS Large Business & International Division. “U.S. taxpayers cannot evade their taxes by setting up undisclosed offshore accounts.  In partnership with the Department of Justice, we will continue our successful efforts to track these taxpayers and their hidden accounts down.”

Acting Assistant Attorney General Ciraolo thanked the IRS and in particular, IRS-Criminal Investigation and the IRS Large Business & International Division for their substantial assistance.  Ciraolo also thanked Paul G. Galindo and Brian D. Bailey, who served as counsel on these matters, as well as Senior Counsel for International Tax Matters and Coordinator of the Swiss Bank Program Thomas J. Sawyer, Senior Litigation Counsel Nanette L. Davis and Attorney Kimberle E. Dodd of the Tax Division.

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

FALLS CHURCH, Va. – The Executive Office for Immigration Review (EOIR) today announced the appointment of six new assistant chief immigration judges (ACIJs). ACIJs are responsible for overseeing the operations of the immigration courts or program portfolio to which they are assigned. Their official assignments will be announced in the coming months.

The new ACIJs will help EOIR focus supervisory functions closer to the immigration courts around the country, which is particularly important given the growth in the immigration judge corps expected over the coming months. “While the immigration courts continue to face incredible strain on their resources under an ever growing backlog of cases, we must take action to fully exercise the abilities of our staff at all levels,” said Acting Chief Immigration Judge Print Maggard. “The placement of each of these dedicated immigration judges into a management role will allow EOIR to increase immigration court efficiencies through organizational change.” In addition to their management responsibilities, the new ACIJs will continue to hear cases.

Biographical information for each ACIJ follows.

Mary Cheng, Assistant Chief Immigration Judge
Mary Cheng was appointed as an assistant chief immigration judge in November 2015. Judge Cheng received a Bachelor of Arts degree in 1993 from New York University and a Juris Doctor in 1997 from New York Law School. From April 2009 to November 2015, she served as an immigration judge at the New York City Immigration Court. From March 2003 to April 2009, Judge Cheng served as an assistant chief counsel for U.S. Department of Homeland Security, Immigration and Customs Enforcement, New York. From June 2002 to March 2003, she worked as an assistant district counsel for the former Immigration and Naturalization Service in New York. From August 2000 to May 2002, Judge Cheng was in private practice in New York. During this time, from June 2001 to June 2002, Judge Cheng served as an administrative law judge for the New York City Department of Finance. From September 1998 to July 2000, she worked as an assistant district counsel for the former Immigration and Naturalization Service in New York. From September 1997 to September 1998, Judge Cheng worked as a judicial law clerk at the New York City Immigration Court entering on duty through the Attorney General’s Honors Program. Judge Cheng is a member of the New York State Bar.

Irene C. Feldman, Assistant Chief Immigration Judge
Irene C. Feldman was appointed as an assistant chief immigration judge in November 2015. Judge Feldman received a Bachelor of Arts degree in 1983 from Mount Holyoke College, a Juris Doctor degree in 1988 from Benjamin N. Cardozo School of Law, and a Master of Science in Management degree in 1995 from Boston University, Ben Gurion University of the Negev in Israel. From 2008 to 2015, Judge Feldman served as an immigration judge at the Eloy (Arizona) Immigration Court. From 2001 to 2008, Judge Feldman served as an assistant U.S. attorney in Puerto Rico and in Arizona. From 1996 to 2001, Judge Feldman worked as an Assistant District Counsel, Office of the District Counsel, for the former Immigration and Naturalization Service in New Jersey and in New York. From 1989 to 1994, Judge Feldman served as an Assistant Prosecutor, in the Office of the County Prosecutor, Bergen County, New Jersey. Judge Feldman is a member of the State Bar of Arizona and the New Jersey State Bar.

Amy C. Hoogasian, Assistant Chief Immigration Judge
Amy C. Hoogasian was appointed as an assistant chief immigration judge in November 2015. Judge Hoogasian received a Bachelor of Arts degree in 1990 from the University of Wisconsin-Madison and a Juris Doctor in 1994 from John Marshall Law School, Chicago. From October 2010 to November 2015, Judge Hoogasian served as an immigration judge at the San Francisco Immigration Court. From 2009 to 2010, she served as chief legal counsel at SAGIN LLC. From 2005 through 2009, Judge Hoogasian served as senior corporation counsel at ULINE, Inc. From 1999 to 2005, she served as an assistant chief counsel, at the U.S. Department of Homeland Security, Immigration and Customs Enforcement in Chicago. From 1995 to 1999, Judge Hoogasian served as attorney to the chairman at the Illinois Pollution Control Board. In 1995, she served as an assistant state’s attorney at the Lake County State’s Attorney’s Office, Waukegan, Ill. Judge Hoogasian is a member of the Illinois State Bar.

H. Kevin Mart, Assistant Chief Immigration Judge
H. Kevin Mart was appointed as an assistant chief immigration judge in November 2015. Judge Mart received a Bachelor of Arts degree in 1976 from the University of Dayton (Ohio) and a Juris Doctor in 1982 from Georgetown University Law Center. Since October 2010 Judge Mart has served as an immigration judge at the Miami Immigration Court. From 1995 to October 2010 Judge Mart worked in private practice in Miami and Orlando, Fla., specializing in immigration law. From 1992 to 1995 Judge Mart worked in private practice specializing in litigation in Cincinnati, Ohio, and the Virgin Islands, and in 1991 worked as an assistant attorney general for the U.S. Virgin Islands. From 1982 to 1990, Judge Mart worked in private practice in New York City at Brown &Wood and Fried, Frank, Harris, Shriver & Jacobson specializing in corporate finance. Judge Mart is member of the State Bar of California, the New York and Ohio State Bars, and the Virgin Islands Bar.

Sheila McNulty, Assistant Chief Immigration Judge
Sheila McNulty was appointed as an assistant chief immigration judge in November 2015. She received a Bachelor of Arts degree from Miami University of Ohio in 1984. Judge McNulty received a Juris Doctorate in 1991 from New England School of Law. From November of 2010 until November of 2015 she served as an immigration judge at the Chicago Immigration Court. Judge McNulty served as a special assistant U.S. attorney for the Northern District of Illinois, Chicago, from 2000 until 2010. Prior to that, she began working for the U.S. Department of Justice through the Attorney General’s Honors Program, serving as a trial attorney in the Chicago District Counsel’s Office of the former Immigration and Naturalization Service from 1991 to 2000. Judge McNulty worked as a community activist and organizer in Cambridge, Mass., from 1985 until 1991. Judge McNulty is a member of the Illinois State Bar.

Clarence M. Wagner Jr., Assistant Chief Immigration Judge
Clarence M. Wagner, Jr. was appointed as an assistant chief immigration judge in December 2015. Judge Wagner received a Bachelor of Arts degree in 1993 from Hampton University, a Juris Doctorate in 1997 from Southern University Law Center and a Master of Law degree in 1999 from Georgetown University Law Center. From October 2010 to November 2015, Judge Wagner served as an immigration judge at the Honolulu Immigration Court. From 2003 to October 2010, he served with the Department of Homeland Security, Immigration and Customs Enforcement, Office of the Principal Legal Advisor, in various capacities, including chief counsel, Honolulu, from 2008 to 2010; deputy chief counsel, New Orleans, from 2006 to 2008; and assistant chief counsel, San Antonio, from 2003 to 2006. From 2002 to 2003 Judge Wagner served as an assistant attorney general for the State of Louisiana Department of Justice in Baton Rouge, La. From February 2002 to June 2002, he served as senior attorney, Legal Affairs Division, Louisiana Department of Environmental Quality. From 1998 to 2001, Judge Wagner served as an officer in the U.S. Army, Office of the Staff Judge Advocate, Honolulu, Hawaii. In that capacity, he was the labor and employment attorney from 1998 to 2000 and the environmental law attorney from 2000 to 2001. He was also appointed as a special assistant U.S. attorney, Department of Justice, U.S. Attorney’s Office, District of Hawaii, from 1998 to 2000. Judge Wagner is a member of the Louisiana State Bar and the State Bar of Texas.

- EOIR -

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

A resident of Charlotte, North Carolina, pleaded guilty on Tuesday in the U.S. District Court of the Western District of North Carolina to conspiracy to defraud the United States, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina.

According to court documents and statements in court, Daniel Heggins and his co-conspirator Joan Clark of Charlotte conspired to defraud the United States by filing false tax returns.  Heggins recruited individuals with debts, such as home mortgages or car loans and created false Forms 1099-OID falsely characterizing the amount of the debts as income.  Heggins and Clark then prepared and filed false Forms 1040 that requested refunds from the Internal Revenue Service (IRS) based on the false Forms 1099-OID.  Heggins and Clark caused the returns to be filed at the IRS office in Charlotte.  Sixteen false tax returns claiming more than $4 million in fraudulent refunds were filed with the IRS as part of the scheme.  According to court documents, Clark and another individual, Marlowe Williams, filed three false tax returns, requesting $900,000 in fraudulent refunds from the IRS and received $601,780.

Heggins faces a statutory maximum sentence of five years in prison and a $250,000 fine. On Nov. 5, Clark, also pleaded guilty to two counts of conspiracy to defraud the United States.  She faces a statutory maximum sentence of five years in prison and a $250,000 fine for each conspiracy count.  On Nov. 9, Williams of New London, North Carolina, pleaded guilty to conspiring with Clark to defraud the United States.  He faces a statutory maximum sentence of five years in prison and a $250,000 fine.  On Sept. 24, Cheryl Jones of Chicago, Illinois, pleaded guilty to presenting a materially false document to the IRS.  Jones submitted false tax returns to the IRS at the direction of Heggins and Clark.  She faces a statutory maximum sentence of one year in prison and a $10,000 fine.

The court has not yet set sentencing dates for any of the defendants.

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

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

An Alabama resident and U.S. Postal Service (USPS) employee pleaded guilty today in the U.S. District Court for the Middle District of Alabama to conspiring to defraud the United States with respect to false claims, aggravated identity theft and embezzling mail, 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, between June 2012 and December 2013, Elizabeth Grant, 42, of Seale, Alabama, conspired with others to obtain fraudulent 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 refunds.

Several co-conspirators, including Tracy Mitchell and Keshia Lanier, have already pleaded guilty and were sentenced for their roles in this scheme.  On August 7, Mitchell was sentenced to 159 months in prison.  On September 25, Lanier was sentenced to 180 months in prison.  

Grant faces a statutory maximum sentence of 10 years in prison and a $250,000 fine for the conspiracy count and five years in prison and a $250,000 fine for the count of embezzling mail.  Grant also faces a mandatory minimum sentence of two years in prison for aggravated identity theft, which is in addition to the sentence she receives for the other counts, as well as a potential $125,000 fine.

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

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

FRESNO, California – Dos residentes de Bakersfield fueron sentenciados el martes por el Juez Superior del Distrito de los Estados Unidos Anthony W. Ishii por sus implicaciones en una trama de fraude hipotecario en Bakersfield, anunció el Procurador de los Estados Unidos Benjamín B. Wagner.

Lucía Yolanda Chávez, de 37 años de edad, fue sentenciada a cuatro años de prisión por conspiración a cometer fraude bancario, fraude por correo y fraude por cable además de ser ordenada a pagar 1.8 millones de dólares en restitución. Joseph Chávez, de 41 años de edad, fue sentenciado a tres años de prisión por conspiración a cometer fraude bancario, fraude por correo y fraude por cable y fue ordenado a pagar 1.44 millones de dólares en restitución. Lucía Chávez también fue ordenada a desposeerse de los intereses de aproximadamente 110,000 de dólares incautados de una cuenta bancaria y a pagar una cantidad de dinero personal establecida por decisión judicial de 1.6 millones dólares de lo embargado. Joseph Chávez fue ordenado a pagar lo establecido por decisión judicial en 3 millones de dólares de dinero personal de lo embargado.

Según documentos del tribunal, los demandados conspiraron junto con otros colaboradores también  demandados para usar ¨compradores de paja¨ para comprar propiedades residenciales en Bakersfield construidas por la empresa constructora Pershing Partners LLC (Pershing Partners) perteneciente a Lucía Chávez y por la empresa constructora Jara Brothers Investments (JBI) perteneciente a los co-demandados Eliseo Jara y Sergio Jara. Los conspiradores pagaban a los compradores de paja para comprar las propiedades de Pershing Partners y JBI y financiaban las compras con préstamos que obtenían de entidades de crédito para los compradores de paja basándose en solicitudes de préstamo falsas y fraudulentas. Para llevar a cabo la conspiración, los conspiradores usaron la empresa Paragon Home Mortgage para obtener y gestionar los préstamos. Lucía Chávez también había sido empleada por Paragon Home Mortgage desde aproximadamente agosto del 2006, y adquirió titularidad de Paragon Home Mortgage de los co-demandados Eliseo Jara Jr. y Sergio Jara en el 2007. Joseph Chávez fue empleado por Paragon Home Mortgage aproximadamente desde junio del 2006 a octubre del 2007 donde trabajaba como agente de préstamos y gerente de la oficina. Joseph Chávez y Lucía Chávez se declararon culpables el 10 de abril del 2015.

Las solicitudes de préstamo en las que figuran los nombres de los compradores de paja contenían declaraciones falsas por parte de estos mismos en relación a sus empleos, sus ingresos, sus bienes, sus intenciones de habitar las propiedades como residencias personales y el origen de los recursos de la cuota inicial para la compra de las propiedades. Los conspiradores ocultaban a las entidades de crédito que las mismas empresas constructoras proporcionaban los fondos para algunas de las cuotas iniciales de los compradores de paja. Los conspiradores también sometían documentación falsa a las entidades de crédito tales como los estados de cuentas falsas y alteradas que pretendían mostrar que los compradores de paja tenían saldos altos en las cuentas de banco, comprobaciones falsas de los fondos bancarios de los compradores de paja, comprobaciones falsas de alquileres que pretendían proceder de los dueños de las viviendas que alquilaban, comprobantes de pago falsos y comprobaciones de empleo falsas.

El caso es el producto de una investigación llevada a cabo por el Servicio de Recaudación de Impuestos - Investigaciones Criminales (IRS-CI) y la Oficina Federal de Investigación (FBI). Los Procuradores Auxiliares de los Estados Unidos Kirk E. Sherriff y Henry Z. Carbajal III procesaron el caso.

El 13 de octubre del 2015 los co-demandados Eliseo Jara y Sergio Jara fueron condenados a seis años y medio a la prisión cada uno y la co-demandada Melissa Jara fue condenada a cinco años de Libertad bajo Supervisión. El co-demandado Antonio Pérez-Marcial fue condenado el 12 de mayo del 2014 a tres años y 10 meses a la prisión y la co-demandada Arlene Jeanette Mojardín fue condenada el 18 de mayo del 2015 a dos años y medio a la prisión por sus implicaciones en la conspiración. La co-demandada Candace Gonzales se declaró culpable, con antelación, de la conspiración para cometer fraude bancario, fraude por correo y fraude por cable y la fecha de su audiencia para dictar la condena queda fijada para el 26 de octubre del 2015. El co-demandado Ricardo Salinas se declaró culpable, con antelación, de fraude bancario y su audiencia también queda fijada para el 26 de octubre del 2015.

Defendants Stole Identities of Prisoners and Deceased Individuals

Two Miami residents pleaded guilty for their role in a stolen identity tax refund fraud conspiracy, Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Wifredo Ferrer of the Southern District of Florida announced today.

Jim Joseph and Roland Alexis pleaded guilty to one count of a multi-object conspiracy to defraud the Internal Revenue Service (IRS), commit wire fraud and commit aggravated identity theft and one count of aggravated identity theft.  Joseph pleaded guilty on Nov. 9 and Alexis pleaded guilty Nov. 5.  According to court documents, between 2007 and July 2014, Joseph, Alexis and others conspired to defraud the United States by filing false federal income tax returns using stolen identities.  Joseph and Alexis obtained the personal identification information of actual individuals, some deceased, including names, social security numbers, addresses and dates of birth, without the individuals’ authorization.  The stolen personal identification information belonged to prisoners and deceased individuals.  Joseph, Alexis and others recruited knowing co-conspirators and unknowing victims to put Electronic Filing Identification Numbers (EFINs) in their names through which fraudulent income tax returns would be filed. 

In late 2009, Alexis formed Worldwide Income Tax Multi-Services LLC and North Miami Income Tax Services.  The companies were created with the intended purpose of filing fraudulent tax returns using stolen identities.  Worldwide Income Tax Multi-Services was located in Miramar, Florida, and listed Alexis as President and Joseph as Vice-President.  North Miami Income Tax Services was set up in Miami and listed Alexis as Registered Agent.  Joseph, Alexis and others then used the stolen identities and EFINs to electronically file more than 860 fraudulent tax returns.  Alexis’s conduct resulted in a tax loss of $1.8 million and Joseph’s conduct resulted in a tax loss of $1.2 million.                                                                                                            

Both individuals face a statutory maximum sentence of five years in prison and three years of supervised release for the conspiracy charge and a statutory mandatory sentence of two years in prison and one year of supervised release for the aggravated identity theft charge.  Joseph and Alexis must serve the two-year sentence for aggravated identity theft in addition to any sentence the court imposes on the conspiracy charge.  Both charges carry a statutory maximum fine of $250,000.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Ferrer commended special agents of the IRS-Criminal Investigation and Homeland Security Investigations, who investigated the case, and Assistant Chief Gregory E. Tortella of the Tax Division and Assistant U.S. Attorney Neil Karadbil of the Southern District of Florida, who prosecuted the case.

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

FRESNO, California – Hoy, el Juez del Distrito de los Estados Unidos Lawrence J. O´Neill dictó sentencia a tres demandados en dos casos por traficar con metanfetamina, anunció el Procurador de los Estados Unidos Benjamín B. Wagner.

 

En el primer caso, José Mojarro Cruz, alias Shyboy, de 28 años de edad, y residente de Bakersfield fue condenado a 15 años y nueve meses a la prisión por conspirar para distribuir y poseer con intento de distribuir metanfetamina y heroína. Se declaró culpable de los hechos el 21 de abril del 2015. El co-demandado Arnoldo Delgado García (Delgado), alias Fabricio Rene Delgado-Perea, de 35 años de edad, y ciudadano de México fue condenado a 11 años y cuatro meses a la prisión. El 11 de mayo del 2015 se declaró culpable de conspirar para distribuir y poseer con intento de distribuir metanfetamina y heroína.

 

Según documentos del tribunal, los demandados distribuían, regularmente, metanfetamina y heroína a varios comerciantes de droga y consumidores del Condado de Kern desde mayo del 2013 hasta enero del 2014. Los demandados reconocieron haber distribuido entre 15 y 45 kilos de metanfetamina y más de 1.000 gramos de heroína. El co-demandado Erik Gesus Rivera, de 28 años de edad, y residente de Bakersfield se declaró culpable de posesión con intento de distribuir metanfetamina, y el 21 de septiembre del 2015 fue condenado a dos años de prisión.

 

Este caso fue el producto de una investigación por el Destacamento Especial para la Lucha Contra las Drogas y el Crimen Organizado (Organized Crime Drug Enforcement Task Force u OCDETF) a través de las Aplicaciones de Ley de Inmigración y Aduanas de los Estados Unidos (U.S. Immigration and Customs Enforcement o ICE), las Investigaciones de la Seguridad de la Patria (Homeland Security Investigations o HSI), la Agencia Antidrogas de Estados Unidos (Drug Enforcement Administration o DEA), la Oficina del Sheriff del Condado de Kern y el Destacamento Especial para las Áreas de Tráfico de Droga de Alta Intensidad del Tri-Condado del Sur (Southern Tri-County High Intensity Drug Trafficking Area Task Force o HIDTA). El Procurador Auxiliar de los Estados Unidos Brian K. Delaney procesó el caso.                                                                   

Caso nº 1:14-cr-048 LJO

En el segundo caso, el Juez O´Neill, condenó a Juan Lascano Jr., de 32 años de edad, y residente de Bakersfield, a 10 años de prisión. El 27 de julio del 2015, Lascano se declaró culpable de distribución de metanfetamina.

Según documentos del tribunal, Lascano y sus co-demandados conspiraron para distribuir metanfetamina en cantidades de una libra por el área de Bakersfield. El 21 de septiembre del 2015, el co-demandado Guillermo Magallanes, de 36 años de edad, y residente de Bakersfield, se declaró culpable de conspiración para distribuir metanfetamina y el co-demandado Pascual Gonzales Magallanes, de 44 años de edad, y residente de Bakersfield, se declaró culpable de distribución de metanfetamina.

La audiencia para dictar sentencia de los dos co-demandados está programada para el 14 de diciembre del 2015. Guillermo Magallanes se enfrenta a una pena máxima establecida por la ley de cadena perpetua y una multa de 5 millones de dólares, y Pascual Gonzales Magallanes se enfrenta a una pena máxima establecida por la ley de 40 años en prisión y una multa de 2 millones de dólares. El tribunal, no obstante, se reserva la decisión sobre las sentencias propiamente dichas hasta que todos los factores aplicables establecidos por la ley y por las Directrices Federales para Dictar Sentencia sean consideradas, tomando en cuenta un número determinado de variables.

Además de los cargos criminales, los Estados Unidos está pidiendo la incautación de 31,242 de dólares, un Lexus IS250 F Sport del 2014, y un Acura TL sedán del 2012, efectos de la actividad del tráfico ilegal de droga.

Este caso es el producto del Destacamento Especial de Lucha Contra las Drogas y el Crimen Organizado (Organized Crime Drug Enforcement Task Force u OCDETF) a través de la Agencia Antidrogas de Estados Unidos (Drug Enforcement Administration o DEA), la Oficina Federal de Investigación (FBI), la Oficina del Sheriff del Condado de Kern y el Departamento de Policía de Bakersfield. El Procurador Auxiliar de los Estados Unidos Brian K. Delaney está procesando el caso.                                                                                                                                                     1:15

SACRAMENTO, California – Martin Wayne Flanders, de 51 años de edad, y antiguo residente de Roseville, fue sentenciado hoy por el Juez del Distrito de los Estados Unidos Troy L. Nunley a seis años y cinco meses de prisión por una trama que se dirigía a propietarios de viviendas que se encontraban en dificultades económicas, anunció el Procurador de los Estados Unidos Benjamín B. Wagner.

En febrero del 2015, Flanders y su esposa Ligia Sandoval Spafford (Sandoval), de 48 años de edad, y residente de Roseville, se declararon culpables de fraude por correo en su participación en la trama fraudulenta.

Según documentos del tribunal, entre los años 2008 y 2010, Flanders cobró tarifas por adelantado a sus clientes por un número de servicios financieros que incluían modificaciones de préstamos, revisiones de préstamos hipotecarios, recuperación de crédito, liberación de deuda, peticiones de bancarrota y un programa para vender casas a “inversionistas” que las alquilaban con la opción a compra. Flanders y Sandoval comerciaban estos servicios con aquellos propietarios de viviendas que se encontraban en dificultades económicas, y en particular con énfasis a personas de habla hispana. Durante un programa de radio que se emitía dos veces por semana en la zona del “Bay Area” por Radio Luz, una emisora de radio Cristiana en español, Sandoval promovía los servicios que ella y Flanders ofrecían. Flanders también hacía publicidad en Univisión, un canal de televisión en español, y revistas en español. Cerca de un 98 por ciento de los clientes de los demandados eran de descendencia hispana; algunos hablaban nada o poco inglés. Sandoval habla español, pero Flanders no lo habla.

          Tanto Flanders como Sandoval dieron testimonios falsos a los inversores sobre el éxito de los planes que se ofrecían o, en el caso, de las devoluciones que estaban disponibles si los planes no prosperaban. En el intento de retrasar el proceso de embargo de las viviendas, Flanders y Sandoval se servían de ofertas ficticias llamadas “ofertas fantasma” para comprar las viviendas de las víctimas a precio reducido, un proceso llamado “short sale,” como también de fingidas peticiones de bancarrota que eran rápidamente desestimadas por el tribunal de bancarrotas llamadas “bancarrotas de esqueleto.”  Al menos, entre 25 a 30 individuos pagaron por los servicios que nunca recibieron o no recibieron las devoluciones cuando los planes no cumplieron con lo prometido. Como mínimo, las pérdidas totales para las víctimas fueron de $125,000 dólares. Algunos propietarios que no pudieron recibir subsidios fueron embargados por sus entidades de credito.

          “Al dirigirse a personas en situaciones de dificultades económicas y con un dominio limitado del inglés, Flanders buscaba enriquecerse estando sobre las espaldas de aquellos que menos podían permitírselo,” declaró el Procurador de los Estados Unidos Wagner. “Estamos agradecidos de la sentencia impuesta por el tribunal, y continuaremos a enfocar nuestros esfuerzos en el procesamiento de tramas depredadoras y fraudulentas.”

 

          Este caso es un producto de una investigación por la Oficina Federal de Investigación (FBI). Los Procuradores Auxiliares de los Estados Unidos Todd A. Pickles y Shelley Weger están procesando el caso.

          Flanders está en detención desde su arresto en octubre del 2012. Sandoval está actualmente en libertad. Sandoval está programada para ser sentenciada por el Juez Nunley el 3 de marzo del 2016. Ella se enfrenta a una pena máxima establecida por la ley de 20 años en prisión y una multa de $250,000 dólares. El tribunal, no obstante, se reserva la decisión sobre la sentencia, propiamente dicha, y hasta que todos los factores aplicables establecidos por la ley y por las Directrices Federales para Dictar Sentencia sean considerados, tomando en cuenta un número determinado de variables.

A federal jury in Mobile, Alabama, has convicted Det Stavangerske Dampskibsselskab AS (DSD Shipping) and three employees with obstructing justice, violating the Act to Prevent Pollution from Ships (APPS), witness tampering and conspiracy, announced Assistant Attorney General John C. Cruden for the Department of Justice’s Environment and Natural Resources Division and U.S. Attorney Kenyen R. Brown of the Southern District of Alabama.  DSD Shipping is a Norwegian-based shipping company that operates crude oil tankers, including the M/T Stavanger Blossom.  Also convicted at trial were three senior engineering officers, Bo Gao, Xiaobing Chen and Xin Zhong, employed by DSD Shipping to work aboard the vessel.  A fourth employee, Daniel Paul Dancu, pleaded guilty in October. 

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

“We will not tolerate the continued use of the world’s oceans as a dumping ground for contaminated waste,” said Assistant Attorney General Cruden.  “These defendants deliberately and egregiously violated the law and fouled the marine environment by dumping waste, then tried to cover it up with false records.  We hope this conviction sends a strong message to shippers worldwide that this activity must end, and we will vigorously prosecute those who continue this criminal behavior.”  

“I am pleased with the record of this office in pursuing environmental crimes,” said U.S. Attorney Brown. “We will continue to prosecute corporations and individuals to protect our resources here along the Gulf Coast as well as around the World.  We need to ensure that all foreign vessels and corporations comply with U.S. Coast Guard Examinations to ensure these resources are protected.” 

“The oceans cannot be used as dumping grounds,” said Acting Special Agent in Charge Andy Castro of the Environmental Protection Agency’s (EPA) criminal enforcement program in Alabama.  “The defendants in this case falsified entries in their vessel’s log books to hide the true nature of its open water discharges.  Today’s guilty verdict by a jury should serve as a warning to would-be violators that the American people will not allow the flagrant violation of U.S. laws.”

“This case shows the importance of interagency cooperation and how working together can keep our nation's waterways cleaner and safer for all,” said U.S. Coast Guard Admiral David R. Callahan.  “I commend the U.S. Attorney's Office, the Department of Justice, as well as Customs and Border Protection for their diligence in this case.  This case is a prime example of the Act to Prevent Pollution from Ships working as it was intended.  The Coast Guard is committed to working with our partners to enforce regulations and hold any violators accountable.”

“CGIS is dedicated to holding those individuals and Corporations accountable who violate United States and International law,” said Resident Agent in Charge John Allen with the U.S. Coast Guard Investigative Service (CGIS).  “CGIS will vigorously prosecute anyone who presents false documents to the U.S. Coast Guard or obstructs vessel examinations performed by the U.S. Coast Guard.” 

The evidence presented during the two-week trial demonstrated that in January 2010, DSD Shipping knew that the oily-water separator aboard the M/T Stavanger Blossom was inoperable.  In an internal corporate memo, DSD Shipping noted that the device could not properly filter oil-contaminated waste water and stated that individuals “could get caught for polluting” if the problem was not addressed.  Rather than repair or replace the oily-water separator, however, DSD Shipping used various methods to bypass the device and force the discharge of oily-wastes into the ocean.  During the last months of the vessel’s operation prior to its arrival in the Port of Mobile, the M/T Stavanger Blossom discharged approximately 20,000 gallons of oil-contaminated waste water.

The evidence at trial also established that DSD Shipping employees intentionally discharged fuel oil sludge directly into the ocean.  Specifically, crewmembers cleaned the vessel’s fuel oil sludge tank, removed approximately 264 gallons of sludge and placed the waste oil into plastic garbage bags.  After hiding the sludge bags aboard the ship from port authorities in Mexico, defendants Chen and Zhong ordered crewmembers to move as many as 100 sludge bags to the deck of the vessel.  There, Zhong threw the sludge bags overboard directly into the ocean. 

DSD Shipping, Dancu, Gao, Chen and Zhong, all attempted to hide these discharges from the U.S. Coast Guard by making false and fictitious entries in the vessel’s oil record book and garbage record book.  Further, after arriving in Mobile, Chen and Zhong lied to the U.S. Coast Guard about the discharge of sludge and ordered lower ranking crewmembers to do the same. 

At the conclusion of trial, DSD Shipping was convicted of one count of conspiracy, three counts of violating APPS, three counts of obstruction of justice and one count of witness tampering.  Defendant Gao was convicted of one count of conspiracy and two counts of obstruction of justice.  Defendant Chen was convicted of one count of violating APPS, three counts of obstruction of justice and one count of witness tampering.  Finally, Zhong was convicted of two counts of violating APPS, two counts of obstruction of justice and one count of witness tampering.  DSD Shipping could be fined up to $500,000 per count, in addition to other possible penalties.  Gao, Chen and Zhong face a maximum penalty of 20 years in prison for the obstruction of justice charges

This case was investigated by the U.S. Coast Guard Sector Mobile, U.S. Coast Guard District Eight, CGIS and the EPA, Criminal Investigations Division.  Assistant U.S. Attorney Michael D. Anderson, with the U.S. Attorney’s Office for the Southern District of Alabama, and the Department of Justice’s Environmental Crimes Section Trial Attorney Shane N. Waller prosecuted the case.

Caused 13 False Tax Returns to be Filed in Just Four Months Claiming $7,470,065 in Refunds

A federal jury convicted Charles W. Parker Jr., 49, of College Park, Maryland, today of one count of conspiring to defraud the United States and six counts of filing false income tax returns.

The conviction was announced by Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division, U.S. Attorney Rod J. Rosenstein of the District of Maryland and Special Agent in Charge Thomas Jankowski of the Internal Revenue Service-Criminal Investigation (IRS-CI), Washington, D.C. Field Office.

According to evidence presented during the trial, from March to June 2009, Parker recruited clients for co-conspirator Penny Jones, a tax return preparer in Idaho, who prepared tax returns falsely reporting the amount of taxes withheld and purportedly paid to the IRS.  Parker collected financial information from clients and provided it to Jones for the preparation of the false tax returns.  Parker paid Jones to prepare false tax returns for Parker and others.  Parker mailed the false tax returns to the IRS for the years 2005 to 2008, claiming large tax refunds to which the clients were not entitled.

On May 26, 2009, after Parker paid Jones to prepare a false tax return for two co-conspirators who were residents of Atlanta, Georgia, caused the IRS to issue a tax refund to the co-conspirators of $1,723,693.  On June 3, 2009, Parker emailed the co-conspirators directing them to wire funds to Parker’s bank account.  The next day, the co-conspirators transferred $182,370 into Parker’s account.

The tax returns filed by Parker and his co-conspirators requested fraudulent refunds totaling $7,470,065.  As a result of these false returns, the IRS issued fraudulent tax refunds to Parker and his coconspirators totaling $2,007,568.  In 2013, Jones was sentenced to 120 months in prison for her role in a scheme to help individuals obtain fraudulent tax refunds from the IRS.

Parker faces a statutory maximum sentence of 10 years in prison for the conspiracy, and a maximum sentence of five years in prison for each of the six counts of filing a false tax return.   U.S. District Judge Roger W. Titus has scheduled sentencing for March 28, 2016 at 11:00 a.m.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Rosenstein praised the Tax Division and IRS-CI for their work in the investigation.  Acting Assistant Attorney General Ciraolo and U.S. Attorney Rosenstein thanked Assistant U.S. Attorney Leah Jo Bressack and Trial Attorney Erin Pulice of the Justice Department’s Tax Division, who are prosecuting the case.

Transaction Would Entrench United’s Dominant Position at Newark, New Jersey, Airport – Eliminating Competition and Resulting in Higher Fares and Fewer Choices for Consumers

The Department of Justice today filed a civil antitrust lawsuit seeking to block a proposed transaction between United Continental Holdings Inc. and Delta Air Lines Inc. in order to preserve competition at Newark Liberty International Airport.  

The Antitrust Division’s lawsuit, filed in the U.S. District Court for the District of New Jersey in Newark, New Jersey, alleges that United’s planned acquisition of 24 takeoff and landing slots at Newark would increase United’s already dominant position at the airport, and would strengthen a barrier that diminishes the ability of other airlines to challenge United at the airport.  As a result, the 35 million air passengers who fly into and out of Newark every year likely would face higher fares and fewer choices.

“A slot is essentially a license to compete at Newark,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division.  “United already holds most of them, and as a result, competition at Newark is in critically short supply.  United is already extracting a ‘Newark premium.’  Airfares at Newark are among the highest in the country while United’s service at Newark ranks among the worst.  Allowing United to acquire even more slots at Newark would fortify United’s monopoly position, and weaken rivals’ ability to challenge that dominance, leaving consumers to pay the price.”

To manage congestion at Newark, the Federal Aviation Administration (FAA) allocates takeoff and landing authorizations, or slots, in order to limit the number of flights that can service Newark during the majority of the hours of the day.  Slots are a scarce resource, and airlines seeking to initiate or expand service at Newark face significant challenges obtaining them in order to support new service. 

According to the department’s complaint, United already controls 73 percent of the slots the FAA has allocated to carriers at the airport – over 10 times more slots than its closest competitor.  No other airline has more than 70 slots:

The complaint also alleges that United “grounds” as many as 82 slots each day at Newark, depriving Newark passengers of flight options that would exist if the slots were flown.

The complaint also details how consumers benefit when slots are held by United’s airline rivals.  In response to the department’s concerns expressed during its review of the United/Continental merger in 2010, United divested its 36 slots at Newark to Southwest Airlines.  United’s then-CEO, Jeff Smisek, lauded the settlement as a “fair solution that would allow Continental and United to create an airline that will provide customers with an unparalleled global network and top-quality products and services, while enhancing domestic competition at Newark.”  Nevertheless, as alleged in the complaint, United’s proposed acquisition of slots from Delta is United’s third attempt to reverse the benefits of the 2010 divestiture by buying slots from its competitors at Newark.

According to the department’s complaint, the acquisition of Newark slots by rivals, such as Southwest Airlines, Jet Blue, and Virgin America, has forced United to compete, resulting in lower ticket prices and greater choice for consumers.  For example, Southwest’s acquisition of 36 slots from United allowed it to introduce new low-fare competition to United on five routes resulting in substantially lowered fares and increased service on five routes into and out of Newark:

Route

Year-over-year Percentage Decrease in Average Fare

Year-over-year Percentage Increase in Number of Passengers

Newark-St. Louis

-27 percent

66 percent

Newark-Houston

-15 percent

53 percent

Newark-Phoenix

-14 percent

57 percent

Newark-Chicago

-11 percent

35 percent

Newark-Denver

-5 percent

49 percent

 

Similarly, when Virgin acquired slots at Newark in 2012 after several years of trying unsuccessfully to obtain slots, it introduced competing nonstop service to Los Angeles and San Francisco, and fares on these routes dropped precipitously.  United later calculated that competing on these routes in response to Virgin’s entry cost it approximately $66 million in annual revenue.

United Continental Holdings Inc. is a Delaware corporation headquartered in Chicago.  Last year United, the third largest airline in the world in terms of revenues, flew over 138 million passengers to over 352 destinations throughout the world. 

Delta Air Lines Inc. is a Delaware corporation headquartered in Atlanta.  Last year Delta, the second largest airline in the world in terms of revenues, flew over 170 million passengers to 316 destinations throughout the world. 

US v United Complaint (236.24 KB)

A Hampton Bays, New York man was sentenced today to 63 months in prison followed by three years of supervised release, for securities fraud and filing a false tax return. 

Wilfred T. Azar, III, 54, formerly of Queenstown, Maryland, was sentenced by U.S. District Judge William D. Quarles Jr, who also entered an order that Azar must perform 100 hours of community service while on supervised release, and pay restitution in the amount of $7,219,362 to the victim investors and $469,936 to the IRS.

The sentence was announced by Acting Deputy Assistant Attorney General Bruce M. Salad of the Department of Justice’s Tax Division; U.S. Attorney Rod J. Rosenstein of the District of Maryland; Special Agent in Charge Thomas Jankowski of the Internal Revenue Service-Criminal Investigation (IRS-CI), Washington, D.C. Field Office and Special Agent in Charge Kevin Perkins of the FBI’s Baltimore Division.

In 1999, Azar became president and majority owner of Empire Corporation and exercised complete control over the operations of Empire.  Empire Corporation owned Empire Towers Corporation.  Empire Towers Corporation’s primary asset was Empire Towers, a 10-story office building in Glen Burnie, Maryland. 

According to Azar’s plea agreement and court documents, by January 2006, Empire Corporation could no longer pay its expenses and was effectively insolvent.  By 2007, Empire Towers Corporation had exhausted its lines of credit from lending institutions. 

From January 2006 to April 2010, Azar caused Empire Corporation to sell bonds to 64 individual investors for more than $7 million.  While many of the bonds were titled “registered,” the bonds were not registered with either the U.S. Securities and Exchange Commission (SEC) or the state of Maryland.  In addition, Azar falsely told investors that Empire Corporation was in good financial health and that the company generated enough revenue to pay the promised 10 percent annual rate of return.  Azar falsely represented that the money invested would be used for a specific renovation project or other capital improvement at the Empire Towers office building.  Azar failed to inform investors that he used most of the money raised from previous bond sales for his own personal purposes.  Although the bonds were issued by Empire Corporation, Azar diverted millions of dollars of proceeds from the bond sales to his own bank account and the bank accounts of other companies that he controlled.

During the period of the fraud, Azar misappropriated approximately $7,219,362 in investor proceeds raised through the sale of bonds.  Azar used the bond proceeds: to purchase a $100,000 Aston Martin luxury automobile, to pay the $3,000 monthly mortgage on his primary residence, to pay $51,000 to an Azar trust, to purchase Baltimore Ravens season tickets for $17,298 and to pay $25,389 in country club dues.  In addition, Azar charged over $420,000 to a credit card paid by Empire Management Services, including daily living expenses, lavish vacations and university tuition for one of his children.  Azar also diverted more than $1.07 million in Empire funds as “loans” to other unrelated businesses he controlled which were never repaid and another $3.31 million to make lulling payments.

Finally, Azar failed to report approximately $1,959,250 of embezzled income on his 2009 tax return, thereby avoiding $469,936 in federal income taxes.

The SEC has also filed a complaint against Azar and another individual in connection with the scheme and that case is pending.

Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations.  Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants.   For more information on the task force, visit www.stopfraud.gov.

Acting Deputy Assistant Attorney General Salad and U.S. Attorney Rosenstein praised the IRS-CI, FBI and SEC for their work in the investigation.  Acting Deputy Assistant Attorney General Salad and U.S. Attorney Rosenstein thanked Assistant U.S. Attorney Martin J. Clarke and Trial Attorney Kenneth C. Vert of the Justice Department’s Tax Division, who prosecuted the case.

A District of Columbia resident pleaded guilty today to a charge stemming from his involvement in a far-reaching stolen identity refund fraud scheme in which he and others working with him obtained more than $315,000 through the filing of fraudulent federal income tax returns seeking refunds, the Justice Department announced.

Ezekiel Raspberry, 39, is the second defendant to plead guilty to federal charges in recent weeks.  Approximately 14 people have pleaded guilty to charges in the U.S. District Court for the District of Columbia.  According to court documents, the overall case involves the filing of at least 12,000 fraudulent federal income tax returns that sought refunds of at least $40 million from the U.S. Treasury.

The guilty plea was announced by Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division, U.S. Attorney Channing D. Phillips of the District of Columbia, Special Agent in Charge Thomas Jankowski of the Internal Revenue Service-Criminal Investigation (IRS-CI), Inspector in Charge David G. Bowers, U.S. Postal Inspection Service, Washington Division and Assistant Inspector General for Investigations John L. Phillips of the U.S. Department of the Treasury.

Raspberry pleaded guilty to conspiracy to defraud the United States with respect to claims. Under federal sentencing guidelines, Raspberry faces at his Jan. 15, 2016 sentencing, an advisory guideline range of 24 to 30 months in prison and a fine of up to $50,000 at his sentencing before the Honorable U.S. District Judge Ellen S. Huvelle of the District of Columbia.  In addition, as part of his plea agreement, Raspberry must pay $315,076 in restitution to the IRS.      

According to the government’s evidence, Raspberry participated in a massive and sophisticated stolen identity refund fraud scheme that involved an extensive network of more than 130 people, many of whom were receiving public assistance. The refunds were sought for tax years 2005 through 2012, often in the names of people whose identities had been stolen, including the elderly, people in assisted living facilities, drug addicts and incarcerated prisoners.  In other cases, the refunds were sent to people who were willing participants in the scheme.  The refunds listed more than 400 “taxpayer” addresses located in the District of Columbia, Maryland and Virginia.

According to documents filed with the court, from September 2008 through November 2010, Raspberry and others conspired to defraud the IRS of approximately $315,076 through the filing of 145 fraudulent federal income tax returns. Raspberry received refund checks from a co-conspirator and deposited them into his bank account. He would then withdraw the funds and provide them to the co-conspirator, keeping a portion of the proceeds for himself.

The refund checks were generated by filing false U.S. federal income tax returns, attaching the Schedule C or C-EZ Net Profit From Business, which falsely claimed that each “taxpayer” operated a business as a sole proprietorship, including a “barber” or “childcare.” The returns falsely stated that the “taxpayer” had gross receipts and two or more dependent children, when, in fact, the “taxpayer” was either a victim of identity theft, was misled into providing his or her identifying information, or was a willing participant in the scheme. No such business had been operated by the “taxpayer” and the “taxpayer” had no such dependents.

In a related action, Bernard Rankin, 43, of Glenarden, Maryland, pleaded guilty on Nov. 4, to conspiracy to defraud the United States with respect to claims. Rankin admitted permitting the use of his residential address and bank account in the scheme and recruiting another individual to deposit fraudulently obtained tax refund checks into that individual’s bank account as well.

In announcing the pleas, Acting Assistant Attorney General Ciraolo, U.S. Attorney Phillips, Special Agent in Charge Jankowski, Inspector in Charge Bowers and Assistant Inspector General Phillips commended those who investigated the case.  They also acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office of the District of Columbia, including former Assistant U.S. Attorney Sherri L. Schornstein and Paralegal Specialist Donna Galindo.  Finally, they expressed appreciation for the work of Assistant U.S. Attorney Ellen Chubin Epstein of the District of Columbia’s Fraud and Public Corruption Section and Trial Attorneys Jeffrey B. Bender and Thomas F. Koelbl and former Trial Attorney Jessica Moran of the Tax Division, who prosecuted the case.

          ALICIA A.G. LIMTIACO, U.S. Attorney for the Districts of Guam and the Northern Mariana Islands (NMI), was invited to attend the 2015 Ninth Circuit Corrections Summit, which was held on November 4-6, 2015, in Sacramento, California.

          The U.S. District Court Judges from Guam and the Northern Mariana Islands, together with other Federal judges and court staff, U.S. Attorneys, members of the bar, state and federal corrections officials, and deputy state attorneys general participated in the summit.  The summit was held in an effort to more effectively manage prisoner litigation within states in the Ninth Circuit, including Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington, Guam and the Northern Mariana Islands.

          Some of the topics covered at the summit were segregated housing, health care delivery, prison grievance procedures, strategies for prisoner cases filed in federal court, and class action litigation.   

          In a press release announcing the summit, Chief Judge Sidney R. Thomas of the Ninth Circuit Court of Appeals stated that "[t]he challenges of prisoner litigation have never been greater, and we need fresh perspectives and initiatives to address these critical issues.”  He further stated that “[t]he summit allows all of the stakeholders to share perspectives, gain understanding and discuss how to more effectively manage inmate litigation, from the initial grievance to trial and beyond.”

A Liberty Township, Ohio, resident pleaded guilty to one count of obstructing and impeding the Internal Revenue Code, announced Acting Deputy Assistant Attorney General Bruce M. Salad of the Justice Department’s Tax Division.

According to court documents, Kyle Wade, 44, was the former vice-president of franchising for Instant Tax Service (ITS), a tax preparation business that claimed to have over 1,100 franchise locations throughout the United States in 2009.  Wade formerly owned multiple ITS franchises.

From Jan. 1, 2004 through Nov. 1, 2012, Wade and another individual executed a scheme to obstruct the Internal Revenue Service (IRS), wherein numerous ITS franchises filed false federal income tax returns without the permission of their taxpayer clients and without receiving a valid W-2 form from each client.  The false returns included false and inflated sole proprietorship Schedule C income in an attempt to increase the Earned Income Tax Credit refund.  Wade and another individual also created and presented false documents with the IRS, such as phony W-2 forms that were created by ITS employees using tax preparation software and various other false IRS forms containing forged signatures.

At his sentencing on a date to be determined later, Wade faces a statutory maximum sentence of three years in prison and a fine of $250,000.

The Tax Division commended the efforts of 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, and Assistant U.S. Attorney Jessica Knight of the Southern District of Ohio, who are prosecuting the case.

FALLS CHURCH, VA – The Executive Office for Immigration Review (EOIR) today announced the investiture of two immigration judges. Acting Chief Immigration Judge Print Maggard presided over the investiture during a ceremony held Nov. 6, 2015, at the U.S. Court of Appeals for the Armed Forces in Washington D.C.

After a thorough application process, then-Attorney General Eric H. Holder Jr. appointed Daniel J. Daugherty to his new position, and Attorney General Loretta E. Lynch appointed Jonathan S. Simpson to his new position.

“We are committed to an effective and efficient immigration court process and we are happy that Congress has given us the funding to hire additional immigration judges, as well as the support staff they need,” said Maggard. “These new immigration judges, along with their 19 colleagues who were invested in June, strengthen our immigration judge corps and will help our agency work towards decreasing our current backlog of more than 450,000 pending cases.”

Daniel J. Daugherty, Immigration Judge, Las Vegas Immigration Court

Attorney General Eric H. Holder Jr. appointed Judge Daugherty to begin hearing cases in November 2015. Judge Daugherty received a Bachelor of Science degree in 1984 from Defiance College and a Juris Doctor in 1987 from the University of Toledo, College of Law. From 2008 through 2015 and 2002 through 2005, Judge Daugherty was a member of the Navy-Marine Corps Trial Judiciary, serving in capacities including chief trial judge and circuit judge. Prior to 2008, and when not serving as a member of the Navy-Marine Corps Trial Judiciary, Judge Daugherty served in the Marine Corps in various capacities including deputy staff judge advocate, chief trial counsel (prosecution), prosecutor, senior defense counsel, defense counsel, and special assistant U.S. attorney. Judge Daugherty also has provided legal services in a number of other positions within the Marine Corps and has served as an assistant county prosecutor. Judge Daugherty is a member of the Ohio Bar.

Jonathan S. Simpson, Immigration Judge, San Francisco Immigration Court

Attorney General Loretta E. Lynch appointed Judge Simpson to begin hearing cases in November 2015. Judge Simpson received a Bachelor of Arts degree in 1995 from Wabash College and a Juris Doctor in 1998 from Seton Hall University. From 2006 through September 2015, Judge Simpson served as assistant chief counsel, U.S. Immigration and Customs Enforcement, Department of Homeland Security, in Los Angeles and San Diego, Calif. From 1997 through 2006, both domestically and abroad, Judge Simpson served in various capacities as a member of the U.S. Navy’s Judge Advocate General’s Corps, including branch chief, officer in charge, and attorney. Judge Simpson is a member of the New Jersey 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.

The Department of Justice returned $1,126,951.45 in forfeited assets to the government of the Republic of Korea today.  The forfeited assets were the profits of a public corruption scheme orchestrated by former Korean President Chun Doo Hwan in the 1990s, and were laundered to the United States by Chun’s family members and associates.  The assets were forfeited in two recent United States civil forfeiture actions as part of the Department of Justice’s Kleptocracy Asset Recovery Initiative, which is coordinated by the department’s Asset Forfeiture and Money Laundering Section.

“The return of these assets is a powerful vindication of the rule of law, and an important victory for the people of the Republic of Korea,” said Attorney General Loretta E. Lynch.  “Since it was established in 2010, the Kleptocracy Asset Recovery Initiative has been an effective tool in our ongoing efforts to curb high-level public corruption around the world.  As we move forward, the Department of Justice will remain committed to using all the resources at its disposal to ensure that government funds go to their lawful purposes; that stolen assets are returned to state coffers; and that corrupt officials are held fully accountable for abusing their positions.”

Immigration and Customs Enforcement-Homeland Security Investigations (ICE-HSI) and the FBI investigated the cases leading to the U.S. forfeiture of the assets being returned to Korea and served as the seizing agencies.

“The FBI is committed to tracing, seizing and forfeiting the assets of corrupt foreign politicians who have abused their power to enrich themselves and use the United States financial markets to launder their ill-gotten gains,” said Assistant Director Joseph Campbell of the FBI’s Criminal Investigative Division.  “The funds returned represent a successful and important collaboration between the United States and the Republic of Korea.”

“I commend the men and women of our Homeland Security Investigations Regional Attaché Office in Korea and the Special Agent in Charge Office in Philadelphia who worked tirelessly to bring this foreign corruption case to fruition,” said Director Sarah R. Saldaña of ICE.  “Let this case be a message that corruption on all levels will be investigated and that the United States will work multilaterally with countries throughout the world to protect citizens from the wrongs caused by public servants motivated by greed.”

In 1997, a criminal court in Korea convicted former President Chun of accepting more than $200 million in bribes from Korean corporations and ordered him to pay approximately $212 million in criminal penalties.  In 2013, the Anti-Corruption Division of the Korean Supreme Prosecutor’s Office opened a money laundering investigation regarding the potential laundering of the bribery proceeds into the United States by Chun and his associates through the acquisition of U.S. real estate and opening of U.S. bank accounts.

Prosecutors assigned to the Kleptocracy Asset Recovery Initiative initiated their own investigation, aided by agents from ICE-HSI and the FBI.  In January 2014, FBI investigators in the Central District of California seized $726,951.45 held in a California escrow account, which was traced to the sale of real estate property acquired by Chun’s son and his girlfriend in 2005 in Orange County, California.  In February 2015, Kleptocracy prosecutors filed a second civil forfeiture action in the Eastern District of Pennsylvania seeking to forfeit a secured investment worth approximately $500,000 in a Pennsylvania company, which also was traced to Chun’s corruption scheme.  On March 4, 2015, the department reached a settlement agreement of its civil forfeiture actions, resulting in the forfeiture of a total of $1,126,951. 

The investigation was conducted jointly by ICE-HSI’s Philadelphia Office, ICE-HSI’s Regional Attaché Office for Korea and Japan at the U.S. Embassy in Seoul, the FBI Los Angeles Division’s West Covina Resident Agency and the Criminal Division’s International Corruption Unit-FBI Kleptocracy Program.  Kleptocracy prosecutors worked closely with Korean law enforcement authorities, principally through the Seoul Central District Prosecutor’s Office, the Supreme Prosecutor’s Office and the Ministry of Justice.  The cases were prosecuted by Assistant Deputy Chief Woo S. Lee and Trial Attorney Della Sentilles of the Criminal Division’s Asset Forfeiture and Money Laundering Section, Assistant U.S. Attorneys Katharine Schonbachler and Steven R. Welk of the Central District of California and Assistant U.S. Attorneys Joseph Minni and Alvin Stout of the Eastern District of Pennsylvania.  The Criminal Division’s Office of International Affairs provided substantial support.     

This case was brought under the Kleptocracy Asset Recovery Initiative by a team of dedicated prosecutors in the Criminal Division’s Asset Forfeiture and Money Laundering Section, working in partnership with federal law enforcement agencies to forfeit the proceeds of foreign official corruption and, where appropriate, return those proceeds to benefit the people harmed by these acts of corruption and abuse of office.  

A Bedford, Virginia couple was convicted today in the U.S. District Court for the Western District of Virginia of theft of government funds and other federal crimes, announced Acting Deputy Assistant Attorney General Larry J. Wszalek of the Justice Department’s Tax Division and U.S. Attorney Anthony P. Giorno of the Western District of Virginia. 

Edgar and Contina Foxx were convicted by a federal jury after a four-day trial.  In addition to the theft of government funds charge, Edgar Foxx was convicted of one count of making a false 2008 tax return and three counts of failure to file a tax return and Contina Foxx was convicted of one count of providing false statements for federal health care program benefits.

According to the indictment, during the years 2008, 2009, 2010 and 2011, Edgar Foxx transported and sold scrap metal which resulted in gross receipts in excess of $500,000.  The jury found that Edgar Foxx filed a false 2008 joint individual income tax return, which failed to report to the Internal Revenue Service (IRS) significant amounts of income he earned that year.  For the tax years 2009 through 2011, Edgar Foxx did not file any individual income tax returns.  The jury found as charged in the indictment that Edgar and Contina Foxx misrepresented or failed to report income to the Social Security Administration (SSA) in order to qualify to receive Medicaid benefits which resulted in their unlawful receipt of social security benefits for the years 2010 through 2012.  Contina Foxx was further convicted of making false statements to the Department of Health and Human Services in the application for benefits involving Medicaid by underrepresenting her total household income.

Sentencing is scheduled on Feb. 23, 2016, before U.S. District Judge Norman K. Moon of the Western District of Virginia, who presided over the trial.  Edgar and Contina Foxx face a statutory maximum sentence of 10 years in prison and a fine of up to $250,000 for the theft of government funds charge.  Edgar Foxx also faces a statutory maximum of one year in prison and a fine of up to $100,000 for each failure to file charge and three years in prison and a fine of up to $250,000 for the false return charge.  Contina Foxx faces a statutory maximum of five years in prison and a fine of up to $250,000 for the false statements for federal health care program benefits charge.

Acting Deputy Assistant Attorney General Wszalek and U.S. Attorney Giorno commended special agents of IRS-Criminal Investigation, special agents of the Office of Inspector General for SSA and special agents of the Office of Inspector General for the Department of Health and Human Services, who investigated the case and Assistant U.S. Attorneys Patrick Hogeboom and Charlene Day of the Western District of Virginia and Trial Attorney Joseph M. Giannullo of the Tax Division, who prosecuted the case.

          ALICIA A.G. LIMTIACO, U.S. Attorney for the Districts of Guam and the Northern Mariana Islands (NMI), was invited to speak at the University of Guam’s (UOG) School of Education Masters Class (MAED) on October 26, 2015, at the University of Guam.   

          U.S. Attorney Limtiaco gave a presentation on cybercrime, including child pornography, child sexual exploitation, sexting and cyberbullying, and shared resources and safety tips.

          The U.S. Attorney’s Office is often invited by elementary, middle and high schools to make presentations on bullying and cyberbullying. Bullying and cyberbullying are prevalent issues in today’s youth and are priorities of the U.S. Attorney’s Office.  

 

Photo of U.S. Attorney Alicia Limtiaco taken at UOG’s MAED Class:

      

 

Verdict Brings Total of 22 Individuals Convicted in Scheme

A jury in Central Islip, New York, convicted six men yesterday on felony charges of conspiracy and fraud in the sale of candy vending machine business opportunities, the Department of Justice announced. 

Edward Morris “Ned” Weaver, 42, of Perrysburg, Ohio, and Lawrence A. Kaplan, 57, of Brooklyn, New York, were convicted of conspiracy, six counts of fraud and one count each of making false statements to federal agents during a related criminal investigation.  Scott M. Doumas, 43, of East Setauket, New York, was convicted of one count of conspiracy and one count of mail fraud.  Richard R. Goldberg, 43, of Bay Shore, New York, and Richard Linick, 73, of Coram, New York, were each convicted of conspiracy and one count of wire fraud.  Paul E. Raia, 64, of Brookhaven, New York, was convicted of conspiracy and two counts of wire fraud.

The convictions followed a six-week trial before U.S. District Court Judge Joan M. Azrack in federal court in the Eastern District of New York.  Each of the defendants faces a statutory maximum sentence of 10 years in prison on the conspiracy count and 25 years in prison on the fraud counts.  Weaver and Kaplan face a statutory maximum sentence of five years in prison on the false statements charges.

“These defendants promised their victims the American dream, but knew that what they in fact were offering was a worthless business opportunity,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “The Department of Justice will continue to prosecute those who seek to scam out of everyday Americans the hard-earned money in their retirement accounts and life savings.”

According to evidence presented at trial, managers, sales representatives and operators of “locating companies” associated with Multivend LLC, d/b/a Vendstar, made material misrepresentations about the profits customers would make from bulk candy vending machines. During the telemarketing calls, Vendstar’s sales representatives falsely claimed to operate their own profitable vending machine businesses.

Additional evidence at trial described how Vendstar advertised nationwide in newspapers and on the Internet.  Vendstar sales representatives promised to provide consumers with everything they needed to operate a successful business, including vending machines, an initial supply of candy, assistance in finding locations for the vending machines, training and ongoing customer assistance.  The locating companies who worked with Vendstar to close deals had no special skills, tools or expertise in finding locations and generally placed consumers’ machines wherever they could as quickly as they could, often in businesses that had not consented to housing the machines and that soon demanded that the machines be removed.  The vending machines generated little business and Vendstar’s customers lost all or nearly all of their investments.  The typical customer paid about $10,000 for the business opportunity.

Prior to this trial, 16 other Vendstar managers, Vendstar sales representatives and locating company operators pleaded guilty to federal felony charges for related conduct at Vendstar.  Evidence presented at trial established that from 2005 to 2010, the Vendstar scheme cost consumers $60 million.

Principal Deputy Assistant Attorney General Mizer commended the U.S. Postal Inspection Service for their investigative efforts.  The case was prosecuted by Trial Attorneys Patrick Jasperse and Alan Phelps of the Civil Division’s Consumer Protection Branch.

A federal jury in Los Angeles convicted a Los Angeles man and owner of a medical supply company today for his role in a $4 million Medicare fraud scheme. 

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Eileen M. Decker of the Central District of California, Special Agent in Charge Christian J. Schrank of the U.S. Department of Health and Human Services-Office of Inspector General’s (HHS-OIG) Los Angeles Region and Assistant Director in Charge David L. Bowdich of the FBI’s Los Angeles Field Office made the announcement.

According to evidence presented at trial, Valery Bogomolny, 43, used his company, Royal Medical Supply, to bill Medicare $4 million between January 2006 and October 2009 for power wheelchairs (PWCs), back braces and knee braces that were medically unnecessary, not provided to beneficiaries or both.  The evidence further showed that Bogomolny created false documentation to support his false billing claims, including creating fake reports of home assessments that never occurred.  Bogomolny personally delivered PWCs to beneficiaries who were able to walk without assistance and signed documents stating that he had delivered equipment when the equipment was not actually delivered.  Bogomolny ultimately received $2.7 million from Medicare on these false claims.

A sentencing hearing is scheduled for Feb. 29, 2016, before U.S. District Judge S. James Otero of the Central District of California, who presided over the trial. 

The case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section.  Trial Attorneys Fred Medick and Ritesh Srivastava of the Criminal Division’s Fraud Section are prosecuting this case. 

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

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

A former high-ranking paramilitary leader in the Autodefensas Unidas de Colombia (AUC or the United Self Defense Forces of Colombia) was sentenced to 198 months in U.S. federal prison today for conspiring to import into the United States and distribute ton-quantities of cocaine, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Acting Administrator Chuck Rosenberg of the U.S. Drug Enforcement Administration (DEA).

“Rodrigo Tovar-Pupo funded his violent and dangerous paramilitary organization by reaping the profits of manufacturing and shipping thousands of kilograms of cocaine into the United States,” said Assistant Attorney General Caldwell.  “His actions did untold damage to the United States and Colombia.  This case demonstrates our continued commitment to work closely with our international partners to stem the flow of the international drug trade.”

“The sentence reflects our unwavering commitment to bring to justice leaders of the AUC and other narco-terrorist organizations throughout the world,” said Acting Administrator Rosenberg.  “Many terror regimes use drug trafficking profits to expand their global influence.  As a top-level AUC commander, Tovar-Pupo led a huge drug trafficking enterprise, overseeing maritime cocaine shipments destined for the United States and other parts of the world.  I am proud of the dedicated men and women throughout DEA who have worked tirelessly to bring him to justice.”

Rodrigo Tovar-Pupo, also known as “Jorge 40,” 54, formerly of Barranquilla, Colombia, pleaded guilty in July 2009 to one count of conspiracy to distribute five kilograms or more of cocaine, knowing and intending that it would be imported into the United States, and was sentenced today by U.S. District Judge Reggie B. Walton of the District of Columbia.  Tovar-Pupo was also ordered to pay a $25,000 fine and to five years of supervised release following his prison sentence.

According to court documents and proceedings, including admissions in connection with his guilty plea and additional testimony, Tovar-Pupo became a member of a paramilitary group in 1996 that later merged with other Colombian paramilitary groups to form the AUC.  The AUC was designated a foreign terrorist organization by the U.S. Department of State in September 2001.  The AUC was removed from the State Department’s list of foreign terrorist organizations in July 2014.  In May 2003, the AUC was placed on the Significant Foreign Narcotics Traffickers list by order of the president, pursuant to the Foreign Narcotics Kingpin Designation Act.  Court documents reflect that the AUC was organized into blocs (or regions) with each bloc having a commander who controlled large areas in Colombia where cocaine was produced. 

According to admissions made in connection with his plea agreement and during other court proceedings, Tovar-Pupo quickly became a top-level commander in the AUC, and his forces controlled all aspects of cocaine production and transportation in his region, which included the north coast of Colombia.  Tovar-Pupo’s organization and its operations were funded through “taxes” he imposed on cocaine manufacturers and traffickers in his region.  In exchange, Tovar-Pupo provided protection and security for the manufacturers and traffickers, including securing coastal areas where cocaine was loaded onto vessels for shipment to the United States and elsewhere.  Tovar-Pupo knew that shipments of large quantities of cocaine, amounting to more than 1,500 kilograms, were manufactured in and transited through his region, and that much of the cocaine was transported to the United States.

Tovar-Pupo was arrested in Colombia based on a provisional arrest warrant and extradited to the United States on May 13, 2008, along with 13 other fugitives.

Today’s sentence for violations of U.S. drug trafficking laws does not account for any violations of Colombian human rights-related laws allegedly committed by Tovar-Pupo in Colombia, which are being addressed in Colombia through the Justice and Peace process—a legal framework enacted in Colombia in 2005 to facilitate the demobilization of its paramilitary organizations—and the Colombian criminal justice system.

The case was investigated by the Department of Justice’s Organized Crime Drug Trafficking Task Forces program, led by DEA’s Bogotá and Cartagena, Colombia, Country Offices, and the DEA Special Operations Division.  The DEA worked in partnership with the Judicial Police of the Prosecutor General’s Office in Colombia and the Colombian National Police.

The case is being prosecuted by Trial Attorney Paul W. Laymon of the Criminal Division’s Narcotic and Dangerous Drug Section (NDDS), with significant assistance from NDDS’ Judicial Attachés in Bogotá, Colombia, the Criminal Division’s Office of International Affairs, and the Prosecutor General’s Office of the Republic of Colombia (Fiscalia), including the Fiscalia’s Transitional Justice program.  

The former CEO of TierOne Bank, a $3 billion publicly traded commercial bank formerly headquartered in Lincoln, Nebraska, was convicted by a federal jury today for orchestrating a scheme to defraud TierOne’s shareholders and to mislead regulators by concealing more than $100 million in losses on loans and declining real estate.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Special Agent in Charge Thomas R. Metz of the FBI’s Omaha, Nebraska, Division and Special Inspector General for the Troubled Asset Relief Program (SIGTARP) Christy Goldsmith Romero made the announcement.   

After a two-week trial, a jury in the District of Nebraska found the former CEO, Gilbert G. Lundstrom, 74, of Lincoln, guilty on 12 of 13 counts, including charges of conspiracy to commit wire fraud and securities fraud, conspiracy to falsify bank entries, wire fraud, securities fraud and falsifying bank entries.  In 2014, co-conspirators James Laphen, TierOne’s former president and chief operating officer, and Don Langford, TierOne’s former chief credit officer, pleaded guilty to multiple felonies in connection with their participation in the scheme.

Evidence at trial showed that Lundstrom was the architect of an aggressive strategy to expand the bank’s portfolio beyond traditional lending in Nebraska to riskier areas like commercial real estate in Las Vegas.  Once the financial crisis hit, Lundstrom’s bet on real estate in riskier areas decimated the bank.  Lundstrom and his co-conspirators then intentionally concealed massive losses – more than $100 million – in TierOne’s loan and real estate portfolio from investors and regulators and provided inflated figures in its required reports to the U.S. Securities and Exchange Commission (SEC) and the Office of Thrift Supervision (OTS).  In April 2009, Lundstrom and his co-conspirators learned that TierOne needed to increase its reserves and Loan Loss Allowance by between $34 million and $114 million, but concealed this information from shareholders and regulators in TierOne’s financial statements.  In addition, during TierOne’s annual shareholder meeting held on May 21, 2009, the evidence showed that Lundstrom misrepresented the state of TierOne’s capital ratios and reserves and whether TierOne had applied for TARP funding.

In June 2010, following TierOne’s ultimate disclosure of $120 million in loan losses and its subsequent delisting from the NASDAQ exchange, TierOne was shut down by the Federal Deposit Insurance Corporation.  At the time of the closure, TierOne had more than 750 employees working at TierOne’s headquarters in Lincoln and at its 69 branch offices located in Nebraska, Iowa and Kansas. 

The case was investigated by the FBI’s Omaha Division and SIGTARP.  The SEC also provided substantial assistance in the investigation.  The case was prosecuted by Trial Attorneys Henry P. Van Dyck and L. Rush Atkinson and Senior Deputy Chief Sandra Moser of the Criminal Division’s Fraud Section.

The Justice Department announced today that following a comprehensive investigation it will not pursue federal criminal civil rights or other federal charges against the federal agents involved in the in-custody altercation that resulted in the death of Mexican national Anastasio Hernandez-Rojas.

Officials from the Department of Justice’s Civil Rights Division, the FBI and the Department of Homeland Security’s Office of the Inspector General (DHS-OIG) met today with Hernandez-Rojas’ family members and their representatives to inform them of this determination.  The department’s decision is based on the facts developed during an independent and comprehensive investigation into this matter.

The department devoted significant time and resources to investigating the events surrounding Hernandez-Rojas’ death on May 31, 2010, three days after he was taken into custody at the San Ysidro Port of Entry in San Diego, California.  A team of experienced federal prosecutors reviewed hundreds of pages of evidence generated by San Diego Police Department Homicide investigators.  Federal agents and the Civil Rights Division then initiated an independent federal investigation into the incident, which included numerous witness interviews and visits to the scene.  The evidence generated during the federal investigation included videos of the incident, federal law enforcement witness accounts, Mexican law enforcement witness accounts, civilian witness accounts, medical personnel accounts, medical records, autopsy reports, official use of force training materials and forensic evidence. 

The evidence developed during the investigation indicated that when Hernandez-Rojas’ handcuffs were removed at the San Ysidro Port of Entry, Hernandez-Rojas began grappling with the two U.S. Border Patrol (USBP) agents and then resisted their efforts to restrain him.  Two Immigration and Customs Enforcement (ICE) agents, as well as another USBP agent, joined the struggle and struck Hernandez-Rojas several times with their asp batons.  The agents again secured Hernandez-Rojas in handcuffs, but he continued to struggle and kick at the agents.  The agents called for backup and a transport vehicle to take Hernandez-Rojas for processing since he was no longer eligible for voluntary return due to the struggle.  As agents attempted to place Hernandez-Rojas in the transport van to take him back to the station, he again physically resisted and attempted to kick the agents.  A number of Customs and Border Protection (CBP) officers responded to the scene, one of whom shocked Hernandez-Rojas with a taser.  Hernandez-Rojas stopped resisting and the agents restrained his legs.  Shortly thereafter, Hernandez-Rojas’ breathing slowed and he became unresponsive.  The CBP officers administered CPR until medical personnel arrived at the scene.  Hernandez-Rojas was pronounced dead two days later after being removed from life support.

Subsequent autopsies concluded that Hernandez-Rojas died of an acute myocardial infarction (heart attack) while being restrained.  Acute methamphetamine intoxication, pre-existing heart disease, the level of physical exertion during the struggle, the electro-shocks from the taser and positional restraint were stated as contributory factors in Hernandez-Rojas’ death.  The medical examiner stated further that Hernandez-Rojas would not have died had there not been methamphetamine intoxication. 

After a careful and thorough review, a team of experienced federal prosecutors determined that the evidence was insufficient to pursue federal criminal civil rights charges.  Under the applicable federal criminal civil rights law, prosecutors must establish, beyond a reasonable doubt, that an official willfully deprived an individual of a constitutional right, meaning that the official acted with the deliberate and specific intent to do something the law forbids.  This is the highest standard of intent imposed by the law.  Neither accident, mistake, fear, negligence nor bad judgment is sufficient to establish a federal criminal civil rights violation.  In the present matter, the federal government could not prove beyond a reasonable doubt that the subjects acted willfully, that is with the specific intent to deprive the victim of a constitutional right.  Specifically, the federal government cannot disprove the agents’ claim that they used reasonable force in an attempt to subdue and restrain a combative detainee so that he could be placed inside a transport vehicle. 

The federal government is also unable to prove, beyond a reasonable doubt, that the subjects violated the federal homicide statutes within the Special Maritime and Territorial Jurisdiction of the United States.  Although positional restraint of Hernandez-Rojas and electro-shocks from the taser were contributory factors in his death, there is no evidence that any of the federal agents deployed the taser or restrained Hernandez-Rojas with malice.  Nor is there sufficient evidence to establish that the federal agents’ conduct violated the federal manslaughter statute, which does not require malice but requires that the federal agents committed a lawful act in an unlawful manner, or without due caution and circumspection, that might produce death.  Rather, the federal agents’ restraint and deployment of the taser against Hernandez-Rojas when he was non-compliant and physically assaultive was not unlawful and, based on the evidence gathered relating to the federal agents’ use of force training, the federal agents’ action were not done without due caution and circumspection.

While the loss of life is regrettable, the facts of this matter do not support a federal prosecution.  Accordingly, the investigation into this incident has been closed.

Washington – El Departamento de Justicia anunció hoy que, después de una investigación exhaustiva, no presentará cargos penales federales de violación de los derechos civiles u otros cargos federales contra los agentes federales involucrados en el altercado asociado a la detención que resultó en el fallecimiento del ciudadano mexicano Anastasio Hernández-Rojas.

Autoridades de la División de Derechos Civiles del Departamento de Justicia, el Buró Federal de Investigación [Federal Bureau of Investigation (FBI)] y la Oficina del Inspector General del Departamento de Seguridad Nacional [Department of Homeland Security - Office of the Inspector General (DHS-OIG)] se reunieron hoy con miembros de la familia de Hernández-Rojas y sus representantes para informarlos de esta determinación.  La decisión del departamento se basó en hechos ocurridos durante una investigación independiente y exhaustiva del asunto.

El departamento le dedicó una importante cantidad de tiempo y recursos a investigar los hechos asociados a la muerte de Hernández-Rojas el 31 de mayo de 2010, tres días después de haber sido detenido en el Puerto de Entrada de San Ysidro en San Diego, California.  Un equipo de fiscales federales experimentados examinaron cientos de páginas de evidencia generados por investigadores del Departamento de Homicidios del Departamento de Policía de San Diego.  Agentes federales y la División de Derechos Civiles luego iniciaron una investigación federal independiente del hecho, la que incluyó a numerosas entrevistas con testigos y visitas al lugar del hecho.  Las pruebas recabadas durante la investigación federal incluyeron videos del incidente, relatos de testigos de oficiales federales, relatos de testigos de policía mexicana, relatos de testigos civiles, relatos de personal médico, registros médicos, informes de autopsia, materiales de capacitación sobre el uso de fuerza oficial y pruebas forenses. 

Las pruebas desarrolladas durante la investigación indicaron que, cuando se le retiraron las esposas a Hernández-Rojas en el Puerto de Entrada de San Ysidro, Hernández-Rojas empezó a luchar con dos agentes de la Patrulla Fronteriza de EE.UU. [U.S. Border Patrol (USBP)] y luego se resistió a sus esfuerzos por contenerlo.  Dos agentes del Servicio de Inmigración y Control de Aduanas [Immigration and Customs Enforcement (ICE)], y un otro agente de la USBP, se unieron al altercado y golpearon a Herández-Rojas varias veces con sus bastones telescópicos.  Los agentes esposaron a Hernández-Rojas otra vez, pero el mismo siguió debatiéndose y pateando a los agentes.  Los agentes pidieron refuerzo y un vehículo de transporte para detener a Hernández-Rojas, ya que había dejado de ser elegible para regreso voluntario a Mexico porque forcejearse. A medida que los agentes intentaban colocar a Hernández-Roja en la camioneta que lo llevaría a la comisaría, nuevamente se resistió e intentó patear a los agentes.  Una serie de agentes de La Oficina de Aduanas y Protección Fronteriza [Customs and Border Protection (CBP)] respondieron al lugar de los hechos, uno de los cuales acertó a Hernández-Rojas con una pistolaTaser.  Hernández-Rojas dejó de resistirse y los agentes le inmovilizaron las piernas.  Poco después, la respiración de Hernández-Rojas se volvió más lenta y Hernández-Rojas dejó de reaccionar.  Los agentes de CBP le practicaron resucitación cardiopulmonar hasta que llegó personal médico al lugar.  Hernández-Rojas fue pronunciado muerto dos días después de haber sido desconectado del equipo de auxilio respiratorio.

Las autopsias que siguieron concluyeron que Hernández-Rojas falleció debido a infarto de miocardio agudo (ataque al corazón) durante su inmovilización.  Se indicó que intoxicación aguda con metanfetamina, enfermedad cardíaca preexistente, el nivel de esfuerzo físico durante la resistencia física y las descargas eléctricas de la pistola Taser y la inmovilización fueron factores que contribuyeron a la muerte de Hernández-Rojas.  Asimismo, el médico forense indicó que Hernández-Rojas no hubiera fallecido si no hubiera existido la intoxicación por metanfetamina. 

Después de un análisis cuidadoso y exhaustivo, un equipo de fiscales federales experimentados determinaron que no existían pruebas suficientes para la presentación de cargos federales penales de derechos civiles.

De acuerdo con las leyes federales penales de derechos civiles aplicables, los fiscales deben establecer, más allá de la duda razonable, que un oficial federal privó intencionalmente a una persona de un derecho constitucional, o sea, que el oficial actuó con intención deliberada y específica de hacer algo prohibido por la ley.  Este es el más alto estándar de determinación impuesto por la ley.  Accidente, error, temor, negligencia o falta de criterio no son suficientes para establecer un violación penal federal de los derechos civiles.  En este caso, el gobierno federal no logró probar más allá de la duda razonable, que los sujetos actuaron de manera deliberada, o sea, con la intención específica de privar a la víctima de un derecho constitucional.  Específicamente, el gobierno federal no logró refutar el alegato de los agentes de que utilizaron fuerza razonable con la intención de dominar y restringir a un detenido combativo, de modo que se lo pudiera colocar dentro de un vehículo de transporte. 

El gobierno federal no podría probar, más allá de la duda razonable, que los sujetos violaron las leyes federales de homicidio dentro del ámbito de la Jurisdicción Especial Marítima y Territorial de los Estados Unidos.  Si bien la inmovilización de Hernández-Rojas y las descargas eléctricas de la pistola Taser fueron factores que contribuyeron para su muerte, no existen indicios de que cualquiera de los agentes federales utilizó la pistola Taser o inmovilizó a Hernández-Rojas con malicia.  Ni existen pruebas suficientes para establecer que la conducta de los agentes federales violó la ley federal de homicidio involuntario, la que no requiere malicia, pero sí requiere que los agentes federales hayan cometido un acto legal de manera ilegal, o sin el cuidado y la circunspección debidas, lo que podría producir la muerte.  Al contrario, la inmovilización y el uso de la pistola Taser por los agentes federales contra Hernández-Rojas, durante su resistencia y cuando se encontraba en estado agresivo, no fue ilegal y, según pruebas reunidas relacionadas con la capacitación acerca de uso de la fuerza de los agentes federales, las acciones de los agentes federales no fueron llevadas a cabo sin el debido cuidado y circunspección.

Mientras la pérdida de una vida es lamentable, los hechos asociados a este caso no justifican un enjuiciamiento federal.  En consecuencia, la investigación de este incidente ha sido cerrada.

Settlement Addresses the Bank’s Errors Affecting Nearly 68,000 Accounts of Homeowners in Bankruptcy

The Department of Justice’s U.S. Trustee Program has entered into a national settlement agreement with Wells Fargo Bank N.A. (Wells Fargo) requiring Wells Fargo to pay $81.6 million in remediation for its repeated failure to provide homeowners with legally required notices, thereby denying homeowners the opportunity to challenge the accuracy of mortgage payment increases.  These failures violated federal bankruptcy rules that took effect in December 2011 and imposed more detailed disclosure requirements to ensure proper accounting of fees and charges on homeowners in bankruptcy.

Bankruptcy Rule 3002.1 requires mortgage creditors to file and serve a notice 21 days before adjusting a Chapter 13 debtor’s monthly mortgage payment.  Wells Fargo acknowledges that it failed to timely file more than 100,000 payment change notices (PCNs) and failed to timely perform more than 18,000 escrow analyses in cases involving nearly 68,000 accounts of homeowners in bankruptcy between Dec. 1, 2011, and March 31, 2015.  Under the settlement, Wells Fargo also will change internal operations and submit to oversight by an independent compliance reviewer.  The proposed settlement has been filed in the U.S. Bankruptcy Court for the District of Maryland, where it is subject to court approval.        

“I am pleased that Wells Fargo has acted responsibly by accepting accountability for its deficient bankruptcy practices, agreed to compensate affected homeowners for those deficiencies and committed to making necessary improvements in its bankruptcy operations,” said Director Cliff White of the U.S. Trustee Program.  “When creditors fail to comply with the bankruptcy laws and rules, they compromise the integrity of the bankruptcy system and must be held accountable.  Transparency in the process is of paramount importance.  Homeowners in bankruptcy have the right to proper and timely notices, particularly when they are being asked to pay more.  The U.S. Trustee Program remains diligent in its effort to hold financial institutions that disregard the law accountable for their actions.”

Settlement Terms

Wells Fargo agrees to pay a total of $81.6 million to homeowners who were in bankruptcy between Dec. 1, 2011, and March 31, 2015, and who were affected by Wells Fargo’s failure to timely file PCNs and escrow statements, including:

• $53.6 million will be paid to more than 42,000 homeowners whose payments increased as to which Wells Fargo failed to timely file a PCN with the court. The payment will be in the form of a credit to the homeowner’s mortgage account in a lump sum amount, which averages $1,254 per homeowner and varies depending on the homeowner’s mortgage balance. More than 70 percent of the total payments will go to homeowners who have mortgage balances under $300,000. These payments will be made regardless of whether homeowners actually paid the increased amount.

• An estimated $10 million will be paid by crediting homeowners’ accounts at the end of their bankruptcy cases if, upon a detailed review of the accounts, it is determined the homeowners were not fully compensated through the initial crediting process described above. Wells Fargo estimates that 15 to 20 percent of homeowners who receive the initial payments will be due additional amounts at case closing.

• $1.5 million will be refunded in cash to about 3,000 homeowners where notices of decreases in monthly payments were not timely provided and the homeowners paid more than the actual amount due.

• $1 million will be refunded in cash to about 2,400 homeowners who satisfied escrow shortages by making a lump sum payment, but whose monthly payments did not decrease to account for the lump sum payment.

• $4.5 million will be paid by crediting the mortgage escrow accounts of about 6,000 homeowners who did not receive timely escrow statements. Wells Fargo will credit the amount of any increase in escrow shortage that was incurred between the time Wells Fargo should have performed the analysis and the time it actually did perform the analysis. As a result, homeowners will not be responsible for any increase in the escrow shortage stemming from Wells Fargo’s failure to timely perform the escrow analysis.

• $4 million will be paid to about 12,000 homeowners by crediting mortgage accounts in the amount of $333, where Wells Fargo failed to timely perform an escrow analysis that would have resulted in a PCN being filed and the homeowner is not already receiving remediation for a missed or untimely PCN.

• $4 million will be refunded in cash to about 6,000 homeowners who did not receive timely escrow statements and whose escrow accounts contained surpluses that Wells Fargo had not refunded or credited toward the next year’s escrow payment.

• $3 million in remediation to about 8,000 homeowners has already been completed by Wells Fargo for certain violations.

In addition to the monetary remediation, Wells Fargo will make changes to internal procedures to prevent recurrence of the violations.  These changes include improvements to its computer platform, improvements to employee training and oversight and implementation of quality control processes to ensure the accuracy and timeliness of PCNs and escrow statements.

The settlement resolves any actions that could be brought by the U.S. Trustee Program for the covered conduct, but does not limit the rights of any homeowner or other third party to take action against Wells Fargo.

Wells Fargo and the U. S. Trustee Program have selected Lucy Morris of Hudson Cook LLP, to serve as an independent reviewer who will verify that Wells Fargo complies with the settlement order.  The independent reviewer will file periodic public reports with the bankruptcy court.  Wells Fargo will pay all costs associated with the compliance review, including the compensation of the independent reviewer. 

Homeowners with questions about the settlement may contact Wells Fargo at 1-800-274-7025.

Director White commended the U.S. Trustee Program team who expertly investigated, litigated and settled this matter, including Deputy Director and General Counsel Ramona Elliott, Senior Trial Attorney Diarmuid Gorham, National Creditor Enforcement Coordinator Gail Geiger, Assistant U.S. Trustee Catherine Stavlas and Trial Attorney Kelley Callard.

The U.S. Trustee Program is the component of the Justice Department that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws.  The U.S. Trustee Program has 21 regions and 93 field office locations.

A federal jury convicted two former Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank) derivative traders – including the bank’s former Global Head of Liquidity & Finance in London – today for manipulating the London InterBank Offered Rates (LIBOR) for the U.S. Dollar (USD) and the Yen, benchmark interest rates to which trillions of dollars in interest rate contracts were tied.  Five former Rabobank employees have now been convicted in the Rabobank LIBOR investigation.

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

“Today’s verdicts illustrate the department’s successful efforts to hold accountable bank executives responsible for this global fraud scheme,” said Assistant Attorney General Caldwell.  “This investigation—which also resulted in the recent conviction of a bank executive in the U.K.—exemplifies the department’s work with our international partners to protect our global markets from fraud.  The verdicts also demonstrate the department’s ongoing efforts to hold individuals who use their corporate positions to commit fraud personally responsible for their actions.”

“The department will continue to pursue aggressively those involved in illegal schemes that undermine the integrity of financial markets,” said Assistant Attorney General Baer.  “And we will hold individuals criminally accountable for directing illegal corporate behavior.”

“These convictions make clear that bank executives and traders will be held accountable for manipulating world interest rates for their own personal benefit,” said Assistant Director in Charge Abbate.  “Today’s verdict is a testament to the dedication of the special agents, analysts and prosecutors who worked tirelessly to uncover manipulation and fraud in the global financial system.”

After a four-week trial, a jury in the Southern District of New York found Anthony Allen, 44, of Hertsfordshire, England, and Anthony Conti, 46, of Essex, England, guilty of conspiracy to commit wire and bank fraud and substantive counts of wire fraud. 

As the trial evidence showed, LIBOR is an average interest rate, calculated based upon submissions from leading banks around the world and reflecting the rates those banks believe they would be charged if borrowing from other banks.  At the time relevant to the charges, LIBOR was calculated for 10 currencies at 15 maturities, ranging from overnight to one year, and was published by the British Bankers’ Association (BBA), a London-based trade association, based on submissions from a panel of 16 banks, including Rabobank.  Allen, Conti and Paul Robson, who previously pleaded guilty to the conspiracy charge, each determined Rabobank’s LIBOR submissions on various occasions.

LIBOR serves as the primary benchmark for short-term interest rates globally and is used as a reference rate for many interest rate contracts, mortgages, credit cards, student loans and other consumer lending products.  Rabobank invested in various derivatives contracts that were directly affected by the relevant LIBOR rates on a certain dates.  If the relevant LIBOR moved in the direction favorable to the defendants’ positions, Rabobank and the defendants benefitted at the expense of the counterparties.  When LIBOR moved in the opposite direction, the defendants and Rabobank stood to lose money to their counterparties.

Evidence at trial established that Allen, who was Rabobank’s global head of liquidity and finance and the manager of the company’s money market desk in London, oversaw a system in which Rabobank employees who traded in these LIBOR-linked derivative products influenced the employees who submitted Rabobank’s LIBOR contributions to the BBA.  These traders asked Allen, Conti, Robson and others to submit LIBOR contributions that would benefit the traders’ or the banks’ trading positions. 

Sentencing is scheduled for March 10, 2016.

In addition to Allen and Conti, three other former Rabobank employees have been convicted in the Rabobank LIBOR investigation.  Robson, Lee Stewart and Takayuki Yagami each pleaded guilty to one count of conspiracy in connection with their roles in the scheme.  Two other former Rabobank employees, Tetsuya Motomura, 42, of Tokyo, and Paul Thompson, 48, of Dalkeith, Australia, have also been charged.  Rabobank entered into a deferred prosecution agreement with the department on Oct. 29, 2013, and agreed to pay a $325 million penalty to resolve violations arising from Rabobank’s LIBOR submissions.

The case was investigated by special agents, forensic accountants and intelligence analysts in the FBI’s Washington Field Office.  The prosecution is being handled by Senior Litigation Counsel Carol L. Sipperly and Assistant Chief Brian R. Young of the Criminal Division’s Fraud Section and Trial Attorney Michael T. Koenig of the Antitrust Division.  The Criminal Division’s Office of International Affairs and Deputy Chief Daniel Braun and Assistant Chief Brent Wible of the Criminal Division’s Fraud Section are thanked for their substantial assistance in this matter.

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

This prosecution is part of President Barack Obama’s Financial Fraud Enforcement Task Force.  President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources.  The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes.  For more information about the task force visit: www.stopfraud.gov.   

The United States filed a complaint seeking to permanently bar an Aberdeen, Maryland, woman and the tax preparation business she operates from preparing federal tax returns and promoting a frivolous tax avoidance scheme, the Justice Department announced today. 

The complaint against Charese Johnson, doing business as Prodigy Accounting Services, was filed in the U.S. District Court for the District of Maryland.  According to the complaint, Johnson prepares income tax returns for customers that fraudulently overstate the refunds due by claiming false withholdings or credits.

The complaint alleges that Johnson promotes a tax avoidance scheme based upon the bogus “redemption” theory, in which individuals assert that the federal government maintains secret accounts for U.S. citizens that can be accessed by issuing various forms to the Internal Revenue Service (IRS).  According to the complaint, Johnson prepares fraudulent IRS Forms 1099-A (Acquisition or Abandonment of Secured Property) and 8281 (Information Return for Publicly Offered Original Issue Discount Instruments) for her customers and files them with the IRS in order to claim enormous tax refunds on their behalf.  The IRS and the courts have repeatedly made clear that the theories Johnson uses in filing the refund claims are frivolous and pure fiction, according to the complaint.  The complaint further alleges that Johnson’s dozens of customers have sought millions of dollars in bogus refunds as a result of Johnson’s conduct.

Return preparer fraud, inflated refund claims and frivolous tax arguments are all among the IRS’ Dirty Dozen Tax Scams for 2015.  The IRS has some tips on its website for choosing a tax return preparer and has launched a free directory of federal tax return preparers.  In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers and tax scheme promoters.  Information about these cases is available on the Justice Department’s website.  An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page.  If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.