District Not Recorded

A Glenn Dale, Maryland, man and former U.S. Postal Service contracting officer was sentenced today to 15 months in prison for receiving bribes in connection with the awarding of mail delivery contracts. 

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Rod J. Rosenstein of the District of Maryland and Special Agent in Charge Paul L. Bowman of the U.S. Postal Service’s Office of Inspector General made the announcement.

In May 2015, Gregory Cooper, 59, pleaded guilty to accepting more than $25,000 in bribes from a co-defendant who owned two companies that bid on and secured transportation contracts with the Postal Service for mail delivery.  Those bribes came in a variety of forms, ranging from fitness equipment delivered to Cooper’s Maryland home to a semester’s worth of college tuition for Cooper’s daughter, in addition to $15,900 in cash.  Cooper admitted that in exchange for these payments, he gave favorable consideration to his co-defendant’s companies in the bidding process for nine Postal Service contracts, all of which were awarded to the co-defendant’s companies. 

In addition to his prison sentence, U.S. District Judge George J. Hazel of the District of Maryland ordered Cooper to forfeit the amount of the bribes, $25,931.76, and to serve three years of supervised release following his prison sentence.

This case was prosecuted by Trial Attorneys Mark J. Cipolletti and Monique Abrishami of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorneys David Salem and Arun G. Rao of the District of Maryland.  The case was investigated by special agents from the U.S. Postal Service Office of Inspector General.

The Department of Justice announced today the first 10 tribes to participate in an initial User Feedback Phase of the Tribal Access Program for National Crime Information (TAP), a program to provide federally recognized tribes the ability to access and exchange data with national crime information databases for both civil and criminal purposes.  

The User Feedback Phase will grant access to national crime information databases and technical support to the following tribes: the Cherokee Nation of Oklahoma, the Eastern Band of Cherokee Indians of North Carolina, the Keweenaw Bay Indian Community of Michigan, the Oneida Indian Nation of New York, the Pascua Yaqui Tribe of Arizona, the Suquamish Indian Tribe of the Port Madison Reservation of Washington, the Shoshone-Bannock Tribes of the Fort Hall Reservation of Idaho, the Tulalip Tribes of Washington, the Confederated Tribes of the Umatilla of Oregon and the White Mountain Apache Tribe of the Fort Apache Reservation of Arizona.

“This innovative program will allow an unprecedented sharing of critical information between tribal, state and federal governments, information that could help solve a crime or even save someone’s life,” said Deputy Attorney General Sally Quillian Yates.  “This initial phase of TAP will help us understand the information gaps and the best ways to use this service to strengthen public safety in Indian country.  The TAP program is a reflection of the Justice Department’s commitment to the government-to-government relationship, to overcoming barriers, and building strong partnerships with American Indian and Alaska Native people.  The department will continue to work with Congress for additional funding to more broadly deploy the program.”

TAP will support tribes in analyzing their needs for national crime information and help provide appropriate solutions, including a state-of-the-art biometric/biographic computer workstation with capabilities to process finger and palm prints, take mugshots and submit records to national databases, as well as the ability to access the FBI’s Criminal Justice Information Service (CJIS) systems for criminal and civil purposes through the Department of Justice.  TAP will also provide specialized training and assistance for participating tribes.

This initial phase, funded by the Office of Justice Programs’ Office of Sex Offender Sentencing, Monitoring, Apprehending, Registering and Tracking (SMART) and supported with technical assistance from the Office of the Chief Information Officer, will focus on assisting tribes that have law enforcement agencies. In the future, the department will seek to address the needs of the remaining tribes and find a long-term solution. 

While in the Tribal Law and Order Act of 2010 Congress required the Attorney General to ensure that tribal officials that meet applicable requirements be permitted access to national crime information databases, the ability of tribes to fully participate in national criminal justice information sharing via state networks has been dependent upon various regulations, statutes and policies of the states in which a tribe’s land is located.  Therefore, improving access for tribal law enforcement to federal crime information databases has been a departmental focus for several years.  In 2010, the department instituted two pilot projects, one biometric and one biographic, to improve informational access for tribes.  The biographic pilot continues to serve more than 20 tribal law enforcement agencies.

Departments of Justice and Interior Working Group

In 2014, the Departments of Justice and the Interior (DOI) formed a working group to assess the impact of the pilots and identify long-term sustainable solutions that address both criminal and civil needs of tribes.  The outcome of this collaboration was the TAP, as well as an additional program by the DOI’s Bureau of Indian Affairs (BIA) that provides tribes with national crime information prior to making child placement decisions in emergency circumstances.  Under the BIA Purpose Code X Program, social service agencies of federally recognized tribes will be able to view criminal history information accessed through BIA’s Office of Justice Services, which will conduct name-based checks in situations where parents are unable to care for their children.

For more information on TAP, visit: www.justice.gov/tribal/tribal-access-program-tap.

For more information about the Justice Department’s work on tribal justice and public safety issues, visit:  www.justice.gov/tribal.

For more information about the Department of the Interior’s Bureau of Indian Affairs, visit: www.indianaffairs.gov/

A Yuba City, California, man pleaded guilty today to producing child pornography, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Benjamin B. Wagner of the Eastern District of California, Special Agent in Charge Ryan Spradlin of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI) San Francisco Field Division and Chief of Police Robert D. Landon of the Yuba City, California, Police Department.

Nathan Penner, 25, pleaded guilty today before U.S. District Judge Troy L. Nunley of the Eastern District of California to one count of production of child pornography.  The sentencing hearing is set for Jan. 21, 2016.

In connection with his plea, Penner admitted that he produced sexually explicit photos and videos of a five-year-old girl in September and October of 2012.  Penner further acknowledged that he had downloaded child pornography.  Subsequent forensic analysis of Penner’s computer and digital media revealed both the child pornography that he produced and hundreds of other child pornography files.

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

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

           Each year communities nationwide join together to raise awareness about the dangers of drug abuse by wearing a red ribbon from October 23 to October 31, which is the National Red Ribbon Week. The first Red Ribbon celebration was organized in 1986 by a grassroots organization of parents concerned about the destruction caused by alcohol and drug abuse. The red ribbon was adopted as a symbol of the movement in honor of Enrique “Kiki” Camarena, an agent with the U.S. Drug Enforcement Administration who was kidnapped and killed while investigating drug traffickers. The Campaign has reached millions of children and has been recognized by the U.S. Congress for its efforts and achievements. In Guam and the NMI, Red Ribbon Week is an opportunity to be visible and vocal in our desire for a drug-free community. Research shows that children are less likely to abuse alcohol and other drugs when parents and other role models are clear and consistent in their opposition to substance use and abuse. The Campaign provides communities with a forum to bring together parents, schools and businesses to find new and innovative ways to keep kids drug free.

           The Red Ribbon Committees in Guam and the NMI consist of local and federal agencies and private and non-profit organizations that have partnered to increase awareness of the National Red Ribbon Campaign’s significance and promote a drug-free community. On Guam, the observance of the Red Ribbon Week is extended beyond one week, with events occurring throughout the month of October. Simon Sanchez High School was last year’s Gate/Wall Decorating Contest Winner. The Red Ribbon Campaign kicked off with a Proclamation Signing on September 28, 2015, at Simon Sanchez High School in Yigo. This event was attended by Lt. Governor Raymond Tenorio, other dignitaries and Red Ribbon Committee members.

           U.S. Attorney Limtiaco made presentations at Dandan Middle School in Saipan, NMI, together with personnel from the U.S. Probation Office. Assistant U.S. Attorney Rosetta San Nicolas and Red Ribbon Guam Coalition members also made a presentation at Okkudo High School in Guam. Other Red Ribbon Committee members made presentations at many other elementary, middle and high schools on Guam. Students learned about the dangers of drugs and were encouraged to be drug and alcohol free.

          In addition to the school outreaches, the following activities were also held in celebration of the Red Ribbon Campaign 2015 in Guam: National Prescription Drug Take Back Day; Drawing Contest and School Gate Decorating Contest; Community Outreach at the Micronesia Mall, which included the distribution of free gunlocks; Wear Red Day; Red Ribbon Wave in Hagatna; Say “Boo” to Drugs at the Agana Shopping Center; Drawing Contest and School Gate Decorating Contest Winners Award Presentation; and various TV and radio appearances.

 

The following are photos taken at the various events.

          

Dignitaries awaiting the start of the Red Ribbon events at Simon Sanchez High School in Guam. From left: Principal Carla Masnayan, Senator Frank Aguon, Jr., Lt. Governor Raymond Tenorio, Acting DEA Resident Agent in Charge Dave Stubbs, Supreme Court of Guam Chief Justice Robert Torres, and Lt. Yin of the Guam Army National Guard U.S. Attorney Alicia Limtiaco looks on as students take the pledge on gun safety, which was also being promoted at the Red Ribbon Campaign

 

Members of the Red Ribbon Committee with students of the Guam Community College’s sign language class who performed several numbers at the Red Ribbon Campaign Outreach at the Micronesia Mall in Guam Some of the students who joined the Red Ribbon Campaign WAVE in Hagatna, Guam Police Recruits supporting the Red Ribbon Campaign WAVE in Hagatna, Guam AUSAs Rosetta San Nicolas and Stephen Leon Guerrero participated at the school outreach at Machanaonao Elementary School in Guam U.S. Attorney Alicia Limtiaco at the school outreach at Dandan Elementary School in Saipan, NMI Say “Boo” To Drugs event at the Agana Shopping Center in Guam An aerial view of the Say “Boo” to Drugs event at the Agana Shopping Center in Guam U.S. Attorney Alicia Limtiaco and Red Ribbon Committee members at the Say “Boo” To Drugs event at the Agana Shopping Center in Guam

 

A federal jury in Oklahoma City convicted two individuals today for their participation in a scheme involving illegal gambling, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Sanford C. Coats of the Western District of Oklahoma.

Kelly Dorn, 53, of Oklahoma City, and Kory Koralewski, 45, of Parker, Colorado, were found guilty of racketeering conspiracy.  Dorn was additionally convicted of conducting an illegal gambling business.  A sentencing hearing has not yet been set.

According to the trial evidence, from 2003 to 2013, Dorn and Koralewski conspired with others to operate Legendz Sports, an international criminal enterprise that ran Internet and telephone gambling services from Panama City.  Legendz Sports took more than $1 billon in illegal wagers, almost exclusively from gamblers in the United States betting on American sporting events.  Dorn worked as a bookie in Oklahoma who illegally solicited and accepted sports wagers as well as settled gambling debts.  Koralewski facilitated the movement of illegal gambling proceeds from the United States to Panama. 

The case was investigated by the FBI and Internal Revenue Service-Criminal Investigation, with the assistance of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and the U.S. Marshals Service. 

The case is being prosecuted by Trial Attorney John S. Han of the Criminal Division’s Organized Crime and Gang Section and Special Assistant U.S. Attorney Robin L. Summer and Assistant U.S. Attorney Travis D. Smith of the Western District of Oklahoma.

The former director of operations of a Department of Defense contracting company in Washington, D.C., pleaded guilty today to soliciting and receiving $193,665 in kickback proceeds in return for steering U.S. government subcontracts to a U.K. company, announced Assistant Attorney General Leslie R. Caldwell of the Criminal Division and U.S. Attorney Dana J. Boente of the Eastern District of Virginia.

Robert W. Gannon, 54, of Bangkok, pleaded guilty to a one-count criminal information charging him with conspiracy to solicit and accept kickbacks.  Gannon will be sentenced on Jan. 28, 2016.

According to his plea agreement, Gannon’s job responsibilities included identifying, evaluating and monitoring subcontracts.  Gannon admitted that he used his position to arrange with executives of a U.K.-based company that they would make kickback payments to Gannon in return for a series of purchase orders Gannon’s company awarded in August 2009 with a total value of nearly $6 million.  Those orders called for the provision of explosive ordinance disposal equipment to U.S. and NATO forces in Afghanistan.  In return for his efforts, Gannon admitted that the U.K. company wired funds with a total value of almost $200,000 from bank accounts in the United Kingdom to Gannon’s account in Singapore.  

The case is being investigated by the FBI, the Defense Criminal Investigative Service and the Special Inspector General for Afghanistan Reconstruction.  The Criminal Division’s Office of International Affairs and the City of London Police provided significant assistance.  The case is being prosecuted by Trial Attorney Wade Weems of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Mark Lytle of the Eastern District of Virginia. 

A Tampa, Florida, area investment advisor was sentenced to 18 months in prison today for perpetrating a $9 million investment fraud scheme involving Facebook stock. 

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney A. Lee Bentley III of the Middle District of Florida, Special Agent in Charge Paul Wysopal of the FBI’s Tampa Field Office and Inspector in Charge Ronald J. Verrochio of the U.S. Postal Inspection Service (USPIS) Miami Division made the announcement. 

Gignesh Movalia, 40, a registered investment advisor, was also ordered by Chief U.S. District Judge Steven D. Merryday of the Middle District of Florida to pay $5,394,419 in restitution and to three years of supervised release following his prison sentence.  Movalia pleaded guilty on Aug. 13, 2015, to one count of investment advisor fraud. 

In connection with his guilty plea, Movalia admitted that he founded OM Global Investment Fund LLC in 2009 and subsequently used the fund to defraud investors.  Specifically, in 2011 and 2012, Movalia raised more than $9 million from 130 investors by falsely claiming to have access to pre-initial public offering shares of Facebook Inc.  Rather than using this money to buy Facebook shares as promised, however, Movalia invested the money in other securities and concealed that fact from investors.  By September 2013 when it went into receivership, the OM Global Fund lost approximately $9 million, with $6 million of those losses as a result of the fraud scheme.

The case was investigated by the FBI and USPIS, with assistance provided by the U.S. Securities and Exchange Commission’s Miami Regional Office.  The case was prosecuted by Trial Attorney Andrew H. Warren of the Criminal Division’s Fraud Section.

The Department of Justice, the Department of Housing and Urban Development (HUD) and the Department of Health and Human Services (HHS) today announced the launch of a federal Domestic Violence and Housing Technical Assistance Consortium to better address the critical housing needs of victims of domestic violence and their children.  The three federal agencies are awarding a total of $2.3 million in grant funding to four organizations who will form this national consortium in order to foster increased collaboration among domestic violence and homeless service providers and provide national training, technical assistance and resource development on domestic violence and housing.

“The limited availability of shelters and the difficulties in accessing safe, affordable housing options too often leave domestic violence survivors homeless, or send them back to abusive partners and unsafe homes,” said Attorney General Loretta E. Lynch.  “The Department of Justice is committed to providing trauma-informed guidance, resources and training across the country to combat this critical challenge, and I am proud to stand with my federal partners as we work to establish a comprehensive federal response to address the unique housing needs and safety concerns of domestic violence survivors.”

“Escaping domestic violence should not increase a person’s chances of becoming homeless,” said HUD Secretary Julián Castro.  “Unfortunately that is too often the case for survivors and their children, which is why I’m proud to join this interagency effort to develop more comprehensive efforts to protect and serve survivors of domestic violence.”

According to the National Intimate Partner and Sexual Violence Survey (NISVS) report, nearly 10 million people in the U.S. experienced physical violence by an intimate partner in 2010.  According to the U.S. Conference of Mayors, in 2008, 28 percent of U.S. families were homeless because of domestic violence and 39 percent of U.S. cities cited domestic violence as the primary cause of family homelessness.  The U.S. Interagency Council on Homelessness (USICH) has established the goal of preventing and ending homelessness among families, youth, and children by 2020.

“Domestic violence is a primary cause of family homelessness because many victims leave their homes to pursue safety,” said Commissioner Rafael López of HHS’ Administration on Children, Youth and Families.  “Victims of domestic violence need housing options that meet their immediate and long-term needs.  This interagency consortium will help us marshal federal resources to address domestic violence.”

As a result of this interagency collaboration, grant funds are being provided to the following organizations:

• District Alliance for Safe Housing (Washington, D.C.)

• National Network to End Domestic Violence (Washington, D.C.)

• National Resource Center for Domestic Violence (Harrisburg, Pennsylvania):

• Training Development Associates (Laurinburg, North Carolina)/Collaborative Solutions, Inc. (Birmingham, Alabama)

The four grant recipients will form the Domestic Violence and Housing Technical Assistance Consortium and will work with domestic violence providers and homeless service providers nationwide to improve policies, identify promising practices and strengthen collaborations necessary to improve housing options for survivors of domestic violence and their children in order to enhance safety, stability, and well-being.  The Department of Justice’s Office for Victims of Crime and Office on Violence Against Women; HUD’s  Office of Special Needs Assistance Programs and HHS’s Administration for Children and Families, Family and Youth Services Bureau, Division of Family Violence Prevention and Services have worked together to increase capacity, resources and guidance to adequately address the housing needs of domestic violence survivors and their children, as leading members of the Domestic Violence Committee of the USICH.

About the Department of Justice’s Office on Violence Against Women

Created in 1995, the Office on Violence Against Women (OVW) provides federal leadership in developing the Nation’s capacity to reduce violence against women through the implementation of the Violence Against Women Act (VAWA) and subsequent legislation. OVW administers financial and technical assistance to communities across the country that are developing programs, policies and practices aimed at ending domestic violence, dating violence, sexual assault and stalking. To learn more, visit www.justice.gov/ovw.

About the Department of Justice’s Office for Victims of Crime

The Office for Victims of Crime (OVC) is committed to enhancing the Nation’s capacity to assist crime victims and to providing leadership in changing attitudes, policies, and practices to promote justice and healing for all victims of crime. Established in 1988 through an amendment to the Victims of Crime Act (VOCA) of 1984, OVC is charged by Congress with administering the Crime Victims Fund (the Fund). Through OVC, the Fund supports a broad array of programs and services that focus on helping victims in the immediate aftermath of crime and continuing to support them as they rebuild their lives. Millions of dollars are invested annually in victim compensation and assistance in every U.S. state and territory, as well as for training, technical assistance, and other capacity-building programs designed to enhance service providers’ ability to support victims of crime in communities across the Nation.  To learn more, visit www.ovc.gov/.

About the Department of Housing and Urban Development’s Office of Special Needs Assistance Programs

The Office of Special Needs Assistance Programs (SNAPS) supports the nationwide commitment to ending homelessness by providing funding opportunities to nonprofit organizations and State and local governments to quickly rehouse homeless individuals and families. Through these opportunities, SNAPS advocates self-sufficiency and promotes the effective utilization of mainstream resources available to individuals and families experiencing homelessness.  https://www.hudexchange.info/homelessness-assistance/.

About the Department of Health and Human Services’ Family Violence Prevention and Services Program

The Family Violence Prevention and Services Program is the primary federal funder of domestic violence emergency shelter and other supportive services in all 50 States, the District of Columbia, 5 Territories and 274 Tribes.  For more facts on the Family Violence Prevention and Services Program, visit http://www.acf.hhs.gov/fvpsa.

Doctor Hid Millions in Secret Accounts in Panama

An Alaskan plastic surgeon was convicted today of four counts of wire fraud and three counts of tax evasion by a federal jury sitting in Anchorage, Alaska, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Karen Loeffler of the District of Alaska.

Dr. Michael Brandner, 67, was convicted following a seven-day jury trial before U.S. District Judge Sharon Gleason of the District of Alaska.  According to the indictment and evidence introduced at trial, in late 2007, shortly after Brandner’s wife filed for divorce, he collected millions of dollars in marital assets and secretly drove from Tacoma, Washington, to Costa Rica in Central America.  In Costa Rica, he opened two bank accounts into which he deposited more than $350,000 in cash and hid a thousand ounces of gold in a safe deposit box.  He then traveled to Panama where he opened an account under the name of a sham corporation and in 2008, deposited $4.6 million into the account.

Dr. Brandner concealed both the existence of the bank accounts and the interest he earned on those accounts from the court in the divorce proceedings and from the Internal Revenue Service (IRS).  Dr. Brandner owed the IRS $600,000 in additional taxes for the 2008 through 2010 tax years.  He presented the divorce court with a fabricated promissory note to mislead the court into believing he had invested more than $3 million in the foreign corporation.

In 2011, once the divorce was final, Dr. Brandner repatriated more than $4.6 million, only to have the funds seized by Homeland Security Investigations agents.  He then lied to federal agents about his control of the funds.

At his March 7, 2016 sentencing, Dr. Brandner faces a statutory maximum penalty of 20 years in prison for each count of wire fraud and five years for each count of tax evasion and a fine of up to $250,000, or twice the gain or loss caused by the offense, on each of the seven counts of conviction.

Acting Assistant Attorney General Ciraolo thanked the special agents of IRS-Criminal Investigation, who investigated the case and Trial Attorney Ignacio Perez de la Cruz of the Tax Division and Assistant U.S. Attorney Bryan Schroder of the District of Alaska, who prosecuted the case.

Image Courtesy of IPSG

KIGALI, Rwanda – US Attorney General Loretta Lynch has told delegates at the INTERPOL General Assembly that upholding the rule of law is a government’s foremost responsibility.

Delivering the keynote speech at the international gathering of some 640 police chiefs and senior law enforcement officials, Attorney General Lynch said INTERPOL ‘stands as an invaluable conduit for mutual assistance between law enforcement agencies across the world and a critical facilitator for international cooperation in matters of security, opportunity and human rights.’

Pointing to the issue of human trafficking as one of her highest priorities as Attorney General, Ms Lynch said it remained one of the foremost challenges to the international community.

“With its ties to organized crime, its preying on flows of migrants and its complex financing schemes, human trafficking is a truly global problem that demands a truly global response,” said Attorney General Lynch.

“The international community has come a long way in the last 15 years, but the fact that millions of individuals remain in forced labour reminds us of how far we have to go. We must find ways to work even more closely together in order to end this affront to our values and stop this crime against humanity,” added the Attorney General pointing to the FBI’s annual Operation Cross Country initiative against individuals trafficking children for sexual exploitation which this year resulted in the arrest of hundreds of sex traffickers.

In addition to highlighting INTERPOL’s role at the forefront of the global crusade against human trafficking, Attorney General Lynch said the world police body’s work involved action against some of the most important and complex law enforcement challenges.

In combating the threat of foreign terrorist fighters, Attorney General Lynch said INTERPOL’s network to coordinate global counter-terrorism activities was an invaluable resource in stemming the illicit travel of individuals moving to and from conflict zones.

Attorney General Lynch praised INTERPOL for driving innovation and fuelling advancements to expand international capabilities to identify crimes and pursue wrongdoers through its global police information systems, round-the-clock support and operational assistance.

In concluding her remarks, the Attorney General encouraged delegates to continue to play their part in upholding the rule of law and urged all countries to ‘continue, every day, to pursue our mission of a safer world, to advance our vision of a more just society and to hold close our hope of a brighter future for all.’

The General Assembly is INTERPOL’s supreme governing body, which meets once a year. Discussions at this year’s session in Kigali are addressing some of most pressing cross-border challenges faced by police today, including counter-terrorism and foreign terrorist fighters, the organized criminal groups behind drug trafficking and people smuggling, and the different facets of cybercrime.

Today, the Department of Justice and the Environmental Protection Agency (EPA) announced a settlement with ASARCO requiring the company to spend $150 million to install new equipment and pollution control technology to reduce emissions of toxic heavy metals at a large smelter located in Hayden, Arizona.  The company will also fund local environmental projects valued at $8 million, replace a diesel locomotive with a cleaner model for $1 million, and pay a $4.5 million civil penalty.

The federal enforcement action targeted hazardous air pollutants, including lead and arsenic, and particulate matter (PM).  With the controls in place, the hazardous air pollutants should be reduced by at least 8.5 tons per year, and PM emissions are expected to be reduced by 3,500 tons per year. The new equipment and controls will also slash the facility’s sulfur dioxide (SO2) emissions by 19,000 tons per year, a reduction of more than 90 percent, according to EPA estimates.  Currently, the ASARCO smelter is the largest source of SO2 emissions in Arizona.

“This settlement will bring tremendous benefits to public health and the environment in Arizona for generations to come through dramatic cuts to harmful air emissions,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division.  “The requirements of this consent decree will not only bring ASARCO into compliance with the nation’s clean air law, but will also result in testing for lead contamination in area homes and improvements to nearby roads to further improve air quality.”

“Big enforcement actions like this result in big returns for American communities,” said Assistant Administrator Cynthia Giles for EPA’s Office of Enforcement and Compliance Assurance.  “The upgraded pollution controls and advanced monitoring technologies ASARCO will install are key to a modern compliance program that cuts pollution around industrial plants.”

“The communities living near this century-old smelter will breathe cleaner air as a result of this landmark enforcement action,” said Regional Administrator Jared Blumenfeld for EPA’s Pacific Southwest Region.  “As one of only three major copper smelters in the nation, it is critically important that the facility operate in a way that complies with federal law, minimizes harmful pollutants and safeguards public health and the environment.”

EPA’s investigation found the company violated federal Clean Air Act standards by failing to adequately control emissions of hazardous air pollutants, such as arsenic and lead, from the Hayden smelter.  Under the settlement announced today, ASARCO will install new and upgraded ventilation hoods to capture hot flue gases from its furnaces to better capture the PM, which includes the hazardous air pollutants and SO2.  The company will also replace an aging electrostatic precipitator with a new, cleaner baghouse and inject high performance lime to reduce SO2 emissions.

To reduce wind-blown dust from the facility, which contains varying levels of heavy metals, the company will implement an improved dust control plan, including the use of wind fences, upgraded water sprayers and the installation of concrete pads.  In addition, ASARCO will operate five ambient air monitors in and around the Hayden and Winkelman communities to track levels of pollutants, including arsenic, lead and PM and will make additional improvements to dust controls if levels are high. 

The settlement requires ASARCO to spend $8 million to fund two environmental mitigation projects.  Of this, $6 million will be used on a road paving project in Pinal County that will reduce dust pollution on local dirt roads close to the towns and benefit residents exposed to PM emissions.  In addition, $2 million will be provided to the Gila County Environmental Health Services to conduct lead-based paint testing and abatement in homes, schools and other public buildings in the towns of Hayden and Winkelman.

ASARCO will spend approximately $1 million to replace an existing diesel switch locomotive operated at the facility with a cleaner diesel-electric switch locomotive.  The project will reduce emissions of nitrogen oxides, which are precursors to the formation of PM2.5 and greenhouse gases. 

Long-term inhalation exposure to inorganic arsenic is associated with irritation of the skin and can affect the brain and nervous system. Exposure to lead can cause effects on the blood, as well as the nervous, immune, renal and cardiovascular systems.  Particulate matter, especially inhalable coarse particles (PM10) and fine particles (PM2.5), can cause coughing or difficulty breathing, decreased lung function, aggravated asthma and even premature death in people with heart or lung disease.  SO2 has also been linked to a number of adverse effects on the respiratory system and SO2 is also a precursor to the formation of PM2.5.  Fine particles are also the main cause of reduced visibility (haze) in parts of the United States, including national parks and wilderness areas.  The PM2.5 and SO2 emission reductions achieved through compliance with this settlement will also serve to reduce visibility impairment owing to emissions from the facility.

Built in 1912 and expanded over the years, the ASARCO Hayden site is a copper ore processing, concentrating and smelter facility located adjacent to Hayden and Winkelman.  The ASARCO plant includes a crusher, concentrator, smelter and tailings impoundment areas and produces 300 to 400 million pounds of copper and over half a million tons of sulfuric acid annually.  ASARCO is owned by Grupo México, a Mexican consortium that owns Ferromex, the largest railroad in Mexico and operates mines and smelters, including the one in Hayden, that make it the fourth largest copper producer in the world.  The Hayden facility is one of three copper smelters in the United States, and the only one owned by ASARCO.

The settlement was lodged with the U.S. District Court of Arizona and is subject to a 30-day public comment period and final court approval. The proposed consent decree can be viewed at: www.justice.gov/enrd/consent-decrees.

More on the settlement: http://www2.epa.gov/enforcement/asarco-llc-settlement

 

                FRESNO, California – Raúl Canchola Farías, 40, residente de Pacoima, ha sido sentenciado hoy por el Juez Federal Anthony W. Ishii a 11 años y tres meses de prisión por posesión con el intento de distribuir metanfetamina, anunció el Procurador de los Estados Unidos Benjamín B. Wagner.

Según los documentos del tribunal, Farías fue arrestado el 5 de noviembre del 2013, después de que su vehículo fuera detenido por un Oficial de la Patrulla de Carretera en la Autopista 99 en Bakersfield y fueron encontradas más de 21 libras de metanfetamina ocultadas en el vehículo. 

Este caso ha sido el resultado de una investigación llevada a cabo por la Agencia Antidrogas de Estados Unidos (Drug Enforcement Administration) o DEA y la Patrulla de Carretera de California. El Procurador Auxiliar de los Estados Unidos Brian K. Delaney procesó el caso.     

FRESNO, California – Raúl Canchola Farías, 40, residente de Pacoima, ha sido sentenciado hoy por el Juez del Distrito de Estados Unidos Anthony W. Ishii a 11 años y tres meses de prisión por posesión con el intento de distribuir metanfetamina, anunció el Procurador de los Estados Unidos Benjamín B. Wagner.

Según los documentos del tribunal, Farías fue arrestado el 5 de noviembre del 2013, después de que su coche fuera detenido por un Oficial de la Patrulla de Carretera en la Autopista 99 en Bakersfield y fueron encontradas más de 21 libras de metanfetamina ocultadas en el vehículo. 

Este caso ha sido el resultado de una investigación llevada a cabo por la Agencia Antidrogas de Estados Unidos (Drug Enforcement Administration) o DEA y la Patrulla de Carretera de California. El Procurador Auxiliar de los Estados Unidos Brian K. Delaney procesó el caso.     

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The Justice Department today filed a lawsuit against the South Dakota Department of Social Services (DSS) alleging that at its Pine Ridge Reservation Office, the state agency repeatedly discriminated against Native American job applicants because of their race, in violation of Title VII of the Civil Rights Act of 1964.

The lawsuit, filed in the U.S. District Court for the District of South Dakota, alleges that in failing to select well-qualified Native American applicants for several positions in DSS’s Pine Ridge Reservation Office, the state agency engaged in a pattern or practice of discrimination and violated Title VII of the Civil Rights Act of 1964, a federal statute that prohibits employment discrimination on the basis of sex, race, color, national origin and religion.

“Federal law provides all Americans with equal opportunity to compete for jobs on a level playing field free from racial discrimination,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “When employers discriminate against qualified job applicants because of what they look like or where they come from, they violate both the values that shape our nation and the laws that govern it.”

According to the complaint, in October 2010, Cedric Goodman, a Native American with supervisory experience as a social worker, as well as several other well-qualified Native Americans, applied for an Employment Specialist position at DSS’s Pine Ridge Office.  The complaint alleges that after interviewing Goodman and the other Native American candidates who met the employer’s objective job qualifications, DSS removed the vacancy and hired no one.  The next day, however, DSS reopened the position and ultimately selected a white applicant with inferior qualifications and no similar work experience.  The complaint alleges that DSS discriminated against Goodman and other similarly-situated Native American applicants based on their race.

In addition, the complaint alleges that denying Goodman’s application was part of a pattern or practice of race discrimination by DSS, where the agency repeatedly removed job postings and used subjective, arbitrary hiring practices to reject qualified Native American applicants for Specialist positions.

Over a two year period beginning in 2010, DSS posted 18 Specialist vacancies for its Pine Ridge Reservation Office.  Even though the agency received nearly 40 percent of its applications from Native Americans, DSS hired 11 Whites and only one Native American, while removing six other openings entirely.

The lawsuit seeks declaratory and injunctive relief requiring DSS to implement employment policies, including fair applicant screening and interviewing practices, that prevent racial discrimination in hiring.  The United States will also seek to obtain “make whole” relief, including monetary damages, for Goodman and other similarly situated individuals. 

"The facts obtained during the investigation by the EEOC are disheartening," said Julianne Bowman, Chicago District Director.  "We are pleased that the Department of Justice is filing a lawsuit to resolve the injustices uncovered."

Goodman originally filed a charge of race discrimination with the Equal Employment Opportunity Commission (EEOC).  The EEOC’s Minneapolis Area Office, in the Chicago District, investigated the matter and found reasonable cause to believe that DSS discriminated against Goodman and a class of Native American applicants.  After unsuccessful conciliation, the EEOC referred the matter to the Justice Department.

The Justice Department’s Civil Rights Division brought this lawsuit as part of a joint effort to enhance collaboration between the Justice Department and the EEOC in the vigorous enforcement of Title VII.  Additional information about the division, including a copy of the complaint, can be found online on its website at www.justice.gov/crt.

U.S. v. S.D. DSS Complaint (146.11 KB)

The Department of Justice announced today that Banque Bonhôte & Cie SA (Banque Bonhôte) has 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, Banque Bonhôte 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.

Banque Bonhôte is a private bank established in 1815 in the City of Neuchâtel, Switzerland.  It is a privately held stock company, and the majority of its share capital is owned by its management board and employees. Until 2002, Banque Bonhôte had a single office in Neuchâtel; since then, it has opened branches in Bienne, Geneva and Berne, Switzerland.

Banque Bonhôte’s cross-border banking business aided and assisted some U.S. clients in opening and maintaining undeclared accounts in Switzerland and concealing the assets and income the clients held in their accounts from the Internal Revenue Service (IRS).  Banque Bonhôte knew, or should have known, that it was likely that certain U.S. taxpayers who maintained accounts at Banque Bonhôte were not complying with their U.S. tax reporting obligations. 

Banque Bonhôte used a variety of means to assist U.S. clients in concealing the assets and income the clients held in their Bonhôte undeclared accounts, including opening and maintaining numbered accounts, as well as holding bank statements and other mail at Banque Bonhôte’s offices in Switzerland.  Banque Bonhôte also opened accounts for U.S. taxpayers who had left UBS or Credit Suisse when these banks were being investigated by the department.

Private bankers, referred to as client relationship managers, served as Banque Bonhôte’s primary contact for accountholders at the bank.  Client relationship managers aided or assisted U.S. clients to open and manage accounts that were undeclared and that were established and maintained in a manner designed to conceal the U.S. taxpayers’ ownership or beneficial interest in the accounts.  Banque Bonhôte compensated client relationship managers, in part, based on the amount of business they generated for Banque Bonhôte.

Banque Bonhôte referred bank clients to Bonhôte Trust SA, a Swiss fiduciary and trust advisory firm located in Neuchâtel and acquired by Banque Bonhote in 2001.  Bonhôte Trust provided assistance in setting up entities such as offshore companies and foundations, including sham entities, for clients including U.S. taxpayers and provided administrative services to those entities.  

Through Bonhôte Trust, Banque Bonhôte created offshore foundations, corporations, trusts and similar entities organized in jurisdictions such as the British Virgin Islands and Nevis.  In some instances, Banque Bonhôte structured a U.S.-related account that appeared as if it was held by a non-U.S. legal entity, such as an offshore corporation or trust, which aided and abetted the clients’ ability to conceal their undeclared accounts from the IRS.  Banque Bonhôte also had accounts opened through external asset managers and maintained in the name of offshore structures, despite knowing that in at least some instances the beneficial owners of such accounts were U.S. persons.  Banque Bonhôte knew or should have known that, at least in some instances, external asset managers opened and managed accounts at Banque Bonhôte in the name of a sham offshore structure that in reality held assets owned by a U.S. client. 

Approximately 35 percent of Banque Bonhôte’s U.S.-related accounts were held in the name of offshore structures, and Banque Bonhôte accepted the use of IRS or substitute forms that falsely stated under penalties of perjury that sham entities beneficially owned the assets in the undeclared accounts.   

Throughout its participation in the Swiss Bank Program, Banque Bonhôte committed to providing full cooperation to the U.S. government.  Among other things, Banque Bonhôte described in detail the structure and operation of its U.S. business, including its cross-border business policies.  Banque Bonhôte was able to disclose the identities of more than half of the beneficial owners of its U.S.-related accounts to the department and provided narrative summaries of other U.S.-related accounts for use in other ongoing and potential department investigations.

Since Aug. 1, 2008, Banque Bonhôte held and managed 63 U.S.-related accounts, including both declared and undeclared accounts, which had a peak of aggregated assets under management of $88.7 million.  Banque Bonhôte will pay a penalty of $624,000.

While U.S. accountholders at Banque Bonhôte 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 Banque Bonhôte 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.

A former Portland, Oregon, resident was sentenced to serve 24 months in prison followed by three years of supervised release for his involvement in a fraudulent income tax refund scheme, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.

Brandon Leath, 36, pleaded guilty on July 23 to one count of conspiracy to file false claims and one count of theft of government funds.  U.S. District Judge for the District of Oregon Robert E. Jones also ordered Leath to pay $55,635 in restitution to the Internal Revenue Service (IRS).

According to court documents, Leath conspired with others, including his wife, Shawntina Ware, to file more than 227 false income tax returns fraudulently claiming more than $1 million in refunds.  The false information on the tax returns included fictitious W-2 wages and inflated withholding amounts.  The co-conspirators often shared the fraudulent refunds with each other by splitting the refund into multiple bank accounts controlled by the co-conspirators or their family and friends.

Three of Leath’s co-conspirators have pleaded guilty to various charges and are scheduled to be sentenced.  On June 5, co-conspirator Jasmine Mason pleaded guilty and is scheduled to be sentenced on Nov. 18.  Ware pleaded guilty on July 23 and is scheduled to be sentenced on Jan. 6, 2016.  Co-Conspirator Tataneisha White pleaded guilty on Oct. 1 and is scheduled to be sentenced on Jan. 7, 2016.

Acting Assistant Attorney General Caroline D. Ciraolo commended special agents of the IRS - Criminal Investigation, who investigated the case, and Trial Attorneys Lori A. Hendrickson and Ryan R. Raybould of the Tax Division, who are prosecuting the case.  Acting Assistant Attorney General Ciraolo also thanked the U.S. Attorney’s Office of the District of Oregon for their substantial assistance.

The Justice Department announced today that a federal grand jury in London, Kentucky, has indicted two former deputy jailers at the Kentucky River Regional Jail on charges related to the July 9, 2013, in-custody death of Larry Trent, a pretrial detainee at the jail.  The indictment charges Damon Hickman, 38, and William Howell, 59, with causing Trent’s death, and charges Hickman with attempting to cover up his involvement in the death. 

Hickman and Howell are charged with federal civil rights violations for depriving Trent of his civil rights.  Count one of the indictment charges Hickman and Howell of failing to provide Trent with necessary medical care after he was injured, thereby acting with deliberate indifference to a substantial risk of harm to Trent, which resulted in Trent’s death.  Count two of the indictment also charges both defendants with using excessive force against Trent, resulting in bodily injury to him.

Hickman is additionally charged with one count of obstruction of justice for falsifying an official log by indicating that observations of Trent were being made and that Trent was “10-4,” meaning that he was safe and not in obvious physical distress, when in fact Trent was not “10-4.”

Hickman and Howell face a maximum penalty of life in prison for the death-resulting civil rights offense, and face a maximum penalty of 10 years in prison for assaulting Trent.  Hickman faces a maximum penalty of 20 years in prison for falsification of records in a federal investigation.

An indictment is merely an accusation, and the defendants are presumed innocent unless proven guilty.

The case is being investigated by the FBI’s London Resident Agency, with assistance provided by the Kentucky State Police.  The case is being prosecuted by Trial Attorney Sanjay Patel of the Civil Rights Division’s Criminal Section and Assistant U.S. Attorney Hydee Hawkins of the Eastern District of Kentucky.

Hickman and Howell Indictment

New Re-Entry Program Aims to Reduce Barriers to Public Housing, Employment and Educational Opportunities      

In an effort to reduce barriers for justice-involved youth, the U.S. Department of Justice and the U.S. Department of Housing and Urban Development (HUD) today announced a new Juvenile Re-Entry Assistance Program: a $1.7 million initiative to help Public Housing Authorities (PHAs) and legal assistance organizations address challenges to housing and employment among justice-involved individuals.

Through the Juvenile Re-entry Assistance Program (JRAP), DOJ and HUD are working collaboratively to help individuals that have paid their debt to society rehabilitate and reintegrate back into their communities. This program specifically excludes those who are convicted of making methamphetamine drugs, sex offenses or domestic violence.

"The Department of Justice is committed to giving justice-involved youth the tools they need to become productive members of society," said Attorney General Loretta Lynch.  "Providing meaningful support through housing opportunities, prevention programs and other critical services is vital to our ongoing efforts to reduce recidivism, promote public safety and foster positive results in communities across the country."

Additionally, HUD announced updated public housing arrests guidance to PHAs regarding the use of arrests in determining who can live in HUD-assisted properties. The Guidance outlines that arrest records may not be the sole basis for denying admission, terminating assistance or evicting tenants; and reiterates that HUD does not require PHAs and owners to adopt “One Strike” policies and includes best practices and models of success from PHAs across the nation.

HUD Secretary Julián Castro made these announcements today in Chicago as part of the Obama Administration’s criminal justice and reentry incentive. 

“Life is about second chances and offering young people an opportunity to turn away from their mistakes and get back on the right path,” said Secretary Castro. “These grants will allow Public Housing Authorities to help these young people to reach their potential and begin to contribute to their own communities.”

Having a juvenile or a criminal record can severely limit a person’s ability to seek higher education, find good employment, or secure affordable housing. Today, there are nearly 55,000 individuals under age 21 in juvenile justice facilities.  These consequences create unnecessary barriers to economic opportunity and productivity, and President Obama and members of his Cabinet continue to take impactful steps to ensure those exiting the justice system become productive, law-abiding citizens. 

A Fort Washington, Maryland man pleaded guilty today to aiding in the preparation of false tax returns, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division, U.S. Attorney Rod J. Rosenstein for the District of Maryland and Special Agent in Charge Thomas Jankowski of the Internal Revenue Service’s (IRS) Criminal Investigation’s Washington, D.C. Field Office.

Vivencio P. Concepcion, 53, pleaded guilty before U.S. District Judge Paul W. Grimm. According to his plea agreement, Concepcion operated Money Concept Services, a tax return preparation business located in Fort Washington, Maryland.  From January 2009 to April 2012, Concepcion prepared more than 24 false federal individual tax returns for more than nine taxpayers using inflated charitable contribution amounts; fictitious unreimbursed employee business expenses and fictitious business income and expenses.  As a result, the client-taxpayers received either larger refunds than they were entitled to or a decrease in the amount of taxes due.

Concepcion admitted that his conduct resulted in a tax loss of between $211,666 and $400,000.  Concepcion has agreed to the entry of an order requiring him to pay $211,666 in restitution.  

Concepcion faces a statutory maximum sentence of three years in prison at his sentencing on Jan. 29, 2016 at 9:00 a.m..

Acting Assistant Attorney General Ciraolo and U.S. Attorney Rosenstein commended the IRS-Criminal Investigation and thanked Assistant U.S. Attorney Lindsay Eyler Kaplan and Trial Attorney Christopher P. O’Donnell of the Tax Division, who are prosecuting the case.

NetCracker Technology Corp. has agreed to pay $11.4 million and Computer Sciences Corp. (CSC) has agreed to pay $1.35 million to resolve allegations under the False Claims Act that they used individuals without security clearances on a Defense Information Systems Agency (DISA) contract, the Justice Department announced today.  NetCracker is a telecom software and services company headquartered in Waltham, Massachusetts, and CSC is an information technology services company with its headquarters in Falls Church, Virginia. 

“Protecting the federal procurement process from false claims is central to the mission of the Department of Justice,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “We will continue to ensure that the government receives what it pays for when federal monies are used to purchase services.”

“Companies that do business with the federal government have a responsibility to fully meet the terms of their contracts,” said U.S. Attorney Channing D. Phillips of the District of Columbia. “In addition to holding these two companies accountable for their contracting obligations, this settlement shows that the U.S. Attorney’s Office will take appropriate measures necessary to ensure the integrity of government communications systems.”

“This NetCracker case is a prime example of how the DISA IG works to detect and prevent fraud schemes within the Agency and recuperate funds for the U.S. government,” said Colonel Bill Eger, Inspector General (IG) of DISA.

NetCracker and CSC implemented software used to help manage the telecommunications network used by the U.S. Department of Defense.  The work was done pursuant to a contract with DISA, under which CSC was the prime contractor and NetCracker was a CSC subcontractor.  From 2008 through 2013, NetCracker allegedly used employees without security clearances to perform work when it knew the contract required those individuals to have security clearances, resulting in CSC recklessly submitting false claims for payment to DISA. 

The civil settlement resolves a lawsuit filed under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and obtain a portion of the government’s recovery.  The civil lawsuit was filed in    the District of Columbia by John Kingsley, a former NetCracker employee.  Mr. Kingsley will receive $2,358,750 as his share of the recovery in this case.

This resolution in this matter was the result of a coordinated effort between the U.S. Attorney’s Office of the District of Columbia, the Civil Division’s Commercial Litigation branch and the DISA IG Office.

The lawsuit is captioned United States ex rel. Kingsley v. NetCracker Technology Corp. Civil Action 1:11-cv-00629 (D.D.C.).  The claims resolved by this settlement are allegations only, and there has been no determination of liability. 

A Los Angeles man was found guilty of sexually abusing three minor girls during trips to Russia over a two-year period.  Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division made the announcement.

Yusef Yunosovich Abramov, 58, was convicted on Friday night after a four-day jury trial of six felony counts, including engaging in illicit sexual conduct in foreign places and traveling in foreign commerce with the intent to engage in illicit sexual conduct.  He is scheduled to be sentenced on Jan. 6, 2016. 

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

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

In April 2014, following an investigation by Russian and U.S. authorities, Abramov was arrested in Los Angeles.  He has remained in custody since then. 

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

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

            ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands (NMI), was recognized as the “2015 Alumnus of the Year” by the Asian Pacific Island Law Students Association (APILSA) and the Asian Pacific American Law Journal (APALJ) at the University of California at Los Angeles (UCLA) on April 25, 2015.   U.S. Attorney Limtiaco is the first Pacific Islander to receive the award; she is a graduate of the  UCLA School of Law Class of 1990.

            APILSA was founded over 30 years ago and consistent with its mission and commitment to serve as a valuable resource and support network for law students to succeed academically, socially, politically, and professionally, APILSA has supported and advocated important fundamental causes as evidenced by its years of community service, accomplishments, and meaningful contributions to causes related to diversity, civil rights, human rights and human dignity, cultural preservation and cultural competency, education, health, and international goodwill and understanding.

            U.S. Attorney Limtiaco commended the hard working and dedicated APILSA members for their invaluable service, for their vision in advocating and promoting these fundamental causes, and for serving as role models for students and the community.

            In her address at the awards banquet, U.S. Attorney Limtiaco stated, “… In law school and like today's APILSA, we – the APILSA generations of the past, through our unified voices, pursued and advocated for the achievement of equality and freedom for human kind, and racial, social and economic justice. We were also able through APILSA's support, to make a difference and contribute to the recruitment and consideration process of Asian and Pacific Islander law school applicants. … We too must remind ourselves that our nation is a nation that promotes diversity, equality and respect for human rights and human dignity.  We must continue then to draw strength from our diversity as a nation, as it is our diversity as a people and the strength that we gain from it that contributes to our resiliency as a nation during our most challenging times.”

 

U.S. Attorney Alicia Limtiaco, James Park, Professor of Law, UCLA School of Law, Rachel Moran, Dean and Michael J. Connell
Professor of Law, UCLA School of Law

 

Yisha Fan and Dat Phan, 2014-2015 APILSA Co-Chairs, U.S.
Attorney Alicia Limtiaco, Rachel Moran, Dean and Michael J.
Connell Professor of Law, UCLA School of Law

The Department of Justice has reached 70 settlements involving 457 hospitals in 43 states for more than $250 million related to cardiac devices that were implanted in Medicare patients in violation of Medicare coverage requirements, the Department of Justice announced today.

“While recognizing and respecting physician judgment, the department will hold accountable hospitals and health systems for procedures performed by physicians at their facilities that fail to comply with Medicare billing rules,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “We are confident that the settlements announced today will lead to increased compliance and result in significant savings to the Medicare program while protecting patient health.”   

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

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

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

“Working as a team with the Department of Justice to investigate and settle false billing claims of this magnitude has resulted in substantial recoveries to Medicare and the successful enforcement of Medicare’s coverage requirements for these procedures,” said Inspector General Daniel Levinson of the Department of Health and Human Services’ Office of Inspector General (HHS-OIG).

The 70 settlements, representing nearly 500 hospitals, are listed on the attached chart.  Most of the settling defendants were named in a qui tam, or whistleblower, lawsuit brought under the False Claims Act, which permits private citizens to bring lawsuits on behalf of the United States and receive a portion of the proceeds of any settlement or judgment awarded against a defendant.  The lawsuit was filed in federal district court in the Southern District of Florida by Leatrice Ford Richards, a cardiac nurse, and Thomas Schuhmann, a health care reimbursement consultant.  The whistleblowers have received more than $38 million from the settlements.  The Department of Justice is continuing to investigate additional hospitals and health systems.

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

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $26.2 billion through False Claims Act cases, with more than $16.4 billion of that amount recovered in cases involving fraud against federal health care programs.

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

The Department of Justice announced that a South Florida man pleaded guilty in U.S. District Court in Cincinnati, Ohio, in connection with the prosecution of a nationwide prescription drug diversion scheme. 

Ricardo Alfredo Jurado, 59, of Miami Beach, pleaded guilty before U.S. District Court Judge Timothy S. Black to one count of conspiracy to commit mail and wire fraud. 

Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division; U.S. Attorney Carter M. Stewart of the Southern District of Ohio; Special Agent in Charge Antoinette V. Henry of the U.S. Food and Drug Administration’s Office of Criminal Investigations (FDA-OCI), Metro Washington Field Office and Assistant Inspector in Charge Christopher White of the U.S. Postal Inspection Service (USPIS), Cincinnati Field Office, announced the guilty plea.

“Prescription drug diversion compromises the integrity of America’s drug supply chain,” said Principal Deputy Assistant Attorney General Mizer.  “This Miami-based supplier sold tens of millions of dollars of illegally diverted drugs, which ended up on the shelves of pharmacies and in the medicine cabinets of American consumers.”

“The drug diversion activities charged in this case create unacceptable public health risks,” said U.S. Attorney Stewart.  “Patients purchased what they believed were FDA-approved prescription drugs that had remained in regulated distribution channels intended to protect against misbranded, adulterated, sub-potent, improperly handled, counterfeit and stolen products.  Instead, these customers received drugs of unknown quality and origin.”

Jurado sold illegally diverted prescription drugs to David Miller and his company, Minnesota Independent Cooperative (MIC).  On May 6, Miller and MIC, along with Artur Stepanyan and Mihran Stepanyan, were indicted in the Southern District of Ohio and charged with one count of conspiracy to commit mail and wire fraud, ten counts of mail fraud and one count of conspiracy to make false statements and to distribute prescription drugs without a wholesale license.  Those charges are still pending.  Jurado is the eighth co-conspirator who pleaded guilty for participating in the drug diversion scheme involving Miller and MIC. 

Miller and MIC sold the prescription drugs obtained through Jurado – along with multiple other illegal sources – to wholesale and retail customers throughout the United States, including in the Southern District of Ohio.  Miller and MIC are alleged to have created fraudulent pedigree documents falsely stating that they had purchased the drugs from B&Y Wholesale, a company in Puerto Rico.  These false pedigrees covered up the illegitimate sources of the drugs – various illicit suppliers, including Jurado – and falsely stated that B&Y was an authorized distributor of the prescription drugs.

According to court documents, from July 2007 through April 2014, Jurado facilitated the sale of tens of millions of dollars of illegally diverted prescription drugs to Miller and MIC.  Jurado obtained the drugs from other illicit, unlicensed sources in South Florida.  To hide Jurado’s involvement in the sale of these drugs, Jurado and Miller used a middleman, Fernando Galan.  On Oct. 14, Galan pleaded guilty for his role in the conspiracy.  Neither Jurado nor Galan was licensed to engage in the wholesale distribution of prescription drugs. 

In connection with the sale of the diverted drugs, Jurado sent bank wiring instructions, frequently through his middleman Galan, directing Miller to send payments for the drugs.  During the course of the entire conspiracy, Jurado and his co-conspirators directed payments to more than 25 different bank accounts at banks in Mexico, Nicaragua, Canada, Florida and other locations.  During the course of the conspiracy, Miller and MIC wired more than $40 million to the bank accounts specified by Jurado. 

This matter is being investigated by FDA-OCI and the USPIS.  Assistant U.S. Attorneys Anne L. Porter and Christy Muncy of Southern District of Ohio and Trial Attorney John W. Burke of the Civil Division’s Consumer Protection Branch are representing the United States in this case. 

The Justice Department announced today that a federal district court has approved a supplemental consent decree between the United States, the Maryland Disability Law Center and the Housing Authority of Baltimore City (HABC).  The original consent decree contained remedies for HABC’s failure to provide accessible housing to persons with disabilities.  The supplemental consent decree, which was approved today by U.S. District Judge J. Frederick Motz of the District of Maryland, continues and amends certain terms in the original consent order in United States v. HABC, and Bailey v. HABC, entered on Dec. 20, 2004. 

“We are pleased with the significant progress made by the Housing Authority of Baltimore City to implement the terms of the original decree,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division.  “We look forward to working with the Housing Authority to create new accessible housing opportunities for persons with disabilities and enhancing their quality of life.”

The original consent decree mandates that HABC create 756 units to comply with federal accessibility standards.  As of Aug. 31, 2015, HABC had developed all but 54 of such units.  Under the supplemental decree, these remaining units will be completed by Dec. 31, 2016.  HABC’s plan requires two and three bedroom single family homes that are fully accessible to families with a household member who has physical disabilities.

The original consent decree also mandates that HABC create 500 units for non-elderly persons with disabilities.   As of Aug. 31, 2015, HABC had created 411 such units.  Under the supplemental decree, the remaining units will be completed by Dec. 31, 2016.  Further, the original consent decree mandates that HABC create 100 new housing opportunities for non-elderly persons with disabilities called “Long Term Affordable” units.  HABC has until Dec. 31, 2017, to develop the remaining balance of these units from certain specified developments.

HABC is participating in the Rental Assistance Demonstration Program.  Under this program, HABC will be transferring certain public housing properties to private ownership.  Under the supplemental decree, the new owners are required to preserve the accessibility of the units and implement the policies and practices that protect the rights of tenants with disabilities. 

The Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability.  More information about the Civil Rights Division and the laws it enforces is available at www.usdoj.gov/crt.  Individuals who believe that they have been victims of housing discrimination can call the division’s Housing Discrimination Tip Line at 1-800-896-7743, e-mail the Justice Department at fairhousing@usdoj.gov or contact HUD at 1-800-669-9777.

HABC Supplemental Consent Decree

A former staff member of the U.S. Senate Committee on Commerce, Science and Transportation was sentenced today to 38 months in prison for a wire fraud scheme, announced Assistant Attorney General Leslie R. Caldwell of the Criminal Division, U.S. Attorney Dana J. Boente of the Eastern District of Virginia and Assistant Director in Charge Paul M. Abbate of the FBI’s Washington Field Office.

Robert Lee Foster, 65, formerly of Falls Church, Virginia, was also ordered to forfeit $499,622.54 and pay $503,003.37 in restitution as part of his sentence, which was imposed by Senior U.S. District Judge T.S. Ellis III of the Eastern District of Virginia.  Foster pleaded guilty on July 31, 2015.

According to admissions made in connection with his guilty plea, between 2008 and May 2015, Foster devised a scheme to fraudulently obtain approximately $500,000 from three women in their 60s and 70s.  Foster admitted that, to perpetuate the scheme, he gained the victims’ trust and confidence, after which he made various false statements to the victims to convince them to send him money.  Among other things, Foster admitted that he told his victims he needed to borrow money to pay for litigation costs and business expenses that did not exist and for foreign travel that did not occur.  Foster also admitted that he promised to repay the victims from large sums of money he claimed he was about to receive, which was another lie.  

This case was investigated by the FBI’s Washington Field Office.  Trial Attorneys Peter Halpern and Kevin Driscoll of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorneys Jamar Walker and Ryan Faulconer of the Eastern District of Virginia prosecuted the case.

            United States Attorney ALICIA A.G. LIMTIACO, U.S. Attorney for the Districts of Guam and the Northern Mariana Islands, was presented with the “Above and Beyond” Award on May 23, 2015, by the Employer Support of the Guard and Reserve (ESGR).  The awards event was held at the Sheraton Laguna Resort & Spa in Tumon, Guam.  U.S. Attorney Limtiaco and the U.S. Attorney’s Office were nominated by an employee of the U.S. Attorney’s Office presently serving in the Guam Air National Guard.

            According to the ESGR website, the Above and Beyond Award is presented by ESGR State Committees to recognize employers at the local level who have gone above and beyond the legal requirements of the Uniformed Services Employment and Reemployment Rights Act (USERRA) by providing their Guard and Reserve employees additional, non-mandated benefits such as differential or full pay to offset lost wages, extended health benefits, and other similar benefits.  The award is given in limited numbers by state committees to employers who have had at least one of their supervisors/managers recognized with a Patriot Award, and who have signed or agreed to sign a Statement of Support.  Statements of Support pledge, among other things, to recognize, honor and enforce USERRA and to encourage opportunities to employ Guardsmen, Reservists, and Veterans.   

            U.S. Attorney Limtiaco expressed her appreciation to all Veterans and to all service members for their courage and fortitude and their commitment to protecting our freedoms as Americans, and to the ESGR for their continued efforts to raise awareness among employers about the significant role and responsibilities employers have in supporting and protecting the rights of employees in military service. 

Student Trainee Clerk Sean Perez, former member of the
U.S. Air Force Reserve, U.S. Attorney Alicia Limtiaco and
AUSA Stephen Leon Guerrero (Major in the Guam Air
National  Guard)

          U.S. Attorney Alicia A.G. Limtiaco, Districts of Guam and the Northern Mariana Islands (NMI), announced that the U.S. Attorney’s Office sponsored training by Glory Gervacio Saure, Director of the Honolulu Local Office for the U.S. Equal Employment Opportunity Commission (EEOC).  In her capacity as Director, Ms. Gervacio Saure oversees the EEOC’s operations in the State of Hawaii and the U.S. Territories of Guam, American Samoa, Wake Islands and the Commonwealth of the Northern Mariana Islands. 

          The half-day training was held at the U.S. Attorney’s Office in Guam on September 17, 2015.  The training session reviewed Equal Employment Opportunity laws and recent EEOC updates, including new developments involving sex discrimination (i.e., discrimination against pregnant women and LGBT persons) and rules and regulations on the use of arrest and conviction records in the employment process.  The training was attended by approximately 30 members from various sectors of the community.

Glory Gervacio Saure during her presentation.

Today, a man was convicted of three counts of murder in Indian country after a week-long jury trial, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Mark F. Green of the Eastern District of Oklahoma.      

David Brian Magnan, 53, was convicted in the shooting deaths of three victims, James Howard, Karen Wolf and Lucilla McGirt, who were all members of the Seminole Nation.  U.S. District Court Judge Ronald A. White of the Eastern District of Oklahoma presided over the trial.   

The evidence presented at trial established that the victims were celebrating a birthday on the evening of March 1, 2004, at Howard’s home.  In the early morning hours of March 2, 2004, Magnan arrived at the home with two other men.  Armed with a pistol, Magnan confronted an individual outside of the house and a fight ensued, after which Magnan shot the individual in the abdomen.  Magnan then entered the home where he found the three victims asleep.  He first confronted Howard, who he shot multiple times in the chest as he lay in bed.  Magnan then moved to a bedroom where he found McGirt and Wolf sleeping.  Magnan shot Wolf in the head and shot McGirt in the shoulder and head.  McGirt survived that evening and identified Magnan as the shooter, but she ultimately succumbed to her wounds and died two weeks later.  Following the shootings, Magnan and the two other men fled the scene and hid the murder weapon, which police subsequently recovered.   

This case was investigated by the Oklahoma State Bureau of Investigation, the Seminole County Sheriff’s Office, the Seminole Nation Lighthorse Police and the FBI.  The case is being prosecuted by Trial Attorney Mike Sheckels of the Criminal Division’s Human Rights and Special Prosecutions Section and Assistant U.S. Attorney Edward Snow of the Eastern District of Oklahoma.  Trial Attorney Richard Friedman of the Criminal Division’s Appellate Section handled an interlocutory appeal. 

          U.S. Attorney Alicia A.G. Limtiaco, Districts of Guam and the Northern Mariana Islands, announced that the U.S. Attorney’s Office hosted an Asset Forfeiture training conducted by Scott Gilbert, Assistant U.S. Attorney of the Southern District of Mississippi, and James Curt Bohling, Assistant U.S. Attorney of the Western District of Missouri.  The training was held at the U.S. Attorney’s Office in Guam on August 26 and 27, 2015, with a live feed to the Northern Mariana Islands via video teleconference, and was made available to federal and local law enforcement officers and the prosecution team of the U.S. Attorney’s Office.  Approximately 75 participants attended the training.

          The training topics included Forfeiture 101, Financial Investigation and Tracing of Assets, Anticipating Defenses, Forfeiting Real Property, Adoption and Structuring Orders, Equitable Sharing, Building a Federal Case from a Money Seizure, and Ethics.

From left to right: U.S. Attorney’s Office Staff from Guam and the
Northern Mariana Islands with instructors Scott Gilbert and James
Bohling, and attendees from DEA and ATF.
 

            ALICIA A.G. LIMTIACO, U.S. Attorney for the Districts of Guam and the Northern Mariana Islands (NMI), was invited to speak on “Enhancing Community Bonds” at Agueda Johnston Middle School’s Youth and Parent “Change for the Better” Symposium, held on February 28, 2015.

            U.S. Attorney Limtiaco introduced the audience to the Department of Justice’s Smart on Crime Initiative, which focuses on crime prevention, strengthening protections for vulnerable populations, and reentry of criminal offenders into the community.  The U.S. Attorney spoke with students, parents/guardians, family members, school teachers, and administrators about the importance of building community relationships, as well as the value of collaboration, diversity, and cultural competency, in our efforts to foster greater understanding, appreciation and trust among the various ethnic and multicultural groups on Guam.  

U.S. Attorney Limtiaco addressing the audience at Agueda
Johnston Middle School.

Picture of the students and parents attending the Symposium

Group photo of the organizers and presenters at the Symposium

Former President and Three District Managers Also Face Criminal Charges

Warner Chilcott U.S. Sales LLC, a subsidiary of pharmaceutical manufacturer Warner Chilcott PLC, has agreed to plead guilty to a felony charge of health care fraud, the Justice Department announced today.  The plea agreement is part of a global settlement with the United States in which Warner Chilcott has agreed to pay $125 million to resolve its criminal and civil liability arising from the company’s illegal marketing of the drugs Actonel®, Asacol®, Atelvia®, Doryx®, Enablex®, Estrace® and Loestrin®.  Prior to today’s guilty plea by Warner Chilcott, several individuals also pleaded guilty or were charged in connection with the company’s illegal activities.  

Warner Chilcott agreed to plead guilty in the District of Massachusetts to criminal charges that the company committed a felony violation by paying kickbacks to physicians throughout the United States to induce them to prescribe its drugs, manipulating prior authorizations to induce insurance companies to pay for prescriptions of Atelvia® that the insurers may not have otherwise paid for and making unsubstantiated marketing claims for the drug Actonel®.

Earlier today, an indictment was unsealed in the District of Massachusetts charging former Warner Chilcott President W. Carl Reichel, 57, of Chester, New Jersey, with one count of conspiring to pay kickbacks to physicians.  Reichel was arrested today in Boston and will make an initial appearance at 2:30 p.m. before U.S. District Court Magistrate Judge Jennifer C. Boal.

“The Justice Department is committed to protecting the integrity of physician prescribing decisions and ensuring that financial arrangements in the healthcare marketplace comply with the law,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “The Department will continue to hold companies and responsible individuals accountable when they use improper incentives, like those alleged here, to promote their products.”

“Doctors’ medical judgment should be based on what is best for the patient, and not clouded by expensive meals and other pharmaceutical company kickbacks,” said U.S. Attorney Carmen M. Ortiz for the District of Massachusetts.  “Pharmaceutical company executives and employees should not be involved with treatment decisions or submissions to a patient’s insurance company.  Today’s enforcement actions demonstrate that the government will seek not only to hold companies accountable, but will identify and charge corporate officials responsible for the fraud.”

In a criminal information filed today in the District of Massachusetts, the government charged that, between 2009 and 2013, Warner Chilcott, through its employees acting at the direction of members of the company’s management team, knowingly and willfully paid remuneration to physicians in order to induce those physicians to prescribe Warner Chilcott drugs.  Under the law, it is illegal to offer or pay remuneration to physicians to induce them to refer individuals to pharmacies for the dispensing of drugs for which payments are made in whole or in part under a federal health care program.  The information alleges that Warner Chilcott employees, at the direction of company management, provided payments, meals and other remuneration associated with so-called “Medical Education Events,” which included dinners, lunches and receptions.  These events, which were often held at expensive restaurants, often contained minimal or no educational component and were instead used to pay prescribing physicians in an attempt to gain a “competitive advantage” over other companies.  Warner Chilcott also enlisted high-prescribing physicians as “speakers” for the company.  In fact, the “speakers” often did not actually speak about any clinical or scientific topics, and, instead, the payments were primarily intended to induce prescriptions.  For instance, Warner Chilcott informed “speakers” who were not prescribing at a high volume that they would not be paid for subsequent events unless their prescribing habits increased.      

In addition, the information alleges that from 2011 to 2013, Warner Chilcott employees knowingly and willfully submitted false, inaccurate, or misleading prior authorization requests and other coverage requests to federal health care programs for the osteoporosis medications Atelvia® and Actonel®.  The false, inaccurate and misleading information was provided to certain insurance companies in order to overcome formulary restrictions that favored less expensive osteoporosis drugs.  For instance, Warner Chilcott was aware that many insurers only paid for Atelvia® if a physician submitted an individualized request explaining why the patient could not be treated with less-expensive medications approved to treat the same conditions.  As detailed in the information, Warner Chilcott sales representatives filled out numerous prior authorizations for Atelvia®, using “canned” medical justifications which often were inconsistent with the patients’ medical conditions.  In some instances, according to the information, Warner Chilcott sales representatives submitted these prior authorizations directly to insurance companies, holding themselves out to be physicians.  In other cases, sales representatives coached physicians and staff about which medical justifications would result in an approved prior authorization, whether or not the justification was true for a particular patient.  

Finally, the information alleges that Warner Chilcott employees were instructed by members of the company’s management team to make unsubstantiated superiority claims when marketing the drug Actonel®.  The management team instructed the sales representatives to tell physicians that Actonel® was superior to other bisphosphonates due to its supposedly unique “mechanism of action.”  According to the information, Warner Chilcott managers also encouraged sales representatives to use props to visually support this false claim, including pouring water and syrup onto two sponges while telling physicians that Actonel, like water, penetrated and exited the bone more quickly than its competitors, represented by the syrup.  Warner Chilcott management directed the sales representatives to make the superiority claim even though the claim was not supported by clinical evidence.

Under the terms of the plea agreement, Warner Chilcott will pay a criminal fine of $22.94 million.    

Warner Chilcott also entered into a civil settlement agreement under which it agreed to pay $102.06 million to the federal government and the states to resolve claims arising from its conduct, which allegedly caused false claims to be submitted to government health care programs.  The civil settlement resolved allegations that Warner Chilcott violated the federal Ant-Kickback Statute by paying illegal remuneration to prescribing physicians in connection with the so-called “Medical Education Events” and speaker programs and caused the submission of false prior authorization requests for Atelvia® and Actonel®.  The federal share of the civil settlement is approximately $91.5 million, and the state Medicaid share of the civil settlement is approximately $10.6 million.

Prior to today’s guilty plea by Warner Chilcott and civil settlement, several individuals were either criminally charged or pleaded guilty to various offenses related to the company’s alleged conduct.   Two former district managers, Jeffrey Podolsky, 49, of East Meadow, New York, and Timothy Garcia, 35, of Los Gatos, California, previously pleaded guilty to various charges, including conspiracy to commit health care fraud and violations of the Health Insurance Portability and Accountability Act (HIPAA).  A third former district manager, Landon Eckles, 30, of Huntersville, North Carolina, was criminally charged earlier this month for alleged HIPAA violations relating to the alleged prior authorization scheme.  Last week a Springfield, Massachusetts physician, Rita Luthra, M.D., 64, of Longmeadow, Massachusetts, was charged with, among other things, allegedly accepting free meals and speaker fees from Warner Chilcott in return for prescribing its osteoporosis drugs. 

“Placing financial gain above the legitimate needs of patients is deplorable,” said Inspector General Daniel R. Levinson of the U.S. Department of Health and Human Services (HHS). “Paying kickbacks and even providing instructions on how to defraud Medicare are practices that will not be tolerated.”

“Pharmaceutical companies and their employees have a significant responsibility to sell and market drugs in an ethical and legal manner,” said Special Agent in Charge Harold H. Shaw of the FBI’s Boston Field Office.  “This settlement and the related indictments reflect the commitment of the FBI and our government partners to aggressively investigate companies and individuals who fail that responsibility and seek to profit from fraudulent activities.”

The civil settlement resolves a lawsuit filed under the whistleblower provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery.  The civil lawsuit was filed in the District of Massachusetts and is captioned United States ex rel. Alexander, et al. v. Warner Chilcott plc, et al., Civil Action No. 11-CA-1121 (D. Mass.).  As part of today’s resolution, the whistleblowers will receive approximately $22.9 million from the federal share of the civil recovery.

The criminal case was prosecuted by the U.S. Attorney’s Office of the District of Massachusetts and the Civil Division’s Consumer Protection Branch.  The civil settlement was handled by the U.S. Attorney’s Office of the District of Massachusetts and the Civil Division’s Commercial Litigation Branch.  Assistance was provided by the FDA’s Office of Chief Counsel, HHS Office of Counsel to the Inspector General, and the National Association of Medicaid Fraud Control Units.  This matter was investigated by the FBI, HHS Office of the Inspector General, the Department of Defense’s Defense Criminal Investigative Service, the FDA’s Office of Criminal Investigations, the Department of Veterans Affairs and the Office of Personnel Management’s Office of Inspector General.      

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $26.2 billion through False Claims Act cases, with more than $16.4 billion of that amount recovered in cases involving fraud against federal health care programs.

Except for the conduct admitted in connection with the criminal plea, the claims resolved by the civil agreement are allegations only, and there has been no determination of civil liability.

A Smith’s Creek, Michigan resident, who specialized in repairing classic and rare cars was sentenced today to two years in prison, followed by two  years of supervised release, for tax evasion and failure to file income tax returns, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.

On April 29, Terry Myr, 71, was convicted by a jury on one count of attempted tax evasion and four counts of failure to file tax returns.  According to the evidence presented at trial and court documents, the Internal Revenue Service (IRS) assessed Myr approximately $195,000 in taxes, interest and penalties for his failure to report all of his income for the tax years 2000 through 2003.  In 2009, when his tax liabilities remained unpaid, Myr sold a rare Ferrari engine for $610,000.  To prevent the IRS from collecting the taxes he owed, Myr transferred property that he owned to a third party, used nominee companies to conceal his income and assets and otherwise dealt in cash.  Myr used some of the Ferrari engine proceeds to purchase more than $360,000 in gold and silver coins.  Myr also attempted to evade the payment of his taxes by asking his customers to pay him in cash, money orders, or prepaid debit cards.  The evidence also showed that although Myr was required to file individual income tax returns, he had not filed a tax return or paid federal income taxes since 2001.  The government estimated that Myr’s actions caused a total tax loss of $738,904.  

U.S. District Court Judge Nancy G. Edmunds in the Eastern District of Michigan also ordered Myr to pay his back taxes, penalties and interest.

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

Anthony Joseph, a commercial fisherman from Levittown, New York, was sentenced today in federal court in Central Islip, New York, to seven months in prison for federal violations stemming from his role in systematically underreporting fluke (summer flounder) that was being harvested as part of the federal Research Set-Aside (RSA) Program, the Justice Department’s Environment and Natural Resources Division announced.

Joseph was also sentenced to three years of supervised release following his incarceration and to pay $603,000 in restitution.

Joseph, the former operator of the dragger F/V Stirs One, pleaded guilty on April 11, 2014, to one count of mail fraud, two counts of wire fraud and one count of falsification of federal records for knowingly submitting 158 falsified fishing logs, known as fishing vessel trip reports (FVTRs) and aiding and abetting the submission of 167 falsified dealer reports from June 2009 through December 2011, as part of a scheme to defraud the United States of overharvested and underreported fluke.

Under the National Oceanic and Atmospheric Administration’s (NOAA) regulations, all of the Stirs One’s catch had to be reported to NOAA on FVTRs.  During the years 2009, 2010 and 2011, the Stirs One principally targeted fluke.  However, under the captaincy and with the knowledge of Joseph, the vessel exceeded its relevant federal and New York State quotas for fluke for at least 158 trips.  These illegal overages totaled 302,000 pounds of fluke worth approximately $626,000.

In order to cover up the illegal fluke harvesting, Joseph falsified the FVTRs that he personally mailed to NOAA.  He also utilized the exempted fisheries permit quota that was acquired through the federal RSA Program as a mask for his fluke overages.  According to court documents, the defendant characterized the RSA Program as “a license to steal” and remarked that during the period of 2009 to 2011, he referred to the Research Set-Aside Program with the nickname, “Research Steal-Aside.”  

NOAA regulations also required the first purchasers of seafood, i.e., directly from the fishing vessel, to report their purchases to NOAA on an electronic form known as a dealer report.  The dealer reports include information such as date of landing, port of landing, catch vessel, corresponding FVTR numbers, commercial grade, species, price and weight.  NOAA utilizes the data in the dealer reports to set quotas and implement other management measures designed to ensure a sustainable fisheries.  The dealer reports also serve as a check on the information that is submitted in FVTRs.  In other words, in order to effectuate his scheme, Joseph needed to ensure that corresponding false dealer reports were being submitted that contained the same false information as was contained on the falsified FVTRs.  A mismatch would have indicated a serious error or fraud, and would have been a red flag for fisheries managers.  Accordingly, during June 2009 to December 2011, the defendant schemed with two other fish dealers to submit false dealer reports in furtherance of the fraud.  In doing so, the defendant aided and abetted previously convicted Alan Dresner and Jones Inlet Seafood Company in their internet submission of a total of at least 167 false dealer reports from computers in New York to NOAA’s Regional Fisheries Office in Gloucester, Massachusetts.

The case was investigated by agents of NOAA’s National Marine Fisheries Service, with assistance from the New York State Department of Environmental Conservation Police.  The case is being prosecuted by Christopher L. Hale of the Justice Department’s Environment and Natural Resources Division’s Environmental Crimes Section.

The Justice Department announced today that it reached a settlement with the operators of Pikes Peak Wrestling League, a youth wrestling league that serves approximately 4,000 children across the state of Colorado, under the Americans with Disabilities Act (ADA).  The settlement resolves allegations that Pikes Peak Youth Sports Association LLC and Peak Youth Sports Association violated the ADA by failing to modify their policies, practices or procedures to allow a child who has dwarfism to “play down” one age division at the 2014 Colorado State Wrestling Championship so that he could compete with wrestlers closer to his weight and size.  The agreement was filed today as a proposed consent decree, which must be approved by the U.S. District Court for the District of Colorado, along with a complaint.

Under the agreement, the wrestling league will adopt and publicize a disability nondiscrimination policy, including procedures for handling requests to modify policies for wrestlers with disabilities.  The league will train employees on ADA requirements and invite coaches affiliated with Pikes Peak Wrestling League and USA Wrestling Directors to attend this training, free of charge.  In addition, the wrestling league will pay compensatory damages to the child identified in the complaint and report to the department on its compliance with the agreement. 

“Participating in athletic competition is a formative experience for children across this country, and children with disabilities are entitled to participate equally in youth sports,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division.  “The ADA celebrated its 25th anniversary this year and private entities that operate youth athletics should be well aware of their obligations under the ADA.”

Title III of the ADA requires public accommodations, including youth sports leagues like Pikes Peak Wrestling League, to reasonably modify their policies, practices or procedures, when such modifications are necessary to afford their goods, services, facilities, privileges, advantages or accommodations to individuals with disabilities and when such modifications would not fundamentally alter the nature of their goods, services, facilities, privileges, advantages or accommodations.  For more information about the ADA, call the department’s toll-free ADA Information Line at 800-514-0301 (TDD 800-514-0383) or access the ADA website at www.ada.gov.

The relevant court documents can be found at the following links: complaint and consent decree.

The Department of Justice announced today that Luzerner Kantonalbank AG (Luzerner), Habib Bank AG Zurich (HBZ), Banque Heritage S.A. and Hyposwiss Private Bank Genève S.A. (Hyposwiss Geneva) have reached resolutions under the department’s Swiss Bank Program.  These banks will collectively pay penalties totaling more than $25 million and continue to cooperate with the department.

“With each agreement executed under the Swiss Bank Program, the department continues to eradicate Swiss bank secrecy and hold accountable those financial institutions that profited from willfully assisting accountholders in the evasion of their U.S. tax obligations,” said Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.  “Working with our partners at the Internal Revenue Service, we are following leads and pursuing criminal and civil investigations focused on targets around the globe.”

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.

Luzerner was established in 1850 by the Canton of Lucerne, a sovereign political subdivision of the Swiss Confederation.  Luzerner was aware that U.S. taxpayers had a legal duty to report to the Internal Revenue Service (IRS) and pay taxes on the basis of all their income, including income earned in accounts that the U.S. taxpayers maintained at Luzerner.  Luzerner knew or had reason to know that it was likely some taxpayers who maintained accounts at Luzerner were not complying with their U.S. tax and reporting obligations.

Luzerner offered a variety of traditional Swiss banking services 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.  These services included hold mail and numbered accounts.  Luzerner also opened and maintained accounts held in the name of non-U.S. corporations, foundations or other entities, while knowing, or having reason to know, that a U.S. taxpayer ultimately held an interest in these non-U.S. entities.  In at least six cases, these structured accounts were established in the names of entities set up in Panama, Seychelles and the British Virgin Islands by two Swiss-based advisory companies.

Luzerner maintained 115 U.S.-related accounts for insurance carriers, commonly called insurance-wrapped accounts, as to which Luzerner was aware that the policy holder or premium payer was a U.S. person.  These accounts titled in the name of an insurance carrier, but are funded with bankable assets transferred to the account by the beneficial owner of the policy.  The insurance carriers, at Luzerner’s request, provided Luzerner with the identities of the beneficial owners of these policies.  The assets in the account, while titled in the name of the insurance carrier, were managed by the external asset manager for the beneficial owner through a power of attorney given by the insurance carrier. 

Nearly all of these insurance-wrapped accounts were managed by a single external asset manager.  In an e-mail sent to the head of the private banking department in December 2007, the head of the external asset manager desk at Luzerner described that external asset manager as “[specializing] in aspects of legal asset protection as well as tax optimization and has approx. CHF 750 million [Swiss francs] in assets under management, in particular in life insurances.  Its main clients include wealthy U.S. nationals (doctors, lawyers, etc.).”  Luzerner knew or had reason to know that U.S. citizens, residents and others obligated to pay U.S. taxes who contributed the assets to the insurance-wrapped accounts sought to conceal their ownership of those and also to evade their U.S. federal income tax obligations.

Since Aug. 1, 2008, Luzerner held a total of 595 U.S.-related accounts, which amounted to approximately $300 million.  Luzerner will pay a penalty of $11.031 million.

HBZ primarily serves South Asian commercial businesses and entrepreneurs, and their families.  In 1941, Habib Bank Ltd. (HBL), the predecessor to HBZ, was founded in Bombay (now Mumbai), India.  In 1967, the founders of HBL founded HBZ as a stand-alone entity in Switzerland.   In 1974, Pakistan nationalized HBL and all of its subsidiaries and overseas branches.  Following the nationalization of HBL, the founders of HBZ rebuilt a global banking business independent of HBL.   HBZ has branches and subsidiaries in Canada, Hong Kong, the Isle of Man, Kenya, Pakistan, South Africa, Switzerland, the United Arab Emirates and the United Kingdom. 

The HBZ Swiss Office has local management, a local banking team and a client base with accounts held in Switzerland that is distinct from, and tracked and managed separately from, the HBZ operations in other jurisdictions.  The HBZ Swiss Office assisted or otherwise facilitated U.S. clients in establishing and maintaining undeclared accounts in a manner that the HBZ Swiss Office knew or should have known was designed to conceal the U.S. clients’ ownership or beneficial interest in the accounts.

Employees of Habib American Bank, Inc. (HAB), an unrelated bank with common ownership, introduced or referred U.S. persons to the HBZ Swiss Office. HBZ has identified one account opened at the HBZ Swiss Office for a U.S. person as a result of a referral from HAB.  HBZ and HAB are owned through separate legal structures for the benefit of members of the same extended family. 

In connection with one relationship, the HBZ Swiss Office assisted with creating four Liechtenstein “Anstalts” or entities with U.S. beneficial owners.  A Liechtenstein law firm structured and managed these entities.  This Liechtenstein law firm served as the nominee, director and signatory authority of these accounts.  The HBZ Swiss Office knew or should have known that these entities were created with an intention of masking U.S. ownership.  The HBZ Swiss Office further facilitated the transfer of the funds from these accounts to HBZ Finance Limited, Hong Kong.

In connection with closing U.S.-related accounts, the HBZ Swiss Office permitted certain U.S. clients to transfer funds to accounts held at other HBZ branches and subsidiaries, or to other accounts at the HBZ Swiss Office, either knowing or when it should have known that such transfers were motivated by a desire to avoid U.S. tax or information reporting requirements.

Since Aug. 1, 2008, HBZ had 125 U.S.-related accounts, comprising approximately $118.9 million in assets under management. HBZ will pay a penalty of $9.4 million.

Banque Heritage is a private bank headquartered in Geneva.  It was founded in 1986 as an asset management firm and obtained its Swiss banking license in 2003.  Banque Heritage has a branch in Zurich, a representative office in Lugano, Switzerland, and a fully licensed banking operation in Uruguay.  It also had an investment advisory company in Guernsey, which was closed in 2014. 

Banque Heritage offered hold mail and opened accounts in the names of offshore structures.  Since Aug. 1, 2008, Banque Heritage had 47 U.S.-related accounts with U.S. beneficial owners that were held by entities created in Panama, the British Virgin Islands, Hong Kong, Belize or other foreign countries. 

Banque Heritage established banking relationships with U.S. taxpayers who were transferring funds from other Swiss financial institutions that were closing such accounts.  In at least seven such instances, comprising at least $10 million, Banque Heritage knew, or had reason to know, that the accounts were or may have been undeclared.  Banque Heritage also:

• Transferred the beneficial ownership of some U.S. taxpayers’ accounts to non-U.S. persons’ accounts at Banque Heritage; and

• Facilitated the transfer, to Banque Heritage’s affiliate in Uruguay, of approximately $700,000 held in at least two U.S.-related accounts being closed at Banque Heritage, when it knew or had reason to know that these accounts were undeclared.

In May 2001, Banque Heritage entered into a Qualified Intermediary (QI) Agreement with the IRS and required all clients to sign a declaration confirming whether the client was a U.S. national or U.S. resident.  Banque Heritage also asked U.S. nationals and U.S. residents to provide an IRS Form W-9.  Prior to May 2009, Banque Heritage’s position was that it could service a U.S. client without reporting the U.S. taxpayer’s interest in the account to the IRS so long as it either prohibited the accountholder from trading in U.S.-based securities or the account was nominally structured in the name of a non-U.S.-based entity accompanied by an IRS Form W-8BEN or a Bank Non-U.S. Status Declaration. In the latter circumstance, U.S. clients, with the assistance of their advisors, would create an entity, such as a Panama corporation or a British Virgin Islands company, and pay a fee to third parties to act as corporate directors.  Those third parties, at the direction of the U.S. client, would then open a bank account at Banque Heritage in the name of the entity or transfer a pre-existing Swiss bank account from another Swiss bank.

In cases involving a non-U.S. entity, Banque Heritage was aware that a U.S. client was the true beneficial owner of the account and would receive from the entity’s directors an IRS Form W-8BEN or equivalent bank document that falsely declared that the beneficial owner was not a U.S. taxpayer.  Knowing that it was probable that certain U.S. taxpayers were not complying with their U.S. income tax and reporting obligations, Banque Heritage effectively provided assistance to certain U.S. taxpayers in evading their U.S. tax obligations, and permitted three accounts to trade in U.S. securities without reporting account earnings or transmitting any withholding taxes to the IRS, as required by the QI Agreement.

Since Aug. 1, 2008, Banque Heritage had 131 U.S.-related accounts with an aggregate maximum balance of approximately $198 million.  Banque Heritage will pay a penalty of $3.846 million.

Hyposwiss Geneva is a private bank based in Geneva that was founded in 1997 as Marcuard Cook & Cie S.A.  Hyposwiss Geneva was acquired by Anglo Irish Bank Corporation Ltd. in 2001 and then by St. Galler Kantonalbank AG, a Category 2 bank in the Swiss Bank Program, in early 2008.  St. Galler Kantonalbank AG announced in June 2013 that it was divesting Hyposwiss Geneva and that Mirelis InvesTrust S.A. would become the new shareholders of Hyposwiss Geneva at the beginning of 2014.

Hyposwiss Geneva opened, serviced and profited from accounts for U.S. clients who Hyposwiss Geneva knew or had reason to know were not complying with their U.S. income tax obligations.  In addition to offering the traditional Swiss banking services of hold mail and accounts with code names or numbers, Hyposwiss Geneva accepted instructions in connection with at least 22 U.S.-related accounts not to invest in U.S. securities and not to disclose the names of U.S. clients to U.S. tax authorities, including the IRS. Hyposwiss Geneva assisted at least one U.S. taxpayer client in concealing his identity from the IRS by titling securities in the name of the U.S. taxpayer’s Hyposwiss Geneva relationship manager as a nominee of the U.S. taxpayer by depositing the securities in the relationship manager’s personal account with another Swiss bank.  Hyposwiss Geneva also processed large cash and gold withdrawals totaling approximately $3.4 million for at least nine U.S. taxpayers at or around the time the clients’ accounts were closed, even though Hyposwiss Geneva knew, or had reason to know, the accounts contained undeclared assets.

Since Aug. 1, 2008, Hyposwiss Geneva opened and maintained at least 21 undeclared accounts in the names of structures that were beneficially owned by U.S. taxpayers, while knowing, or having reason to know, that these structures were used by U.S. clients to help conceal their identities from the IRS.  One structured account was a U.S. trust, two were Swiss-based operating companies and 21 U.S.-related accounts were held by a non-U.S. structure, such as an offshore corporation or trust, which aided and abetted the clients’ ability to conceal their undeclared accounts from the IRS.  The entities were incorporated as follows: 10 companies in the British Virgin Islands; five companies in Panama; one trust in the Cook Islands; and one each in Liberia, St. Vincent & the Grenadines, the Marshall Islands, and the Cayman Islands.

Since Aug. 1, 2008, Hyposwiss Geneva held a total of 91 U.S.-related accounts with approximately $74.9 million in assets under management. Hyposwiss Geneva will pay a penalty of $1.109 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 settlements and the steady success of DOJ’s Swiss Bank Program continue to alter the thinking of those seeking to hide their money offshore,” said acting Deputy Commissioner International David Horton of the IRS Large Business & International Division (LB&I). “Through these agreements, we are shining a bright light on those who sought to evade paying what they owe. U.S. taxpayers with undeclared accounts need to report their foreign accounts and pay their income taxes” 

“The bank agreements announced today continue to change the paradigm of the offshore banking world and the message sent to that community should be clear,” said Chief Richard Weber of IRS-Criminal Investigation (CI). “The days of secretly hiding funds offshore to avoid paying taxes are over.  We are proud of our joint efforts and the resulting success of the program to date. Each additional agreement provides us with highly-detailed data on the accounts, schemes and linkages we need to combat international tax evasion.”

Acting Assistant Attorney General Ciraolo thanked the IRS, and in particular, IRS-CI and the IRS LB&I Division for their substantial assistance.  Ciraolo also thanked Michael N. Wilcove, Henry C. Darmstadter, John E. Sullivan, Thomas G. Voracek and Kimberle E. Dodd, 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 and Senior Litigation Counsel Nanette L. Davis of the Tax Division.

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

The government has intervened in three False Claims Act lawsuits and filed a consolidated complaint against SavaSeniorCare LLC and related entities (Sava) alleging that Sava knowingly and routinely submitted false claims to Medicare for rehabilitation therapy services that were not medically reasonable and necessary, the Department of Justice announced today.  Sava is one of the nation’s largest healthcare providers, operating approximately 200 skilled nursing facilities (SNFs) in 23 states.

“The provision of Medicare benefits must be dictated by patient need, not by Medicare providers’ efforts to maximize profits by pressuring their employees to provide medically unnecessary services,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “The Department of Justice will continue to aggressively pursue companies that seek to engage in this kind of fraudulent scheme.”

The government’s complaint alleges that Sava exerted significant pressure on its SNFs to meet unrealistic financial goals that resulted in the provision of medically unreasonable, unnecessary and unskilled services to Medicare patients.  Sava allegedly set these aggressive, prospective corporate targets for the highest Medicare reimbursement rates to significantly increase Sava’s revenues without regard for its patients’ actual clinical needs and then pressured its staff to meet those goals.  Sava also allegedly delayed discharging patients from its facilities, even though the patients were medically ready to be discharged, in order to increase its Medicare payments.

“Enforcing the False Claims Act and combating healthcare fraud remains a top priority of the U.S. Attorney’s Office,” said U.S. Attorney David Rivera of the Middle District of Tennessee.  “When healthcare providers subject patients to unnecessary treatment, we will intervene and hold them accountable.”

The three consolidated lawsuits were filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government for false claims for government funds and to receive a share of any recovery.  The False Claims Act also permits the government to intervene in such lawsuits, as it has done in these cases.  Under the Act, a defendant that is found liable is subject to damages equal to three times the government’s loss plus applicable penalties. 

The government’s intervention in these matters illustrates its emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $26.2 billion through False Claims Act cases, with more than $16.4 billion of that amount recovered in cases involving fraud against federal health care programs.  Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement, including the conduct described in the United States’ complaint, can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).

The lawsuits are being handled by the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office of the Middle District of Tennessee.  Investigative support is being provided by the U.S. Attorneys’ Offices of the Southern District of Texas and the Western District of Texas; the Offices of Inspector General for the Department of Health and Human Services and the Office of Personnel Management and the National Association of Medicaid Fraud Control Units.

The cases are captioned United States ex rel. Hayward v. SavaSeniorCare, LLC, et al., No. 3:11-0821 (M.D. Tenn.); United States ex rel. Scott v. SavaSeniorCare Administrative Services, LLC, 3:15-0404 (M.D. Tenn.); and United States ex rel. Kukoyi v. Sava Senior Care, L.L.C., et al., No. 3:15-1102 (M.D. Tenn.).

The claims asserted in the government’s complaint against Sava are allegations only and there has been no determination of liability.

Tri-Marine Management Co., Tri-Marine Fishing Management and Cape Mendocino Fishing (Tri-Marine) have agreed to pay $1.05 million in civil penalties and to perform fleet-wide inspections and other corrective measures to resolve claims stemming from an October 2014 oil spill in American Samoa and related violations of spill prevention regulations, the Department of Justice and the Coast Guard announced today.  

In its complaint, filed today along with the lodging of a consent decree in the U.S. District Court for the District of Hawaii, the United States alleges that the Tri-Marine companies are liable for the October 2014 oil spill from their 230-foot commercial tuna fishing vessel, the Capt. Vincent Gann, into Pago Pago Harbor in American Samoa and related violations of the Coast Guard’s spill prevention regulations.  After the Capt. Vincent Gann returned to Pago Pago Harbor from a two-month fishing voyage, it struck two moored fishing vessels while maneuvering in the harbor on Oct. 16, 2014.  The hull of the Capt. Vincent Gann was breached during the crash and at least 35 barrels of marine fuel oil flowed out of the bulbous bow into the water.  It is illegal to store fuel in the bulbous bow.

The complaint further alleges the illegal oil storage was done to extend the duration of the fishing voyage and allow storage of a larger catch of fish.  The extra fuel oil had been stored in two of the fish holds, but the oil was transferred out of the fish holds to the bulbous bow to make room for storage of tuna in those fish holds. 

The complaint also alleges the vessel was equipped with unlawful piping configurations that tied the bilge water system into the fuel system and that the extra fuel originally was loaded into the vessel using an unauthorized method of pumping fuel oil with hoses over the top of the deck into open fish holds. 

In addition to payment of the civil penalties, the consent decree requires Tri-Marine to perform inspections and corrective measures across its entire fleet of ten American Samoa-based vessels, including a top-to-bottom review and overhaul of all of the vessels’ oil handling practices, operator certifications, independent audits, increased reporting, and the engagement of a full-time consultant or in-house personnel focused on environmental and maritime compliance.  

“This settlement sends a clear message to vessel owners and operators that they cannot put profits ahead of protection of the marine environment or compliance with the law,” said Assistant Attorney General John C. Cruden, for the Justice Department’s Environment and Natural Resources Division.  “Tri-Marine will pay a significant penalty and conduct meaningful fleet-wide corrective measures for its release of oil into Pago Pago Harbor, a sensitive and valuable marine environment.  We are grateful to our partner at the U.S. Coast Guard for their swift and diligent investigation of these violations.” 

“Storage of oil in the bulbous bow has long been prohibited and poses obvious and serious risks to a vessel’s crew and the marine environment,” said Captain Shannon Gilreath, Sector Commander of the Coast Guard’s Sector Honolulu, which covers both American Samoa and Hawaii.  “This enforcement action reinforces this point and emphasizes safety and pollution prevention measures within this fleet of vessels.” 

Section 311(b) of the Clean Water Act makes it unlawful to discharge oil or hazardous substances into or upon the navigable waters of the United States or adjoining shorelines in quantities that may be harmful to the environment or public health.  In addition, the Coast Guard has promulgated spill prevention regulations for vessels and other facilities under Section 311(j) of the Act.  The penalty paid for this spill and the related spill prevention violations will be deposited in the federal Oil Spill Liability Trust Fund managed by the National Pollution Fund Center.  The Oil Spill Liability Trust Fund is used to pay for federal response activities and to compensate for damages when there is a discharge or substantial threat of discharge of oil or hazardous substances to waters of the United States or adjoining shorelines.

The proposed consent decree, lodged in the District of Hawaii, is subject to a 30-day public comment period and court review and approval.  A copy of the consent decree is available on the Department of Justice website at www.justice.gov/enrd/Consent_Decrees.html.

A Spokane, Washington, man was sentenced last night to more than four years in federal prison for selling industrial bleach as a miracle cure for numerous diseases and illnesses, including cancer, AIDS, malaria, hepatitis, Lyme disease, asthma and the common cold, the Department of Justice announced today. 

Louis Daniel Smith, 45, was sentenced by Chief Judge Rosanna Malouf Peterson of the Eastern District of Washington to serve 51 months in prison to be followed by three years of supervised release. 

After a seven-day trial in June, a jury convicted Smith of one count of conspiracy to commit multiple crimes, three counts of introducing misbranded drugs into interstate commerce with intent to defraud or mislead and one count of fraudulently smuggling merchandise into the United States.  Evidence at trial showed that Smith operated a business called “Project GreenLife” (PGL) from 2007 to 2011.  PGL sold a product called “Miracle Mineral Supplement,” or MMS, over the Internet.  MMS is a mixture of sodium chlorite and water.  Sodium chlorite is an industrial chemical used as a pesticide, for hydraulic fracturing and for wastewater treatment.  Sodium chlorite cannot be sold for human consumption, and suppliers of the chemical include a warning sheet stating that it can cause potentially fatal side effects if swallowed.

“Today’s sentence is a just result reflecting the defendant’s role as the leader of a business that sold dangerous chemicals as miracle cures to sick people and their desperate loved ones,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “Consumers have the right to expect that the medicines that they purchase are safe and effective.”

The government presented evidence that Smith instructed consumers to combine MMS with citric acid to create chlorine dioxide, add water and drink the resulting mixture.  Chlorine dioxide is a potent agent used to bleach textiles, among other industrial applications.  Chlorine dioxide is a severe respiratory and eye irritant that can cause nausea, diarrhea and dehydration.  Smith provided instructions for use of his product including that nausea, diarrhea and vomiting were all signs that the miracle cure was working.  The instructions also stated that despite a risk of possible brain damage, the product might still be appropriate for pregnant women or infants who were seriously ill.

According to the evidence presented at trial, Smith created phony “water purification” and “wastewater treatment” businesses in order to obtain sodium chlorite and ship his MMS without being detected by the Food and Drug Administration (FDA) or U.S. Customs and Border Protection.  The government also presented evidence that Smith hid evidence from FDA inspectors and destroyed evidence while law enforcement agents were executing search warrants. 

Before trial, three of Smith’s alleged co-conspirators, Chris Olson, Tammy Olson and Karis DeLong, Smith’s wife, pleaded guilty to introducing misbranded drugs into interstate commerce.  Chris Olson, along with alleged co-conspirators Matthew Darjanny and Joseph Lachnit, testified at trial that Smith was the leader of PGL.

The case was investigated by agents of the FDA’s Office of Criminal Investigations and the U.S. Postal Inspection Service.  The case was prosecuted by Christopher E. Parisi and Timothy T. Finley of the Civil Division’s Consumer Protection Branch in Washington, D.C.

A former business manager of the Local 657 of the Laborers International Union of North America (LIUNA) and two building contractors were charged today with stealing from Local 657 and related offenses. 

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Assistant Director in Charge Paul M. Abbate of the FBI’s Washington Field Office, Special Agent in Charge Steven D. Anderson of the Department of Labor-Office of Inspector General’s Office of Labor Racketeering and Fraud Investigations’ Washington, D.C., Regional Office and District Director Mark Wheeler of the Department of Labor’s Office of Labor Management Standards’ Washington, D.C., District Office made the announcement.  

Anthony Wendel Frederick Sr., 49, of Upper Marlboro, Maryland, was charged with one count of theft from a labor organization, one count of receiving unlawful labor payments, wire fraud and one count of money laundering

Gary Amoes Cooper, 56, of Upper Marlboro, and Christopher Andrew Kwegan, 58, of Randallstown, Maryland, each also were charged with one count of theft from a labor organization, one count of payment unlawful labor payments, wire fraud and several counts of money laundering.  Cooper and Kwegan own STS General Contracting of Greenbelt, Maryland.  All three defendants are in custody and are scheduled to have their initial appearance at 1:45 p.m. EDT today before U.S. Magistrate Judge G. Michael Harvey of the District of Columbia. 

LIUNA is a labor organization that represents laborers in the construction industry.  LIUNA’s Local 657 represents construction laborers in Washington, D.C., and five adjacent counties.  For approximately 10 years, until June 2014, Frederick served as the business manager for Local 657.

The indictment alleges that, from May 2013 to June 2014, Frederick directed more than $1.7 million in Local 657 funds to STS Contracting without the knowledge or authorization of the Local 657 Executive Board or officials in the LIUNA International.  Specifically, according to the indictment, in June 2014, a routine audit of the local union by LIUNA revealed that Frederick had paid nearly $1.1 million to STS Contracting for minimal renovations at the Local 657 administrative building.  In addition, the indictment alleges that, without authorization, Frederick directed over $580,000 in Local 657 funds to STS Contracting for expediting permits for the construction of a new training center for Local 657, which expediting had previously been handled by another construction firm.  According to the indictment, the LIUNA auditor also discovered that Frederick grossly overpaid STS Contracting for expediting various permits, including $20,000 to expedite a $143 excavation permit, and more than $20,000 to renew existing permits, which could have been accomplished online for approximately $250 apiece.

The indictment further alleges that Cooper and Kwegan used the stolen Local 657 funds to make a down payment of $225,000 on a home purchased by Frederick and to pay for the construction of a three-car garage on the property, and directed more than $600,000 to a corporation owned in part by Frederick’s wife.  In addition, Cooper and Kwegan allegedly depleted a company bank account, which primarily contained stolen Local 657 funds, by withdrawing more than $500,000 in cash, sending hundreds of thousands of dollars to third parties in Qatar, and using the remainder for personal items, entertainment, shopping trips, hotel stays and overseas travel.

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

The case is being investigated by the FBI and the Department of Labor.  The case is being prosecuted by Trial Attorney Vincent Falvo of the Criminal Division’s Organized Crime and Gang Section.

The Department of Justice and Department of Health and Human Services (HHS) today announced $1.5 million in new federal grants focused on violence prevention efforts in Baltimore.

Joining Administrator Robert L. Listenbee of the Justice Department’s Office of Juvenile Justice and Delinquency Prevention at a press conference to announce the grants were Deputy Director Kristina Rose of the Justice Department’s Office for Victims of Crime, Regional Director Joanne Grossi of the Department of Health and Human Services, Baltimore Mayor Stephanie Rawlings-Blake and Baltimore Health Commissioner Dr. Leana Wen.

“At the Department of Justice, we firmly believe that a public health approach – one that fights not just the symptoms but the root causes of violence – is the most effective and sustainable way to prevent and reduce crime in our communities,” said Administrator Listenbee.  “What is so tremendously gratifying about these efforts is that they are all the direct result of partnerships – between Safe Streets Baltimore, the health department, the schools, the faith community and agencies across the federal government.  We are proud to make these investments and honored to be part of this exciting work.”

“Violence devastates individuals and families and can undermine the very fabric of our communities,” said Regional Director Grossi.  “The good news is that there is hope – we know what works to prevent violence.  The federal government is looking forward to collaborating with NACCHO and the city of Baltimore to prevent the violence and foster a safe and healthy environment for all residents.”

The three grants from the U.S. Department of Justice include:

• $999,564 from the Office for Victims of Crime to more effectively reach male survivors of violence and their families.During the three-year project period, these partners will convene a planning group to develop a culturally-relevant, trauma-informed curriculum for survivors, establish a standardized and multidisciplinary shooting response protocol and implement a plan to increase public awareness of the effects of trauma and victimization.

• $278,000 from the Office of Juvenile Justice and Delinquency Prevention for the National Forum on Youth Violence Prevention to implement strategies and evidence-based programs to reduce youth violence.As a means of addressing school climate issues, the Baltimore City Health Department and the Baltimore Public School System aim to enhance the capacity of schools to successfully implement and sustain the school-wide positive behavioral interventions and support (PBIS) model.

• $70,000 from the Office of Juvenile Justice and Delinquency Prevention to integrate the faith community into activities aimed at the prevention and reduction of youth violence and victimization within and around the Safe Streets Baltimore areas.Specifically, this funding will support a Faith Community Coordinator position to conduct outreach to Baltimore’s diverse faith-based community which serves and surrounds the Safe Streets areas.

Additionally, the Department of Health and Human Services, through the Centers for Disease Control and Prevention, has awarded the National Association of County and City Health Officials (NACCHO) with $175,000 to fund a pilot of Safe Streets in the Sandtown-Winchester neighborhood of Baltimore.

A request for proposals is currently offering community-based organizations in West Baltimore the opportunity to bring the program credited with reducing gun violence to their neighborhoods.

In 2014, Safe Streets workers had 15,000 client interactions and mediated 880 conflicts.  More than 80 percent of interactions were deemed to be “likely” or “very likely” to result in gun violence.  Three of the four sites have gone over a year without a fatal shooting.

An Arkansas chiropractor was sentenced today to serve 17 months in prison, followed by one year of supervised release announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and Acting U.S. Attorney Kenneth Elser of the Western District of Arkansas.

“Today’s sentence sends a clear message that the department, working with its law enforcement partners, will aggressively pursue and prosecute those individuals who willfully seek to obstruct the Internal Revenue Service and evade their tax obligations,”  said Acting Assistant Attorney General Ciraolo.

According to court documents, Philip Roberts, 60, of Fort Smith, Arkansas, had an outstanding federal income tax liability of more than $2 million for tax years 1991 through 2004.  In 2008, Roberts filed a series of false and fraudulent documents with the Internal Revenue Service (IRS) in an effort to obstruct and impede the tax laws, including filing false financial instruments that claimed millions of dollars of transactions with both the Secretary of the Treasury and the IRS Commissioner, and filing forms that falsely reported payments to the IRS. 

Roberts pleaded guilty on June 22 to corruptly endeavoring to obstruct and impede the IRS.  U.S. District Judge Timothy L. Brooks of the Western District of Arkansas also ordered Roberts to pay a $3,000 fine.  This is Roberts’ second conviction for income tax related offenses.  In 2000, after a jury trial, Roberts was convicted of two counts of willfully failing to file federal income tax returns and sentenced to serve 16 months in prison. 

“An important part of our mission is to protect the integrity of the Federal tax system,” said J. Russell George, Treasury Inspector General for Tax Administration (TIGTA). “TIGTA will vigorously investigate individuals who attempt to corruptly interfere with the administration of the Internal Revenue laws through fraudulent means, and will do everything within its power to ensure that those involved will be prosecuted to the fullest extent of the law.”

Acting Assistant Attorney General Ciraolo and Acting U.S. Attorney Elser commended the Treasury Inspector General for Tax Administration, who investigated the case, as well as Trial Attorneys Robert A. Kemins and David Zisserson of the Tax Division and Assistant U.S. Attorney Kimberly Davis of the Western District of Arkansas, who prosecuted the case.

A resident of Tangipahoa Parish, Louisiana, was sentenced to serve 15 months in prison to be followed by three years of supervised release for his involvement in a stolen identity refund fraud (SIRF) scheme, 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 announced today.

Brad Lewis, aka Bird, 33, pleaded guilty on May 26 to one count of a multi-object conspiracy to defraud the United States and to commit mail fraud and theft of public money.  U.S. District Judge Jay C. Zainey of the Eastern District of Louisiana imposed today’s sentence and also ordered Lewis to pay $1,136,966.94 in restitution owed to the Internal Revenue Service (IRS).

According to court documents, Lewis and his co-defendants conspired to prepare and file false income tax returns using stolen identities, including the victims’ names and social security numbers, to claim large tax refunds.  The refund checks were mailed to addresses in Louisiana, including post office boxes that Lewis opened.  Once the checks were received, Lewis and his co-defendants falsely endorsed and deposited the refund checks into bank accounts under their control.  The co-conspirators then divided the proceeds of the refund checks amongst themselves.

The indictment also charged Cedrick Mitchell aka Skeet, 40; Corey Lewis, 37; Craig Lewis, 40; Angela Chaney, 43; Thaddeus Richardson, 49; and Martin Jackson Sr., 49, with conspiracy to defraud the United States, conspiracy to commit money laundering, conspiracy to commit mail fraud, conspiracy to commit theft of public money and other charges.  On Sept. 15, Cedrick Mitchell was sentenced to 33 months in prison.  On Sept. 29, Corey Lewis was sentenced to 75 months in prison.  On Oct. 6, Thaddeus Richardson was sentenced to 51 months in prison.  On Oct. 13, Angela Chaney was sentenced to 36 months in prison and Craig Lewis was sentenced to three years of probation.  On Oct. 20, Martin Jackson Sr. was sentenced to 12 months and one day in prison.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Polite commended special agents of IRS-Criminal Investigation and the U.S. Postal Inspection Service, who investigated the case and Assistant U.S. Attorneys Hayden Brockett and Dall Kammer of the Eastern District of Louisiana and Trial Attorney Lauren M. Castaldi of the Tax Division, who are prosecuting the case.

A Georgia real estate investor pleaded guilty today for his role in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Georgia.

Trent Gaines admitted that he and others conspired not to bid against one another at public real estate foreclosure auctions from October 2008 to November 2010 in Fulton County, Georgia, and from September 2006 to February 2011 in DeKalb County, Georgia.  Gaines also admitted to conspiring with others to use the mail to carry out a scheme to fraudulently acquire title to selected Fulton and DeKalb properties sold at public auctions, to make and receive payoffs and to divert money to co-conspirators that should have gone to mortgage holders and others.  The selected properties were then awarded to the conspirators who submitted the highest bids in private side auctions open only to Gaines and his co-conspirators.

“Today’s prosecution demonstrates the division’s continuing commitment to vigorously prosecute domestic cartels and fraud, and to obtain justice for victims of antitrust and fraud offenses,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division.  “The guilty plea is the 10th prosecution against defendants for bid rigging at public foreclosure auctions in Georgia.” 

According to documents filed with the court, the purpose of the conspiracies was to suppress and restrain competition and divert money to the conspirators that otherwise would have gone to pay off the mortgage and other holders of debt secured by the properties, and, in some cases, the defaulting homeowner.

“This case again illustrates not only the problems regarding bid rigging at real estate auctions in Georgia but also the federal efforts involved in shutting this type of criminal activity down,” said Special Agent in Charge J. Britt Johnson of the FBI’s Atlanta Division.  “The FBI reminds the public that such activity as seen in this case is a violation of federal law and, as such, the FBI will continue to work with the U.S. Department of Justice’s Antitrust Division in identifying, investigating and presenting for federal prosecution, those involved.”

Including Gaines, 10 cases have been filed as a result of the ongoing investigation being conducted by the Antitrust Division’s Washington Criminal II Section, the FBI’s Atlanta Division and the U.S. Attorney’s Office of the Northern District of Georgia.

Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions in Georgia should contact the Antitrust Division’s Washington Criminal II Section at 202-598-4000, call the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258 or visit www.justice.gov/atr/contact/newcase.htm.

The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force, which was established 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.  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. 

The Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants since fiscal year 2009.  For more information about the task force, please visit www.StopFraud.gov.

A former executive of a water treatment chemicals manufacturer has pleaded guilty for his role in a conspiracy to eliminate competition by fixing prices, rigging bids and allocating customers for liquid aluminum sulfate supplied to municipalities and pulp and paper companies in the United States.

Frank A. Reichl, of Flanders, New Jersey, admitted to agreeing not to compete for contracts for liquid aluminum sulfate, a coagulant used by municipalities to treat drinking and waste water, and by pulp and paper companies in their manufacturing processes. 

“By agreeing not to disturb each other’s ‘historical’ business, Reichl and his co-conspirators cheated municipalities and paper companies out of competitive prices for their supplies of liquid aluminum sulfate, a key water treatment chemical,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division.  “We continue to work with our partners at the FBI to hold offenders in this industry criminally accountable.”

According to documents filed with the court, from 1997 until July 2010, Reichl and his co-conspirators met to discuss each other’s liquid aluminum sulfate business, submitted intentionally losing bids to favor the intended winner of the business, withdrew inadvertently winning bids and discussed prices to be quoted or bid to customers.  Reichl is the first defendant to plead guilty to participating in this decade-and-a-half-long conspiracy.

“Reichl and his co-conspirators colluded to circumvent competitive bidding and independent pricing for liquid aluminum sulfate contracts, and conspired to raise prices by submitting artificially inflated bids to their customers,” said Special Agent in Charge Richard M. Frankel of the FBI’s Newark Division.  “They also allocated customers in furtherance of their collusive scheme.  By agreeing to violate both the spirit and the letter of the competitive process, Reichl and others defrauded municipalities as well as pulp and paper companies out of millions of dollars.”

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

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

The Department of Justice today announced the release of an Office of Community Oriented Policing Services (COPS Office) report that addresses ambushes and violence against police officers.  The report, Ambushes of Police: Environment, Incident Dynamics, and the Aftermath of Surprise Attacks against Law Enforcement, analyzes ambushes of the police and provides new information that can guide police executives, trainers, supervisors, policymakers and researchers in addressing the issue. 

“Law enforcement officers regularly put their lives on the line in order to protect our communities and serve our nation,” said Attorney General Lynch.  “As part of our work to support these brave men and women, the Department of Justice is committed to extensive efforts aimed at preventing violent action against the police.  This report will serve as a critical base of knowledge as we work to defend our law enforcement and ensure our officers’ safety.”

“Every day, law enforcement officers serve this nation with distinction by protecting all of us from harm,” said Director Ronald Davis of the COPS Office.  “That protection, however, comes at great risk to the men and women who courageously don the uniform and wear the badge.  We know that the murder of a police officer in the line of duty is an assault on the entire community.  When that murder is a result of an ambush, it also attacks the very foundation of our democracy.  We must act to address this persistent threat.  This ambush report is an important first step.”

The report, compiled by CNA, investigates methods for preventing, responding to, and effectively responding to ambushes of police officers.  Ambush attacks against law enforcement officers remain a threat to officer safety, with the number of attacks per year holding steady since a decline in the early 1990s and the proportion of fatal attacks on officers attributable to ambushes increasing.

The report examines the environmental factors prevalent in ambush situations, and considers factors that may impact the survivability of an ambush assault.  It also examines how police organizations can learn in the wake of these critical incidents and aid in the development and evaluation of policies and training programs aimed at improving outcomes following an ambush assaults against an officer.

The report, Ambushes of Police: Environment, Incident Dynamics, and the Aftermath of Surprise Attacks against Law Enforcement, is available here: https://cops.usdoj.gov/RIC/ric.php?page=detail&id=COPS-P340.

The COPS Office is a federal agency responsible for advancing community policing nationwide.  Since 1995, the COPS Office has invested more than $14 billion to advance community policing, including grants awarded to more than 13,000 state, local and tribal law enforcement agencies to fund the hiring and redeployment of more than 126,000 officers and provide a variety of knowledge resource products including publications, training and technical assistance.  For additional information about the COPS Office, please visit www.cops.usdoj.gov.

Report Highlights Four Police Departments with Effective Programs

The Department of Justice today announced the release of a new report that focuses on advancing the health and safety of police officers across the country.  The publication, Health, Safety, and Wellness Program Case Studies in Law Enforcement, focuses on the innovative approaches to promoting officer safety and wellness taken by four police agencies.  The report was released by the Department of Justice’s Office of Community Oriented Policing Services (COPS Office).

“The health and wellness of law enforcement officers is essential to public safety,” said Attorney General Lynch.  “In order to ensure that our communities are kept as secure as possible, we must provide the officers who serve them with the tools they need to protect their health, ensure their well-being, and manage the rigors of their difficult work.  The case studies in this report offer an important guide as we seek to support and care for men and women who risk their lives for us every day.”

“The safety and well-being of our police officers are as important to community policing and public safety as are building community trust and confidence,” said Director Ronald Davis of the COPS Office.  “We know police work is tough, stressful, and dangerous.  Officers are put in dangerous situations every day.  We must make police officer wellness and safety a top priority.”

The four case studies presented in the publication offer an opportunity to better understand the significance and value that officer wellness programs present in successfully reducing officer sickness, injuries and deaths associated with poor health or traffic-related accidents.  The case studies serve as models for safety, health and wellness programs and each offers practical strategies that have shown positive results.  The four law enforcement agencies featured in this publication are the Boca Raton Police Department, the Prince George’s County Police Department, the Fairfax County Police Department and Reno Police Department.

The report is the product of the Attorney General’s Officer Safety and Wellness Group, led by the COPS Office and Bureau of Justice Assistance, in partnership with the Major Cities Chiefs Association.  The group is comprised of representatives from police associations and unions, federal government agencies, universities and local law enforcement agencies, with additional subject matter experts and guest presenters with expertise on specific topics. 

The publication, Health, Safety, and Wellness Program Case Studies in Law Enforcement, is available here: https://cops.usdoj.gov/RIC/ric.php?page=detail&id=COPS-P332.

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

Attorney General Lynch to Launch Phase Two of Six-City Community Policing Tour Highlighting Jurisdictions that Effectively Implement Recommendations in the 21st Century Policing Guidebook

The Department of Justice today released a new resource guide called The President’s Task Force on 21st Century Policing Implementation Guidebook, which outlines strategies to help communities, law enforcement and local government implement recommendations in the President's Task Force on 21st Century Policing Report.  President Obama announced the new guidebook today at the International Association of Chiefs of Police Convention in Chicago.   

As part of the announcement, the Attorney General will launch Phase Two of the Justice Department’s Community Policing Tour.  Each stop along the six-city tour will highlight a jurisdiction that is effectively implementing one of the six pillars outlined in the task force guidebook.

“The Department of Justice is dedicated to building trust between law enforcement officers and the communities they serve; enlisting the public’s assistance in reducing crime; and creating the stronger and safer communities that all Americans deserve,” said Attorney General Loretta E. Lynch.  “This implementation guide offers a crucial blueprint for elected officials, law enforcement officers, and community leaders alike as they work to put important policies and reforms into practice across the country.”

“The President’s Task Force on 21st Century Policing Implementation Guide highlights specific actions for local elected and appointed government officials, law enforcement agencies, communities and other stakeholders to support a comprehensive approach to reduce crime and build trust and legitimacy,” said Director Ronald Davis of the Office Community Oriented Policing Services (COPS Office).  “Success will require collaboration and partnerships among these groups.”

Guidebook Summary on 21st Century Policing: Five Ways Stakeholder Groups Can Implement the Task Force’s Recommendations

Communities

1. Engage with local law enforcement; participate in meetings, surveys, and other activities.

2. Participate in problem-solving efforts to reduce crime and improve quality of life.

3. Work with local law enforcement to ensure crime-reducing resources and tactics are being deployed that mitigate unintended consequences.

4. Call on state legislators to ensure that the legal framework does not impede accountability for law enforcement.

5. Review school policies and practices, and advocate for early intervention strategies that minimize involvement of youth in the criminal justice system.

Law enforcement

1. Review and update policies, training, and data collection on use of force, and engage community members and police labor unions in the process.

2. Increase transparency of data, policies, and procedures.

3. Call on the POST Commission to implement all levels of training.

4. Examine hiring practices and ways to involve the community in recruiting.

5. Ensure officers have access to the tools they need to keep them safe

Local government

1. Create listening opportunities with the community.

2. Allocate government resources to implementation.

3. Conduct community surveys on attitudes toward policing, and publish the results.

4. Define the terms of civilian oversight to meet the community’s needs.

5. Recognize and address holistically the root causes of crime.

The President’s Task Force on 21st Century Policing was charged by President Barack Obama with identifying best practices and offering recommendations on how policing practices can promote effective crime reduction while building public trust.  The task force submitted its final report to the President in May 2015.  In July 2015, the White House and the COPS Office convened a forum of elected officials, police executives and community members to jointly discuss the task force recommendations and share strategies for implementation.

The implementation guide is a companion to the task force report and is informed by strategies shared at the July convening and feedback from the field.  It provides guidance on implementing the task force’s 59 recommendations and 92 action items and serves as a resource for law enforcement, local government, community members and other stakeholders interested in concrete examples of how to turn the task force recommendations into action. 

The President’s Task Force on 21st Century Policing Implementation Guidebook is available here: https://cops.usdoj.gov/RIC/ric.php?page=detail&id=COPS-P341.  Further information about the President’s Task Force on 21st Century Policing is available here: https://www.cops.usdoj.gov/default.asp?Item=2761.

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

APL Limited has agreed to pay the government $9.8 million to resolve allegations that it violated the False Claims Act in connection with a contract to provide GPS tracking of shipping containers in Afghanistan, the Justice Department announced today.  APL, an ocean carrier based in Scottsdale, Arizona, is a wholly-owned American subsidiary of Singapore-based Neptune Orient Lines Limited.  

The Department of Defense contract required APL to affix a satellite tracking device to each shipping container transported from Karachi, Pakistan to U.S. military bases in Afghanistan when the Department of Defense (DOD) requested the tracking services.  The United States alleges that APL billed the DOD for tracking services despite knowing that the tracking devices completely or partially failed to transmit data, or were not affixed to shipping containers.  The government also claims that APL attached a single satellite tracking device to two shipping containers despite being required to affix one device to every container.

“Today’s settlement demonstrates our commitment to ensure that contractors doing business with the military perform their contracts honestly,” said Principal Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “We will continue to ensure that there are appropriate consequences for those who knowingly fail to live up to their bargain and misuse taxpayer funds.”

“The U.S. Attorney’s Office will continue to work with our partners to protect the public fisc from government contractors who fail to deliver what they promise,” said Acting U.S. Attorney Brian J. Stretch of the Northern District of California.

“Thanks to the collaborative efforts of many U.S. law enforcement professionals, APL is today being held accountable for their actions,” said Director Frank Robey of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit.  “I applaud all those responsible for their continued pursuit of those who attempt to take advantage of the U.S. military through false claims for services that were not provided.”

The settlement with APL was the result of a coordinated effort among the Civil Division’s Commercial Litigation Branch; the U.S. Attorney’s Office of the Northern District of California, Affirmative Civil Enforcement Unit; DOD’s Defense Criminal Investigative Service; the Army’s Criminal Investigation Command and DOD’s Defense Contract Audit Agency.

The claims resolved by today’s civil settlement are allegations only; there has been no determination of liability.

Under a settlement with the Department of Justice and the Environmental Protection Agency (EPA), the Municipality of San Juan has agreed to make substantial upgrades to its storm sewer systems.  The upgrades and related cleaning activities are aimed at eliminating or minimizing daily discharges of large volumes of raw sewage and will minimize discharges of other pollutants into nearby water bodies, including the San Juan Bay Estuary and the Martin Peña Canal.  The estimated cost of the upgrades and actions over the life of the agreement is $180 million.

“The residents of San Juan deserve a better storm sewer system, one that does not expose them to the serious health risks posed by untreated sewage,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division.  “The requirements of this settlement are good for the environment and necessary for the long-term health and safety of local waterways and communities.”          

“Billions of gallons of raw sewage are released every year, threatening public health and the environment in San Juan,” said Regional Administrator Judith A. Enck for EPA.  “This legally binding agreement will ensure that this sad legacy of sewage pollution is finally addressed.”

Storm water runoff in urban areas is collected through separate storm sewer systems and is discharged into local waterways.  When rain falls on roofs, streets and parking lots, the water cannot soak into the ground and carries trash, bacteria, heavy metals and other pollutants into streams, often damaging health.  In addition, property and infrastructure can be damaged by storm water runoff due to erosion.  The primary method to control these storm water discharges is through the use of effective practices to protect water quality under a storm water permit issued under the Clean Water Act.  Storm water permits do not authorize the discharge of raw sewage, which has been occurring in San Juan for years.

In addition to documenting daily discharges of untreated sewage, EPA documented that the Municipality of San Juan failed to implement its own storm water management plan, including failing to establish storm sewer maps to facilitate the detection of illegal discharges and failing to implement a program to detect illegal discharges and failure to provide routine cleaning and maintenance to its system.  Between 2008 and 2013, EPA documented that pollutants, including millions of gallons of untreated sewage, were being discharged every day from the Municipality of San Juan’s system.  In addition to collecting rain from streets, EPA determined that San Juan’s storm sewer system has been collecting sewage from homes through pipes that have been improperly connected to the storm sewers.  EPA also determined that infiltration from cracked sanitary systems and direct connections of sanitary sewers to storm sewers have resulted in additional contributions of untreated sewage to the storm sewer systems.

The waters receiving the untreated sewage include those that are classified for activities where the human body may come into direct and indirect contact with the water, such as fishing, boating, swimming, wading and/or other recreational and commercial activities.  Untreated sewage can carry bacteria, viruses and other harmful pollutants that can cause a number of illnesses.  Direct and indirect human exposure to or contact with untreated sewage and contaminated waters discharged on a daily basis presents an imminent and substantial endangerment to human health and welfare.

Under this legal agreement, the Municipality of San Juan will come into compliance with their storm water permit, develop and implement a storm water management program to prevent pollutants from entering and being discharged from their storm sewer systems and to develop and implement a plan to identify and address issues within their systems, including eliminating illegal discharges.  Illicit connections and discharges in some areas of San Juan must be eliminated within 10 years and in other areas within 14 years.  Within eight years, the Municipality of San Juan must also submit a schedule for the completion of an investigation of and a design plan for eliminating all illegal connections and discharges to its municipal separate storm sewer systems in the remainder of the city of San Juan and San Juan must also implement the plan and complete construction within an EPA-approved schedule.

Additional requirements under the agreement include:

• Capital improvements: The Municipality of San Juan must install, inspect, maintain and replace warning signs at sewer outfalls, submit a vacuum truck sludge disposal plan and submit standard operating procedures for pump stations.  The municipality must also submit a plan to address and abate backflow from the receiving waters into the storm sewer system east of the Stop 18 Pump Station.

• Asset management program: The Municipality of San Juan will develop an asset management program, including protocols and operating procedures for inspection, cleaning and repair of sewer infrastructure; consistently clean the sewer system; and submit a routine cleaning schedule and checklist to the EPA for review.

• Spill prevention control and countermeasures: San Juan will develop and implement a spill prevention control and countermeasures plan, as well as a spill control plan.

• Water quality monitoring and outfall inventory program: The municipality will sample and monitor water quality, maintain an electronic record of information on system outfalls and complete an inventory of all of its outfalls in the city of San Juan within three years.

• Warning Signs: The Municipality of San Juan will inform the public through warning signs posted at discharge points and through a public education program on the dangers of being exposed to these discharges.

• Urgent Action Registry: The Municipality of San Juan will maintain an Urgent Action Registry that will track all complaints by government agencies and individuals of illegal discharges into San Juan's storm sewer systems.  San Juan will address these complaints within one to three years from the date a complaint is made.  This is an innovative tool to address the multiple traditionally unaddressed complaints to bring relief to affected residents.

The Municipality of San Juan will consider green infrastructure projects to comply with obligations under the agreement.  Green infrastructure is an environmentally friendly technique to manage storm water that uses vegetation, soils, and natural processes to manage water and create healthier, more resilient urban environments.

Discharges of untreated sewage from San Juan’s storm sewers disproportionately affect disadvantaged communities in the municipality, leading to the prevalence of gastrointestinal symptoms in areas such as the neighborhoods adjacent to the Martín Peña Canal.  By requiring the municipality to prevent exposure to untreated sewage, EPA is advancing environmental justice in the community through the fair treatment and meaningful involvement of all people, regardless of race or income, in the environmental decision-making process.

The settlement was lodged today in the U.S. District Court of Puerto Rico, and is subject to a 30-day public comment period and approval by the federal court.  The settlement will be available for viewing at www.justice.gov/enrd/Consent_Decrees.html