District Not Recorded

The Department of Justice announced today that Pitney Bowes Presort Services Inc. (Pitney Bowes) has agreed to pay the United States $9.4 million to resolve allegations that it underpaid postage for mail processed at its Reading, Pennsylvania, facility by claiming discounts to which it was not entitled.  Pitney Bowes, which is based in Omaha, Nebraska, helps prepare mailings for large mailers by, among other things, gathering, sorting and presenting the mail to the U.S. Postal Service. 

“Those who obtain government benefits are expected to comply with the terms of those benefits,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “This settlement demonstrates that there will be consequences for those who do not live up to their obligations.”

The settlement announced today resolves allegations that Pitney Bowes claimed discounted postage rates for mail that failed to comply with the Move Update standard, which requires that mail be updated with change-of-address information provided by the Postal Service.  Pitney Bowes was obligated to ensure that mail it submitted on behalf of its customers at discounted postage rates complied with Move Update, by either updating addresses on the mail directly or having its customers perform the updates.  The Postal Service offered lower postage rates to Pitney Bowes for complying with Move Update and other requirements.

“When mailers don’t adhere to Move Update standards it negatively affects the entire mailing community,” said Inspector in Charge David W. Bosch of the U.S. Postal Inspection Service’s (USPIS) Philadelphia Division.  “The U.S. Postal Inspection Service will continue to investigate mailers who fail to comply with postal regulations.”

This matter was jointly investigated by USPIS and the Civil Division’s Commercial Litigation Branch.  The claims settled in this case are allegations only, and there has been no determination of liability.

Two residents of Hammond, Louisiana, were sentenced for their involvement in a stolen identity tax fraud 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.

Angela Chaney, 43, was sentenced by U.S District Judge Jay C. Zainey of the Eastern District of Louisiana to serve 36 months in prison to be followed by three years of supervised release.  Craig Lewis, 40, was sentenced by Judge Zainey to serve three years of probation.  Chaney and Lewis each pleaded guilty to one count of a multi-object conspiracy to defraud the United States and to commit theft of public money and mail fraud on July 2 and June 23, respectively.  Chaney additionally pleaded guilty to one count of aggravated identity theft.  Their restitution to the Internal Revenue Service (IRS) will be determined at a later date.

According to court documents, Chaney, Lewis and their 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 were opened by the co-conspirators.  Once the checks were received, Chaney, Lewis and their co-conspirators brought checks to others who 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; Thaddeus Richardson, 49; and others with conspiracy to defraud the United States, conspiracy to commit money laundering, conspiracy to commit mail fraud and conspiracy to commit theft of public money.  Corey Lewis was also charged with three counts of theft of public money and three counts of aggravated identity theft.  Mitchell was sentenced to serve 33 months in prison on Sept. 15, Corey Lewis was sentenced to serve 75 months in prison on Sept. 29 and Richardson was sentenced to serve 51 months in prison on Oct. 6.  All of the remaining defendants in this case have pleaded guilty to various charges and are awaiting sentencing.

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 Castaldi of the Tax Division, who are prosecuting the case.

The Justice Department announced today the filing of a lawsuit against Nebraska Beef Ltd., which is headquartered in Omaha, Nebraska, for failing to comply with the terms of a settlement agreement that the parties entered to resolve a civil rights investigation.

The complaint alleges that Nebraska Beef entered into a settlement agreement with the Justice Department on Aug. 24, 2015, to resolve the department’s investigation into whether Nebraska Beef was discriminating against work-authorized non-citizens.  The agreement requires Nebraska Beef to pay $200,000 as a civil penalty, and also to compensate affected workers who present valid claims for backpay, among other terms.  Although Nebraska Beef’s civil penalty payment was due ten business days after the agreement was signed by both parties, the company has failed to make any payments.  Nebraska Beef has stated that it will not comply with almost all of the terms of the agreement because it feels that the department’s press release announcing the agreement should have been worded differently.  The parties’ agreement, however, does not contain any terms or provisions restricting the language in the department’s press release. 

“The Department of Justice will take swift action not only when an employer discriminates against its employees, but also when an employer fails to live up to its end of an agreement,” said Principal Assistant Attorney General Vanita Gupta, head of the Civil Rights Division.  “It is important that employers understand and abide by their duties not to engage in discriminatory practices, and honor their commitments under a settlement.”          

The Justice Department’s Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) is responsible for enforcing the anti-discrimination provision of the Immigration and Nationality Act (INA), which was the subject of the department’s investigation of Nebraska Beef.  Among other things, the statute prohibits citizenship status and national origin discrimination in hiring, firing or recruitment or referral for a fee; unfair documentary practices; retaliation; and intimidation.  The INA’s anti-discrimination provision prohibits employers from discriminating against people with permission to work in the United States because of their citizenship status, including by asking non-citizens to present more or different documents than necessary to prove their authorization to work in the United States.     

For more information about protections against employment discrimination under immigration laws, call OSC’s worker hotline at 1-800-255-7688 (1-800-237-2515, TTY for hearing impaired); call OSC’s employer hotline at 1-800-255-8155 (1-800-237-2515, TTY for hearing impaired); sign up for a free webinar at www.justice.gov/crt/about/osc/webinars.php, email osccrt@usdoj.gov; or visit OSC’s website at www.justice.gov/crt/about/osc.   

Defendant Cashed Fraudulent Tax Refund Checks Totaling More than $1.3 Million

A Columbus, Georgia, resident pleaded guilty to one count of operating an unlicensed money transmitting business, Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Michael J. Moore of the Middle District of Georgia announced today.

According to court documents, between February 2013 and March 2014, Sawan Shah, aka Sunny, 43, owned, operated and managed several money transmitting companies in the Columbus area.  Shah offered check-cashing services to the public, including cashing checks that exceeded $1,000.  Shah knew that he and his companies were required to be registered with Financial Crimes Enforcement Network (FinCEN) and with the state of Georgia.  Neither Shah nor any of the businesses he controlled were registered with FinCEN or the state of Georgia as a money transmitting business or as a check cashier.

Several individuals approached Shah about cashing tax refund checks that were issued in the names of other individuals.  Shah agreed to do so and did not require proof of identification for the individuals listed on the checks.  Shah charged fees between 10 and 30 percent of the check’s worth, due to his knowledge that the checks were involved in tax fraud.  In 2013 and 2014, Shah cashed approximately 567 federal tax refund checks that totaled $1,357,476.18.  Those refund checks were the result of fraudulent claims for refund submitted in the names of stolen identities. 

A sentencing hearing has been scheduled for Jan. 26, 2016.  Shah faces a statutory maximum sentence of five years in prison.  Shah agreed to a forfeiture order in the amount of $1,357,476.18.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Moore commended special agents of Internal Revenue Service-Criminal Investigation and the U.S. Secret Service, who investigated the case, and Trial Attorney Michael C. Boteler of the Tax Division and Assistant U.S. Attorney Crawford L. Seals of the Middle District of Georgia, who are prosecuting the case. 

Additional information about the Tax Division and its enforcement efforts against stolen identity tax refund fraud may be found on the division’s website. 

El Departamento de Justicia anunció hoy la presentación de una demanda contra Nebraska Beef, Ltd., con sede en Omaha, Nebraska, por no cumplir con los términos de un acuerdo que las partes firmaron para resolver una investigación de violaciones de derechos civiles.

La demanda alega que Nebraska Beef firmó un acuerdo con el Departamento de Justicia el 24 de agosto del 2015 para resolver la investigación del Departamento sobre si Nebraska Beef estaba discriminando a inmigrantes no ciudadanos con autorización para trabajar. El acuerdo exige que Nebraska Beef pague $200,000 en sanciones civiles y que indemnice a los trabajadores afectados que presenten reclamaciones válidas para pagos retroactivos, entre otros términos. Aunque las sanciones civiles de Nebraska Beef vencieron diez días después de que ambas partes firmaran el acuerdo, la compañía se negó a hacer el pago. Nebraska Beef ha declarado que no va a cumplir con casi ninguno de los términos del acuerdo porque sienten su opinión, el comunicado de prensa del Departamento que anunció el acuerdo debería haber sido redactado de otra manera. No obstante, el acuerdo entre las partes no contiene ningún término o disposición que restrinja el lenguaje del comunicado de prensa del Departamento. 

"El Departamento de Justicia actuará con rapidez, no sólo cuando un empleador discrimina a sus empleados, sino también cuando un empleador no cumple con su parte de un acuerdo," dijo Vanita Gupta, Subprocuradora Prinicpal General y Directora de la División de Derechos Civiles del Departamento de Justicia. "Es importante que los empleadores entiendan y cumplan con sus obligaciones de no incurrir en prácticas discriminatorias y que honren sus compromisos en virtud de un acuerdo."    

La Oficina del Consejero Especial para Prácticas Injustas en el Empleo Relacionadas a Inmigración (OSC, por sus siglas en inglés) del Departamento de Justicia es responsable de hacer cumplir la disposición antidiscriminatoria de la ley de Inmigración y Nacionalidad (INA, por sus siglas en inglés), que fue objeto de investigación del Departamento de Nebraska Beef. Entre otras cosas, la ley prohíbe la discriminación por motivos del estatus de ciudadanía u origen nacional en la contratación, el despido, o el reclutamiento o la referencia por comisión; prácticas documentales injustas; las represalias o la intimidación. La disposición antidiscriminatoria de la INA prohíbe que los empleadores discriminen a las personas con permiso para trabajar en los Estados Unidos debido a su estatus de ciudadanía, lo que incluye pedir a los no ciudadanos que presenten documentos adicionales o diferentes a los que sean necesarios para probar su autorización para trabajar en los Estados Unidos.

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

A Washington, D.C., Metropolitan Police Department Officer was convicted today in the U.S. District Court for the District of Columbia of corruptly endeavoring to obstruct the Internal Revenue Service (IRS), announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.

Ishmeal Heru-Bey, formerly known as Jamal Adams, of Glenarden, Maryland, was convicted by a federal jury after a five-day trial. 

According to the evidence presented at trial, Heru-Bey failed to file individual income tax returns on a timely basis for the years 2005 through 2012.  To prevent the Metropolitan Police Department from withholding federal income taxes from his wages and paying them over to the IRS, Heru-Bey submitted three false IRS Forms W-4 (Employee’s Withholding Allowance Certificates) on which he falsely claimed he was exempt from income tax withholding.  After Heru-Bey was indicted on tax charges in March 2015, he filed false U.S. Individual Income Tax Returns for tax years 2011 and 2014 on which he fraudulently claimed deductions relating to unreimbursed employee expenses, including expenses for uniforms, dry cleaning, vehicle mileage and meals.  The government introduced evidence at trial that proved Heru-Bey was not entitled to claim these expenses because he was on paid administrative leave from the Metropolitan Police Department during those years and therefore had no police powers.  The government presented evidence that the resulting tax loss for the years 2005 through 2011 and for 2014 exceeded $90,000. 

Sentencing is scheduled on Jan. 7, 2016, before U.S. District Judge James E. Boasberg of the District of Columbia, who presided over the trial of the case.  The count of conviction carries a statutory maximum sentence of three years in prison and a $250,000 fine.

Acting Assistant Attorney General Ciraolo thanked the special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Thomas Jankowski, who investigated the case, and Trial Attorneys Jeffrey A. McLellan and Melissa S. Siskind of the Tax Division, who prosecuted the case.

     ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that defendant CORINNA CONCEPCION, who was convicted at the trial of  U.S. v. Francisco Arias, Eder Cortez-Zelaya and Corinna Concepcion in the District Court of Guam, was sentenced today.

     CORINNA CONCEPCION,  age 44, from Agat, was sentenced by Chief Judge Frances Tydingco-Gatewood, to 169 months imprisomnent for conspiracy to distribute methamphetan1ine (ice) and 169 months imprisonment for money laundering.  Both sentences are to be served concurrently.

     CORINNA CONCEPCION organized her husband Lawrence Concepcion, her son-in­ law A.J. Santos, her nephew-in-law, Joshua Moye, and her friend Florentina Depamaylo to receive packages containing methamphetamine.  The packages were sent from Las Vegas, Nevada to Guam by her co-defendants  Francisco Arias and Eder Cortez-Zelaya.   All of her co­ defendants except for Arias and Cortez-Zelaya have been sentenced.  Aria and Cortez-Zelaya will be sentenced on November 2, 2015 in the U.S. District Court of Guam.

     U.S. Attorney Limtiaco stated, "Our community is not immune from the poison of methamphetamine.  This case illustrates the hard work our partners in law enforcement do every day to stop the distribution of methamphetamine into Guam.  This conviction resulted from the concerted efforts of law enforcement pa1tners in the Organized Crime Drug Enforcement Task Force (OCDETF) investigation, a focused multi-agency, multi-jurisdictional  task force investigating and prosecuting the most significant drug trafficking organizations throughout the United States by leveraging the combined expertise of federal , state and local law enforcement agencies."

     This OCDETF investigation involved federal agents and local law enforcement officers of the U.S. Postal Inspection Service (USPIS), Drug Enforcement Administration (DEA), U.S. Department of Homeland Security Investigations (HSI), Guam Police Department (GPD), Guam Customs and Quarantine Agency (GCQA), Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF), U .S. National Oceanic Atmosphere Administration (NOAA), and U.S. Coast Guard Criminal Investigative Service (CGIS).

The United States filed a complaint against a Western New York contracting company, and its owners and an employee, alleging that they submitted false claims for federal contracts intended for service-disabled, veteran-owned small businesses, the Department of Justice announced.

The lawsuit was filed in U.S. District Court in Buffalo, New York, against Strock Contracting, Inc., Lee Strock, Kenneth Carter and Cynthia Ann Golde, who are alleged to have defrauded the government by falsely claiming eligibility for millions of dollars in contracts being awarded by the Air Force, Army, and Department of Veterans Affairs intended for service-disabled, veteran-owned (SDVO) small businesses. Strock largely owns and manages Strock Contracting, Inc., and Strock and Carter were officers and partial owners of Veteran Enterprises Company, Inc. (VECO), which was awarded the contracts. Golde was a former employee of VECO.

“Congress established the Service-Disabled, Veteran-Owned contracting programs to provide economic opportunities for veterans with service-connected disabilities and to help them participate in federal contracting and compete in the American economy,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.“The Justice Department is committed to making sure that only eligible companies participate in these types of federal contracting programs.”

“This country long ago developed policies designed to ensure that our wounded warriors have the ability to participate in government-funded programs, and to have their transition into the civilian economy eased to the extent possible,” said U.S. Attorney William J. Hochul Jr. of the Western District of New York.  “This lawsuit – the first of its kind in this District – sends a strong message that this office will vigorously protect programs designed to aid those who have already given so much in the honorable service of their country.”

Between 2008 and 2013, VECO obtained millions of dollars in federal contracts offered by the government to legitimate SDVO small businesses. The defendants won these contracts after claiming that VECO met all the requirements to be an SDVO small business. The government’s complaint alleges that VECO did not meet the requirements and was not entitled to such contracts.   In particular, the government alleges that VECO was a sham business whose day to day operations were controlled by Strock Contracting and the individual defendants.  For example, the government’s complaint alleges that the purported owner of VECO did not even have a key to VECO’s offices, which were located in the same building as Strock Consulting. 

The civil complaint is the result of an investigation by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Western District of New York, the Veteran’s Administration, Office of Inspector General, Northeast Regional Office; the U.S. Army Criminal Investigation Division Command, Major Procurement Fraud Unit (MPFU); the FBI; the Small Business Administration’s Office of Inspector General and Office of General Counsel and the Department of Defense, Office of the Inspector General, Defense Criminal Investigative Service.

The case is captioned United States v. Lee Strock, et al, No. 15-CV-887-G (W.D. New York).   The claims made in the complaint are allegations only, and there has been no determination of liability.

Cincinnati-based West Chester Hospital and its parent company, UC Health, have agreed to pay $4.1 million to settle allegations that West Chester Hospital violated the False Claims Act by billing federal health care programs for costs associated with medically unnecessary spine surgeries, the Justice Department announced today.       

“Hospitals have a responsibility to ensure that services provided at their facilities are medically necessary and appropriate before they bill federal health care programs for those services,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “When providers charge for medically unnecessary services, we will aggressively seek remedies under the False Claims Act.”

This settlement resolves allegations that West Chester Hospital knowingly submitted claims to Medicare and Medicaid for hospital charges related to medically unnecessary spine surgeries performed between 2009 and 2013 by Dr. Abubakar Atiq Durrani, a surgeon from Mason, Ohio, who had admitting privileges at West Chester Hospital.  Durrani was arrested in July 2013 and charged with health care fraud violations relating to allegations that he performed medically unnecessary spine surgeries on patients residing in Ohio and Kentucky.  Following his arraignment, Durrani allegedly fled the United States and remains a fugitive.  

Medicaid is funded jointly by the states and the federal government.  The state of Ohio and commonwealth of Kentucky paid for some of the Medicaid claims at issue and will receive approximately $72,000 of the settlement amount.       

“Federal health care programs cover only those procedures that are medically necessary,” said U.S. Attorney Carter M. Stewart of the Southern District of Ohio.  “The U.S. Attorney’s Office is committed to pursuing providers that seek payment for unnecessary medical procedures.”

“Any time greed replaces medical necessity as the primary factor in performing invasive procedures and surgeries on Medicare and Medicaid patients, our most vulnerable citizens – the elderly, disabled, and economically disadvantaged – are imperiled,” said Special Agent in Charge Lamont Pugh of the Health and Human Services Office of Inspector General (HHS-OIG).  “Medical businesses and physicians who unnecessarily place patients at risk to boost profits will be held accountable for their actions.”

The civil settlement resolves a lawsuit filed under the whistleblower provisions of the False Claims Act, which permit 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 Southern District of Ohio by former patients of Durrani and is captioned United States ex rel. Scott, et al. v. Durrani, et al.  As part of today’s resolution, the whistleblowers will receive approximately $800,000 from the federal share of the settlement.

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $25.2 billion through False Claims Act cases, with more than $16.1 billion of that amount recovered in cases involving fraud against federal health care programs.

This matter was investigated by the U.S. Attorney’s Office of the Southern District of Ohio and the Civil Division’s Commercial Litigation Branch, with assistance provided by HHS-OIG.  The claims resolved by this settlement are allegations only and there has been no determination of liability.

A Dallas resident and former chief executive officer and president of Arrow Trucking Company was sentenced today to serve seven and one-half years in prison for conspiracy to defraud the United States, bank fraud and tax evasion, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U. S. Attorney Danny C. Williams Sr. of the Northern District of Oklahoma.

“Corporate officers who willfully fail to report and pay over employment taxes and use that money for their own benefit are violating their obligations to their employees and the United States, stealing from the U.S. Treasury, and giving their companies an unfair advantage over competitors that comply with the law,”  said Acting Assistant Attorney General Ciraolo.  “Today’s sentence is a warning to those individuals who refuse to carry out their fiduciary duties that the United States will investigate them, prosecute them, and seek lengthy prison sentences for their crimes.”

“Today’s sentencing reflects the Northern District’s strong commitment to ensuring that justice is served,” said U.S. Attorney Williams. “Along with our law enforcement partners we will aggressively pursue financial crimes. Mr. Pielsticker conspired to defraud millions of dollars in part for his personal benefit including a wedding and Bentley and Maserati automobiles.”

James Douglas Pielsticker, 47, formerly of Tulsa, Oklahoma, pleaded guilty earlier this year to a two‑count superseding information charging him with one count of a dual-object conspiracy to defraud the United States and to commit bank fraud and one count of willfully attempting to evade his individual income taxes for the year 2009.  Chief U.S. District Court Judge Gregory K. Frizzell of the Northern District of Oklahoma also sentenced Pielsticker to serve three years of supervised release following his 90 month prison term and ordered him to pay $21,026,682.03 in restitution to the Internal Revenue Service (IRS) and the Transportation Alliance Bank (TAB).

According to the plea agreement and other court records, in 2009, Pielsticker and others conspired to defraud the United States by failing to account for and pay federal withholding taxes on behalf of Arrow Trucking Company and by making payments to Pielsticker outside the payroll system.  Pielsticker and others withheld Arrow Trucking Company employees’ federal income tax withholdings, Medicare and social security taxes, but did not report or pay over these taxes to the IRS, despite knowing they had a duty to do so. 

The conspirators paid for Pielsticker’s personal expenses with money from Arrow Trucking Company and submitted fraudulent invoices to TAB to induce the bank to pay funds to Arrow Trucking Company that were not warranted.  In total, the conspiracy caused a loss to the United States totaling more than $9.562 million.

Pielsticker also tried to evade his and his wife’s 2009 income taxes by causing Arrow Trucking Company to pay personal expenses on his behalf, causing his employer to underreport his wages and other compensation on his W-2 form, and by preparing a fraudulent draft joint 2009 U.S. Individual Income Tax Return.

“Today’s sentencing sends a strong message to corporate executives, officers, and business owners, that employment tax violations are a serious matter and will be vigorously pursued,” said Chief Richard Weber of IRS Criminal Investigation (CI).  “Mr. Pielsticker and his co-conspirators had a duty to pay more than $9 million in taxes withheld from Arrow Trucking employees yet they intentionally failed to do so.  IRS CI will aggressively pursue employment tax cases as these crimes not only hurt the government and local economy, they also hurt the employees and can have adverse effects on future social security or Medicare benefits.”

“Mr. Pielsticker abdicated his responsibility as the CEO of Arrow Trucking, and concocted a fraudulent scheme to mask his illegal activities,” said Special Agent in Charge Scott Cruse of the FBI. “In doing so Pielsticker chose his own personal extravagances over the needs of his employees, which ultimately led to Arrow Trucking closing its doors during the Christmas holidays, a time when all of us count on our paychecks the most. Today’s sentencing and monetary judgment is a reminder the FBI will pursue all criminals to the fullest extent of the law.”

Acting Assistant Attorney General Ciraolo and U.S. Attorney Williams commended the special agents of the IRS-CI and FBI, who investigated this case, and Assistant U.S. Attorneys Jeffrey A. Gallant and Catherine Depew of the Northern District of Oklahoma and Special Assistant U.S. Attorney and Trial Attorney of the Tax Division Charles A. O’Reilly, who prosecuted the case on behalf of the United States.

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

A California man was indicted today for his role in a mass mailing scam targeting holders of U.S. trademarks.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Eileen M. Decker of the Central District of California, Inspector in Charge Robert Wemyss of the United States Postal Inspection Service (USPIS) Los Angeles Division, Inspector in Charge David G. Bowers of the USPIS Washington Division and Special Agent in Charge Erick Martinez of the Internal Revenue Service Criminal Investigation (IRS-CI) Los Angeles Field Office made the announcement.

Artashes Darbinyan, 35, of Glendale, California, was charged in the Central District of California with 12 counts of mail fraud and four counts of aggravated identity theft.  His arraignment is scheduled for Oct. 19, 2015.

According to the indictment, from September 2013 through September 2015, Darbinyan operated and controlled the Trademark Compliance Center (TCC) (aka Trademark Compliance Office (TCO)), which purported to offer trademark registration and monitoring services.  The indictment alleges that, through TCC and TCO, Darbinyan sent mass solicitations to holders of trademarks recently registered with the U.S. Patent and Trademark Office offering, for a fee, to register the holders’ trademarks with U.S. Customs and Border Protection, which uses an Intellectual Property Rights (IPR) recordation database to screen and block imports of infringing products, and to send users of its service regular reports of potentially confusing or infringing marks.  According to the indictment, Darbinyan did not intend to, and did not, provide the promised services.

The indictment alleges that, to perpetuate the scheme and to avoid detection Darbinyan used the names of other persons to open accounts for TCC and TCO at “virtual office centers” (i.e., businesses that offered call answering and mail forwarding services) in the Washington, D.C., and Los Angeles areas, and directed employees of the Washington, D.C.-area virtual office centers to forward to the virtual office centers in the Los Angeles area mail addressed to TCC and TCO.  According to the allegations in the indictment, these forwarded envelopes contained payments from trademark holders for the aforementioned trademark registration and monitoring services, which Darbinyan retrieved and deposited into bank accounts that he controlled.

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

The case was investigated by the USPIS and IRS-CI.  The case is being prosecuted by Trial Attorney William E. Johnston of the Criminal Division’s Fraud Section.

Darbinyan Indictment

A federal grand jury in Covington, Kentucky, returned an indictment against one former and two current Japanese automotive executives for their alleged participation in a conspiracy to fix prices and rig bids for the sale of automotive body sealing products sold in the United States.

The indictment, filed today in the U.S. District Court of the Eastern District of Kentucky, charges Keiji Kyomoto, Mikio Katsumaru and Yuji Kuroda – all Japanese nationals – with conspiring to rig bids for and fix the prices of body sealing products sold to Honda Motor Company Ltd., Toyota Motor Corp. and certain of their subsidiaries and affiliates for installation in vehicles manufactured and sold in the United States and elsewhere.  Automotive body sealing products consist of body-side opening seals, door-side weather-stripping, glass-run channels, trunk lids and other smaller seals, which are installed in automobiles to keep the interior dry from rain and free from wind and exterior noises. 

“These executives conspired for years with their competitors to fix the prices of body sealing products sold to Honda and Toyota and installed in U.S. cars,” said Deputy Assistant Attorney General Brent Snyder of the Justice Department’s Antitrust Division.  “Today’s indictment is another reminder that antitrust violations are not just corporate offenses but also crimes by individuals.  The Antitrust Division will continue to vigorously prosecute executives who orchestrate their companies’ efforts to break the law.”

“The FBI is committed to aggressively investigating individuals who engage in criminal conduct that corrupts the global marketplace,” said Special Agent in Charge Howard S. Marshall of the FBI’s Louisville Division.  “We will continue our work with the Department of Justice Antitrust Division to uncover schemes aimed at creating an unfair competitive advantage by way of price fixing, bid rigging or other illegal means.”

The indictment alleges that Kyomoto, Katsumaru and Kuroda participated in the conspiracy from at least as early as September 2003 until at least October 2011.  For most of this period, Kyomoto resided in the United States and served as President of an unnamed joint venture with offices in Indiana and Michigan, which manufactured and sold automotive body sealing products. 

Katsumaru, who resided in Japan, served in multiple managerial positions during the conspiracy period, including Manager of the Sales and Marketing Division, for an unnamed company based in Hiroshima, Japan, that partially owned the joint venture and also manufactured and sold automotive body sealing products.  Kuroda, who resided in Japan, served as a sales branch manager at the same Hiroshima-based company for the entirety of the charged period.

According to the indictment, Kyomoto, Katsumaru and Kuroda each instructed subordinates at their respective companies to communicate with co-conspirators at other companies in order to allocate sales of, rig bids for and fix the prices of automotive body sealing products; were aware that employees under their supervision were engaging in such communications; and condoned such communications.  The indictment further alleges that Kyomoto attended meetings in the United States with co-conspirators during which Kyomoto and the co-conspirators reached agreements regarding sales of automotive body sealing products to Honda and Toyota.  The indictment also alleges that Katsumaru and Kuroda instructed and encouraged certain employees at their company to destroy evidence of the conspiracy.  Each individual faces a maximum penalty to 10 years in prison and a $1 million criminal fine if convicted. 

Today’s charge is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by the Antitrust Division’s criminal enforcement sections and the FBI.  A total of 58 individuals and 37 companies have been charged and have agreed to pay more than $2.6 billion in criminal fines.  This indictment was brought by the Antitrust Division’s Chicago Office and the FBI’s Louisville Field Office, Covington Resident Agency, with the assistance of the FBI’s International Corruption Unit and the U.S. Attorney’s Office of the Eastern District of Kentucky.  Anyone with information about anticompetitive conduct in the automotive parts industry should contact the Antitrust Division’s Citizen Complaint Center at 888-647-3258, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Louisville Field Office at 502-263-6000.

A Miami-area pharmacy owner was sentenced today to 46 months in prison for his role in the submission of more than $1.8 million in fraudulent claims to Medicare.

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

Evelio Fernandez Penaranda, 47, of Miami, pleaded guilty to one count of health care fraud on July 23, 2015.  In addition to today’s prison sentence, Chief U.S. District Court Judge K. Michael Moore of the Southern District of Florida ordered Penaranda to pay $1,876,241 in restitution. 

Penaranda owned Naranja Pharmacy Inc.  According to admissions made in connection with Penaranda’s guilty plea, between May 2013 and March 2014, Naranja Pharmacy submitted fraudulent claims to Medicare for prescription drugs that were not prescribed by physicians, not medically necessary and not provided to Medicare beneficiaries.  In connection with his guilty plea, Penaranda admitted that Naranja Pharmacy submitted these false claims by obtaining and using the unique identifying information of Medicare beneficiaries and doctors without their consent.

Penaranda also admitted that he controlled Naranja Pharmacy’s bank accounts, and that he transferred the payments received from Medicare to himself and his accomplices.  According to admissions made in connection with Penaranda’s plea, during the course of the scheme, Naranja Pharmacy submitted over $1.8 million in false claims for prescription drugs to the Medicare program.

The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office of the Southern District of Florida.  The case was prosecuted by Trial Attorney Nicholas E. Surmacz of the Criminal Division’s Fraud Section.

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

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

The Department of Justice announced today that Schaffhauser Kantonalbank (SHKB) 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, SHKB 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.

SHKB is a regional Swiss bank that was founded in 1883 and operates out of its headquarters in Schaffhausen, Switzerland. All seven of SHKB’s locations are within the Canton of Schaffhausen, and all branches are within a radius of 10 miles of its headquarters. As a cantonal bank, SHKB is obliged to service primarily the residents of the Canton of Schaffhausen and the surrounding areas.

Through its managers, employees and others, SHKB knew or had reason to know that some U.S. taxpayers who had opened and maintained accounts at SHKB were not complying with their U.S. income tax and reporting obligations. SHKB offered a variety of traditional Swiss banking services that it knew could assist, and that did in fact assist, U.S. clients in the concealment of assets and income from the Internal Revenue Service (IRS).  One such service was hold mail, through which SHKB would hold all mail correspondence for a particular client at SHKB. It also offered code name or numbered account services, where SHKB would allow the accountholder to replace his or her identity with a code name or number on bank statements and other documentation sent to the client. These services helped U.S. clients to eliminate the paper trail associated with the undeclared assets and income they held at SHKB in Switzerland. By accepting and maintaining such accounts, SHKB assisted some U.S. taxpayers in evading their U.S. tax obligations.

SHKB opened and maintained accounts for U.S. taxpayers who had left other banks being investigated by the department without ensuring that each such account was compliant with U.S. tax law from the account’s inception at SHKB. SHKB also arranged for the issuance of credit, debit or travel cards to the beneficial owners of some U.S.-related accounts, and offered travel cash cards, on which a client could load up to 10,000 Swiss francs, U.S. dollars or euros from his or her SHKB bank account by instructing SHKB by telephone, mail or e-mail.  The client could then use the card for purchases or remit unused balances back to the SHKB account. Use of these cards by U.S. persons facilitated their access to or use of undeclared funds on deposit at SHKB.

SHKB issued checks, including series of checks, in amounts of less than $10,000 that were drawn on accounts of U.S. taxpayers, even though SHKB knew, or had reason to know, that the withdrawals were made to avoid triggering scrutiny under the U.S. currency transaction reporting requirements.  Furthermore, since Aug. 1, 2008, SHKB processed significant cash withdrawals for at least 15 U.S. taxpayers at or around the time the clients’ accounts were closed, even though SHKB knew, or had reason to know, the accounts contained undeclared assets. For example, in November 2009, SHKB processed a U.S. taxpayer’s cash withdrawal of more than 400,000 euros when SHKB closed the account.

In the period since Aug. 1, 2008, SHKB held one structured account that was a U.S.-related account with maximum assets under management of approximately $11.5 million. The nominal accountholder was a foundation in Liechtenstein, but the true owner was a U.S. person, which aided and abetted the client’s ability to conceal an undeclared account from the IRS.

In 2001, SHKB entered into a Qualified Intermediary Agreement (QI Agreement) with the IRS.  The QI Agreement was designed to help ensure that, with respect to U.S. securities held in an account at SHKB, non-U.S. persons were subject to the proper U.S. withholding tax rates and that U.S. persons holding U.S. securities were properly paying U.S. tax. In general, if an accountholder wanted to trade in U.S. securities and avoid mandatory U.S. tax withholding, the QI Agreement required SHKB to obtain the consent of the accountholder to disclose the client’s identity to the IRS. The QI Agreement required SHKB to obtain IRS Forms W-9 and to undertake IRS Form 1099 reporting for new and existing U.S. clients engaged in U.S. securities transactions.

In 2002, SHKB forbade the purchasing or holding of U.S. securities for U.S. persons, and it also required all U.S.-domiciled persons to provide a hold-mail instruction to SHKB. As a practical matter, this policy allowed SHKB to avoid having to disclose the identities of U.S. clients to the IRS under its QI Agreement. SHKB chose to continue to service U.S. clients without disclosing their identities to the IRS and without considering the impact of U.S. criminal law on that decision. Until May 2012, SHKB did not require all of its U.S. clients to provide a signed IRS Form W-9 and to confirm whether their accounts were disclosed to the IRS.

Through the Swiss Bank Program, SHKB has cooperated with the department and provided information to the U.S. government about its cross-border business with U.S.-related accounts. Following SHKB’s efforts, approximately 24 of its U.S.-related accounts have thus far entered into an IRS Voluntary Disclosure Program or Initiative. Moreover, SHKB has obtained waivers of Swiss bank secrecy for approximately 87 percent of its U.S.-related accounts and has provided customer names for those accounts to the U.S. government.

Since Aug. 1, 2008, SHKB held a total of 182 U.S.-related accounts with approximately $84.5 million in assets under management.  SHKB will pay a penalty of $1.613 million.

While U.S. accountholders at SHKB 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 SHKB 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 Kimberle E. Dodd, 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 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.

SHKB Executed NPA and SOF (897.82 KB)

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 Fulton and DeKalb counties, Georgia.

Morris Podber admitted that he conspired with others not to bid against one another at public real estate foreclosure auctions on selected properties.  After the public foreclosure auctions, Podber admitted that he and his co-conspirators would divvy up the targeted properties in private side auctions, open only to the conspirators.  Podber admitted to conspiring to use the mail to carry out their fraud, which included making and receiving payoffs and diverting money to co-conspirators that should have gone to the mortgage holders and others.

“This is the ninth real estate investor held accountable for bid rigging at public foreclosure auctions in Georgia,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division.  “We will continue to root out anticompetitive conduct at foreclosure auctions and obtain justice for homeowners and lenders.”

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.  Podber admitted to participating in a conspiracy in Fulton County from July 2005 until August 2010; and to participating in a conspiracy in DeKalb County from October 2006 to August 2011. 

“Incidents of bid rigging at public real estate auctions continue to be an issue in Georgia and elsewhere in the United States, and the FBI would like to remind the public that such matters are violations of federal law,” said Special Agent in Charge J. Britt Johnson of the FBI’s Atlanta Field Office.  “The FBI will continue to work with the U.S. Department of Justice’s Antitrust Division in identifying, investigating and prosecuting those individuals engaged in such activities.”

The ongoing investigation is 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 should contact the Washington Criminal II Section of the Antitrust Division at 202-598-4000, call the Antitrust Division’s Citizen Complaint Center at 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.  The task force 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 is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations.  Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants.  For more information about the task force, please visit www.StopFraud.gov.

The nation’s second-largest nursing home pharmacy, PharMerica Corp., has agreed to pay $9.25 million to resolve allegations that it solicited and received kickbacks from pharmaceutical manufacturer Abbott Laboratories in exchange for promoting the prescription drug Depakote for nursing home patients.  PharMerica is headquartered in Louisville, Kentucky.

“Elderly nursing home residents suffering from dementia have little control over the medications they receive and depend on the unbiased judgment of healthcare professionals for their daily care,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “Kickbacks to entities making drug recommendations compromise their independence and undermine their role in protecting nursing home residents from the use of unnecessary drugs.”

Nursing homes rely on consultant pharmacists, such as those employed by PharMerica, to review their residents’ medical charts at least monthly and make recommendations to their physicians about what drugs should be prescribed for those residents.  The settlement announced today resolves allegations that in exchange for recommending that physicians prescribe Depakote, an anti-epileptic drug manufactured by Abbott, to nursing home residents, PharMerica solicited and received kickbacks from Abbott.  The government alleges that the kickbacks were disguised as rebates, educational grants and other financial support.

In May 2012, the United States, numerous individual states and Abbott entered into a $1.5 billion global civil and criminal resolution that, among other things, resolved Abbott’s liability under the False Claims Act for alleged kickbacks to nursing home pharmacies, including PharMerica.  The settlement announced today resolves PharMerica’s role in that alleged kickback scheme.

“The settlement announced  today should serve as a stark reminder to pharmaceutical companies and those with whom they do business that the Department of Justice and its investigative agencies will continue to monitor their activities,” said U.S. Attorney Anthony P. Giorno of the Western District of Virginia.  “When those activities involve improprieties such as the payment of kickbacks, we will not hesitate to hold them accountable.  We owe nothing less in fulfilling our duty to ensure that nursing home residents are provided with the appropriate drugs based upon their needs rather than the business interests of the companies providing the drugs.”

Approximately $6.75 million of the settlement will go to the United States, while $2.5 million has been allocated to cover Medicaid program claims by states that elect to participate in the settlement.  The Medicaid program is jointly funded by the federal and state governments.

“Nursing home pharmacies accepting kickbacks from drug makers in exchange for prescribing certain prescription drugs puts vulnerable residents at risk for receiving unnecessary medications, corrupts medical decision making, and inflates health care costs,” said Special Agent in Charge Nick DiGiulio of the U.S. Department of Health and Human Services’ Office of Inspector General (HHS-OIG).  “Our agency will continue to root out such corrosive practices from our health care system.”

The settlement partially resolves allegations in two lawsuits filed in federal court in the Western District of Virginia by Richard Spetter and Meredith McCoyd, former Abbott employees.  The lawsuits were filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery.  The act also allows the government to intervene and take over the action, as it did in part in this case.  As part of today’s resolution, Ms. McCoyd will receive $1 million from the federal share of the settlement amount.

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 $25.2 billion through False Claims Act cases, with more than $16.1 billion of that amount recovered in cases involving fraud against federal health care programs.

This matter was jointly handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office of the Western District of Virginia, HHS-OIG, the commonwealth of Virginia’s Office of Attorney General and the National Association of Medicaid Fraud Control Units.

The cases are captioned United States ex rel. Spetter v. Abbott Labs., et al., Case No. 10-cv-00006 (W.D. Va.) and United States ex rel. McCoyd v. Abbott Labs., et al., Case No. 07-cv-00081 (W.D. Va.).  The claims resolved by the settlement are allegations only, and there has been no determination of liability.

A Miami physician was charged in an indictment unsealed today with participating in a Medicare fraud scheme that caused losses of more than $20 million. 

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

Henry Lora, M.D., 51, of Miami, was charged with one count of conspiracy to commit health care fraud and wire fraud; and one count of conspiracy to defraud the United States, receive health care kickbacks and make false statements relating to health care matters.

According to allegations in the indictment, Lora and Isabel Medina owned and operated Merfi Corporation (Merfi), a Miami-area clinic that employed physicians, physician assistants and other medical professionals.  The indictment alleges that, in exchange for kickbacks and bribes, Lora and his co-conspirators wrote prescriptions for home health care and other services for Medicare beneficiaries that were not medically necessary or not provided.  Lora and his co-conspirators allegedly falsified patient records to make it appear as if the beneficiaries qualified for the services for which Medicare was billed.

According to the indictment, the alleged actions of Lora and his co-conspirators prompted multiple Miami-Dade home health care agencies and other providers to bill Medicare for services that were not medically necessary or not provided.  Medicare made payments on these fraudulent claims.

Medina pleaded guilty to conspiracy to commit health care fraud and was sentenced in March 2014 to nine years in prison.  Medina admitted that her activities and those of her co-conspirators at Merfi caused losses to the Medicare program exceeding $20 million.

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

The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office of the Southern District of Florida.  This case is being prosecuted by Trial Attorney A. Brendan Stewart of the Criminal Division’s Fraud Section. 

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

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

Lora Indictment

Late yesterday, a federal judge in South Dakota issued a permanent injunction against Robert “Larry” Lytle of Rapid City, South Dakota and his medical device businesses, the Justice Department announced.  Lytle marketed laser devices to treat a variety of medical conditions and diseases through several entities, including QLasers PMA and 2035 PMA, and is the owner and operator of 2035 Inc.

In October 2014, the Justice Department brought a civil action to enforce provisions of the federal Food, Drug and Cosmetic Act (FDCA).  As the court found, Lytle and his businesses violated the FDCA by marketing and distributing the QLaser devices nationwide for the treatment of more than 200 different diseases and medical disorders without clearance or approval from the U.S. Food and Drug Administration (FDA). 

“We brought this lawsuit because Mr. Lytle had been putting consumers at risk, while attempting to evade the FDCA – a law Congress enacted to protect public health and safety,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “It is especially noteworthy and gratifying that the Department was able to obtain some recompense for the innocent consumers whom Lytle victimized.”

According to the complaint and evidence adduced at a trial, Lytle has been distributing the QLaser devices with false and misleading labeling claims, touting their use for treating such serious conditions as cancer, HIV/AIDS and diabetes.  Although two of the devices are cleared for providing temporary relief of pain associated with osteoarthritis of the hand, none of the devices have been cleared by the FDA or otherwise approved to treat any other medical conditions.  Moreover, using the QLaser devices can be harmful in certain situations, and its use to treat other serious conditions, is unsupported by any published clinical studies.

The permanent injunction issued yesterday by U.S. District Court Chief Judge Jeffrey L. Viken follows a trial held in March 2015, in which the government established that the QLaser’s labeling was false and misleading and that, in fact, using the lasers according to their directions could be dangerous to health.  Yesterday’s court order requires that Lytle and his businesses cease directly or indirectly manufacturing, packing, labeling and/or distributing any medical device unless and until they comply with certain terms of the injunction.

The court also ordered Lytle to refund the full amount consumers paid for their QLaser devices, whether the devices were purchased directly from Lytle’s businesses or through one of his several distributors.  Depending on the specific package purchased, each consumer typically paid between $4,295 and $12,600, according to the evidence before the court.  Lytle has admitted that he has sold at least 20,000 devices since 1998.

Lytle is required to pay the United States $10,000 per day for any violation of the permanent injunction, and is subject to other sanctions, including fines and imprisonment, for failing to comply.

“This ruling will help restore consumer confidence and send a strong message that a company cannot exercise blatant disregard of the law, especially when consumers’ health is at risk,” said U.S. Attorney Randolph J. Seiler of the District of South Dakota.  “Justice has been served with this permanent injunction, and it will prohibit Mr. Lytle from continuing to thumb his nose at federal regulations that protect public health and safety.”

“Robert Lytle and his businesses ignored previous FDA warnings and continued to produce and distribute these devices in violation of federal law,” said Acting Director Jan Welch of the Office of Compliance in the FDA’s Center for Devices and Radiological Health.  “The FDA will remain vigilant in protecting the health of the American public by ensuring that medical devices are shown to be safe and effective before being used by patients.”

The government’s case is being handled by Trial Attorney Ross S. Goldstein of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Camela C. Theeler of the District of South Dakota.  Sonia Nath, with the FDA’s Office of Chief Counsel, is assisting with this case.

QLasers PMA and Robert Lytle Order of Permanent Injunction (399.06 KB)

A resident of Capitol Heights, Maryland, was sentenced today to serve 46 months in prison for his involvement in a far-reaching identity theft and tax fraud scheme in which he and others working with him filed fraudulent federal income tax returns seeking more than $2.5 million in refunds, the Justice Department announced.

Alvalonzo Graham, 30, is among approximately 12 people who have pleaded guilty to charges in the U.S. District Court for the District of Columbia.  According to court documents, the overall case involves the filing of at least 12,000 fraudulent federal income tax returns using stolen identifying information that sought refunds of at least $40 million from the U.S. Treasury.

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

On March 18, 2014, Graham pleaded guilty to conspiracy to defraud the United States through the filing of false income tax returns.  He was sentenced by U.S. District Judge Ellen S. Huvelle of the District of Columbia.  Upon completion of his prison term, he will be placed on three years of supervised release.  In addition, as part of his plea agreement, Graham must pay $424,017.35 in restitution to the IRS.

“Today’s sentence is a warning to those who think they can profit from stealing identities and filing false claims for refund,” said Acting Assistant Attorney General Ciraolo.  “The department has made it a priority to work with the IRS and other federal and state law enforcement agencies to fully investigate and prosecute stolen identity refund fraud and see that these offenders pay for their crimes with significant jail terms.”

“The theft of identities and taxpayer dollars has become a nationwide epidemic, and this case shows the lengths that criminals will go in pursuit of cashing in,” said Acting U.S. Attorney Cohen.  “Unfortunately for Alvalonzo Graham and his co-conspirators, this case also shows the lengths that law enforcement will go to protect taxpayers’ dollars and to prosecute those who try to scam the system.”

“Perpetrators of identity theft schemes are motivated by greed, acting as if they are above the law and with total disregard for the consequences to the victims,” said Special Agent in Charge Jankowski.  “The actions of criminals such as Mr. Graham, create distressing hardships for many innocent taxpayers and have a devastating impact on the entire community.”

“This case serves as yet another example of the significant results that can be achieved when law enforcement agencies partner, share information, and collaborate,” said Inspector in Charge Bowers.  “Identity theft is an increasing problem. Today’s sentence shows that this type of criminal conduct, especially when it involves the U.S. mail, will not be ignored or go unpunished.”

“Today’s sentencing reflects the Treasury Office of Inspector General and our law enforcement partners continuing focus and efforts to protect both the Treasury and the hard-working American taxpayers from offenders who fraudulently conspire to obtain improper payments from the Treasury,” said Assistant Inspector General for Investigations Phillips.

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

According to documents filed with the court, from January 2011 through July 2012, Graham prepared and mailed fraudulent federal income tax returns, deposited the fraudulently-obtained tax refund checks into his own bank account and recruited, coordinated, directed and compensated others in the execution of the scheme, including a bank teller.  Graham’s actions and those of the people he directed and paid resulted in the filing of approximately 492 fraudulent income tax returns claiming $2,552,740 in refunds.  He maintained a bank account into which he deposited approximately 97 fraudulently obtained U.S. Treasury checks that totaled approximately $424,017.  Graham kept portions of these fraudulently obtained refunds.

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

A Milledgeville, Georgia, couple was sentenced to prison today for skimming more than $1.5 million in cash from their business without disclosing the income on their tax returns, Acting Assisting Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney John A. Horn of the Northern District of Georgia announced.

Kenneth Horner, 59, and his wife, Kimberly Horner, 54, were each sentenced to serve 18 months in prison followed by three years of supervised release, and ordered to pay restitution in the amount of $ 144,455 to the Internal Revenue Service (IRS).  The Horners were found guilty of filing false corporate tax returns and false individual income tax returns following a four-day trial in February 2015.

“Businesses are required to honestly report and pay taxes due, and should expect the same of their competitors,” said Acting Assistant Attorney General Ciraolo.  “Those business owners who evade these obligations not only steal from the U.S. Treasury, but gain an unfair competitive advantage, and the department is committed to holding them accountable.”

“Small business owners should take note of this case,” said U.S. Attorney John Horn.  “Skimming cash from your business account and intentionally failing to report that money to the IRS, as a federal jury concluded these defendants did, is illegal.  Community services and all other benefits of government depend upon citizens paying their fair share of taxes.”

“IRS Criminal Investigation is sworn to protect the tax system and bring to justice those who steal from the Treasury,” said Special Agent in Charge Veronica F. Hyman-Pillot of IRS-Criminal Investigation (CI). “In today’s economic environment, it’s more important than ever that the American people feel confident that everyone is paying their fair share.  Today’s sentence demonstrates that our largest enforcement program is directed at the portion of American taxpayers, who willfully and intentionally violate their known legal duty of filing and paying their fair share of taxes.”

According to the indictment and other information presented in court, Kenneth and Kimberly Horner owned Topcat Towing and Recovery Inc. (Topcat Towing), a towing business in Lithonia, Georgia.  Between 2005 and 2008, Topcat Towing had an exclusive contract with DeKalb County, Georgia, for all county car tows needed from the south precinct of the county.  Between 2005 and 2008, the defendants skimmed more than $1.5 million in cash receipts from their towing business and deposited those cash receipts into their personal bank account without disclosing the income to their tax return preparer or on the corporate and personal tax returns filed with the IRS.

The defendants tried to conceal their cash deposits from the government by “structuring” their deposits, which is the act of splitting up cash deposits that exceed $10,000 for the purpose of avoiding the filing of a Currency Transaction Report (CTR) by the financial institution.  Most financial institutions, including banks, are generally required to file CTRs for cash transactions that exceed $10,000, and the CTRs are submitted to the U.S. Department of Treasury. 

In 2007 and 2008, the defendants used their unreported cash, in part, to build a custom home in Conyers, Georgia, that was appraised at more than $900,000. 

Acting Assistant Attorney General Ciraolo and U.S. Attorney Horn commended special agents of IRS-CI, who investigated the case, and Assistant U.S. Attorney Steven D. Grimberg of the Northern District of Georgia and Trial Attorney Christopher Maietta of the Tax Division, who prosecuted the case. 

LYON, France – A US Homeland Security Committee task force report which recognizes INTERPOL’s systems as ‘crucial global tools for combating terrorist and foreign fighter travel’ has been welcomed by the world police body.

The ‘Combating terrorist and foreign fighter travel’ report, published following an extensive, six month review to assess the severity of the threat from individuals who leave home to join jihadist groups overseas and to identify potential security gaps, makes 32 key findings and accompanying recommendations.

The report states: “The closest the international community has come to centrally tracking foreign fighters is through a database created last year by INTERPOL…. Thousands of these fighters are returning home, and this database has the potential to become the global “tripwire” to detect their movements.”

With the report also highlighting how data from INTERPOL enabled US law enforcement to identify hundreds of previously unknown terrorist suspects and foreign fighters, the task force recommends ‘the US must work with international partners to designate INTERPOL as a central repository for foreign fighter identities.’

Other key recommendations include;

• ­The US government should make it a top diplomatic priority to ramp up foreign partner use of INTERPOL systems, including the regular provision of information to the organization’s databases, and as a screening mechanism at borders and ports of entry, especially for counterterrorism purposes.
• ­The Administration should consider granting State and local law enforcement the ability to quickly submit INTERPOL notices for wanted subjects in their jurisdictions. Aspiring foreign fighters often leave for the conflict zone with little or no notice, and giving state and local partners the ability to expedite notices to INTERPOL’s 190 member states could help stop extremists in their tracks on the way to terrorist safe havens, especially in cases where local authorities are tipped off to a suspect who was not previously on federal law enforcement’s radar.

Welcoming the report, INTERPOL Secretary General Jürgen Stock said its findings once again underlined the absolute necessity for countries to share information on foreign terrorist fighters.

The report was published on the same day as Secretary General Stock addressed the Leaders’ Summit on Countering ISIL and Violent Extremism on the sidelines of the United Nations (UN) General Assembly, hosted by US President Barack Obama.

The INTERPOL Chief updated the Summit on INTERPOL’s implementation of UN Security Council Resolution 2178 which recognizes the Organization’s role as a global, neutral information sharing platform against foreign terrorist fighters. 
 
The Summit heard that with 52 countries now contributing to INTERPOL’s FTF database, information shared through its channels had increased six-fold in the last year, with some 5,000 foreign terrorist fighters identified so far in INTERPOL’s systems.

The full report is available at: https://homeland.house.gov/news/reports/committee-unveils-foreign-fighter-task-forces-final-report.

The Department of Justice announced today that two Athens, Texas, residents have been sentenced for their role in the smuggling of imitation, unapproved and misbranded prescription drugs from China.

Tom Giddens, 57, and Wanda Hollis, 63, were each sentenced to serve 15 months in prison by U.S. District Court Judge Michael H. Schneider in the Eastern District of Texas.  In April 2015, they each pleaded guilty to one count of conspiracy to smuggle the drugs into the United States.  A third defendant, Catherine Nix, 42, also of Athens, will be sentenced at a later date.

In 2009, the defendants smuggled at least 43 known shipments, totaling approximately 106,000 pills, from China to Texas.  The shipments contained unapproved, bogus versions of several U.S. Food and Drug Administration (FDA)-approved drugs that, because of the health and safety risks associated with their use, require valid prescriptions to dispense.  The prescription drugs seized included: Xanax®; Valium®; sibutramine; Cialis®; Viagra®; and, Stilnox®, marketed in the United States as Ambien®.  None of the pills that were seized and tested were legitimate.  Some were sub-potent, but most contained entirely different active ingredients from the legitimate, approved versions.  The defendants also attempted to conceal their smuggling by using shipping labels that misrepresented the contents of their shipments, including customs declarations falsely describing the contents as “gifts” or “toys” with low declared monetary values, and by using multiple addresses in an effort to reduce the likelihood of seizures by U.S. Customs and Border Protection authorities.

“Consumers of prescription drugs need to know that what they are buying is legitimate, safe, and approved,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “This illegal operation introduced over 100,000 bogus pills into the stream of commerce, potentially posing a huge public health and safety risk.  Consumers should know that the drugs they are buying are exactly what they appear to be, and not false versions of name-brand products that could ultimately do them more harm than good.”

“This office remains committed to stemming the increasing flood of illegitimate prescription drugs that come into East Texas,” said U.S. Attorney John M. Bales of the Eastern District of Texas.  “This case puts the very real, inherent dangers of counterfeit prescription drugs on full display.  These pills looked almost exactly like their legitimate counterparts, but lacked any of the safety or efficacy of the legitimate versions.”

“FDA’s laws are in place to ensure that consumers have access to safe and effective prescription drugs,” said Director George M. Karavetsos of the FDA’s Office of Criminal Investigations.  “Those who evade those laws risk harming the public’s health.  We will continue to work with our law enforcement partners to keep the U.S. marketplace free of illegitimate medical products.”

This case was investigated by the FDA-OCI and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.  The case was prosecuted by Assistant U.S. Attorney Allen Hurst of the Eastern District of Texas and by Trial Attorney John W.M. Claud of the Civil Division’s Consumer Protection Branch.

Three former ocean freight executives have been indicted for participating in a long-running price-fixing conspiracy.  These executives – Yoshiyuki Aoki, Masahiro Kato and Shunichi Kusunose – have been charged with allocating customers and routes, rigging bids and fixing prices for the sale of international ocean shipments of roll-on, roll-off cargo to and from the United States and elsewhere, including the Port of Baltimore.  The affected cargo included cars, trucks, construction equipment and agricultural equipment. 

Aoki, formerly of Kawasaki Kisen Kaisha (K-Line), and Kato and Kusunose, formerly of Nippon Yusen Kabushiki Kaisha (NYK), are among seven executives who have been charged in the investigation so far.  Four have pleaded guilty and been sentenced to prison.  NYK, K-Line and one other company have also pleaded guilty and paid more than $136 million in criminal fines.

“The companies and executives who conspired to restrict competition and raise prices for shipping these products must be held accountable,” said Assistant Attorney General Bill Baer of the Antitrust Division.  “We previously charged NYK and K-Line for their role in this long-running conspiracy.  Today we are continuing our effort to ensure that the executives at those companies who orchestrated the ocean shipping conspiracy face the consequences as well.”

“These felony charges indicate to those intent on corrupting our economy they will be identified and brought to justice,” said Special Agent in Charge Kevin Perkins of the FBI’s Baltimore Division.  “Our job is to protect victims who don’t see these crimes occurring, but who always end up paying the price.”

The indictment, which was returned by a grand jury in the District of Maryland, charges Aoki with participating in the conspiracy from at least as early as 2001 until at least September 2012; Kato with participating from at least as early as April 2002 until at least September 2012; and Kusunose with participating from at least as early as April 2004 until at least September 2012. 

An indictment is a formal charging document and defendants are presumed innocent until proven guilty.

This investigation is being conducted by the Antitrust Division’s Washington Criminal I Section and the FBI’s Baltimore Field Office, with assistance from the U.S. Customs and Border Protection Office of Internal Affairs, Washington Field Office/Special Investigations Unit.  Anyone with information in connection with this investigation is urged to call the Antitrust Division’s Washington Criminal I Section at 202-307-6694, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Baltimore Field Office at 410-265-8080.

Aoki et al Indictment (491.73 KB)

The Department of Justice announced today that Finacor SA, a Swiss asset management firm, has reached a resolution with the department through a non-prosecution agreement.

Finacor submitted a Letter of Intent to participate as a Category 2 bank in the department’s Swiss Bank Program.  Although it was ultimately determined that Finacor was not eligible for the Swiss Bank Program due to its structure largely as an asset management firm, the firm is required under today’s agreement to fully comply with the obligations imposed under the terms of that program.  Under the terms of the agreement, Finacor is required to:

• Make a complete disclosure of its 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 regarding 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 a penalty of $295,000.

Finacor 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 Finacor for tax-related criminal offenses.

“Today’s agreement reflects the department’s willingness to reach fair and appropriate resolutions with entities that come forward in a timely manner, disclose all relevant information regarding their illegal activities and cooperate fully and completely, including naming the individuals engaged in criminal conduct,” said Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.  “Through the Swiss Bank Program, we have received information not just about culpable banks, but also asset management and investment advisory firms that played a role in the concealment of U.S.-related accounts and the evasion of U.S. taxes.  Now is the time for these firms to come forward, accept responsibility for their actions and reach a resolution with the department.”

Finacor was established in Basel, Switzerland, in 1945, and is a corporation organized under the laws of Switzerland.  It operates a small, privately-held asset management business in one office in Basel with five employees.  Finacor is licensed as a broker-dealer by the Swiss Financial Market Supervisory Authority (FINMA).  Although it is not a custodian bank, Finacor manages client assets held at other custodian banks.

For decades prior to and through in or about 2013, Finacor conducted a U.S. cross-border asset management business that aided and assisted U.S. clients in opening and maintaining undeclared accounts in Switzerland and concealing the assets and income they held in these accounts.  Finacor offered two types of accounts: asset management accounts and fiduciary accounts.  For both types of accounts, Finacor managed client assets but held them at custodial banks in Switzerland.  Initially, the majority of client funds were held by Finacor at UBS.  However, after UBS notified Finacor in July 2008 that it would no longer service the accounts of U.S. citizens without an IRS Form W-9, Finacor transferred its undeclared U.S. client accounts to a Swiss Bank Program Category 2 bank. 

For asset management accounts, client assets were held in the names of the clients at the custodian bank.  For these accounts, the Know Your Customer rules applied to the custodian bank and not to Finacor.  For fiduciary accounts, client assets were held in Finacor’s name at the custodian bank.  This provided Finacor clients with an additional degree of anonymity.  For these accounts, the custodian banks did not know the identity of the clients.  Consequently, the Know Your Customer rules and Qualified Intermediary (QI) requirements applied to Finacor and not the custodian banks.  Finacor knew that its fiduciary accounts services allowed U.S. clients to conceal their ownership of money held at its custodian banks in Switzerland from those custodian Swiss banks and, in turn, the Internal Revenue Service (IRS).

Finacor used a variety of means to assist U.S. clients in concealing their undeclared accounts, including by:

• Providing fiduciary account services that concealed the identity of its clients, including U.S. clients, from its custodian banks in Switzerland;

• Holding account-related mail at Finacor for clients, including U.S. clients, to keep mail regarding their undeclared accounts from being sent to the U.S.;

• Sending checks to the United States in amounts below $10,000 to assist clients in avoiding U.S. currency transaction reporting requirements;

• Using code words for money transfers to conceal the repatriation of undeclared assets and income back into the United States; and

• For the purpose of subverting its QI Agreement with the IRS, divesting U.S. securities from its undeclared U.S. accounts and avoiding having to disclose the identities of U.S. clients to the IRS under its QI Agreement.

Since Aug. 1, 2008, Finacor managed 11 U.S. accounts with peak aggregate assets under management of $14.6 million.  The 11 U.S. accounts consisted of two asset management and nine fiduciary accounts.  All of Finacor’s undeclared U.S. accounts have entered the IRS Offshore Voluntary Disclosure Program (OVDP).  Moreover, Finacor obtained waivers of Swiss bank secrecy for all of its U.S. accounts and provided client names and other identifying information for those accounts to the U.S. government.  Finacor has closed all of its U.S.-related fiduciary accounts or converted them to asset management accounts and intends to relinquish its broker-dealer license by the end of 2015.  Without a broker-dealer license, Finacor cannot operate fiduciary accounts.

Finacor has committed to providing full cooperation to the U.S. government and has made timely and comprehensive disclosures regarding its U.S. cross-border business consistent with the Swiss Bank Program’s requirements and deadlines.  Among other things, Finacor provided customer names and other identifying information for the majority of U.S. accounts as evidence that the account is participating in the OVDP or declared to the IRS, as well as for use in other potential department investigations.  Finacor also provided the name and information of the relationship manager primarily responsible for servicing U.S. clients and the external asset manager who managed several of Finacor’s U.S. client accounts, in satisfaction of the Swiss Bank Program requirements.

“Agreements like that with Finacor SA redefine international tax compliance initiatives and have far-reaching, global implications,” said Chief Richard Weber of IRS-Criminal Investigation (CI).  “The American public can expect that we will use all of the information we are gathering to vigorously pursue individual U.S. taxpayers who illegally conceal assets offshore and to develop innovative strategies to combat international tax evasion worldwide.”

Acting Assistant Attorney General Ciraolo thanked the IRS, and in particular, IRS-CI and the IRS Large Business & International Division for their substantial assistance.  Ciraolo also thanked Kevin F. Sweeney, who served as counsel on this matter, as well as Senior Counsel for International Tax Matters 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.

Today at Vanity Fair’s 2015 New Establishment Summit, Assistant Attorney General for National Security John P. Carlin and CEO of Sony Entertainment Michael Lynton had a moderated conversation with the President and CEO of the Aspen Institute, Walter Isaacson.  They highlighted the growing threat posed by sophisticated computer intrusions to the entertainment industry and the economy at large, discussed the role the federal government can play in protecting companies before, during and after a serious hack and emphasized the importance of public-private partnerships to cybersecurity.

This was the first time that Carlin and Lynton were together on stage to discuss the unprecedented, state-sponsored network intrusion of Sony Pictures Entertainment in November 2014.  Carlin and Lynton recounted the story of the hack and highlighted Sony’s valuable cooperation with law enforcement.  They emphasized the role that public-private partnerships play in averting cyber hacks and mitigating their damage.  Carlin said that Sony’s willingness to involve law enforcement immediately was “an important lesson that Sony did right.”  “Literally within hours of the original breach – within the first 24 hours – Sony reached out and the FBI had a team go to Sony to assist,” Carlin added.

Carlin took this opportunity to stress the value of reaching out to law enforcement and making a connection early, before an intrusion takes place.  “The reason [Sony] knew who to call is that they had a relationship where a high-level executive knew by name and by a face” their law enforcement contact. 

To this end, Carlin announced an NSD outreach initiative to promote information sharing and resilience, as well as to help private companies protect themselves and respond to cyber intrusions.  “In large part because of incidents like Sony, we’ve started a new outreach program,” Carlin said, “so that we are reaching out, preventively, to talk to people about best practices and what to think about before the attack happens.”  Carlin highlighted that NSD recently named the first Director of the Outreach Program for the Protection of National Assets, Christine Kringer.  This new position is the latest in a series of structural changes at NSD designed to reflect the division’s prioritization of combating cyber threats to the national security, as well as its counterintelligence and counterproliferation efforts.  Last year, NSD charged a new Deputy Assistant Attorney General with oversight and coordination of the division’s protection of national assets program. 

This focus on outreach complements the Justice Department’s national network of specially-trained National Security Cyber Specialists, and Computer Hacking and Intellectual Property coordinators who are available 24/7 to support companies as they face intrusions and online threats from a variety of sources in real-time. 

Over the past 18 months, the Department of Justice has prioritized outreach efforts on cyber threats and cybersecurity, hosting discussions with the financial services sector in New York, addressing the Gaming Association in Las Vegas and conducting outreach to insurance companies, national labs, universities and the energy and transportation sectors.  Through these efforts, Carlin and other senior Department of Justice officials have met with hundreds of c-suite executives, CIOs and CISOs, general counsels, outside lawyers and other corporate representatives to discuss the unique challenges companies face in today’s elevated threat environment.

Furthermore, the National Security Division continues to partner with the Criminal Division, the FBI and U.S. Attorney’s Offices to make joint visits and to participate in roundtables with companies to answer questions from both corporate security teams and in-house legal counsel.  Carlin noted that the department is working to dispel the perception that law enforcement “comes in and seizes your servers,” and to show instead that they are “there to help and they very much respect the need of the business to get back to doing what it does.” 

He closed his remarks by underscoring the Department of Justice’s commitment to overcoming perceived hurdles to cooperation and his own pledge to be responsive to the needs of private sector partners, whether they simply want to establish early lines of communication or call while under the strain of a continuing network breach. 

A resident of Hammond, Louisiana, was sentenced to prison for his involvement in a stolen identity tax fraud 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.

Thaddeus Richardson, 49, was sentenced by U.S District Judge Jay C. Zainey of the Eastern District of Louisiana to serve 51 months in prison to be followed by three years of supervised release.  Richardson pleaded guilty on July 2 to seven counts of theft of public money, one count of conspiracy to commit money laundering, and one count of a dual-object conspiracy to defraud the United States and to commit mail fraud and theft of public money.  Judge Zainey will determine the amount in restitution Richardson has to pay to the Internal Revenue Service (IRS) at a later date.

According to court documents, Richardson 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 were opened by the co-conspirators.  Once they received the checks, Richardson 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; and others with conspiracy to defraud the United States, conspiracy to commit money laundering, conspiracy to commit mail fraud and conspiracy to commit theft of public money.  Lewis was also charged with three counts of theft of public money and three counts of aggravated identity theft.  On Sept. 15, Mitchell was sentenced to serve 33 months in prison.  On Sept. 29, Lewis was sentenced to serve 75 months in prison.  All of the remaining defendants in this case have pleaded guilty to various charges and are awaiting sentencing.

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 Castaldi of the Tax Division, who are prosecuting the case.

The Justice Department’s Antitrust Division, at the request of the Federal Trade Commission, filed a civil antitrust lawsuit today in U.S. District Court in Washington, D.C., against Len Blavatnik for violating the premerger notification and waiting period requirements of the Hart-Scott-Rodino (HSR) Act of 1976 when he acquired voting securities of TangoMe Inc. in August 2014.  At the same time, the department filed a proposed settlement, subject to approval by the court, under which Blavatnik has agreed to pay a $656,000 civil penalty to resolve the lawsuit.

The HSR Act of 1976, an amendment to the Clayton Act, imposes notification and waiting period requirements for transactions meeting certain size thresholds so that they can undergo premerger antitrust review.  Federal courts can assess civil penalties for premerger notification violations under the HSR Act in lawsuits brought by the Department of Justice.  For a party in violation of the HSR Act, the maximum civil penalty is $16,000 per day.

Further details about this matter are described in the FTC’s press release issued today, and in the attached complaint.

The Department of Justice announced today that it filed two civil actions in federal court in the Central District of California seeking to enjoin the importation and sales activities of two California companies and three individuals in connection with their importation of illegal and dangerous children’s products.  The department filed the two actions at the request of the Consumer Product Safety Commission (CPSC), alleging that the defendants were responsible for importing children’s products containing, among other things, lead, phthalates and small parts posing a choking hazard for children under the age of three.  The companies and defendants have agreed to settle the lawsuits and be bound by a consent decree of permanent injunction.

“Companies who do not comply with CPSC’s statutes and regulations regarding toys put American children at risk,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “Parents have a right to feel confident that the toys their children play with are safe.”  

“We have zero tolerance for companies and individuals who put children at risk,” said CPSC Chairman Elliot F. Kaye.  “To protect our children from unsafe and dangerous toys, we’ll continue to use all available enforcement tools at our disposal as well as continue to collaborate with our federal partners.  Parents deserve no less when it comes to the safety of their children’s toys.”

“There is no greater responsibility of the Department of Justice than to protect our nation’s children,” said U.S. Attorney Eileen M. Decker of the Central District of California.  “Today’s action demonstrates the Department’s commitment to keeping our children safe from all sources of harm.”

Both complaints allege that the defendants imported toys and other children’s products in violation of the Consumer Product Safety Act (CPSA) and the Federal Hazardous Substances Act (FHSA).  One complaint was filed against Brightstar Group Inc., a Los Angeles importer and retailer of children’s products and toys, and its owner, Sherry Chen, 61, of Arcadia, California.  The complaint alleges that since August 2013, CPSC collected dozens of samples from Brightstar’s import shipments as they attempted to enter the Port of Los Angeles/Long Beach, California, and from Brightstar’s Los Angeles facility.  Based on their findings, CPSC issued nine Letters of Advice between September 2013 and April 2015, notifying the Brightstar defendants that their products violated federal standards.  CPSC found numerous children’s products, including a fire engine set, a tea set, toy boxing gloves, collapsing stroller and marbles, in violation of the CPSA, the FHSA and their implementing regulations.  Most of the violative products were stopped at import and were not sold to consumers.  Chen is also sued for violations, which include importing violative infant rattles that occurred while she was the manager of Taifung Corp., a now-dissolved California corporation owned by her husband that also imported and sold children’s products and toys.

A second action was filed against Unik Toyz Trading Inc. (Unik), a Los Angeles importer and retailer of children’s products and toys, its owner, Julie Tran, 33, and its manager, Kiet Tran, 38, both of of Arcadia, California.  The complaint alleges that since September 2011, CPSC identified 39 samples of children’s products imported by Unik, including toy cars, toy trains, bubble guns and art materials, that violate federal standards for children’s toys.  These violations include illegal levels of lead content and toys intended for children under the age of three that contain small parts and accessible batteries.  Most of these violative toys were stopped at import at the Port of Los Angeles/Long Beach and were not sold to consumers.

In conjunction with the filing of the complaints, the defendants in both lawsuits agreed to settle the litigation and be bound by a consent decree of permanent injunction.  All of the defendants agreed to immediately cease all importation and sale of toys and children’s products, unless and until the CPSC determines that the firm’s practices have come into compliance with the law and with various remedial measures set out in the decrees.  The proposed consent decrees are awaiting judicial approval.

The cases are being handled by Trial Attorneys Melanie Singh and Ann F. Entwistle of the Civil Division’s Consumer Protection Branch, with the assistance of Renee McCune of the CPSC’s Office of the General Counsel.  The U.S. Attorney’s Office of the Central District of California also provided assistance.

            United States Attorney ALICIA A.G. LIMTIACO, U.S. Attorney for the Districts of Guam and the Northern Mariana Islands (NMI), announced that Assistant U.S. Attorney (AUSA) Rosetta San Nicolas was invited to speak at Wettengel Elementary School for Career Day on May 21, 2015.  AUSA San Nicolas spoke to three 5th grade classes with approximately 25 students in each class.  AUSA San Nicolas shared the educational process of becoming an attorney and her duties as an AUSA.  She also conducted a “Bullying, Cyberbullying and Internet Safety presentation.”   

            The U.S. Attorney’s Office for the Districts of Guam and the Northern Mariana Islands, continues to conduct presentations at various schools on the topics of “Bullying, Cyberbullying and Internet Safety.”  If your school would like a presentation by U.S. Attorney Limtiaco, please email salome.blas@usdoj.gov to make arrangements.

AUSA San Nicolas addressing the students

AUSA San Nicolas addressing the students

The United States today joins the five Gulf states in announcing a settlement to resolve civil claims against BP arising from the April 20, 2010 Macondo well blowout and the massive oil spill that followed in the Gulf of Mexico.

This global settlement resolves the governments’ civil claims under the Clean Water Act and natural resources damage claims under the Oil Pollution Act, as well as economic damage claims of the five Gulf states and local governments.  Taken together this global resolution of civil claims is worth $20.8 billion, and is the largest settlement with a single entity in the department’s history.

Also today, consistent with the settlement, the Deepwater Horizon Trustees Council, made up of representatives of the five Gulf states and four federal agencies, has published a draft damage assessment and restoration plan and a draft environmental impact statement.  The plan includes a comprehensive assessment of natural resource injuries resulting from the oil spill and provides a detailed framework for how the trustees will use the natural resource damage recoveries from BP to restore the Gulf environment.

“Building on prior actions against BP and its subsidiaries by the Department of Justice, this historic resolution is a strong and fitting response to the worst environmental disaster in American history,” said Attorney General Loretta Lynch.  “BP is receiving the punishment it deserves, while also providing critical compensation for the injuries it caused to the environment and the economy of the Gulf region.  I am proud that the Department of Justice has helped lead the way from tragedy to opportunity, and I am confident that our actions today will help to ensure that Gulf communities emerge from this disaster stronger and more resilient than ever before.”

“Five years after one of the worst environmental disasters in our nation's history, which claimed 11 lives and caused untold damage, we have reached a historic milestone with today's settlement,” said Secretary of Commerce Penny Pritzker.  “With this settlement, federal, state and local governments and the Gulf coast communities will have the resources to make significant progress toward restoring ecosystems, economies, and businesses of the region.  We are committed to ensuring the Gulf Coast comes back stronger and more vibrant than before the disaster.  If made final, the settlement will provide the U.S. and Gulf states with the resources and certainty needed for effective restoration planning and improvements.”

“This agreement brings renewed hope for a fully restored Gulf of Mexico to millions of Americans who value the Gulf for its contributions to our economy, our environment and plentiful recreational opportunities,” said Interior Secretary Sally Jewell.  “Today’s settlement is a significant step in restoring the natural resources that were impacted by the Deepwater Horizon oil spill and a breakthrough for building back the resilience of this region. The Trustees will continue to work with people along the coast to ensure they have every opportunity to be engaged in these meaningful recovery and restoration efforts that will generate jobs, improve water quality, support our tribal responsibilities and result in an improved wildlife habitat for migratory birds and hundreds of vulnerable species.”

“Through this historic settlement, USDA will continue working with rural communities, landowners and other partners to conserve watersheds and working lands,” said Agriculture Secretary Tom Vilsack.  “This work will benefit the Gulf of Mexico and its associated natural resources as well as help local economies that were damaged by the Deepwater Horizon Oil Spill.”

“Today is a day of justice for every family and every Gulf community whose health, land, water, and livelihoods were threatened by the Deepwater Horizon disaster,” said Administrator Gina McCarthy of EPA.  “This settlement puts billions of dollars to work to help restore the Gulf, and holds BP publically accountable for changes to its practices, to prevent this kind of disaster from happening again.”

“Today’s settlement ensures that BP repays the Government for its costs in responding to the Deepwater Horizon tragedy,” said Admiral Paul Zukunft of the U.S. Coast Guard Commandant. “The historic civil penalty also sends a clear message of accountability for those who pollute the U.S. environment.  In addition, this settlement is a positive step toward restoring our Gulf Coast to health and to ensure that it remains a national centerpiece for economic prosperity, a place of recreation and, most importantly, a pristine home to the generations of Americans who work and reside along its bays, rivers and estuaries.”

On April 10, 2010, less than 50 miles off the coast of Louisiana, the Macondo well suffered a catastrophic blowout.  The ensuing explosion and fire destroyed the Deepwater Horizon drilling rig, killing 11 men aboard and sending more than three million barrels of oil into the Gulf of Mexico over a period of nearly three months.  Oil flowed within deep ocean water currents hundreds of miles away from the blown-out well, resulting in oil slicks that extended across more than 43,000 square miles, affecting water quality and exposing aquatic plants and wildlife to harmful chemicals.  Oil was deposited onto at least 400 square miles of the sea floor and washed up onto more than 1,300 miles of shoreline from Texas to Florida.

The spill damaged and temporarily closed fisheries vital to the Gulf economy, oiled hundreds of miles of beaches, coastal wetlands and marshes and killed thousands of birds and other marine wildlife, among other economic and natural resource injuries. 

On Dec. 15, 2010, Attorney General Eric Holder announced a civil lawsuit against BP and several co-defendants, seeking to hold them accountable for the Deepwater Horizon disaster.  The federal lawsuit culminated in a three-phase civil trial in which the United States proved, among other things, that the spill was caused by BP’s gross negligence.  

Each of the Gulf States – Alabama, Florida, Louisiana, Mississippi and Texas – also filed civil claims against BP relating to the spill, including claims for economic losses and natural resource damages.

Under the terms of a consent decree lodged in federal court in New Orleans this morning, BP must pay the following:

• $5.5 billion federal Clean Water Act penalty, plus interest, 80 percent of which will go to restoration efforts in the Gulf region pursuant to a Deepwater-specific statute, the RESTORE Act. This is the largest civil penalty in the history of environmental law.

• $8.1 billion in natural resource damages, this includes $1 billion BP already committed to pay for early restoration, for joint use by the federal and state trustees in restoring injured resources. BP will also pay up to an additional $700 million, some of which is in the form of accrued interest, specifically to address any later-discovered natural resource conditions that were unknown at the time of the agreement and to assist in adaptive management needs.  The natural resource damages money will fund Gulf restoration projects that will be selected by the federal and state trustees to meet five different restoration goals and 13 restoration project categories.  These include restoration focusing on supporting habitats such as coastal wetlands, but also provide for specific resource types, such as marine mammals, fish and water column invertebrates, sturgeon, submerged aquatic vegetation, oysters, sea turtles, birds and lost recreational use, among others.

• $600 million for other claims, including claims for reimbursement of federal and state natural resource damage assessment costs and other unreimbursed federal expenses and to resolve a False Claims Act investigation due to this incident.

The payments will be made over time and are backed by parent company guarantees from BP Corporation North America Inc. and BP P.L.C.

Additionally, BP has entered into separate agreements to pay $4.9 billion to the five Gulf states and up to a total of $1 billion to several hundred local governmental bodies to settle claims for economic damages they have suffered as a result of the spill.

Notice of both the consent decree and the draft damage assessment and restoration plan are published in the federal register.  Both will be available for public comment for 60 days.  The materials and instructions for commenting on the consent decree can be found at http://www.justice.gov/enrd/deepwater-horizon.  The materials and instructions for commenting on the draft damage assessment and restoration plan and draft environmental impact statement can be found at www.gulfspillrestoration.noaa.gov.  A series of public meetings will be held in the Gulf region and Washington, D.C. to solicit comments on the proposed consent decree and the draft restoration plan.

Earlier settlements:

The settlements announced today are in addition to several earlier criminal and civil settlements of federal government claims concerning the Deepwater Horizon disaster. 

First, on Feb. 17, 2012, MOEX Offshore 2007 LLC, which had a 10 percent stake in the well, agreed to settle its liability for the Deepwater Horizon oil spill in a settlement with the United States valued at $90 million.  Approximately $45 million of the $90 million settlement was dedicated to directly benefit the Gulf  in the form of penalties, as well as coastal and habitat protection projects.

 On Jan. 29, 2013, BP Exploration and Production Inc. pleaded guilty to illegal conduct leading to and after the 2010 Deepwater Horizon disaster, and was sentenced to pay $4 billion in criminal fines, penalties and restitution, including $2.4 billion for natural resource restoration.

On Feb. 14, 2013, Transocean Deepwater Inc., the Deepwater Horizon’s owner and operator, pleaded guilty to violating the Clean Water Act and was sentenced to pay $400 million in criminal fines and penalties, for its conduct in relation to the disaster.  A separate civil settlement imposed a record $1 billion Clean Water Act penalty on Transocean and required the company to take significant measures to improve its performance and prevent recurrence of this conduct.

            ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands (NMI), announced that Zoie Susuico, the first place essay winner at the middle school level, was the student counterpart for the U.S. Attorney for Law Week 2015.  Ms. Susuico is an 8th grade student at McCool Middle School, Department of Defense Educational Activities.

            Ms. Susuico met with several staff of the U.S. Attorney’s Office who shared their duties, including the Victim Witness Coordinator, the National Security Specialist, the Grand Jury Coordinator, Legal Assistant, Budget Officer, Assistant Systems Manager, and Assistant U.S. Attorney.        

            In addition to shadowing the U.S. Attorney’s Office staff for the day, Ms. Susuico and the other students who participated in the Law Week Student Island Leadership Day, attended presentations by the U.S. Marshal Service, U.S. Probation Office, and the U.S. Secret Service.

U.S. Attorney’s Office staff from left to right:  Student Clerk Sean Perez, Student Clerk John Ruane, USA Stephen Leon Guerrero, AUSA Mohammad Khatib, Legal Assistant Noreen Soriano, Zoie Susuico, AUSA Jessica Cruz, Paralegal Jackie Emmanuel, Legal Assistant Roxanne Ferrer, LEC/Victim Witness Specialist Mae Blas, and National Security Specialist Joe Quitano
 

            ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands (NMI), announced that the staff of the U.S. Attorney’s Office, District of Guam, donated 80 cases of water for delivery to victims of Supertyphoon Maysak in the State of Yap in the Federated States of Micronesia, in April 2015.  Senator Frank Blas, 33rd Guam Legislature, coordinated with the Office of the Mayor of the village of Barrigada, Guam regarding the logistics.

            U.S. Attorney Limtiaco and her staff know all too well the devastation caused by typhoons and were grateful for the opportunity to assist our neighboring islands.

From left to right:  (kneeling) John Ruane and Ed Talato, (standing) Irving Vida, Gil Mones, Connie San Nicolas, Patrick O’Keefe, Noreen Soriano, Mikel Schwab, Michelle Perez, Jennifer Mafnas, Shirley Baza, Jackie Emmanuel, Roxanne Ferrer, Joe Quitano, Alicia Limtiaco, Greg Helm and Mae Blas
 

            ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands (NMI), announced that Stephen F. Leon Guerrero, an Assistant U.S. Attorney (AUSA) for the District of Guam, who is a member of the Guam Air National Guard, was promoted to Major on June 30, 2015, at the Guam National Guard Compound in Barrigada, witnessed by numerous family members, friends and co-workers.

            Major Stephen F. Leon Guerrero is the Staff Judge Advocate for the 254th Air Base Group at Andersen Air Force Base, Guam.  He provides legal advice to the Group Commander and Squadron Commanders on matters affecting the Guam Air National Guard.  He also assists military members with legal assistance issues, mission readiness, and legal processes.  Major Leon Guerrero received his direct commission in November 2007.  He is admitted to practice law before the United States Court of Appeals for the Armed Forces, United States Ninth Circuit Court of Appeals, United States Air Force Court of Criminal Appeals, United States District Court of Guam, and Supreme Court of Guam. 

            In his capacity as an AUSA, Leon Guerrero is employed with the Criminal Division for the District of Guam.  As a federal prosecutor, AUSA Leon Guerrero assists the U.S. Attorney on prosecutorial matters affecting Guam.  He prosecutes drug trafficking, fraud, and immigration related cases in federal district court and handles appellate cases before the Ninth Circuit Court of Appeals.  AUSA Leon Guerrero is also the U.S. Attorney’s Office’s Anti-Terrorism Advisory Counsel (ATAC), and Prevention and Reentry Coordinator.

            Major Leon Guerrero received his Bachelor of Science degree in Criminal Justice Administration, cum laude, University of Arizona in Tucson in 2001, and his Juris Doctor from Thomas M. Cooley Law School in Lansing, Missouri, in 2006. 

Col. Johnny S. Lizama administering the oath to Major Stephen Leon Guerrero

          U.S. Attorney Alicia A.G. Limtiaco, Districts of Guam and the Northern Mariana Islands, announced that the staff from the Guam and Saipan offices received Retirement Planning Training conducted by Elizabeth “Irene” Meader.  Ms. Meader is employed by Government Retirement and Benefits, Inc. and is from North Carolina.  Prior to her employment with Government Retirement and Benefits, Inc., she worked at and retired from the Office of Personnel Management (OPM).  The training was held at the U.S. Attorney’s Office in Guam on July 8, 2015.  

          The Retirement Planning Training topics included: Eligibility for Retirement; Determining High-3; Computation of Annuity; Federal Employees Retirement System (FERS) Annuity Supplement; Disability Benefits; Survivor Benefits; Creditable Service; Deposits/Redeposits; Military Service Deposits; Voluntary Contributions; Cost-of-Living Adjustments; Application for Retirement; Processing your Retirement; Withholdings and Taxation; Social Security; Medicare; Thrift Savings Plan; Federal Employees’ Group Life Insurance; Federal Employees Health Benefits; Federal Employees Dental/Vision Program; Long Term Care Insurance; and Flexible Spending Accounts.

          The training was very well-received and the staff expressed their appreciation to Ms. Meader for her presentation and professionalism.

          U.S. Attorney Alicia A.G. Limtiaco, Districts of Guam and the Northern Mariana Islands, announced that the staff of the U.S. Attorney’s Office received professional development training conducted by Robin M. Fields, Assistant General Counsel, Executive Office for United States Attorneys (EOUSA) General Counsel’s Office, Washington, D.C; Avery Bakeley, Deputy Assistant Director, EOUSA Equal Employment Opportunity Staff, Washington, D.C.; and Angela Groce, Counselor, EOUSA Employee Assistance Program from the National Advocacy Center, Columbia, South Carolina.  The training was held at the U.S. Attorney’s Office in Guam from January 28 to 30, 2015.  

          The professional development topics included:  “Developing Effective Communication Styles,” “Social Styles,” “Conflict Resolution,” “Social Media,” “Management Training,” “Mental Health in the Legal Profession/Managing Stress and Grief,” and “Emotional Intelligence.”

          The participants, who included management, litigation and administrative staff, enjoyed team-building exercises and learned about fostering an effective and rewarding work place, working with different personality styles, stress management, and ethics in social media. The training finished with an island-style fiesta catered by the staff to share with the trainers the traditional foods of Guam and the Northern Mariana Islands.

Seated from left to right are Angela Groce, Robin Fields, U.S.
Attorney Alicia Limtiaco and Avery Bakeley surrounded by the staff from both districts

Nicole Benjamin, Roxanne Ferrer and Jackie Emmanuel enjoying the fiesta spread prepared by the employees for the trainers in appreciation

Management team with the trainers, left to right, AO Ed Talato, Criminal Chief Marivic David, Trainer Robin Fields, Trainer Angela
Groce, Trainer Avery Blakeley, U.S. Attorney Alicia Limtiaco, Criminal Chief Mikel Schwab, Special Counsel to U.S. Attorney
Jessica Cruz

Today, in a press conference held at the Department of Justice, Attorney General Loretta E. Lynch reinforced the need for national, consistent data on law enforcement interactions with the communities they serve, especially data collection on the use-of-force.  The Attorney General noted that the department has already taken steps to improve the accuracy and consistency of use-of-force data from law enforcement.

“The department’s position and the administration’s position has consistently been that we need to have national, consistent data,” said Attorney General Lynch.  “This information is useful because it helps us see trends, it helps us promote accountability and transparency,” said Attorney General Lynch.  “We’re also going further in developing standards for publishing information about deaths in custody as well, because transparency and accountability are helped by this kind of national data.”

Currently, federal authorities publish annual figures on the number of “justifiable homicides” by law enforcement.  But this reporting is voluntary and not all police departments participate, causing the figures to be incomplete.  That’s why the Justice Department and the Obama Administration are taking steps to work with law enforcement to improve the process.

“This data is not only vital – we are working closely with law enforcement to develop national consistent standards for collecting this kind of information,” Attorney General Lynch added.

The department has already taken steps to improve accurate accounts of use-of-force data from law enforcement:

• The Bureau of Justice Statistic (BJS) and the FBI are collaborating with major policing organizations, such as the International Association of Chiefs of Police (IACP), the Major Cities Chiefs of Police Association (MCCA), the Major County Sheriffs Association (MCSA) on defining data collections on police use-of-force and homicides by law enforcement officers. 

• The department also requires the records of police interactions when we enter into consent decree and collaborative reform agreements.

• The FBI recently announced that the Uniform Crime Reporting Statistics (UCR) will begin to collect data on non-fatal shootings between law enforcement and civilians.

• BJS has been conducting work on new methods for not only identifying deaths in police custody (as defined by the Deaths in Custody Reporting Act (PL 113-242), where they will go further than what the newspapers and media reports on law enforcement homicides that are derived from open source records verifying that the media accounts are correct and complete.BJS will do this by surveying police departments, medical examiners’ offices and investigative offices about the reports that it identifies from open source and using data from the multiple source to obtain a more accurate factual account of each incident.BJS will complete its methodology study by late 2015/early 2016 and then begin to stand up a national program on arrest related deaths.

  The President’s Task Force on 21st Century Policing and the President’s Police Data Initiative also seek to encourage better data and record keeping for local law enforcement reinforces the administration’s position on this need.

  Excerpts from the Attorney General’s Press Conference:

  ATTORNEY GENERAL LYNCH:  [L]et me be clear: police shootings are not minutiae at all and the department’s position and the administration’s position has consistently been that we need to have national, consistent data.  Both on excessive force and on officer involved shootings is vital.  The point I was trying to make at that conference related to our overall view of how we deal with police departments as part of our practice of enforcing consent decrees, or working with them and I was trying to make the point that we also have to focus on building community trust which is a very individual – very local – practice.  Unfortunately, my comments gave the misperception that we were changing our view in some way about the importance of this data – nothing could be further from the truth.  This data is not only vital – we are working closely with law enforcement to develop national consistent standards for collecting this kind of information.

  ***

  ATTORNEY GENERAL LYNCH:  [W]e do require it [data collection].  When we have consent decrees with departments and frankly we find it very, very useful as we look at data and trends and as we publish consent decrees we encourage other departments to do so.  And frankly police departments also are finding it useful.  Certainly the fact that we don’t have a nationwide, consistent set of standards is – not only does it make our job difficult it makes it hard to see these trends and that’s why it is so important to focus on these.  And that’s why we are working through the department’s research arm – our Bureau of Justice Statistics and the FBI – are working with the leading police organizations; International Association of Chiefs of Police; Major Cities Chiefs; Major Counties Sheriffs; to look at these standards.  And we’re also going further in developing standards for publishing information about deaths in custody as well; because transparency and accountability are helped by this kind of national data.

            ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, was invited to be a keynote speaker at the Guam Social Work Conference 2015, “Celebrating Diversity in Micronesia:  Empowering and Developing Communities Together,” held on March 18-20, 2015.   U.S. Attorney Limtiaco also made a presentation, together with Karen Carpenter, a retired professor Emeritus from the University of Guam and presently a Victim Advocate, volunteering at Erica’s House, Victim Advocates Reaching Out, and the Guam Coalition Against Sexual Assault and Family Violence, and a member of the Guam Human Trafficking Task Force.

            U.S. Attorney Limtiaco spoke on the topic of “Preventing Human Trafficking in the Pacific Region,” and shared information on the Pacific Regional Response to Combat Human Trafficking Initiative (the “Initiative”), which is a collaborative effort among the U.S. Attorney’s Office for the Districts of Guam and the NMI; the U.S. Department of State, Office to Monitor and Combat Trafficking in Persons; U.S. Department of the Interior, Office of Insular Affairs; the U.S. Department of Labor; the Guam Human Trafficking Task Force, the NMI Human Trafficking Intervention Coalition; and other community partners.  U.S. Attorney Limtiaco also discussed the intersection and relationship between human trafficking, sexual assault, child abuse and domestic and family violence, and prevention and enforcement efforts in the Pacific region. 

            The Initiative employs a multidisciplinary model, including participation, coordination, and collaboration among law enforcement, prosecution, victim service providers, social services, medical, mental and public health professionals, faith based organizations, educational institutions, Consulates, and other community stakeholders.  The Initiative calls for the establishment and provision of victim services, investigation and prosecution of human trafficking, training opportunities, community outreach/ public awareness and prevention programs, and creation of human trafficking task forces and coalitions in the Pacific region island communities.  The Initiative also provides fundamental training in human trafficking, including victimization, investigation and prosecution, prevention efforts, and other related topics to law enforcement, prosecution, victim service providers, social services, medical, mental and public health professionals, faith based organizations, educational institutions, Consulates, and other community stakeholders in our Pacific region island communities, which is critical to effective prevention and enforcement efforts in the region.

            Victim Advocate Karen Carpenter shared information about how small jurisdictions like Guam with its limited resources can be responsive to the needs of victims of crime, including victims of human trafficking and other forms of abuse and exploitation.  The workshop explored how the Initiative was organized, the importance of unique approaches to the problem depending on the jurisdiction, and the implications for other small jurisdictions.

            Other keynote speakers at the conference were Kathy Jetnil-Kijiner, a poet, writer, journalist, and word-artist-empowerment activist; Francis Hezel, SJ, a prolific author of many books and articles on the region’s history and culture  and founder of the Micronesian Seminar, an educational, social and research institute that engaged in a variety of public awareness programs for the indigenous population; and the Hon. Benjamin Cruz, retired Chief Justice of the Supreme Court of Guam and Vice Speaker of the 33rd Guam Legislature.   There were also more than 30 other speakers at the conference.

            Approximately 200 participants attended the Guam Social Work Conference 2015.

U.S. Attorney Alicia Limtiaco giving her keynote remarks at the conference

Karen Carpenter and U.S. Attorney Alicia Limtiaco presenting at the conference

Hospice Allegedly Knowingly Billed Medicare for Ineligible Patients

Guardian Hospice of Georgia LLC, Guardian Home Care Holdings Inc. and AccentCare Inc. (collectively Guardian) agreed to pay $3 million to resolve allegations that Guardian knowingly submitted false claims to the Medicare program for hospice patients who were not terminally ill, the Department of Justice announced today.  Guardian is a for-profit hospice which provides hospice services in Atlanta.

“The Medicare hospice benefit is intended to provide comfort and care to patients nearing the end of life,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “We will continue to aggressively pursue companies that abuse the Medicare hospice benefit to improperly inflate their profits.”

The Medicare hospice benefit is available for patients who elect palliative treatment (medical care focused on providing patients with relief from pain, symptoms or stress) for a terminal illness and have a life expectancy of six months or less if their illness runs its normal course.  Before billing Medicare, a hospice provider is obligated to comply with Medicare requirements and ensure that patients who are foregoing curative care are in need of end of life care.

The government alleged that Guardian submitted or caused the submission of false claims for hospice care for patients who Guardian knew were not terminally ill.  Specifically, the United States contended that Guardian’s business practices contributed to its submission of claims for patients who did not have a terminal prognosis of six months or less, including failing to properly train its staff and medical directors on the hospice eligibility criteria, setting aggressive targets to recruit and enroll patients, and failing to properly oversee the Atlanta hospice.

“Medicare payments to hospices are increasing every year,” said U.S. Attorney John A. Horn of the Northern District of Georgia.  “In order to preserve Medicare funds for services patients truly need, we will continue to pursue hospice providers who abuse the Medicare hospice benefit by billing Medicare for the care of patients who are not terminally ill.”

“Hospice care is only medically appropriate – and reimbursed by Medicare – for terminally ill patients who are in the last months of their lives,” said Special Agent in Charge Derrick L. Jackson of the U.S. Department of Health and Human Services-Office of Inspector General (HHS-OIG).  “We will continue to vigorously investigate health care companies that put their own profits above their duty to give appropriate medical care to their patients and bill Medicare only for legitimate health care services.”

The settlement resolves allegations filed by Rose Betts and Jennifer Williams, former employees of Guardian, under the qui tam or whistleblower provisions of the False Claims Act, which authorize private parties to sue for false claims on behalf of the United States and share in the recovery.  Ms. Betts and Ms. Williams will receive approximately $510,000.

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 $25.1 billion through False Claims Act cases, with more than $16.1 billion of that amount recovered in cases involving fraud against federal health care programs.

This matter was investigated by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office of the Northern District of Georgia, the FBI and HHS-OIG.  The claims resolved by the settlement are allegations only and there has been no determination of liability.

The lawsuit is captioned U.S. ex rel. Betts, et al. v. Texas Home Health of America, L.P., et al., No. 1 12:CV-0412 (N.D. Ga.).

A resident of Reseda, California, was sentenced to prison today for conspiring to submit false claims, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and Acting U.S. Attorney Brian J. Stretch of the Northern District of California.

Duffy R. Dashner, aka Kevin Dashner, 42, was sentenced to serve 57 months in prison to be followed by three years of supervised release and ordered to pay $1,769,418 in restitution to the Internal Revenue Service (IRS).  He was detained following today’s sentence.  On June 18, Dashner pleaded guilty to one count of conspiracy to submit false claims.

According to court documents, Dashner and his co-conspirators, including Mark R. Maness, operated a business called O.I.D. Process through which they helped others to prepare and file individual federal income tax returns that claimed false Original Issue Discount (OID) interest income and federal tax withholdings, resulting in fraudulent claims for tax refunds (OID returns).  Dashner and Maness charged clients of O.I.D. Process a non-refundable registration fee to join the organization, and a 20 percent “refund acquisition fee” for any refund check issued by the IRS.  Dashner and Maness also operated a website and conducted weekly conference calls with clients to promote their business and to assist clients in preparing and filing OID returns.

Dashner and Maness required clients of O.I.D. Process to change their mailing address with the IRS to the address of another co-conspirator who was an attorney in San Francisco.  As a result, all correspondence from the IRS to the clients and the clients’ O.I.D. refund checks were sent to the attorney’s address rather than the clients’ home addresses.  In this way, Dashner and Maness ensured they would receive a 20 percent refund acquisition fee.  O.I.D. Process’s clients filed approximately 200 OID returns claiming refunds that totaled approximately $228 million.

Maness, who previously pleaded guilty to conspiracy to submit false claims against the United States, was sentenced in February 2015 to serve 41 months in prison and ordered to pay $1,176,668 in restitution to the IRS.

Acting Assistant Attorney General Ciraolo and Acting U.S. Attorney Stretch commended the efforts of special agents of IRS-Criminal Investigation, who investigated the case, and Assistant U. S. Attorney Michael G. Pitman of the Northern District of California and Trial Attorney Matthew J. Kluge of the Tax Division, who prosecuted the case.

Attorney General Loretta E. Lynch announced today that the Justice Department will launch a new collaborative strategy to more closely partner with businesses in intellectual property enforcement efforts and will award over $3.2 million to ten jurisdictions to support state and local task forces in the training, prevention, enforcement and prosecution of intellectual property theft and infringement crimes.

“The digital age has revolutionized how we share information, store data, make purchases and develop products, requiring law enforcement to strengthen our defenses against cybercrime – one of my top priorities as Attorney General,” said Attorney General Lynch. “High-profile instances of hacking – even against large companies like Sony and Target – have demonstrated the seriousness of the threat all business face and have underscored the potential for sophisticated adversaries to inflict real and lasting harm.” 

The new FBI collaborative strategy builds upon the work previously done by the department while also working with industry partners to make enforcement efforts more effective. As part of the strategy, the FBI will partner with third-party marketplaces to ensure they have the right analytical tools and techniques to combat intellectual property concerns on their websites. The bureau also will serve as a bridge between brand owners and third-party marketplaces in an effort to mitigate instances of the manufacture, distribution, advertising and sale of counterfeit products. This new strategy will help law enforcement and companies better identify, prioritize and disrupt the manufacturing, distribution, advertising and sale of counterfeit products. Crimes will then be investigated by the FBI and other partners of the National Intellectual Property Rights Coordination Center and finally prosecuted by the Department of Justice.

Additionally, the Office of Justice Program’s Intellectual Property Enforcement Program (IPEP) will award $3.2 million in grants to aid state and local law enforcement in addressing intellectual property crimes.

Local award recipients announced today include the following:

City of Austin Police Department

$400,000

City of Hartford Police Department

$399,545

Cook County State Attorney's Office

$400,000

Baltimore County Police Department

$120,174

North Carolina Department of Secretary of State

$367,076

New Jersey State Police

$269,619

City of Phoenix Police Department

$253,129

City of Portland Police Department

$373,569

Virginia State Police

$253,128

City of San Antonio Police Department

$400,000

Since IPEP’s establishment in 2009, the department has invested nearly $14.8 million for 41 task forces across the country. These grants have supported the arrest of 3,522 individuals, the dismantling of 1,882 piracy or counterfeiting organizations and the seizure of $266,164,989 in counterfeit property, other property and currency in conjunction with IP enforcement operations.

The department also launched a new intellectual property website http://www.justice.gov/iptf to serve as a both a resource to companies facing intellectual property challenges as well as a mechanism to educate the public on how intellectual property theft is a growing threat to the country’s public safety and economic well-being.

Intellectual property theft refers to the violation of criminal laws that protect copyrights, patents, trademarks and other forms of intellectual property and trade secrets both in the United State and abroad. Faulty and counterfeit products are often sold to unsuspecting consumers and pose a severe threat to their health and safety. In a few circumstances, these activities are used to fund dangerous or violent criminal enterprises or organized crime networks.

The Department of Justice today filed a statement of interest in S.R. & L.G. v. Kenton County, et al, in federal court in the Eastern District of Kentucky.  The plaintiffs in the case are two elementary school children – named in the complaint as eight-year-old third grader S.R. and nine-year-old fourth grader L.G. – who allege that a school resource officer (SRO) violated their rights under the Fourth and 14th Amendment and Title II of the Americans with Disabilities Act (ADA) when the SRO handcuffed them in school, behind their backs, above their elbows, and at their biceps, after the children exhibited conduct arising out of their disabilities.

The purpose of the statement of interest, which does not take a position on the merits of the case, is to provide the court with a framework to assess the plaintiffs’ claim.  The department’s statement of interest explains the requirements to protect the rights of children, particularly children with disabilities, in their interactions with SROs.  SROs can partner with schools to help maintain a safe and positive school environment—when their role is clearly defined and they are trained to perform it properly.  However, if SROs do not observe appropriate limits on their role and responsibility, the Justice Department writes, they risk “criminaliz[ing] school-related misbehavior and risk lasting and severe consequences for children, particularly children with disabilities.” 

In its statement of interest, the Justice Department emphasizes that school resource officers should not handle routine disciplinary incidents that school officials should properly address.  The brief also describes the particularized facts and circumstances the court should consider in evaluating whether the SRO’s conduct in this case was objectively reasonable under the Fourth Amendment.  Finally, the department confirms that the ADA applies to SROs’ interactions with children with disabilities and that this statute requires SROs to make reasonable modifications in their procedures when necessary, and requires law enforcement agencies to change policies that discriminate against children with disabilities. 

S.R. and L.G. v. Kenton County, et al. was filed in August 2015.  The Department of Justice filed its statement of interest under a federal law that gives the Attorney General the authority to attend to the interests of the United States in any case pending in a federal court. 

A Phenix City, Alabama, resident pleaded guilty for her role in a stolen identity tax refund fraud (SIRF) conspiracy, Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney George L. Beck Jr. of the Middle District of Alabama announced today.

According to court documents, between Jan. 1, 2013, and Dec. 31, 2013, Benita Short conspired with others to defraud the United States by filing false federal income tax returns using stolen identities.  Short obtained personal identifiable information, including names, social security numbers, addresses and dates of birth, without the individuals’ authorization.  A co-conspirator obtained the stolen personal identifiable information from an individual who had access to Alabama state databases and gave it to Short.  This co-conspirator also obtained Electronic Filing Identification Numbers (EFINs) in the names of several tax preparation businesses and provided the EFINs to Short.  Short then used the stolen identities and EFINs to electronically file 326 fraudulent tax returns, causing a tax loss of $456,853.  Short also caused fraudulent income tax refund checks to be cashed at several businesses in Alabama and Georgia.

Short additionally pleaded guilty to one count of aggravated identity theft.  She faces a statutory maximum sentence of 10 years in prison and three years of supervised release for the conspiracy charge and a statutory mandatory sentence of two years in prison and one year of supervised release for the aggravated identity theft charge.  Short must serve the two-year sentence for aggravated identity theft in addition to whatever sentence the court imposes for the conspiracy charge.  Both charges carry a statutory maximum fine of $250,000.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Beck commended special agents of Internal Revenue Service-Criminal Investigation, who investigated the case, and Trial Attorneys Michael C. Boteler and Michael P. Hatzimichalis of the Tax Division and Assistant U.S. Attorney Jonathan Ross of the Middle District of Alabama, who are prosecuting the case.

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

The U.S. Departments of Justice and Labor have reached an agreement with the Washington State Department of Labor and Industries (L&I) to resolve civil rights complaints filed by limited English proficient (LEP) workers who alleged that they were subject to national origin discrimination in the state’s workers’ compensation program.  These workers alleged that they were denied access to interpreters and to vital information in their primary languages.  The agreement calls for significant improvements in language assistance services for LEP workers.

“This agreement symbolizes how federal and state government can work together to improve access to government services for limited English proficient communities.” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the U.S. Department of Justice’s Civil Rights Division.  “The Department of Justice will continue its efforts to ensure these communities have equal access to government services.”

“Navigating a system of government benefits can be daunting for anyone,” said U.S. Attorney Annette L. Hayes of the Western District of Washington.  “This is particularly so for members of our community who are applying for workers compensation benefits and whose primary language is not English.  The changes to Washington’s Labor and Industries practices set forth in this settlement agreement will ensure all workers’ rights are protected regardless of their country of origin.”

“I commend L&I for its commitment to work with the Civil Rights Center and the Department of Justice to remove language barriers for limited English proficient workers.” said Director Naomi M. Barry-Pérez of the U.S. Department of Labor’s Civil Rights Center.

The Departments of Justice and Labor worked with L&I to develop a memorandum of agreement (MOA) that memorializes L&I’s commitment to develop and implement a language access program that ensures LEP individuals are provided meaningful access to L&I programs, activities, and information.  The MOA and new L&I Language Access Policy include the following commitments:

• All L&I staff will ensure LEP individuals receive language assistance services at no charge.
• L&I will develop a Language Access Plan, that sets forth the management actions needed to implement the Language Access Policy and ensure compliance with federal civil rights laws, including the tasks to be undertaken, assignment of responsibility, deadlines, processes, resources, quality controls, and periodic updates.
• L&I will translate claim and application forms, complaint and consent forms, letters and notices, and electronic materials into non-English languages.
• L&I will add advisory members to the Language Access Steering Committee to represent the interests of LEP workers and the Washington employer community.
• L&I will submit detailed monitoring reports that document its implementation of the MOA.

The investigation was jointly conducted by the Federal Coordination and Compliance Section (FCS) in the Department of Justice’s Civil Rights Division, the U.S. Attorney’s Office for the Western District of Washington and the U.S. Department of Labor’s Civil Rights Center (CRC).  Title VI of the Civil Rights Act of 1964, Section 188 of the Workforce Investment Act of 1998, the Victims of Crime Act, and their corresponding implementing regulations all prohibit national origin discrimination and require recipients of federal financial assistance to provide LEP individuals meaningful access to programs and activities through no-cost language assistance services.

FCS has worked with a number of state courts, law enforcement agencies, correctional agencies and other government entities to ensure Title VI compliance and access to language assistance services for LEP individuals.  Please click here for further information about FCS.  For additional LEP-related resources, go to LEP.gov, the Federal Interagency Website on LEP.

CRC enforces nondiscrimination laws that apply to recipients of financial assistance from the U.S. Department of Labor and, in some circumstances, from other federal departments and agencies.  For more information about CRC, call 202-693-6500 (voice) or 800-877-8339 (relay) or visit CRC’s website.

The Department of Justice and the Environmental Protection Agency (EPA) today announced a settlement with Mosaic Fertilizer LLC that will ensure the proper treatment, storage and disposal of an estimated 60 billion pounds of hazardous waste at six Mosaic facilities in Florida and two in Louisiana.  The settlement resolves a series of alleged violations by Mosaic, one of the world’s largest fertilizer manufacturers, of the federal Resource Conservation and Recovery Act (RCRA), which provides universal guidelines for how hazardous waste must be stored, handled and disposed.  The 60 billion pounds of hazardous waste addressed in this case is the largest amount ever covered by a federal or state RCRA settlement and will ensure that wastewater at Mosaic’s facilities is properly managed and does not pose a threat to groundwater resources.

At Mosaic’s eight facilities in Florida and Louisiana, hazardous waste from fertilizer production is stored in large piles, tanks, ditches and ponds; the piles can reach 500 feet high and cover more than 600 acres, making them some of the largest manmade waste piles in the United States.  The piles can also contain several billion gallons of highly acidic wastewater, which can threaten human health and cause severe environmental damage if it reaches groundwater or local waterways.

Under the settlement, Mosaic Fertilizer will establish a $630 million trust fund, which will be invested until it reaches full funding of $1.8 billion. These funds will cover the future closure of four Mosaic facilities—the Bartow, New Wales and Riverview plants in Florida and the Uncle Sam plant in Louisiana—and also be put toward the treatment of hazardous wastewater at and long-term care of those facilities and two additional  facilities which are already undergoing closure. The Mosaic Company, Mosaic Fertilizer’s parent company, will provide financial guarantees for this work, and the settlement also requires Mosaic Fertilizer to submit a $50 million letter of credit.

Mosaic will also spend $170 million on projects to reduce the environmental impact of manufacturing and waste management programs at its facilities and $2.2 million on two local environmental projects.  Mosaic will also pay a $5 million civil penalty to the United States and $1.55 million to the State of Louisiana and $1.45 million to the State of Florida, who joined the Department of Justice and EPA as plaintiffs in this case.

“This settlement represents our most significant enforcement action in the mining and mineral processing arena, and will have a significant impact on bringing all Mosaic facilities into compliance with the law,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division.  “Moreover, through this settlement, we establish critical financial assurance to cover the enormous closure and care costs at all these facilities.  This sets the standard for our continuing enforcement of RCRA in the entire phosphoric acid industry. And, it reflects our emphasis on working jointly with impacted states.”

“This case is a major victory for clean water, public health and communities across Florida and Louisiana,” said Assistant Administrator Cynthia Giles for EPA’s Office of Enforcement and Compliance Assurance.  “Mining and mineral processing facilities generate more toxic and hazardous waste than any other industrial sector.  Reducing environmental impacts from large fertilizer manufacturers operations is a national priority for EPA, as part of our commitment to pursuing cases that have the biggest impact on protecting public health.”

The alleged violations in this case stem from storage and disposal of waste from the production of phosphoric and sulfuric acids, key components of fertilizers, at Mosaic’s facilities in Bartow, Lithia, Mulberry and Riverview, Florida, and St. James and Uncle Sam, Louisiana.  Mosaic failed to properly treat, store, and dispose of hazardous waste, and also failed provide adequate financial assurance for closure of its facilities.

As part of EPA’s National Enforcement Initiative for mining and mineral processing, the agency has required phosphate fertilizer production facilities to reduce the storage volumes of hazardous wastewaters, ensure that waste piles and ponds have environmentally-protective barriers installed and verify the structural stability of waste piles and ponds.

Mosaic has committed to spending approximately $170 million over the next several years to implement an innovative reconfiguration of their current operations and waste management systems.  The development of these of industry-leading technologies will optimize resource efficiency and decrease the amount of raw materials required to produce fertilizer.  This case spurred Mosaic to develop advanced engineering controls and practices to recover and reduce some types of acid wastes that result from fertilizer production, which will reduce the amount and toxicity of the waste materials stored at Mosaic’s facilities and the severity of potential spills while cutting Mosaic’s costs for treating material at closure, which would otherwise have been categorized as hazardous waste.

Under the settlement, Mosaic will also fund a $1.2 million environmental project in Florida to mitigate and prevent certain potential environmental impacts associated with an orphaned industrial property located in Mulberry, Florida.  In Louisiana, Mosaic will spend $1 million to fund studies regarding statewide water quality issues.

Mosaic produces phosphorus-based fertilizer that is commonly applied to corn, wheat and other crops across the country. Sulfuric acid is used to extract phosphorus from mined rock, which produces large quantities of a solid material called phosphogypsum and wastewater that contains high levels of acid.  EPA inspections revealed that Mosaic was mixing certain types of highly-corrosive substances from its fertilizer operations, which qualify as hazardous waste, with the phosphogypsum and wastewater from mineral processing, which is a violation of federal and state hazardous waste laws.

A consent decree formalizing the settlement was lodged today in the U.S. District Courts for the Middle District of Florida and the Eastern District of Louisiana and is subject to a 45-day public comment period and approval by the federal court.

For a copy of the consent decree, visit www.justice.gov/enrd/consent-decrees.

WASHINGTON – Los Departamentos de Justicia y Trabajo de EE.UU. han realizado un acuerdo con el Departamento de Trabajo e Industrias [Department of Labor and Industries (L&I)] del Estado de Washington en resolución de demandas de derechos civiles entabladas por trabajadores con conocimientos dominio limitado del Inglés [limited English proficient (LEP)] que alegaron que fueron objeto de discriminación por origen nacional en el programa de compensación del trabajador del estado.  Los trabajadores alegaron que se les negó acceso a intérpretes y a información vital en sus idiomas principales.  El acuerdo exige mejoras importantes en los servicios de asistencia idiomática para trabajadores LEP.

“Este acuerdo simboliza cómo el gobierno federal y estatal pueden trabajar juntos en mejorar el acceso a servicios gubernamentales para comunidades con conocimientos limitados del inglés”, señaló la Procuradora General Adjunta Suplente Principal Vanita Gupta, líder de la División de Derechos Civiles del Departamento de Justicia de EE.UU.  “El Departamento de Justicia seguirá adelante con su labor de garantizar que estas comunidades tengan acceso igualitario a servicios gubernamentales”.

“La comprensión de un sistema de beneficios gubernamentales puede resultarle sobrecogedor a cualquiera”, dijo la Fiscal Federal Annette L. Hayes del Distrito Oeste de Washington.  “Esto es especialmente así para los miembros de nuestra comunidad que solicitan beneficios de compensación del trabajador y cuyo idioma principal no es el inglés.  Los cambios a las prácticas de Trabajo e Industrias de Washington establecidos en este acuerdo conciliatorio garantizarán que se protejan los derechos de todos los trabajadores, independientemente de su país de origen”.

“Felicito a L&I por su compromiso de trabajar con el Centro de Derechos Civiles y el Departamento de Justicia para eliminar las barreras idiomáticas para trabajadores con conocimientos limitados del inglés", dijo la Directora Naomi M. Barry-Pérez del Centro de Derechos Civiles del Departamento de Trabajo de EE.UU.”

Los Departamentos de Justicia y Trabajo trabajaron con L&I en el desarrollo de un memorando de acuerdo [memorandum of agreement (MOA)] que documenta el compromiso de L&I de desarrollar e implementar un programa de acceso idiomático que asegure que las personas LEP tengan acceso significativo a programas, actividades e información de L&I.  El MOA y la nueva Política de acceso idiomático de L&I incluyen los siguientes compromisos:

• Todo el personal de L&I se asegurará de que las personas LEP reciban servicios de asistencia idiomática sin cargo.
• L&I desarrollará un Plan de Acceso Idiomático que establezca las acciones de gestión necesarias para implementar la Política de Acceso Idiomático y asegure el cumplimiento de las leyes federales de derechos civiles, incluidas las tareas a realizarse, la asignación de responsabilidades, plazos, procesos, recursos, controles de calidad y actualizaciones periódicas.
• L&I traducirá a idiomas extranjeros sus formularios de reclamación y solicitud, formularios de quejas y consentimiento, cartas y avisos y materiales electrónicos.
• L&I agregará miembros asesores al Comité Directivo de Acceso Idiomático para que representen los intereses de los trabajadores LEP y a la comunidad de empleadores de Washington.
• L&I presentará informes de monitoreo detallados que documenten su implementación del MOA.

La investigación fue realizada en forma conjunta por la Sección de Coordinación y Cumplimiento Federal [Federal Coordination and Compliance Section (FCS)] de la División de Derechos Civiles del Departamento de Justicia, la Fiscalía Federal para el Distrito Oeste de Washington y el Centro de Derechos Civiles [Civil Rights Center (CRC)] del Departamento de Trabajo de EE.UU.  El Título VI de la Ley de Derechos Civiles de 1964, Sección 188 de la Ley de Inversión en Fuerza Laboral de 1998, y sus reglamentaciones correspondientes prohíben la discriminación por origen nacional y exigen que los beneficiarios de asistencia financiera federal brinden acceso significativo a programas y actividades a las personas LEP por medio de servicios de asistencia idiomática gratuitos.

La FCS ha trabajado con una serie de tribunales, agencias de fuerzas del orden público, agencias correccionales estatales y otras entidades gubernamentales para garantizar el cumplimiento del Título VI y el acceso a servicios de asistencia idiomática para personas LEP.  Haga clic aquí para más información sobre la FCS.  Para más recursos relacionados con las personas LEP, diríjase a LEP.gov, el portal de Internet Interagencias Federal.

El CRC hace valer las leyes antidiscriminatorias aplicables a beneficiarios de asistencia federal del Departamento de Trabajo de EE.UU. y, en algunas circunstancias, de otros departamentos y agencias federales.  Para obtener más información sobre el CRC, llame al 202-693-6500 (voz) o 800-877-8339 (‘relay’) o visite el portal en Internet del CRC.

• Información para clientes con un dominio limitado del inglés (Limited English Proficient, LEP) que participan en programas y actividades del Departamento de Trabajo e Industrias del Estado de Washington
• Washington State Department of Labor and Industries Memorandum of Agreement

The Department of Justice announced today that BHF-Bank (Schweiz) AG (BHF) 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, BHF 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.

BHF was established in 1974 as a wholly-owned Swiss subsidiary of BHF-BANK Aktiengesellschaft (BHF-BANK AG), a private bank located in Germany.  Deutsche Bank AG purchased BHF-BANK AG in 2010, and in 2014, BHF-BANK AG was sold to a consortium of investors.  BHF is headquartered in Zurich and has a branch in Geneva.  The name of the group is now BHF Kleinwort Benson Group.

BHF opened and maintained undeclared accounts for U.S. taxpayers.  It chose to continue to service U.S. customers without disclosing their identities to the Internal Revenue Service (IRS) or taking steps to ensure that clients were compliant with U.S. tax laws and without considering the impact of U.S. criminal law on that decision.

BHF offered a variety of traditional Swiss banking services that it knew could assist, and did assist, U.S. clients in the concealment of assets and income from the IRS, such as “hold mail” services, which minimized the paper trail between the U.S. clients and undeclared assets and income, and debit cards, which allowed U.S. clients to access their undeclared accounts without having to visit BHF.

In 1982, Plinius Management Limited, Zurich (Plinius), a trust company, was formed as a wholly-owned subsidiary of BHF to provide special services for wealthy clients, which included advice regarding trusts, foundations, fiduciary agreements and holding companies in order to protect assets and minimize tax liability.  Plinius had no employees, and BHF provided it with staff and infrastructure.

Plinius also assisted with referrals to establish various types of structures, including Liechtenstein Anstalten and Stiftungen, and British Virgin Islands and Panamanian entities.  Plinius did not create the structures; instead, it would contact an external trust company or law firm in Liechtenstein to set up the entity within the agreed-upon jurisdiction.  While Plinius’ relationship managers did not have access to the Forms A held by BHF that identified the beneficial owners, in some cases they were aware of the ultimate beneficial owner(s) of the accounts.  Four subsidiary-related structured accounts were established for U.S. persons, which improperly sheltered U.S. taxpayer-clients and hid their assets from the IRS.

U.S.-related accounts, including offshore structured accounts, came into BHF through its relationship managers, through external asset managers or otherwise.  For example, one account in the name of an offshore entity was referred to a BHF manager from a U.S.-based structuring lawyer prior to 2008, and transferred to BHF from another Swiss bank.  The file contained a Form W-8BEN and certification of non-U.S. persons for the offshore corporate accountholder.  BHF’s management approved opening the account even though the account also held U.S. securities.  There was no Form W-9 completed or provided to BHF for the U.S. beneficial owner.  BHF did not confirm that the U.S. beneficial owner was compliant with U.S. tax obligations. 

In the fourth quarter of 2000, BHF signed a Qualified Intermediary (QI) Agreement with the IRS.  The QI regime provided a comprehensive framework for U.S. information reporting and tax withholding by a non-U.S. financial institution with respect to U.S. securities.  The QI Agreement was designed to help ensure that, with respect to U.S. securities held in an account at BHF, non-U.S. persons were subject to the proper U.S. withholding tax rates and that U.S. persons were properly paying U.S. tax.

BHF implemented a policy that every client had to sign either a Form W-9 or a Declaration of Non-U.S. Person Status, which required the customer to declare whether he or she was a U.S. person for tax purposes.  Some U.S. clients who did not want to have their identities disclosed to the IRS could avoid detection by declining U.S. securities.  Approximately five clients refused to sign a Form W-9, but BHF nevertheless continued to service these clients’ accounts and kept them open.

While participating in the Swiss Bank Program, BHF encouraged existing and prior accountholders and beneficial owners of U.S.-related accounts to provide evidence of tax compliance or of participation in any of the IRS Offshore Voluntary Disclosure Programs or Initiatives or to disclose their accounts to the IRS through such a program.  BHF sought waivers of Swiss bank secrecy from all accountholders and obtained waivers for more than 50 percent of its accounts.  BHF has also provided certain account information related to U.S. taxpayers that will enable the government to make requests under the 1996 Convention between the United States of America and the Swiss Confederation for the Avoidance of Double Taxation with respect to Taxes on Income for, among other things, the identities of U.S. accountholders.

Since Aug. 1, 2008, BHF held a total of 125 U.S.-related accounts, comprising total assets under management of approximately $202,964,006.  BHF will pay a penalty of $1.768 million.

While U.S. accountholders at BHF 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 BHF 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 Ciraolo thanked the IRS, and in particular, IRS-Criminal Investigation and the IRS Large Business & International Division for their substantial assistance.  Ciraolo also thanked Charles M. Duffy, 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, Attorney Kimberle E. Dodd 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.

New Second Chance Grants Announcement Will Impact Nearly 45 Jurisdictions around the Country

The Justice Department announced today that it will award grants totaling $53 million to 45 jurisdictions, to reduce recidivism among adults and youth returning to their communities after confinement.

The Second Chance Act (SCA) programs, administered through the Office of Justice Programs’ (OJP’s) Bureau of Justice Assistance (BJA) and Office of Juvenile Justice and Delinquency Prevention (OJJDP) support state, local and tribal community organizations in their efforts to reduce recidivism, provide reentry services and support research programs.

SCA funding covers a broad range of services, training, mentorship and technical assistance programs. 

BJA grant awards:

• SCA Two-Phase Adult Reentry Demonstration, 10 awards totaling $7,774,158;

• SCA Reentry Program for Adults with Co-Occurring Substance Abuse and Mental Disorders, 10 awards totaling $5,989,258;

• SCA Mentoring, six awards totaling $5,983,401;

• National Reentry Resource Center (supplement), one award totaling $5,281,751

• SCA Statewide Recidivism Reduction (supplements), four awards totaling $3,995,861;

• SCA Technology Career Training Program, four awards totaling $2,949,536;

• SCA Statewide Recidivism Reduction Planning, seven awards totaling $594,222;

• SCA and Corrections Visiting Fellows, two awards totaling $487,551; and

• Vera Institute of Justice Postsecondary Education/Pell Experiment (supplement), one award totaling $200,000.

OJJDP grant awards:

• SCA Supporting Latino/a Youth from Out-of-Home Placement to the Community, six awards totaling $2,900,000;

• SCA Strengthening Relationships Between Young Fathers and Their Children: A Reentry Mentoring Project, seven awards totaling $2,939,067;

• SCA Strengthening Families and Children of Incarcerated Parents, three awards totaling  $1,239,276;

• SCA Comprehensive Statewide Juvenile Reentry System Reform Implementation, three awards totaling $2,196,894;

• SCA Smart of Juvenile Justice: Enhancing Youth Access to Justice Initiative, Training and Technical Assistance (to provide legal services to youth reentering the community), one award totaling, $708,106;

• SCA Smart on Juvenile Justice: Community Supervision, six awards totaling $1,000,000;

• SCA Smart on Juvenile Justice: Community Supervision Training and Technical Assistance, one award totaling $650,000; and

• Initiative to Develop Juvenile Reentry Measurement Standards, one award totaling $750,000.

These programs include training and job placement for incarcerated or detained adults and juveniles in technology-related jobs; training for mentors to assist pre- and post-release; screening and assessments pre-release and evidence-based treatment after incarceration to improve outcomes for incarcerated individuals with substance abuse and mental disorders; and assistance for jurisdictions providing reentry services to members of Native American tribes.

These grants also provide supplemental funding to improve existing reentry research and programs, including ongoing data-driven assessments of the needs, policy barriers and resource gaps for successful reentry.  Additional funding will enable the Vera Institute to deliver technical assistance in post-secondary education and corrections and to share best practices through its resource center.

In addition, the Justice Department awarded two fellowships: its first-ever Second Chance Visiting Fellow, Daryl Vincent Atkinson, who will engage formerly incarcerated individuals to gather what is needed for successful reentry; and a Corrections Visiting Fellow, Dr. Emily Wang of Yale University, who will measure the risk of hospitalization following prison release among Medicaid beneficiaries and the impact of community primary care on patient recidivism.

Lastly, the National Reentry Resource Center (NRRC) will continue to offer training and technical assistance for grantees and administer the What Works in Reentry Clearinghouse, a “one-stop shop” for research on the effectiveness of a wide variety of reentry programs and practices.  The NRRC collaborates with the Attorney General’s Federal Interagency Reentry Council (FIRC), and other federal agencies.

For more information on the NRRC, please visit: www.nationalreentryresourcecenter.org. 

For more information on FIRC, please visit: csgjusticecenter.org/nrrc/projects/firc/.

About OJP

OJP, headed by Assistant Attorney General Karol V. Mason, provides federal leadership in developing the nation’s capacity to prevent and control crime, administer justice and assist victims.  OJP has six components: BJA; the Bureau of Justice Statistics; the National Institute of Justice; OJJDP; the Office for Victims of Crime and the Office of Sex Offender Sentencing, Monitoring, Apprehending, Registering and Tracking.  More information about OJP can be found at www.ojp.gov.

Two former officials of the Peanut Corporation of America (PCA) were sentenced to prison today in Albany, Georgia, for their roles in a conspiracy to defraud their customers by shipping salmonella-positive peanut products before the results of microbiological testing were received and falsifying microbiological test results, the Department of Justice announced today.  Last week, PCA’s former president received 28 years in prison, the largest criminal sentence ever given in a food safety case.

Samuel Lightsey, 50, of Blakely, Georgia, a former operations manager at PCA’s Blakely plant, was sentenced by Senior U.S. District Court Judge W. Louis Sands of the Middle District of Georgia to serve 36 months in prison to be followed by three years of supervised release.  Daniel Kilgore, 46, also of Blakely, and a former operations manager at PCA’s Blakely plant, was sentenced to serve 72 months in prison to be followed by three years of supervised release.

Both Lightsey and Kilgore pleaded guilty to conspiracy, mail and wire fraud, and the sale of misbranded and adulterated food.  Additionally, both Lightsey and Kilgore served as witnesses in the 2014 trial of Stewart Parnell, 61, of Lynchburg, Virginia, the former owner and president of PCA; Michael Parnell, 56, of Midlothian, Virginia, Stewart Parnell’s brother, who worked at P.P. Sales and was a food broker who worked on behalf of PCA; and Mary Wilkerson, 41, of Edison, Georgia, who held various positions at PCA’s Blakely plant, including receptionist, office manager and quality assurance manager.  Lightsey was on the witness stand during nine trial days and Kilgore testified as a witness during five trial days.

The trial, which led to the convictions of Stewart Parnell, Michael Parnell and Mary Wilkerson, established that tainted food led to a salmonella outbreak in 2009 with more than 700 reported cases of salmonella poisoning in 46 states.  According to the Centers for Disease Control and Prevention, based on epidemiological projections, that number translates to more than 22,000 total cases, including nine deaths.  During the sentencing phase of the case, the court found that the evidence presented at trial linked PCA’s contaminated peanut products to the victims’ illnesses. 

“Today’s sentences are a just result,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “They reflect the roles that the defendants played in these terrible acts, their acceptance of responsibility for those roles, and their willingness to assist the government, albeit after the fact, in ensuring that all of those who engaged in criminal activity were held accountable.  The Department of Justice will continue to work aggressively with its partners to ensure that the American people are protected from food that is adulterated or misbranded.” 

The government presented evidence at trial to establish that Stewart Parnell and Michael Parnell, with Lightsey and Kilgore, participated in several schemes by which they defrauded PCA customers and jeopardized the quality and purity of their peanut products.  Specifically, the government presented evidence that the defendants misled customers about the presence of salmonella in their products.  For example, the Parnells, Lightsey and Kilgore fabricated certificates of analysis (COAs) that accompanied various shipments of peanut products.  COAs are documents that summarize laboratory results, including test results concerning the presence or absence of pathogens in food.  According to the evidence, on several occasions, the Parnells, Lightsey and Kilgore participated in a scheme to fabricate COAs that stated that the food at issue was free of pathogens when in fact there had been no testing of the food or tests had revealed the presence of pathogens.

The government also presented evidence that demonstrated that when the U.S. Food and Drug Administration (FDA) officials visited PCA’s Blakely plant to investigate the outbreak, Stewart Parnell, Lightsey and Wilkerson gave untrue or misleading answers to questions posed by those officials.

“By making sure that the individuals involved in the corporate fraud at PCA were held accountable, I am confident that the message to other executives is clear,” said U.S. Attorney Michael J. Moore of the Middle District of Georgia.  “Because we all know that it is people who make decisions about what goes on behind the corporate curtain, we'll be looking to hold those individuals personally accountable when they steer their businesses down the path of fraud.  Mr. Kilgore and Mr. Lightsey acknowledged their wrongdoing, and today their sentences reflect not only their acceptance of that responsibility, but also the requirement of accountability.”

“Today’s sentencing in federal court will afford these defendants, former corporate officers at Peanut Corporation of America, plenty of time to reflect on their roles in the fatal 2009 salmonella outbreak as a result of their criminal conduct,” said Special Agent in Charge J. Britt Johnson of the FBI Atlanta Field Office.  “It is the FBI’s hope that this will provide some solace to the families of those that died and the many more that suffered as a result of this outbreak.”

On Sept. 21, Judge Sands sentenced Stewart Parnell to serve 336 months in prison to be followed by three years of supervised release, Michael Parnell to serve 240 months in prison to be followed by three years of supervised release and Mary Wilkerson to serve 60 months in prison to be followed by two years of supervised release.

The case was prosecuted by Trial Attorneys Patrick Hearn and Mary M. Englehart of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Alan Dasher of the Middle District of Georgia.  Principal Deputy Assistant Attorney General Mizer and U.S. Attorney Moore thank the investigative efforts of the FBI and the FDA’s Office of Criminal Investigations.

A former resident of Portland, Oregon, pleaded guilty today to conspiring to file fraudulent income tax returns claiming more than $1 million in refunds, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and Acting U.S. Attorney Billy J. Williams of the District of Oregon.

According to the plea agreement, Tataneisha White, 42, admitted that during 2010, she conspired with other individuals to prepare and file more than 227 fraudulent income tax returns.  The false information on the tax returns included fictitious wage and withholding information and fraudulent refundable credits.  White has agreed to pay $626,750 in restitution to the Internal Revenue Service (IRS), which is the amount of fraudulent claims for refunds that were deposited into bank accounts under her control.

White also pleaded guilty to one count of theft of government funds and one count of filing a false claim.

White faces a statutory maximum sentence of 10 years in prison for the theft of government funds count, a statutory maximum sentence of 10 years in prison for the conspiracy count and a statutory maximum sentence of five years in prison for the false claims count.  White also faces a maximum potential sentence of three years of supervised release and a fine of up to $250,000 for each count of conviction.

Acting Assistant Attorney General Ciraolo commended the special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorneys Lori Hendrickson and Ryan Raybould of the Tax Division, who are prosecuting the case.  Ciraolo also thanked the U.S. Attorney’s Office in Portland for their valuable assistance in this case. 

A co-founder of Imperial Integrative Health Research and Development LLC (Imperial) was sentenced to serve 83 months in prison in federal court today for his role in a fraud scheme related to Imperial and its product, OXYwater, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Carter M. Stewart of the Southern District of Ohio.

Thomas E. Jackson, 40, of Powell, Ohio, was sentenced by U.S. District Court Judge Gregory L. Frost of the Southern District of Ohio.  In addition to the prison sentence, Jackson was ordered to serve three years of supervised release and to pay $8,840,706 in restitution to victims of the fraud.  On March 25, Jackson was convicted of conspiracy to commit wire fraud, conspiracy to commit money laundering, eight counts of wire fraud and 12 counts of money laundering. 

Jackson’s business partner, Preston J. Harrison, 43, and Harrison’s wife, Lovena Harrison, 42, both of Lewis Center, Ohio, also went to trial in March and were convicted of multiple crimes.  Preston Harrison was convicted of conspiracy to defraud the United States, filing a false income tax return, conspiracy to commit wire fraud, conspiracy to commit money laundering and 12 counts of money laundering.  Lovena Harrison was convicted of conspiracy to defraud the United States, filing a false income tax return and structuring financial transactions to evade currency reporting requirements.

The Harrisons were sentenced on Aug. 25.  Preston Harrison was sentenced to serve 83 months in prison to be followed by three years of supervised release, and ordered to pay approximately $8.8 million to victims of the fraud and approximately $376,000 in restitution to the Internal Revenue Service (IRS).  He was also ordered to forfeit $1.1 million, including two vehicles, eight weapons, cash and the contents of a bank account.  Lovena Harrison was sentenced to serve 12 months and one day in prison to be followed by three years of supervised release, and ordered to pay approximately $376,000 in restitution to the IRS.

According to court testimony, Jackson and Preston Harrison operated Imperial, based in Westerville, Ohio, and developed OXYwater, a beverage that promoters claimed was an all-natural, vitamin-enhanced sports drink that contained added oxygen for improved physical performance.

The defendants engaged in a scheme to deceive Imperial’s investors about Imperial and OXYwater’s structure, composition, finances, sales and profits in order to make the company appear to be a lucrative and profitable financial investment.  Jackson and Preston Harrison produced and sent false and fraudulent documents intended to deceive investors in order to obtain additional investments in Imperial.  They then misappropriated that money for their own personal use, which included purchasing jewelry, a Cadillac Escalade, a BMW vehicle, weapons, clothing, home improvements and a swimming pool.

Between August 2010 and spring 2013, Jackson and Preston Harrison misappropriated approximately $2 million of the investors’ funds.  The defendants’ scheme caused investors to suffer substantial losses when the corporation was forced to declare bankruptcy with no assets.  As a result of the defendants’ conduct, investors lost approximately $9 million.

In 2011, Preston Harrison misappropriated approximately $1.1 million from Imperial, which he and Lovena Harrison diverted into an account in the name of a daycare business and used for personal expenses.  The Harrisons did not report the money as income on their 2011 income tax return.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Stewart commended special agents of IRS-CI and the FBI, who investigated the case, as well as Assistant U.S. Attorney Jessica Kim of the Southern District of Ohio and Trial Attorney Jason Scheff of the Tax Division, who prosecuted the case.

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