District Not Recorded

The Justice Department, along with the U.S. Attorney’s Office of the Eastern District of Michigan, announced today that it has reached an agreement with the University of Michigan under the Americans with Disabilities Act (ADA).  The agreement, filed as a consent decree along with a complaint in the U.S. District Court for the Eastern District of Michigan, resolves allegations that the university violated the ADA by failing to accommodate a maintenance employee with degenerative back disease.  Specifically, the Justice Department alleged that the university failed to offer the employee, and another employee with a disability, reassignment to available vacant positions for which they were qualified; rather, the employees were required to compete for available positions along with all other applicants.  The complaint also alleges that the university engaged in a pattern or practice of disability discrimination by applying a policy that denies reassignment as a reasonable accommodation in violation of the ADA. 

Title I of the ADA prohibits employers from discriminating against individuals on the basis of disability in various aspects of employment.  These prohibitions include failing to provide reasonable accommodations, including reassignment, where such an accommodation does not pose an undue hardship.

“It is contrary to the letter and the spirit of the ADA to require disabled employees who need a reassignment as a reasonable accommodation to compete for that assignment,” said head of the Civil Rights Division, Principal Deputy Assistant Attorney General Vanita Gupta.  “As we celebrate the 25th anniversary of the ADA, we recognize its critical impact in the American workplace breaking down barriers for individuals with disabilities.  We commend the university for working cooperatively with the department to promptly resolve this matter and affect necessary changes.”

The consent decree, which must be approved by the court, requires the university to pay the employees a total of approximately $215,000 for monetary and compensatory damages, revise the university’s policies on reassignments and transfers, provide training to university staff on Title I of the ADA and file periodic reports with the department.

Those interested in finding out more about the ADA may call the Justice Department’s toll-free ADA information line at 800-514-0301 (TDD 800-514-0383) or visit www.ada.gov.

Attorney General Lynch released the following statement after the federal grand jury released its indictment against Dylann Storm Roof:

“Good afternoon and thank you for coming.

“I am joined here today by Vanita Gupta, the head of the department’s Civil Rights Division and Mark Giuliano, Deputy Director of the FBI.

“We are here today to announce that a federal grand jury in South Carolina has returned a 33-count indictment against Dylann Storm Roof, charging him with federal hate crimes and firearms charges for killing and attempting to kill African-American parishioners at Emanuel African Methodist Episcopal Church in Charleston, South Carolina, because of their race and in order to interfere with their exercise of their religion.

“As set forth in the indictment, several months prior to the tragic events of June 17, Roof conceived of his goal of increasing racial tensions throughout the nation and seeking retribution for perceived wrongs he believed African Americans had committed against white people.

“To carry out these twin goals of fanning racial flames and exacting revenge, Roof further decided to seek out and murder African Americans because of their race.   An essential element of his plan, however, was to find his victims inside of a church, specifically an African-American church, to ensure the greatest notoriety and attention to his actions.

“As alleged, Roof set forth the evening of June 17, 2015 to carry out this plan and drove to the Emanuel African Methodist Episcopal Church in Charleston, South Carolina, known as “Mother Emanuel.”  Mother Emanuel was his destination specifically because it was a historically African-American church of significance to the people of Charleston, of South Carolina and the nation.

“On that summer evening, Dylann Roof found his targets, African Americans engaged in worship.  Met with welcome by the ministers of the church and its parishioners, he joined them in their bible study group.  The parishioners had bibles.  Dylann Roof had his 45 caliber glock pistol and eight magazines loaded with hollow point bullets.  And as set forth in the indictment, while the parishioners of Mother Emanuel were engaged in religious worship and bible study, Dylann Roof drew his pistol and opened fire on them, ultimately killing nine church members. 

“As you know, the state of South Carolina is also prosecuting Roof for the murders, attempted murders and firearms offenses he is alleged to have committed.  We commend the state authorities for their tremendous work and quick response.  It is important to note, however, that South Carolina does not have a hate crimes statute and as a result, the state charges do not reflect the alleged hate crime offenses presented in the federal indictment returned today.    

“The federal indictment returned today charges Roof with nine murders and three attempted murders under the Matthew Shepard and James Byrd Hate Crimes Prevention Act.  This federal hate crimes law prohibits using a dangerous weapon to cause bodily injury, or attempting to do so, on the basis of race or color.  The Shepard Byrd Act was enacted specifically to vindicate the unique harms caused by racially motivated violence.

“Roof is also charged with nine murders and three attempted murders under a second federal hate crimes statute that prohibits the use or threat of force to obstruct any person’s free exercise of their religious beliefs.

“Finally, Roof has been charged with multiple counts of using a firearm in the commission of these racially motivated murders and attempted murders.

“For these crimes, Roof faces penalties of up to life imprisonment or the death penalty.  No decision has been made on whether to seek the death penalty in this case.  The department will follow our usual rigorous protocol to thoroughly consider all factual and legal issues relevant to that decision, which will necessarily involve counsel for the defendant Roof.  In addition, consultation with the victims’ families is an important part of this decision making process and no decision will be made before conferring with them.

“The family members of those killed at Emanuel AME and the survivors were informed of these federal charges earlier today.

“I also note that this indictment contains allegations and is not evidence of the defendant’s guilt.

“This federal grand jury indictment follows an announcement I made on June 18, 2015, that the Department of Justice was conducting a hate crime investigation into the shooting incident at Emanuel AME.  Immediately following the shooting, experienced prosecutors from the U.S. Attorney’s Office in South Carolina and the Civil Rights Division began working closely with the FBI, ATF and state and local law enforcement officials including the South Carolina Law Enforcement Division – or SLED – Charleston Police and the Solicitor’s Office for the Ninth Circuit of South Carolina, in thoroughly investigating these crimes.  I would like to the many state and federal law enforcement officials for their dedication and hard work to ensure that this investigation was conducted thoroughly and expeditiously.  I would also like to thank South Carolina U.S. Attorney Bill Nettles for his and his office’s tremendous efforts on this case, as well as the dedicated attorneys from the Civil Rights Division.

“In particular, I would like to thank Charleston Solicitor Scarlett Wilson for being such a cooperative and effective partner in this matter.  We have a strong working relationship with Solicitor Wilson and her office and we look forward to our continued collaboration as these parallel state and federal prosecutions work their way through their respective court systems.”

"Questions?”

WASHINGTON – A former New York businessman, who disappeared the same day a federal jury sitting in the U.S. District Court in Newark, New Jersey, began deliberating in his tax evasion and fraud trial, was caught while in Greece more than 18 years after his conviction, and appeared in federal court in the District of New Jersey on Friday, July 17, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.

Gideon Misulovin, 58, whose last known address was in New York City, was extradited from Greece to the United States to serve his 10-year prison sentence.  He has been incarcerated in the United States since his return on July 16.         

On March 7, 1996, a jury convicted Misulovin of conspiracy to impede and impair the Internal Revenue Service (IRS) in the ascertainment and collection of more than $6.5 million in federal motor fuel excise taxes, wire fraud and money laundering stemming from a scheme to conceal the unpaid diesel fuel excise taxes from state and federal tax authorities.

During trial, Misulovin was free on $500,000 bail and attended each day of the trial.  He failed to appear in court March 4, 1996, for the parties’ closing arguments.  U.S. Senior District Judge Dickinson R. Debevoise of the District of New Jersey in Newark issued a warrant for his arrest.  On June 25, 1997, Judge Debevoise sentenced Misulovin in absentia to serve 10 years in prison and a three-year term of supervised release, and to pay a $150,000 fine.  The court also ordered Misulovin to pay restitution in the amount of $200,000 to the United States and $100,000 to the state of New Jersey.

The evidence at trial established that from 1988 through Jan. 31, 1993, Misulovin and his co-conspirators sold untaxed diesel fuel in a series of paper transactions using wholesale companies.  Some of the companies were shams and called “burn” or “butterfly” companies.  As part of the scheme, the sham company would assume the federal and state tax liability and then vanish, allowing the conspirators to keep the excise taxes they collected from truck stops and service stations.

The case, part of a then-nationwide motor fuel excise tax enforcement effort, was investigated jointly by the Motor Fuel Task Force and the U.S. Attorney’s Office of the District of New Jersey.  In an effort to infiltrate the bootleg gasoline industry, task force agents set up an undercover business called RLJ Management that competed directly with the defendants’ operation.

At the conclusion of the undercover operation, in November 1992, federal agents seized Misulovin’s assets, including approximately $70,000 in cash from his residence and $277,000 from his business bank account.

Misulovin’s co-defendant and co-conspirator, Arnold Zeidenfeld, of Brooklyn, New York, pleaded guilty prior to trial and testified for the government.  Gurmit Singh and Manbir Singh, of Matawan, New Jersey, who operated truck stops in southern New Jersey, also pleaded guilty for their roles in the scheme.

In August 2014, based on an Interpol Red Notice, Misulovin was detained in a Greek airport using an alias and traveling with an Israeli passport.  He was subsequently arrested pursuant to a U.S. request for a provisional arrest, and after contested extradition proceedings, was found extraditable in 2015.

The task force included attorneys from the Tax Division and agents from the IRS Criminal Investigation and Examination Divisions, the FBI, the U.S. Department of Transportation and the New Jersey State Department of Taxation and Finance.  Seth D. Uram, formerly a Trial Attorney in the Tax Division and now an Assistant U.S. Attorney in Portland, Oregon, and Trial Attorney Charles A. O’Reilly of the Tax Division prosecuted the case.

Acting Assistant Attorney General Ciraolo thanked the Department of Justice’s Office of International Affairs, the FBI’s New Jersey Field Office and the Greek Ministry of Justice for their assistance in apprehending and extraditing Misulovin.  Ciraolo also thanked the U.S. Attorney’s Office of the District of New Jersey for their substantial assistance. 

Once every two years, the World Police and Fire Games (WPFG) bring together the world’s toughest law enforcement, customs and corrections officers, and firefighters as they compete head-to-head in more than 60 extreme sporting events like Archery, Canine Search, and Toughest Competitor Alive. This year’s Games were held June 26-July 5 in Fairfax County, VA and welcomed more than 9,500 competitors from 70 different countries, 5,100 volunteers, and tens of thousands of spectators. Events such as the Games, with crowds this large and diverse, call for law enforcement and public safety support with international reach. Interpol Washington offered the WPFG Operations Center and the Fairfax County Police Department complementary tools and services to ensure everyone stayed safe while enjoying the event. For the first time Interpol Washington’s 24/7/365 Interpol Operations and Command Center (IOCC) helped field potential threats and was available around the clock to query subjects at this year’s Games. The IOCC helped to ensure a timely and coordinated law enforcement response was ready in the event of a major threat with an international nexus. The 2017 Games will be held in Montréal, Canada.

Three family members were indicted for their alleged participation in a scheme to defraud Miami-area lenders and the Export-Import Bank of the United States (Ex-Im Bank), announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida.

Guillermo M. Sanchez, 60, Isabel C. Sanchez, 36, and Gustavo Giral 38, all of Cutler Bay, Florida, are charged in the indictment with conspiracy to commit wire fraud, wire fraud, conspiracy to commit money laundering and money laundering.

According to allegations in the indictment, from 2007 through 2012, the defendants utilized companies they controlled to create fictitious invoices for sales of merchandise that never occurred.  In a process called “factoring,” the defendants sold the accounts receivables to two Miami-area lenders for approximately 90 percent of the value of the merchandise listed on the alleged fake invoices.  The lenders were not aware that the invoices were fake, and expected to recover the full amount owed from the purported purchasers.  To perpetuate the fraud, the defendants allegedly transferred the proceeds through numerous bank accounts under their control and, in a Ponzi-style scheme, used a portion of the funds to pay off other factored invoices.

After the Miami lenders refused to extend further credit, the defendants and their co-conspirators allegedly created false invoices and shipping documents to obtain a loan guaranteed by the Ex-Im Bank.  Rather than acquiring, selling and shipping American-manufactured goods as required for Ex-Im Bank-guaranteed loans, the defendants allegedly used the loan proceeds to extend the fraudulent scheme by paying off other lenders, and split the remaining funds among themselves and other co-conspirators.  Ultimately, the defendants defaulted on both the factoring loans and the Ex-Im Bank loan.

Co-conspirators Fredy Moreno-Beltran, Ricardo Beato and Jorge Amad were separately charged, and each have pleaded guilty to participating in the scheme.  According to his plea agreement, Moreno-Beltran owned Clientric, a purported purchaser of goods from companies controlled by the defendants.  According to their plea agreements, Beato and Amad owned Approach Technologies International, a company that the defendants falsely claimed had sold nearly $2 million of American-manufactured telephone call center software to Clientric in order to obtain an Ex-Im Bank-guaranteed loan.  In connection with their guilty pleas, Beato, Amad and Moreno admitted that the invoices provided to Ex-Im Bank were false.

The alleged scheme caused approximately $8 million in losses to the private lenders and nearly $2 million in losses to the United States. 

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

The case is being investigated by the Ex-Im Bank Office of Inspector General, with assistance provided by the FBI and U.S. Immigration and Customs Enforcement Homeland Security Investigations.  The case is being prosecuted by Senior Litigation Counsel Patrick Donley and Trial Attorney William Bowne of the Criminal Division’s Fraud Section.

Sanchez et al Indictment

The Department of Justice’s Antitrust Division announced today that it will close its investigation into AT&T’s proposed $48 billion acquisition of DirecTV.

This announcement follows a statement by FCC Chairman Tom Wheeler that a final order approving the transaction has been circulated to the Commission.

“After an extensive investigation, we concluded that the combination of AT&T’s land-based internet and video business with DirecTV’s satellite-based video business does not pose a significant risk to competition,” said Assistant Attorney General Bill Baer of the Antitrust Division.  “Our investigation benefitted from the Division’s close and constructive working relationship with the FCC.  The commitments that the proposed FCC order includes, if adopted, will provide significant benefits to millions of subscribers.”

A former New York businessman, who disappeared the same day a federal jury sitting in the U.S. District Court in Newark, New Jersey, began deliberating in his tax evasion and fraud trial, was caught while in Greece more than 18 years after his conviction, and appeared in federal court in the District of New Jersey on Friday, July 17, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division. 

Gideon Misulovin, 58, whose last known address was in New York City, was extradited from Greece to the United States to serve his 10-year prison sentence.  He has been incarcerated in the United States since his return on July 16.           

On March 7, 1996, a jury convicted Misulovin of conspiracy to impede and impair the Internal Revenue Service (IRS) in the ascertainment and collection of more than $6.5 million in federal motor fuel excise taxes, wire fraud and money laundering stemming from a scheme to conceal the unpaid diesel fuel excise taxes from state and federal tax authorities.

During trial, Misulovin was free on $500,000 bail and attended each day of the trial.  He failed to appear in court March 4, 1996, for the parties’ closing arguments.  U.S. Senior District Judge Dickinson R. Debevoise of the District of New Jersey in Newark issued a warrant for his arrest.  On June 25, 1997, Judge Debevoise sentenced Misulovin in absentia to serve 10 years in prison and a three-year term of supervised release, and to pay a $150,000 fine.  The court also ordered Misulovin to pay restitution in the amount of $200,000 to the United States and $100,000 to the state of New Jersey.

The evidence at trial established that from 1988 through Jan. 31, 1993, Misulovin and his co-conspirators sold untaxed diesel fuel in a series of paper transactions using wholesale companies.  Some of the companies were shams and called “burn” or “butterfly” companies.  As part of the scheme, the sham company would assume the federal and state tax liability and then vanish, allowing the conspirators to keep the excise taxes they collected from truck stops and service stations.

The case, part of a then-nationwide motor fuel excise tax enforcement effort, was investigated jointly by the Motor Fuel Task Force and the U.S. Attorney’s Office of the District of New Jersey.  In an effort to infiltrate the bootleg gasoline industry, task force agents set up an undercover business called RLJ Management that competed directly with the defendants’ operation.

At the conclusion of the undercover operation, in November 1992, federal agents seized Misulovin’s assets, including approximately $70,000 in cash from his residence and $277,000 from his business bank account. 

Misulovin’s co-defendant and co-conspirator, Arnold Zeidenfeld, of Brooklyn, New York, pleaded guilty prior to trial and testified for the government.  Gurmit Singh and Manbir Singh, of Matawan, New Jersey, who operated truck stops in southern New Jersey, also pleaded guilty for their roles in the scheme.

In August 2014, based on an Interpol Red Notice, Misulovin was detained in a Greek airport using an alias and traveling with an Israeli passport.  He was subsequently arrested pursuant to a U.S. request for a provisional arrest, and after contested extradition proceedings, was found extraditable in 2015.  

The task force included attorneys from the Tax Division and agents from the IRS Criminal Investigation and Examination Divisions, the FBI, the U.S. Department of Transportation and the New Jersey State Department of Taxation and Finance.  Seth D. Uram, formerly a Trial Attorney in the Tax Division and now an Assistant U.S. Attorney in Portland, Oregon, and Trial Attorney Charles A. O’Reilly of the Tax Division prosecuted the case.

Acting Assistant Attorney General Ciraolo thanked the Department of Justice’s Office of International Affairs, the FBI’s New Jersey Field Office and the Greek Ministry of Justice for their assistance in apprehending and extraditing Misulovin.  Ciraolo also thanked the U.S. Attorney’s Office of the District of New Jersey for their substantial assistance. 

Attorney General Loretta E. Lynch met with President Muhammadu Buhari of Nigeria today at the Blair House in Washington, D.C.  Both leaders discussed opportunities for U.S. Department of Justice officials to increase collaborative efforts with their Nigerian counterparts to dismantle and defeat Boko Haram, ISIL and other terrorist organizations active in the region.  The Attorney General underscored the importance of combatting transnational crime and corruption through the Kleptocracy Initiative.  These anti-corruption efforts not only assist the Nigerian people in their efforts to recover assets stolen from victims but they are also helpful tools to protect the U.S. financial system from being utilized by criminals.  

The Justice Department announced today that, as part of its Barrier Free Health Care Initiative, it has reached three additional settlements with health care providers to ensure that they are complying with the Americans with Disabilities Act (ADA).  The announcement comes as the department marks the 25th anniversary of the ADA.  The Department of Justice, including the nation’s U.S. Attorneys and the Civil Rights Division, are proud to play a critical role in enforcing the ADA, working towards a future in which all the doors are open to equality of opportunity, full participation, independent living, integration and economic self-sufficiency for persons with disabilities.

The new settlement agreements—entered into by the U.S. Attorney’s Office for the Eastern District of Virginia and the U.S. Attorney’s Office for the Eastern District of Michigan—address the requirements of the ADA for health care providers, such as hospitals, medical clinics, nursing homes, mental health facilities and doctor’s offices, to, among other things, provide effective communication to people who are deaf or have hearing disabilities in the provision of medical services.  In addition, the U.S. Attorney’s Office for the Southern District of New York recently filed a lawsuit against, Emmanuel Asare, M.D. and Springfield Medical Aesthetic PC d/b/a Advanced Cosmetic Surgery of New York for failures to provide medical treatment for an individual with HIV. 

“Eliminating disability-based discrimination in health care is a priority for the department under the Americans with Disabilities Act,” said head of the Civil Rights Division, Principal Deputy Assistant Attorney General Vanita Gupta.  “Twenty five years after the passage of the ADA, we fully expect that all health care providers will provide equal access to people with disabilities.”

In the Fairfax Nursing Center (FNC) settlement, entered into by the U.S. Attorney for the Eastern District of Virginia on July 6, 2015, the U.S. Attorney’s Office for the Eastern District of Virginia entered into a settlement agreement with the Fairfax Nursing Center requiring it to: 

• adopt policies and procedures that ensure that individuals who are deaf or hard of hearing—patients and companions—receive auxiliary aids and services that insure effective communication;

• train its staff on the ADA’s effective communication requirements;

• pay $80,000 to the complainants and $5,000 to the United States in a civil penalty; and

• establish a fund of $12,500 to sponsor training on the ADA’s requirements for others in the Virginia nursing facility industry. 

The investigation began with a complaint alleging that FNC violated the ADA by failing to provide appropriate auxiliary aids and services, including sign language interpreter services, to two individuals who are deaf (two family members of a patient) during critical interactions relating to the patient’s medical care. 

In two matters involving individual medical practices in the Eastern District of Michigan, the U.S. Attorney’s Office entered into settlement agreements with the office of Dr. Srinivas Mukkamala and the office of Dr. Arshad Pervez, to ensure that they provide sign language interpreters and other appropriate auxiliary aids and services for patients and companions who are deaf or hard of hearing. 

The Department of Justice’s Barrier-Free Health Care Initiative is a partnership of the nation’s U.S. Attorneys and the Civil Rights Division.  The initiative, launched on the 22nd anniversary of the ADA in July 2012, includes the participation of more than 45 U.S. Attorney’s Offices.  Today’s Barrier-Free Health Care Initiative settlements may be found at www.ada.gov/settlemt.htm.  For more information on the Barrier Free Health Care Initiative visit www.ada.gov/usao-agreements.htm. 

The department has a number of publications available to assist entities to comply with the ADA, including a Business Brief on Communicating with People Who Are Deaf or Hard of Hearing in Hospital Settings, www.ada.gov/hospcombr.htm and publications specific to health care providers, HIV discrimination and effective communication with people with hearing and vision disabilities, as well as publications about tax credits available for providing access.  For more information on the ADA and to access these publications, visit www.ada.gov and www.ada.gov/aids.  Those interested in finding out more about these settlements or the obligations of public accommodations under the ADA may call the Justice Department’s toll-free ADA information line at 800-514-0301 or 800-514-0383 (TDD), or access its ADA website at www.ada.gov.  ADA complaints may be filed by email to ada.complaint@usdoj.gov.

As part of the Justice Department’s year-long celebration marking the 25th anniversary of the American with Disabilities Act (ADA)—ADA 25: Advancing Equal Access—the department announced today the signing of three agreements with counties to improve access to all aspects of civic life for persons with disabilities.  The agreements, reached with the Champaign County, Illinois; Merced County, California; and Yakima County, Washington, are all part of Project Civic Access (PCA), the department’s wide-ranging initiative to ensure that cities, towns and counties throughout the country comply with the ADA.  

The PCA initiative ensures that people with disabilities have an equal opportunity to participate in civic life, a fundamental part of American society.  As part of the PCA initiative, Justice Department staff survey state and local government facilities, services and programs in communities across the country to identify what is needed to comply with the ADA.  The agreements address the steps a community must take to improve access.  With the signing of these three agreements, the department has entered into nine PCA agreements this year alone, and more than 217 agreements since the initiative began.

Under the agreements announced today, the counties will remove barriers to accessibility in buildings, such as government office buildings providing services to its citizens, courthouses, police or sheriff offices, jails, libraries, recreation centers, community centers, polling places, parks and fairgrounds.  The agreements also require the counties to:

• make physical modifications to facilities so that parking, routes into the buildings, entrances, public telephones, restrooms, service counters and drinking fountains are accessible to people with disabilities, as well as make sure that assembly areas have the required wheelchair and companion seating;
• post, publish and distribute a notice to inform members of the public of the provisions of Title II and their applicability to the municipalities’ programs, services and activities;
• train staff in using their state relay service for telephone communications;
• develop a method for providing emergency management policies and procedures for persons with disabilities, including preparation, notification, response and clean-up;
• develop a method for providing information for interested persons with disabilities concerning the existence and location of the municipalities’ accessible services, activities and programs;
• establish, implement and post online a policy that their web pages be accessible, create a process for implementation and ensure that all new and modified web pages are accessible; and
• implement a plan for the accessibility of sidewalks and curb cuts within their borders.

“The story of civil rights for persons with disabilities is the story of having to fight paternalistic laws and ill-advised social mores,” said head of the Civil Rights Division, Principal Deputy Assistant Attorney General Vanita Gupta.  “Individuals with disabilities faced the indignities of not being able to enter public buildings or have equal access to the services, programs and activities offered by their local governments; they were barred from attending schools and getting jobs.  Until, that is, the passage of the Americans with Disabilities Act.  As we celebrate the 25th anniversary of this major civil rights law, the department renews its commitment to work with state and local governments to ensure that their citizens with disabilities attain equal access to all of their programs, activities and services.”

For more information about the ADA, today’s agreement and the PCA initiative, individuals may access the ADA web page at http://www.ada.gov/civicac.htm or call the toll-free ADA Information Line at (800) 514-0301 or (800) 514-0383 (TTY).

The United States filed a complaint seeking to permanently bar a former Staten Island, New York, man and the tax preparation business he operates from preparing federal tax returns for others, the Justice Department announced today.

The civil complaint against Ranti Azeez-Taiwo and his business, Lot Associates Inc., was filed in the U.S. District Court for the Eastern District of New York.  The complaint alleges that Azeez-Taiwo prepares federal income tax returns for customers that understate their correct tax liabilities.  The government’s suit alleges that the understatements are the result of fabricated or inflated itemized deductions, particularly charitable deductions and unreimbursed employee business expense deductions, which are claimed on Schedule A, and sole-proprietorship business expenses, which are claimed on Schedule C.  According to the complaint, an undercover Internal Revenue Service (IRS) agent provided Azeez-Taiwo with information that should have resulted in a tax return showing more than $500 in tax due to be paid, but Azeez-Taiwo instead prepared a return claiming a refund of more than $500.

The suit contends that in January 2013, a grand jury indicted Azeez-Taiwo on 30 counts of willfully aiding and assisting in the preparation of false federal income tax returns for tax years 2006 through 2010.  The complaint further alleges that Azeez-Taiwo was ultimately convicted on multiple counts and on March 6, 2014, was sentenced to serve 18 months in prison.  This civil suit seeks to bar Azeez-Taiwo from ever preparing federal tax returns for others again.

The IRS estimates that Azeez-Taiwo has prepared more than 7,000 tax returns since 2006, the complaint alleges.  The complaint further contends that the IRS has audited or examined over 250 returns prepared by Azeez-Taiwo and the total tax deficiency for those returns alone exceeds $773,000.  According to the complaint, Azeez-Taiwo’s conduct could have caused more than $773,000 in harm to the U.S. Treasury.

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

Agreement Resolves Allegations that Defendants Discriminated Against Section 8 Voucher Holders on the Basis of Race

The Justice Department today announced a settlement with the Housing Authority of Los Angeles County (HACoLA), and the cities of Lancaster, California, and Palmdale, California, to resolve allegations that these parties targeted African Americans with discriminatory enforcement of the Section 8 housing choice voucher program.  The parties have agreed to enter into a court-enforceable agreement that will provide broad relief meant to ensure unbiased enforcement of the voucher program so that African-American voucher holders in the Antelope Valley are not targeted because of their race.

HACoLA, a public housing agency that administers the Section 8 voucher program in Los Angeles County, has agreed to pay $1,975,000 in monetary damages on behalf of itself and the cities, and a $25,000 civil penalty to the United States.  When combined with the department’s previously announced settlement with the Los Angeles County Sheriff’s Department (LASD) for related conduct, this means that a total of $2,675,000 is available to compensate individuals who have been harmed by the discriminatory enforcement of the voucher program.  In addition, many voucher holders who were discriminated against will be eligible to have voucher terminations removed from their public housing record, and a few of those who were improperly terminated will be reinstated to the voucher program.

“Housing choice vouchers, also known as Section 8 vouchers, are meant to help families find homes in neighborhoods that provide greater opportunities for them and their children,” said head of the Civil Rights Division, Principal Deputy Assistant Attorney General Vanita Gupta.  “Such families should be welcomed in every community, including those in the Antelope Valley.  No family living in Los Angeles County should fear having housing authority or law enforcement personnel show up at their homes simply because they are African American and use vouchers to pay their rent.”

“Local government officials worked with the Los Angeles County Housing Authority and the Sheriff’s Department to subject African-American families to discriminatory enforcement actions in an effort to discourage them from using Housing Choice vouchers to live in Lancaster and Palmdale,” said U.S. Attorney Eileen M. Decker of the Central District of California.  “This type of discrimination is fundamentally wrong and is inconsistent with American values of freedom and equality.  This settlement, together with an earlier settlement with the Sheriff’s department, will ensure it does not recur, and will also provide more than $2.6 million to compensate those harmed.”

The Justice Department’s complaint, filed today in the U.S. District Court of the Central District of California, alleges that between the years 2004 and 2011, in direct response to racially-based public opposition to the growing presence of African-American voucher holders living in Lancaster and Palmdale, the cities initiated and teamed with HACoLA and LASD in a targeted campaign of discriminatory enforcement against African-American voucher holders in order to discourage and exclude them and other African Americans from living in the cities.  City officials contracted with HACoLA for additional investigative services and devoted substantial financial resources to voucher program enforcement efforts, directed and encouraged LASD deputies to become involved in HACoLA’s enforcement efforts, fueled public opposition to the voucher program by making disparaging statements about voucher program participants and discouraged landlords from renting to voucher holders.  There was no legitimate law enforcement or programmatic justification for these types of extraordinary enforcement efforts. 

HACoLA and LASD used their resources to effectuate the cities’ mutual discriminatory goals and to carry out their own discriminatory motives by disproportionately subjecting African-American voucher holders in the cities to more intrusive and intimidating compliance checks and referring those households for termination from the voucher program at greater rates than white voucher holders living in the cities, or any voucher holders living elsewhere in the county of Los Angeles.

Pursuant to the agreement announced today, HACoLA will undertake reforms to its voucher program enforcement protocol, and will cease, for at least six years, the use of unannounced field compliance checks.  HACoLA also will not share personal information about voucher holders with any third party, including LASD or the cities.   

Lancaster and Palmdale have agreed to enforce their ordinances and process complaints in a way that treats voucher holders and their landlords no differently from other renters and landlords.  Each city will develop procedures for handling discrimination complaints, and have agreed not to seek identifying information regarding voucher holders.  Each city will implement a fair and affordable marketing plan to make clear that the cities are open to all regardless of race, and each will designate a person or entity to oversee compliance and receive complaints of alleged discrimination, among other things.  Employees of both cities and HACoLA are required to participate in fair-housing training to prevent discriminatory conduct in the future. 

The department estimates that hundreds of African-American voucher holders were subjected to the defendants’ discriminatory conduct, including many of the approximately 200 who were interviewed in the course of the department’s investigation.  The agreement announced today outlines a process for compensating victims.  This process may take a year or longer.  African-American voucher holders who believe they may have been discriminated against by HACoLA, LASD and/or the cities during a compliance check in the Antelope Valley between 2004 and 2011 should contact the Justice Department at 1-800-896-7743, option 98 or e-mail the department at fairhousing@usdoj.gov.  

The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status.  More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt.  Persons who believe that they have experienced unlawful housing discrimination elsewhere can contact the Justice Department at 1-800-896-7743, or e-mail fairhousing@usdoj.gov or contact the Department of Housing and Urban Development at 1-800-669-9777.

HACoLA Settlement Agreement

HACoLA Complaint

Irfan Demirtas, aka Nasrullah, 56, a duel Dutch-Turkish national, made his first appearance today in the U.S. District Court of the District of Columbia on a federal indictment charging him with terrorism offenses arising from his support of the Islamic Movement of Uzbekistan (IMU), a designated foreign terrorist organization. 

The indictment was announced by Assistant Attorney General for National Security John P. Carlin, Acting U.S. Attorney Vincent H. Cohen Jr. of the District of Columbia and Assistant Director in Charge Andrew G. McCabe of the FBI’s Washington, D.C., Field Office.

“According to the allegations in the indictment, Demirtas provided material support to the Islamic Movement of Uzbekistan, a designated foreign terrorist organization, through his fundraising and recruiting activities,” said Assistant Attorney General Carlin.  “Counterterrorism is the National Security Division’s highest priority and we will continue to pursue justice against those who provide material support to designated foreign terrorist organizations.”

“Today Irfan Demirtas was brought into an American courtroom to face charges that he raised money and recruited fighters for a foreign terrorist organization battling the Afghan government and its allies, including U.S. troops,” said Acting U.S. Attorney Cohen.  “His extradition to the United States is an important step forward in holding him accountable for his alleged role in fomenting terror across Europe and the Middle East.  Demirtas is one of four defendants currently pending trial on international terrorism charges in separate cases in the federal court here in our nation’s capital.  These cases highlight our resolve to find and bring to justice those who support terror around the world.”

“Demirtas was arrested and extradited to face justice in the U.S. because of his role as the European-based fundraiser and recruiter for a designated terrorist organization that directly worked against U.S. forces and our allies,” said Assistant Director in Charge McCabe.  “On a daily basis, the FBI is faced with investigating complex cases that involve terrorist threats.  Through international partnerships, the FBI will continue to pursue those who provide support to terrorist groups who threaten the security of our nation’s equities around the globe.”

On Dec. 8, 2011, Demirtas was charged in a sealed four-count indictment for conduct occurring from at least January 2006 through May 2008.  Specifically, he was charged with providing material support to terrorists, which carries a maximum penalty of 15 years in prison; providing material support and resources to a designated foreign terrorist organization, which carries a maximum penalty of 15 years in prison; receiving military-type training from a foreign terrorist organization, which carries a 10-year prison sentence; and using or carrying a firearm during and in relation to a crime of violence, which carries up to a mandatory 30-year prison sentence.

During the charged conduct, the IMU was a militant Islamic group acting as an armed insurgency against the legitimate government of Afghanistan and its allies, including the armed forces of the United States.  The IMU was designated by the U.S. Department of State as a Foreign Terrorist Organization on Sept. 25, 2001.  During the conduct charged in the indictment, Demirtas was a resident of the Netherlands.  He was appointed by the IMU as its European-based fundraiser.  He was responsible for raising funds and recruiting fighters for the IMU.  His activities allegedly took place in Pakistan, Afghanistan, Turkey, Jordan, the Netherlands, France and elsewhere outside the United States.

In January 2015, Demirtas was arrested in Germany based on a red notice that had been issued on these charges.  He was detained and then extradited to the United States on July 17, 2015.  The indictment was unsealed today.

An indictment is merely a formal allegation that a defendant has committed a violation of criminal laws and every defendant is presumed innocent until, and unless, proven guilty. 

The case is being investigated by the FBI’s Washington Field Office and is being prosecuted by the U.S. Attorney’s Office of the District of Columbia and the National Security Division’s Counterterrorism Section.

Demirtas Indictment

Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division (ENRD) announced the creation of a new position designed to facilitate work with State and local government attorneys.

Andrea L. Berlowe – Counselor to the Assistant Attorney General for State and Local Matters

The newly created role of Counselor for State and Local Matters is designed to facilitate the joint efforts by the division and its environmental partners in state and local governments.  In this important position, Berlowe will work with the National Association of Attorneys General, the Environmental Council of the States (ECOS) and individual attorneys in state and local governments who work on environment and natural resource matters. She also will advise and assist ENRD’s leadership in litigation, legislation and policy matters affecting state and local governments.

“The majority of environmental litigation takes place at the state and local level and, therefore, cooperative federalism is a top priority for ENRD,” said Assistant Attorney General Cruden.  “Andrea’s breadth of experience in the division will make her an effective liaison between the division and our enforcement partners in state and local governments and build on our prior efforts to foster these critical relationships.”

One important function of the counselor will be to increase collaboration with our state and local partners to achieve shared environmental enforcement goals.  Such collaboration may range from developing and implementing joint training to serving as a resource for state and local counterparts on issues of shared concern.  The counselor also will advise and assist the division regarding litigation, legislation and policy matters affecting state and local governments.

“I would like to thank Assistant Attorney General John C. Cruden for his insight with the creation of the position of Counselor on State and Local Matters,” said NAAG President Marty Jackley of South Dakota.  “Allocating resources to work directly with state and local governments is invaluable and we look forward to fostering this partnership while addressing the environment and natural resource issues that affect every citizen throughout the country.”

“We commend Assistant Attorney General Cruden for his attention to improving the state-federal legal relationship,” said ECOS President Robert J. Martineau Jr., Commissioner of the Tennessee Department of Environment and Conservation.  Martineau, an attorney with past service in the federal government, has made improving coordination between states and the federal government on legal matters a priority while at the helm of the national organization of state environmental agency heads.  “We look forward to making this renewed function at the U.S. Department of Justice Environment and Natural Resources Division productive and positive.”

Berlowe joined ENRD through the Attorney General’s Honors Program in 1993, serving first as a Trial Attorney, then Senior Attorney, in the Division’s Natural Resources Section.  Since 2001, she has served as Senior Counsel in the Law and Policy Section (LPS) where she handled a wide variety of policy, litigation and legislative matters involving public lands and natural resources, oceans issues, professional responsibility, and international environmental law.  During her ENRD tenure, Berlowe has litigated a broad array of cases in federal district courts and courts of appeal and worked closely with the division’s leadership office on policy matters.  She has received multiple awards from ENRD and client agencies for her work.  In 2013, Berlowe was detailed as special counsel to the newly established Gulf Coast Ecosystem Restoration Council, a new federal entity created by Congress and comprised of six federal agencies and the five Gulf Coast states, which is tasked with developing and funding comprehensive ecological and economic recovery of the Gulf Coast region following the Deepwater Horizon disaster.  She earned a J.D., cum laude, and a Masters in Environmental Law and Policy, summa cum laude, from Vermont Law School and holds a B.S. in Zoology from the University of Vermont.

Three Clarksville, Tennessee, men pleaded guilty to using a firearm to kill during a home-invasion robbery.  Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney David Rivera of the Middle District of Tennessee made the announcement.

Cornell Oliver, 23, and Blake Wright, 25, pleaded guilty today before Chief U.S. District Judge Kevin H. Sharp to use of a firearm in a crime of violence resulting in death.  Jerry Dinkins, 26, pleaded guilty on June 26, 2015, to the same offense.  Wright and Oliver will be sentenced on Nov. 10, 2015, and Dinkins will be sentenced on Oct. 23, 2015.

According to the plea agreements, on Oct. 27, 2010, Oliver, Dinkins and Wright participated in a home-invasion robbery at a crack house in Clarksville, and that the defendants targeted the house and the victim Raymond Caston, aka Black, because he was known to cook and sell substantial amounts of crack cocaine at the house and to have large amounts of cash. 

The plea agreements provide that, when the defendants arrived at the house, one of the defendants kicked open the door.  At the time, at least eight people were inside the house.  The defendants then entered and demanded money and drugs from Caston.  One of the defendants proceeded to hit Caston with a gun.  After Caston indicated that he did not have money or drugs, the defendants forced Caston outside.  People inside the house then heard multiple gunshots, but did not see which of the defendants actually fired shots.  The defendants then fled, and Caston, who had been shot three times, was pronounced dead at the scene. 

DNA and other physical and forensic evidence collected at the scene and eyewitness accounts also connected the defendants to the murder.

The case was investigated by Clarksville Police Department and the Drug Enforcement Administration.  The case is being prosecuted by Trial Attorney Laura Gwinn of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney Lynne T. Ingram of the Middle District of Tennessee.

Dinkins Plea Agreement

Oliver Plea Agreement

Wright Plea Agreement

Two Former Company Executives Plead Guilty to Participating In Bribery Scheme

Louis Berger International Inc. (LBI), a New Jersey-based construction management company admitted to violations of the Foreign Corrupt Practices Act (FCPA) and agreed to pay a $17.1 million criminal penalty to resolve charges that it bribed foreign officials in India, Indonesia, Vietnam and Kuwait to secure government construction management contracts.  Two of the company’s former executives also pleaded guilty to conspiracy and FCPA charges in connection with the scheme.   

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Paul J. Fishman of the District of New Jersey and Special Agent in Charge Richard M. Frankel of the FBI’s Newark Division made the announcement.

LBI entered into a deferred prosecution agreement (DPA) today and admitted its criminal conduct, including its conspiracy to violate the anti-bribery provisions of the FCPA.  Pursuant to the DPA, LBI has agreed to pay a $17.1 million criminal penalty, to implement rigorous internal controls, to continue to cooperate fully with the department and to retain a compliance monitor for at least three years.

Richard Hirsch, 61, of Makaati, Philippines, and James McClung, 59, of Dubai, United Arab Emirates, each pleaded guilty to one count of conspiracy to violate the FCPA and one substantive count of violating the FCPA.  Hirsch previously served as the Senior Vice President responsible for the company’s operations in Indonesia, Thailand, the Philippines and Vietnam.  McClung previously served as the Senior Vice President responsible for the company’s operations in India and, subsequent to Hirsch, in Vietnam.  The sentencing hearings for Hirsch and McClung are scheduled for Nov. 5, 2015.

According to admissions in the DPA and statements in the charging documents, from 1998 through 2010, the company and its employees, including Hirsch and McClung, orchestrated $3.9 million in bribe payments to foreign officials in various countries in order to secure government contracts.  To conceal the payments, the co-conspirators made payments under the guise of “commitment fees,” “counterpart per diems,” and other payments to third-party vendors.  In reality, the payments were intended to fund bribes to foreign officials who had awarded contracts to LBI or who supervised LBI’s work on contracts. 

Among other factors, in entering into a DPA in this case, the government considered: (1) LBI’s self-reporting of the misconduct; (2) the company’s cooperation, including voluntarily making both U.S. and foreign employees available for interviews, and collecting, analyzing and organizing evidence and information for federal investigators; (3) the company’s extensive remediation, including terminating the officers and employees responsible for the corrupt payments; and (4) the company’s demonstrated commitment to improving its compliance program and internal controls. 

This case was investigated by the FBI’s Newark Division.  This is being prosecuted by Trial Attorney John W. Borchert of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Thomas J. Eicher and Scott B. McBride of the District of New Jersey.  The Criminal Division’s Office of International Affairs also provided assistance.    

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

Louis Berger International Complaint

Louis Berger International Continuance & DPA

The Department of Justice’s Civil Rights Division announced today that it has reached a partial settlement in its civil rights lawsuit against Maricopa County, Arizona, and Maricopa County Sheriff Joseph M. Arpaio.  The settlement resolves the United States’ claims that the Maricopa County Sheriff’s Office (MCSO) conducted unlawful detentions of Hispanics during worksite raids of local businesses in violation of the Fourth and 14th Amendments, and retaliated against critics of Sheriff Arpaio and MCSO in violation of the First Amendment.  The parties have filed a joint motion requesting that the federal district court in Arizona approve and agree to enforce the settlement agreement.  The parties also reached a separate settlement resolving the United States’ claim that MCSO failed to provide adequate language access for limited English-proficient Hispanics in MCSO jails in violation of Title VI of the Civil Rights Act of 1964.   

“The resolution of these claims, with the important safeguards against future constitutional violations included in these agreements, is in the best interests of the people of Maricopa County,” said Deputy Assistant Attorney General Mark Kappelhoff of the Justice Department’s Civil Rights Division.  “The Maricopa County Sheriff’s Office changed many of their practices after the commencement of our litigation, and these agreements ensure that progress continues and the Constitutional rights of the people of Maricopa County will be protected for the long term.”

Under the agreements, MCSO will comply with the following measures, ensuring that its activities comport with federal law and the Constitution:

• Before MCSO may conduct any worksite raids, it must first establish a set of written policies and protocols and submit them to the Civil Rights Division for review, to ensure that the worksite raids comply with all applicable laws and constitutional protections.  If MCSO conducts a worksite raid, the Civil Rights Division may request any information and documents to determine whether the operation was conducted consistently with federal law and the Constitution. 

• MCSO will prohibit retaliation against individuals engaging in First Amendment protected activity, such as public criticism of Sheriff Arpaio or the MCSO.  

• MCSO must ensure that limited English-proficient (LEP) Hispanic inmates in MCSO jails have adequate language access and are protected from unlawful, national origin-based discrimination.  These measures include:

  • Improving MCSO’s policies and practices for identifying LEP inmates;

  • Ensuring that LEP inmates have adequate access to language assistance services, such as bilingual staff, telephonic interpretation services and Spanish-language translations of important written policies and postings in the jails; and

  • Requiring that all vital announcements in MCSO facilities be made in both English and Spanish; and

Requiring MCSO to take reasonable steps to ensure that medical staff are informed if an inmate needing medical attention is LEP and requires language assistance.

As part of today’s agreements, if the Civil Rights Division determines that MCSO is not in substantial compliance with any provision of the agreements, it will attempt to first resolve the issue with MCSO; if the Civil Rights Division is unable to cooperatively resolve the compliance issues, however, it may bring appropriate enforcement actions before the federal district court in Arizona.

Today’s agreements resolve the majority of the claims involved in the division’s lawsuit, filed in May 2013, against Sheriff Arpaio and Maricopa County.  That lawsuit alleged four patterns or practices of unconstitutional conduct: (1) discriminatory policing against Hispanic persons in MCSO’s saturation patrols, general traffic enforcement and worksite operations targeting Hispanic immigrants, (2) detentions in violation of the Fourth Amendment during MCSO’s worksite raids targeting Hispanic immigrants, (3) failures in the provision of language access to Hispanic LEP jail inmates and (4) retaliatory police action against critics of Sheriff Arpaio and MCSO.  Last month, the federal district court of Arizona granted the United States’ motion for partial summary judgment on its discriminatory policing claim, finding that the United States was entitled to judgment on its claims that MCSO had engaged in discrimination against Hispanics in its enforcement of traffic laws.  A remedy on that issue is still to be determined by the court.  The parties are in ongoing discussions to resolve the remaining claims in the division’s lawsuit.

The agreements, as well as a description of the division’s previous investigation of and litigation against the Maricopa County Sheriff Arpaio and Maricopa County, will be available at: http://www.justice.gov/crt/about/spl/.

Maricopa Settlement Agreement and Attachment A.pdf (1.03 MB)

Maricopa Proposed Order.pdf (23.54 KB)

Maricopa Joint Motion to Approve.pdf (37.86 KB)

Scheme Defrauded More than 330 Victims Across the Country

A federal judge in the Eastern District of New York sentenced two sales representatives to prison today for their roles in a vending machine business opportunity fraud scheme, the Department of Justice announced today. 

Howard S. Strauss, 66, of Jericho, New York, was sentenced to serve 28 months in prison by U.S. District Court Judge Joan M. Azrack, who also ordered him to pay $2,291,844 in restitution to 230 victims.  Mark Benowitz, 68, of Midlothian, Virginia, was sentenced to serve 24 months in prison and ordered to pay $997,210 in restitution to 103 victims.

Both Strauss and Benowitz pleaded guilty last year to fraud charges in connection with Multivend LLC, doing business as Vendstar, a company based in Deer Park, New York, that sold vending machine business opportunities to consumers throughout the United States until 2010.  Strauss and Benowitz were Vendstar sales representatives who misrepresented the business opportunity’s likely profits, the amount of money that Vendstar’s prior customers were earning, how quickly customers were likely to recover their investment, the quality of locations that were available for the vending machines, and the level of location assistance that customers would receive from locating companies recommended by Vendstar.  Both Strauss and Benowitz also falsely told potential customers that they operated profitable candy vending machine routes themselves.

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

Twenty-two individuals have been charged with fraud in connection with Vendstar, including Vendstar managers and sales representatives, and the operators of locating companies recommended by Vendstar.  Three of those defendants have now been sentenced; 13 defendants are awaiting sentencing; and six defendants are scheduled to stand trial in September.

Principal Deputy Assistant Attorney General Mizer commended the U.S. Postal Inspection Service for its thorough investigation.  The case is being prosecuted by Trial Attorneys Patrick Jasperse and Alan Phelps of the Civil Division’s Consumer Protection Branch.

In two separate cases, two members of the Two Six nation and one member of the Latin Kings were indicted for murder in aid of racketeering and other offenses, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney David A. Capp of the Northern District of Indiana. 

“Prosecutions, like the one announced here, demonstrate the effectiveness of the task force approach to fighting gang violence,” said Assistant Attorney General Caldwell.  “Along with our partners, the Criminal Division will aggressively work to release the grip that gangs hold on many neighborhoods across this country.”

“If you are a member of a violent street gang and you committed a murder or other violent act last week or last decade, we are coming at you,” said U.S. Attorney Capp.  He also reiterated his office’s continuing commitment to removing all members of these violent street gangs from the streets on northwest Indiana.

Marcus Lovell Jenkins, 26, of East Chicago, Indiana, and Charles Garcia-Berrios, 22, of Hammond, Indiana, were charged by superseding indictment with murder in aid of racketeering and use of a firearm in connection with a crime of violence for their alleged roles in the killing of Kemond Coleman.  Jenkins also is charged with possession of a firearm by a prohibited person.

According to the allegations in the indictment, Jenkins and Garcia-Berrios are members of the Two Six Nation street gang.  The indictment alleges that, on July 26, 2014, Jenkins and Garcia-Berrios shot and killed Coleman for the purpose of maintaining and enhancing their positions within the gang.  Garcia-Berrios and Two Six member Julio Ivan Cartagena previously were charged with the attempted murders of two individuals in this case.  All three defendants are in federal custody.

In a separate case, Anton James, 19, of Hammond, was charged by indictment with murder in aid of racketeering and murder resulting from the use of a firearm during a crime of violence for his alleged role in the murder of Martin Hurtado Sr.  According to the allegations in the indictment, James is a member of the Latin Kings street gang.  The indictment alleges that, on Oct. 28, 2014, James shot and killed Hurtado Sr. believing that he was Martin Hurtado Jr., whom James believed was a rival gang member.  James made his initial appearance in federal court this afternoon before Magistrate Judge Andrew Rodovich of the Northern District of Indiana.

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

These cases are the result of the investigative efforts of the FBI, the ATF, the East Chicago Police Department, the Hammond Police Department, the Lake County, Indiana, Sheriff’s Department and Lake County High Intensity Drug Trafficking Area officers and agents.  The Lake County Prosecutor’s Office also has provided assistance.  The Jenkins case is being prosecuted by Trial Attorney Andrew Creighton of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney David Nozick of the Northern District of Indiana.  The James case is being prosecuted by Assistant U.S. Attorney Nozick.

Jenkins Superseding Indictment

James Indictment

A 28-count indictment was filed charging a Sheffield Lake, Ohio, man with providing material support to Islamic State of Iraq and the Levant (ISIL), as well as firearms and narcotics violations.

Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Steven D. Dettelbach of the Northern District of Ohio and Special Agent in Charge Stephen D. Anthony of the FBI’s Cleveland Division made the announcement.

Amir Said Rahman Al-Ghazi aka Robert C. McCollum, 38, was arrested last month after he attempted to buy an AK-47 from an undercover agent.

Al-Ghazi, who changed his name from Robert McCollum earlier this year, is alleged to have pledged his support to ISIL and Abu Bakr Al-Baghdadi via social media in 2014.  From July 2014 to June 2015, Al-Ghazi made multiple statements trying to persuade others to join ISIL.  He also expressed his own desire to perpetrate an attack on the United States and had attempted to purchase an AK-47 assault rifle.  Al-Ghazi has communicated with individuals he believed to be members of ISIL in the Middle East and took steps to create propaganda videos for ISIL, according to court documents.

Count one of the indictment charges Al-Ghazi with attempting to provide material support to ISIL.  Counts two and three charge Al-Ghazi with being a felon in possession of a firearm.  Counts four through 28 pertain to his sale of marijuana from February 2014 through last month.

If convicted, the defendant’s sentence will be determined by the court after a review of the federal sentencing guidelines and factors unique to the case, including the defendant’s prior criminal record (if any), the defendant’s role in the offense and the characteristics of the violation.

An indictment is only a charge and is not evidence of guilt.  A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.

This case was investigated by the FBI’s JTTF.  This case is being prosecuted by Assistant U.S. Attorneys Matthew W. Shepherd and Christos N. Georgalis, and the National Security Division’s Counterterrorism Section.

Al-Ghazi Indictment

A New Hampshire man was charged with remotely hacking into the social media, email and online shopping accounts of almost a dozen minor females and threatening that he would delete, deface, and make purchases from the accounts unless the victims sent him sexually explicit photographs of themselves.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting U.S. Attorney Donald Feith of the District of New Hampshire and Special Agent in Charge Lisa A. Quinn of the U.S. Secret Service’s Boston Field Office made the announcement. 

“Predators troll the Internet in search of vulnerable children to extort for their own sexual gratification,” said Assistant Attorney General Caldwell.  “The Criminal Division and our law enforcement partners are committed to protecting our youth from sextortion and to finding and prosecuting wrongdoers lurking in the shadows of the Internet.”

“Individuals who would take advantage of today’s modern technologies to entice and then threaten minors deserve special investigative and prosecutorial attention,” said Acting U.S. Attorney Feith.  “We will continue to work with law enforcement, technology specialists and education professionals to teach minors about the dangers of placing personal information in social media and the need to report threats of this nature so that we may bring these predators to justice.”

“Child sexual exploitation is an alarming problem in our society,” said Special Agent in Charge Quinn.  “The Secret Service is committed to work closely with our law enforcement partners to identify and prosecute these predators.”

Ryan J. Vallee, 21, of Franklin, New Hampshire, was charged by indictment with 10 counts of making interstate threats, two counts of computer hacking to steal information, seven counts of computer hacking to extort and seven counts of aggravated identity theft.  Vallee is scheduled to make his initial appearance today at 4:30 p.m. EDT in the District of New Hampshire.

According to the indictment, from 2012 through November 2013, Vallee, using various aliases that included “Seth Williams” and “James McRow,” engaged in a computer hacking and “sextortion” campaign designed to coerce numerous minor females to provide him with sexually explicit photographs of themselves.  He allegedly hacked into and took control of the girls’ online accounts – including their e-mail, Facebook and Instagram accounts – and threatened to delete the accounts, and defaced the contents of some of the accounts.  Vallee also allegedly hacked into the girls’ Amazon.com accounts and, using their stored payment card information and shipping addresses, ordered items of a sexual nature and had them shipped to the girls’ homes.  Vallee also allegedly obtained sexually explicit photographs of the girls and their friends and distributed them to others.

The indictment alleges that, in conjunction with his harassment campaign, Vallee sent communications to his victims, usually using a text message spoofing or anonymizing service, threatening to continue his attacks unless the victims provided sexually explicit photographs of themselves.  The indictment alleges that, when victims refused to comply with Vallee’s demands and begged him to leave them alone, Vallee responded with threats to inflict additional harm.

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

The case is being investigated by the U.S. Secret Service, with substantial assistance from the Belmont, New Hampshire, Police Department.  The case is being prosecuted by Senior Trial Attorney Mona Sedky and Trial Attorney Sumon Dantiki of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Arnold H. Huftalen of the District of New Hampshire.

Vallee Indictment

Three Banks Collectively Will Pay Penalties of More than $3.1 Million and Continue to Cooperate with Department

The Department of Justice announced today that Mercantil Bank (Schweiz) AG, Banque Cantonale Neuchâteloise and Nidwaldner Kantonalbank have reached resolutions 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 agreements signed today, each bank agrees to cooperate in any related criminal or civil proceedings, demonstrate its implementation of controls to stop misconduct involving undeclared U.S. accounts and pay penalties in return for the department’s agreement not to prosecute these banks for tax-related criminal offenses.

Mercantil Bank (Schweiz) AG is based in Zurich and initiated operations in 1988.  Its main focus is private banking, which offers wealth management services to individuals and private investment companies.  Mercantil opened, serviced and profited from accounts for U.S. clients and knew or should have known that many of its U.S. clients were likely not complying with their tax obligations.  Its cross-border banking business 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.  Until 2010, Mercantil maintained a U.S. toll-free telephone number to service its customers. 

Mercantil used a variety of means that could and did assist U.S. clients in concealing their accounts, including hold mail and code name or numbered account services, thereby ensuring that documents reflecting the existence of the accounts could remain outside the United States, beyond the reach of U.S. tax authorities and protected by Swiss banking secrecy laws.  Mercantil also assisted clients in opening and maintaining accounts in the names of sham entities.  For example, Mercantil provided accounts for what were referred to as “Personal Investment Companies” through its private banking unit.  Where there was no active, ongoing business, it was Mercantil’s practice to ignore the form of the structures and to treat the beneficial owners of the entity as the accountholders in substance.  Mercantil provided services to the accounts knowing that they could be used for evasion or avoidance of tax obligations.  On one occasion in March 2008, Mercantil opened an account for a bank executive with U.S. citizenship in the name of a Panamanian holding company.  In that instance, Mercantil accepted and included in account records forms provided by the director of the Panamanian company that falsely represented the ownership of the account for U.S. federal income tax purposes.

Since Aug. 1, 2008, Mercantil held a total of 116 U.S.-related accounts with a maximum aggregate value totaling over $59.8 million.  Mercantil will pay a penalty of $1.172 million.

Banque Cantonale Neuchâteloise (BCN) was formed in 1883 and is headquartered in the city of Neuchâtel, Switzerland.  BCN opened, serviced and profited from accounts for U.S clients with the knowledge that many likely were not complying with their U.S. tax obligations.  BCN knew or had reasons to know that it was likely that certain U.S. taxpayers were maintaining undeclared accounts at BCN in order to evade their U.S. tax obligations in violation of U.S. law.

BCN provided traditional Swiss banking services that it knew could assist, and that did in fact assist, certain U.S. taxpayers to evade their U.S. tax obligations and otherwise hide accounts held at BCN from the Internal Revenue Service (IRS).  For example, after it became public that the department was investigating the conduct of UBS, and later other Swiss banks, BCN allowed several U.S. persons to open accounts at BCN and transfer funds into those BCN accounts from the banks under investigation.

BCN provided numbered accounts and agreed to hold bank statements and other mail relating to accounts at BCN, rather than send them to U.S. taxpayers located in the United States, thereby ensuring that documents reflecting the existence of the accounts remained outside the United States and beyond the reach of U.S. tax authorities.  In some instances, BCN permitted accounts to be held by Swiss or, in one case, foreign non-operating entities that were ultimately beneficially owned by U.S. persons.  By permitting U.S. accountholders to hold their accounts in the name of non-operating entities, BCN thus enabled U.S. accountholders to conceal their identity from the U.S. government.  Until 2014, BCN permitted its U.S. accountholders to withdraw funds in cash both by withdrawing sums below $10,000 and, in some cases, withdrawing larger sums of cash when closing their accounts.

As part of its participation in the Swiss Bank Program, BCN has provided certain account information related to U.S. taxpayers which may assist the government in making 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, BCN had 190 U.S. clients with a total of 595 U.S.-related accounts.  The maximum dollar value, in the aggregate, of all accounts associated with U.S. taxpayers at BCN was approximately $67.5 million.  BCN will pay a penalty of $1.123 million.

Nidwaldner Kantonalbank (NKB), established in 1879, is a public and registered cantonal bank in Switzerland owned by the canton of Nidwalden, Switzerland.  Despite understanding that U.S. taxpayers had a legal duty to report to the IRS and to pay taxes on income earned in accounts maintained in Switzerland, NKB opened and maintained undeclared accounts for U.S. taxpayers.  NKB chose to continue to service U.S. clients without disclosing their identity to the IRS and without regard for the impact of U.S. criminal law on that decision. 

NKB offered a variety of traditional Swiss banking services that it knew could assist, and that did assist, U.S. clients in the concealment of assets and income from the IRS.  These services included hold mail and numbered accounts.  NKB also allowed U.S. nationals with Swiss relatives to open accounts, even in circumstances where NKB was or should have been aware that the accounts were not declared in the United States.

In several instances, requirements of an agreement NKB had with the IRS, in particular with respect to requiring IRS Forms W-9 from U.S. clients, were either not followed or were waived by NKB.  For example, in one case, NKB knowingly waived the W-9 requirement for an account from a bank under investigation by the department.  This allowed the accountholders, both U.S. citizens and residents, to hold U.S. securities in the account without disclosure of the account to the IRS.  NKB’s failure to comply with its reporting and withholding obligations allowed these and other U.S. accountholders to conceal their accounts from U.S. authorities.

One external asset manager had a relationship with an NKB banker and brought five accounts to NKB, including some from Credit Suisse.  One of these accounts held U.S. securities through a life insurance policy (an “insurance wrapper”) for the benefit of a U.S. person, allowing the account to hold U.S. securities without disclosure to U.S. authorities.  NKB accepted another account from UBS that was owned by an individual who was a foreign national and U.S. resident.  At the time it approved the account, NKB was aware that the client left UBS because he was concerned about the U.S. government’s activities in investigating U.S. persons with accounts at that bank. 

During the Applicable Period, NKB held a total of 95 U.S.-related accounts with a peak value of assets under management of approximately $30.5 million.  NKB will pay a penalty of $856,000.

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

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

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 and International Division for their substantial assistance.  Ciraolo also thanked Dara B. Oliphant, Gregory S. Seador, Sean P. Beaty and Kathleen E. Lyon, who served as counsel on these matters, as well as Senior Counsel for International Tax Matters and Coordinator of the Swiss Bank Program Thomas J. Sawyer and Senior Litigation Counsel Nanette L. Davis of the Tax Division.

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

A former Washington, D.C., public school teacher and tax return preparer and her son, a current Washington, D.C., public school teacher and former tax return preparer, were sentenced to prison today in the U.S. District Court for the District of Columbia, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division. 

Sherri Davis, 42, and her son, Andre Davis, 24, both of Washington, D.C., were convicted by a federal jury on Jan. 29 of one count of conspiracy to defraud the United States.  Sherri Davis was also convicted of 25 counts of aiding and assisting in the preparation and filing of false federal individual income tax returns and three counts of filing her own false tax returns.  Andre Davis was also convicted of one count of aiding and assisting in the preparation and filing of a false tax return.

U.S. District Court Judge Thomas Hogan of the District of Columbia sentenced Sherri Davis to serve 48 months in prison to be followed by three years of supervised release, and ordered her to pay $642,103 in restitution to the Internal Revenue Service (IRS) and a $2,900 special assessment.  Judge Hogan sentenced Andre Davis to serve six months of home detention and 100 hours of community service as part of five years of supervised release, and ordered him to pay $37,537 in restitution to the IRS and a $200 special assessment.

“Identifying and prosecuting fraudulent return preparers are among the Tax Division’s highest priorities,” said Acting Assistant Attorney General Ciraolo.  “Today’s sentences demonstrate that those who willfully assist U.S. taxpayers in filing false returns and in doing so, stealing from the U.S. Treasury, will pay a heavy price for their criminal conduct.”

According to the evidence presented at trial, from 2003 through 2012, Sherri Davis was the owner and operator of 2FT Fast Facts Tax Service, a tax return preparation business located in Washington, D.C.  In 2012, Sherri Davis changed the business name to Davis Financial Services and Andre Davis was designated as the owner and operator of that business.

At trial, the evidence established that Sherri and Andre Davis prepared and filed false tax returns for clients that included various false and fraudulent deductions, expenses and credits intended to reduce the amount of taxes owed and obtain refunds for their clients that were larger than the clients were entitled to receive.  In some instances, Sherri and Andre Davis, and others working for them, included false and fraudulent Schedules C that reported false business losses and Schedules A that reported fraudulent itemized deductions.  On some of the returns, Sherri and Andre Davis completely fabricated the Schedule C businesses.  On other returns, the Schedule A included false or grossly inflated gifts to charity, job expenses and other miscellaneous expenses.

The evidence at trial further established that for calendar years 2007 through 2009, Sherri Davis filed her own false income tax returns on which she failed to report more than $300,000 in tax preparation fees that she received from her business.

“IRS-Criminal Investigation is focused on cases where greedy individuals, who for their own personal benefit, participate in identity theft schemes to accumulate ill-gotten wealth at a cost to the taxpayer,” said Special Agent in Charge Thomas Jankowski of the IRS-Criminal Investigation (CI), Washington, D.C., Field Office.  “In cooperation with the Department of Justice, IRS-CI is committed to holding thieves, such as Sherri and Andre Davis, accountable for their misdeeds.”

Acting Assistant Attorney General Ciraolo commended special agents of IRS-Criminal Investigation and the Washington, D.C., Office of Tax and Revenue-Criminal Investigation Division, who investigated the case, and Trial Attorneys Jessica Moran, Tiwana Fleming and Mark McDonald of the Tax Division, who prosecuted the case.  Ciraolo also thanked the U.S. Attorney’s Office of the District of Columbia for their substantial assistance.

The owner and operator of a payment processing company that was involved in the unauthorized withdrawal of millions of dollars from consumers’ bank accounts pleaded guilty to fraud, the Justice Department announced today.

Neil Godfrey, 76, of Santa Ana, California, pleaded guilty to a one-count information charging him with wire fraud in the Eastern District of Pennsylvania.  The information described how, working as a payment processor, Godfrey knowingly enabled fraudulent merchants to withdraw money from consumers’ bank accounts without the consumers’ knowledge or consent. 

In pleading guilty, Godfrey admitted that he used a Santa Ana processing company named Check Site Inc. to assist at least two fraudulent merchants.  The merchants operated websites that purportedly offered payday loans.  The websites were simply a ruse to harvest consumers’ bank account information.  Instead of providing consumers with payday loans, the merchants operating the websites used the information provided by the consumers in loan applications to withdraw money from the consumers’ bank accounts.  Using Check Site, Godfrey knowingly processed the merchants’ fraudulent withdrawals and provided the merchants access to the banking system.

“Payment processors commit a federal offense when they knowingly facilitate consumer fraud,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “The Justice Department will not sit idly by while companies and individuals take money from victims’ accounts without their consent.  As this case demonstrates, the Department of Justice will continue to prosecute those involved in perpetrating or knowingly assisting fraud schemes.”

In pleading guilty, Godfrey admitted to using payment devices called remotely created checks (RCCs) to facilitate fraud schemes.  Once the fraudulent merchants had obtained consumer names and bank account information, the merchants created RCCs, which Check Site submitted through the banking system to the consumers’ banks.  Unlike an ordinary check, an RCC is generally honored without the signature of the account holder.  When the RCCs were processed, Check Site kept a fee and transferred the remainder of the withdrawals to the merchants.

The information to which Godfrey pleaded guilty charged that he was an expert in finding banks that were willing to facilitate these transactions and ignore the red flags raised by these transactions.  Such banks included one located in Irvine, California, and one located in Philadelphia.  The information also alleged that Godfrey helped the fraudulent merchants stay off the radar of other banks and regulators so that the fraud could continue.  For example, Godfrey advised merchants how to change the names of their companies and set up the facade of a legitimate company to defeat banks’ attempts at due diligence.

In an email message quoted in the information, Godfrey advised a fraudulent merchant that “the lesson we have learned is that we must trick the [bank] folk.  It means you need to set up some type of website front.  What we need to do is set up a legitimate website selling anything you can think of – that is what you get approved on.  It is irrelevant if anything is ever sold there – just so it exists. . . .  In the mean time we set up false credit card approval etcetera.  It is this we use to run the transactions.  Yes, there will be a lot of returns, but what we do is send through transactions over the next few weeks that don’t have high returns.  They stop looking and then we can run the regular stuff. . . .  [A]fter several months we junk that company and go to another company.”

Principal Deputy Assistant Attorney General Mizer thanked the Federal Trade Commission for providing Attorney Michelle Chua to serve as a Special Assistant U.S. Attorney on the case, and commended the FBI for its thorough investigation.  The case is being prosecuted by Assistant U.S. Attorney Patrick J. Murray of the Eastern District of Pennsylvania and Trial Attorney Patrick Jasperse of the Civil Division’s Consumer Protection Branch.

Attorney General Loretta E. Lynch provided the following statement on the shooting in Chattanooga, Tennessee:

“On behalf of the Department of Justice, I offer my heartfelt condolences and deepest sympathies to the loved ones of the U.S. servicemembers who were murdered and the law enforcement officer who was wounded in this shameful and cowardly act of violence.  I have directed the FBI to take the lead in the national security investigation of this heinous attack on members of our military.  The U.S. Attorney’s office and department prosecutors are also actively involved.  In the days ahead, we intend to work with our partners in law enforcement and the intelligence community to ensure that the American people are protected and that justice is served.”

Three owners and the CEO of a government contracting company headquartered in Falls Church, Virginia, all of whom are retired Army National Guard colonels, were indicted today for their alleged participation in a scheme to bribe an active-duty Army National Guard colonel in order to obtain millions of dollars of Army National Guard marketing, retention and recruitment contracts.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Dana J. Boente of the Eastern District of Virginia, Assistant Director in Charge Andrew G. McCabe of the FBI’s Washington, D.C., Field Office, Acting Special Agent in Charge Paul Sternal of the Defense Criminal Investigative Service (DCIS) Mid-Atlantic Field Office and Director Frank Robey of the U.S. Army Criminal Investigative Command’s Major Procurement Fraud Unit (Army-CID) made the announcement.

“As alleged in the indictment, four retired colonels have been charged with using their corporate marketing firm to funnel bribe payments to high-ranking accomplices in the Army National Guard to corruptly obtain lucrative marketing contracts,” said Assistant Attorney General Caldwell.  “This case is emblematic of the Criminal Division’s ongoing efforts to root out corruption wherever it may be found, including at the highest ranks of our armed services.”

“These criminal charges reflect our continued commitment to rooting out public corruption wherever it occurs,” said U.S. Attorney Boente.  “The public contracting process should be one of integrity and fairness, and these cases should send a strong message that public corruption will be vigorously prosecuted in the military as well as other areas of government.”

“The FBI’s top criminal priority is investigating and stopping corrupt officials and the organizations they do business with,” said Assistant Director in Charge McCabe.  “These indictments outline a significant bribery scheme that undermined a fair government contracting process.”

“The actions of the defendants have brought them dishonor and erode confidence in the integrity of a contracting process intended to support their fellow citizen soldiers,” said Acting Special Agent in Charge Sternal.  “The Defense Criminal Investigative Service, alongside its law enforcement partners and the U.S. Attorney's Office, remain vigilant and committed to bringing individuals who subvert the acquisition system to justice.”

“Today's indictment illustrates our commitment and cooperation shared between law enforcement agencies investigating this type of corruption and bribery,” said Director Robey.  “It is unconscionable how these former military officers betrayed the offices they once held for monetary gain.”

Edwin Stuart Livingston III, 67, of The Villages, Florida; Ronald Joseph Tipa, 68, of Sunny Isles Beach, Florida; Thomas Edward Taylor, 66, of Alexandria, Virginia; and Ross Bernard DeBlois Sr., 55, of Fairfax Station, Virginia, are each charged by indictment with one count of conspiracy to commit bribery, one count of bribery of a public official, one count of conspiracy to commit honest services fraud and five counts of honest services fraud.

According to the indictment, Livingston, Tipa, Taylor and John Jones, 77, a retired brigadier general from the New York Army National Guard, each owned 25 percent of MPSC and constituted MPSC’s Board of Directors.  DeBlois was the company’s CEO. 

The National Guard Bureau (NGB) is a joint activity of the U.S. Department of Defense (DOD), the state units of the Army National Guard and the Departments of the Army and Air Force.  The NGB oversees the distribution of federal funding provided to the Army National Guard and its state units.

The DOD provides millions of dollars in federal funds to the NGB for, among other things, advertising, marketing and sponsorships in order to recruit new Army National Guard members.  The NGB then uses these funds to promote the Army National Guard on a national level by entering into marketing contracts.

According to the allegations in the indictment, in 2010 or 2011, Livingston and Tipa offered Robert Porter, 50, who then was an active-duty colonel in the Army National Guard who held a high-level position at the NGB, a deal in which MPSC would pay Porter 1 percent of the value of all contracts he steered to MPSC.  The indictment alleges that Porter was to receive the bribe payment after he retired from the NGB and began working for MPSC, and that the payment was to be concealed as an “incentive fee” or “bonus” payment in MPSC payroll records.

According to the indictment, during 2011 and 2012, Porter allegedly steered at least three NGB marketing contracts to MPSC, which were worth a total of approximately $5.5 million.  The indictment alleges that, during a July 2014 meeting of MPSC’s board of directors, DeBlois confirmed that three contracts were awarded to MPSC while Porter was “in uniform.”  Thereafter, Livingston, Tipa, Taylor and Jones allegedly unanimously voted to make the promised bribe payment to Porter.  The indictment further alleges that, between July and September 2014, MPSC made three payments to Porter, each for over $10,000.

In September 2014, Porter pleaded guilty to conspiracy to commit bribery and bribery of a public official, and in February 2015, Jones pleaded guilty to conspiracy to commit bribery and bribery of a public official in connection with this scheme.

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

The case was investigated by the FBI’s Washington Field Office, DCIS Mid-Atlantic Field Office and Army-CID’s Major Procurement Fraud Unit.  The case is being prosecuted by Trial Attorney Alison L. Anderson of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Jonathan Fahey of the Eastern District of Virginia.

Individuals with information regarding bribery or corruption within the NGB’s retention and recruitment contracting process or at MPSC should contact the FBI’s Washington Field Office at (202) 278–2000.

MPSC Indictment

In a settlement announced today by the Department of Justice and the Environmental Protection Agency (EPA), Interstate Power and Light, a subsidiary of Alliant Energy, has agreed to install pollution control technology and meet stringent emission rates to reduce harmful air pollution from the company’s seven coal-fired power plants in Iowa.  The settlement also requires Interstate Power and Light to spend a total of $6 million on environmental mitigation projects and pay a civil penalty of $1.1 million to resolve alleged violations of the Clean Air Act.  Linn County, Iowa, the state of Iowa and the Sierra Club join the United States as co-plaintiffs in the case.

“This settlement is a victory for air quality and public health in Iowa,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division.  “This agreement will cover all of Interstate’s coal-burning facilities in Iowa, requiring new pollution cutting technology and environmental projects to enhance air quality in surrounding communities, among other lasting benefits.” 

“The emissions reductions required by this settlement will lead to cleaner air and significant environmental and public health benefits for Iowans," said U.S. Attorney Kevin W. Techau for the Northern District of Iowa.  “This settlement will eliminate thousands of tons of harmful air pollution each year significantly improving air quality in Iowa and throughout the Midwest.  The agreement demonstrates the Department of Justice’s strong efforts, along with EPA, to bring large sources of air pollution into compliance with the Clean Air Act.”

“To serve the communities in which they operate, power plants must protect clean air for those living nearby,” said Assistant Administrator Cynthia Giles for EPA’s Office of Enforcement and Compliance Assurance.  “This case delivers on the goals of EPA’s national enforcement initiative to reduce air pollution from the largest sources.  By installing new equipment and funding mitigation projects, Interstate Power and Light can help conserve energy and cut pollution in communities across Iowa.”

Under the settlement, Interstate Power and Light will install and continuously operate new and existing pollution control technology at its two largest plants in Lansing and Ottumwa, Iowa and will retire or convert to cleaner-burning natural gas its remaining five plants in Burlington, Cedar Rapids, Clinton, Dubuque and Marshalltown, Iowa.  The new, state-of-the-art pollution controls required by the settlement are expected to cost approximately $620 million.  EPA estimates that the settlement will reduce sulfur dioxide (SO2) emissions by 32,500 tons per year and nitrogen oxide (NOx) emissions by 3,800 tons per year once the settlement is fully implemented.

Interstate Power and Light will also be required to spend $6 million on environmental mitigation projects.  The company will choose from five potential projects, including solar energy and anaerobic digester installations, replacing coal-fired boilers at schools with lower-emission equipment, an alternative fuel vehicle replacement program and a residential program to change out wood burning stoves and fireplaces. 

SO2 and NOx, two predominant pollutants emitted from power plants, have numerous adverse effects on human health and are significant contributors to acid rain, smog and haze. These pollutants are converted in the air to particulate matter that can cause severe respiratory and cardiovascular impacts and premature death.

This settlement is part of EPA’s national enforcement initiative to control harmful emissions from large sources of pollution, which includes coal-fired power plants, under the Clean Air Act’s New Source Review requirements.  The total combined SO2 and NOx emission reductions secured from all these settlements will exceed 2 million tons each year once all the required pollution controls have been installed and implemented.

The settlement was filed with the U.S. District Court for the Northern District Court of Iowa for 30 days to allow for public comment.  The company is required to pay the penalty within 30 days after the court approves the settlement.

More on the settlement: http://www.justice.gov/enrd/consent-decrees

More information about EPA’s enforcement initiative: http://www.epa.gov/compliance/data/planning/initiatives/2011airpollution.html

As Part of Coordinated Law Enforcement Efforts in 20 Countries, United States Charges 12 Defendants in Connection with Computer Fraud Conspiracy

The computer hacking forum known as Darkode was dismantled, and criminal charges have been filed in the Western District of Pennsylvania and elsewhere against 12 individuals associated with the forum, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney David J. Hickton of the Western District of Pennsylvania and Deputy Director Mark F. Giuliano of the FBI.

“Hackers and those who profit from stolen information use underground Internet forums to evade law enforcement and target innocent people around the world,” said Assistant Attorney General Caldwell.  “This operation is a great example of what international law enforcement can accomplish when we work closely together to neutralize a global cybercrime marketplace.”

“Of the roughly 800 criminal internet forums worldwide, Darkode represented one of the gravest threats to the integrity of data on computers in the United States and around the world and was the most sophisticated English-speaking forum for criminal computer hackers in the world,” said U.S. Attorney Hickton.  “Through this operation, we have dismantled a cyber hornets’ nest of criminal hackers which was believed by many, including the hackers themselves, to be impenetrable.”

“This is a milestone in our efforts to shut down criminals’ ability to buy, sell, and trade malware, botnets and personally identifiable information used to steal from U.S. citizens and individuals around the world,” said Deputy Director Giuliano.  “Cyber criminals should not have a safe haven to shop for the tools of their trade and Operation Shrouded Horizon shows we will do all we can to disrupt their unlawful activities.”

As alleged in the charging documents, Darkode was an online, password-protected forum in which hackers and other cyber-criminals convened to buy, sell, trade and share information, ideas, and tools to facilitate unlawful intrusions on others’ computers and electronic devices.  Before becoming a member of Darkode, prospective members were allegedly vetted through a process in which an existing member invited a prospective member to the forum for the purpose of presenting the skills or products that he or she could bring to the group.  Darkode members allegedly used each other’s skills and products to infect computers and electronic devices of victims around the world with malware and, thereby gain access to, and control over, those devices.   

The takedown of the forum and the charges announced today are the result of the FBI’s infiltration, as part of Operation Shrouded Horizon, of the Darkode’s membership.  The investigation of the Darkode forum is ongoing, and the U.S. Attorney’s Office of the Western District of Pennsylvania is taking a leadership role in conjunction with the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS).

The charges announced today are part of a coordinated effort by a coalition of law enforcement authorities from 20 nations to charge, arrest or search 70 Darkode members and associates around the world.  The nations comprising the coalition include Australia, Bosnia and Herzegovina, Brazil, Canada, Colombia, Costa Rica, Cyprus, Croatia, Denmark, Finland, Germany, Israel, Latvia, Macedonia, Nigeria, Romania, Serbia, Sweden, the United Kingdom and the United States.  Today’s actions represent the largest coordinated international law enforcement effort ever directed at an online cyber-criminal forum.

The following defendants face charges in the Western District of Pennsylvania:

• Johan Anders Gudmunds, aka Mafi aka Crim aka Synthet!c, 27, of Sollebrunn, Sweden, is charged by indictment with conspiracy to commit computer fraud, conspiracy to commit wire fraud, and conspiracy to commit money laundering.  He is accused of serving as the administrator of Darkode, and creating and selling malware that allowed hackers to create botnets.Gudmunds also allegedly operated his own botnet, which at times consisted of more than 50,000 computers, and used his botnet to steal data from the users of those computers on approximately 200,000,000 occasions.

• Morgan C. Culbertson, aka Android, 20, of Pittsburgh, is charged by criminal information with conspiring to send malicious code.  He is accused of designing Dendroid, a coded malware intended to remotely access, control, and steal data from Google Android cellphones.  The malware was allegedly offered for sale on Darkode.

• Eric L. Crocker, aka Phastman, 29, of Binghamton, New York, is charged by criminal information with sending spam.He is accused of being involved in a scheme involving the use of a Facebook Spreader which infected Facebook users’ computers, turning them into bots which Crocker controlled through the use of command and control servers.  Crocker sold the use of this botnet to others for the purpose of sending out massive amounts of spam.

• Naveed Ahmed, aka Nav aka semaph0re, 27, of Tampa, Florida; Phillip R. Fleitz, aka Strife, 31, of Indianapolis; and Dewayne Watts, aka m3t4lh34d aka metal, 28, of Hernando, Florida, are each charged by criminal information with conspiring to send spam.  They are accused of participating in a sophisticated scheme to maintain a spam botnet that utilized bulletproof servers in China to exploit vulnerable routers in third world countries, and that sent millions of electronic mail messages designed to defeat the spam filters of cellular phone providers.

• Murtaza Saifuddin, aka rzor, 29, of Karachi, Sindh, Pakistan, is charged in an indictment with identity theft.Saifuddin is accused of attempting to transfer credit card numbers to others on Darkode.

The following defendant faces charges in the Eastern District of Wisconsin:

• Daniel Placek, aka Nocen aka Loki aka Juggernaut aka M1rr0r, 27, of Glendale, Wisconsin, is charged by criminal information with conspiracy to commit computer fraud.He is accused of creating the Darkode forum, and selling malware on Darkode designed to surreptitiously intercept and collect email addresses and passwords from network communications.

The following defendants face charges in the District of Columbia:

• Matjaz Skorjanc, aka iserdo aka serdo, 28, of Maribor, Slovenia; Florencio Carro Ruiz, aka NeTK aka Netkairo, 36, of Vizcaya, Spain; and Mentor Leniqi, aka Iceman, 34, of Gurisnica, Slovenia, are each charged in a criminal complaint with racketeering conspiracy; conspiracy to commit wire fraud and bank fraud; conspiracy to commit computer fraud, access device fraud and extortion; and substantive computer fraud.Skorjanc also is accused of conspiring to organize the Darkode forum and of selling malware known as the ButterFly bot.

The following defendant faces charges in the Western District of Louisiana:

• Rory Stephen Guidry, aka k@exploit.im, of Opelousas, Louisiana, is charged with computer fraud. He is accused of selling botnets on Darkode.

The charges and allegations are merely accusations.  A defendant is presumed innocent until and unless proven guilty.

This investigation, Operation Shrouded Horizon, is being conducted by the FBI with assistance from Europol and their European Cyber Crime Center (EC3).  This case is being prosecuted by Assistant U.S. Attorneys James T. Kitchen and Charles A. Eberle of the Western District of Pennsylvania and Trial Attorneys Gavin A. Corn, Marie-Flore Johnson and Harold Chun of CCIPS, Assistant U.S. Attorney Erica O’Neil of the Eastern District of Wisconsin and Assistant U.S. Attorney Myers Namie of the Western District of Louisiana.  The Criminal Division’s Office of International Affairs also provided significant assistance.  

*****

In a related case, Aleksandr Andreevich Panin, aka Gribodemon, 26, of Tver, Russia; and Hamza Bendelladj, aka Bx1, 27, of Tizi Ouzou, Algeria, pleaded guilty on Jan. 28, 2014, and June 26, 2015, respectively, in the Northern District of Georgia in connection with developing, distributing and controlling SpyEye, a malicious banking trojan designed to steal unsuspecting victims’ financial and personally identifiable information.  Bendelladj and Panin advertised SpyEye to other members on Darkode.  One of the servers used by Bendelladj to control SpyEye contained evidence of malware that was designed to steal information from approximately 253 unique financial institutions around the world.  Panin and Bendelladj will be sentenced at a later date.

This case is being prosecuted by Assistant U.S. Attorneys Steven Grimberg and Kamal Ghali of the Northern District of Georgia.  All press inquiries relating to this case should be directed to the U.S. Attorney’s Office for the Northern District of Georgia at USAGAN.PressEmails@usdoj.gov or (404) 581-6016.

Ahmed et al Information - Western District of Pennsylvania

Crocker Information - Western District of Pennsylvania

Culbertson Information - Western District of Pennsylvania

Gudmunds Indictment - Western District of Pennsylvania

Saifuddin Indictment - Western District of Pennsylvania

Placek Information - Eastern District of Wisconsin

Panin et al Indictment - Northern District of Georgia

Skorjanc et al Complaint - District of Columbia

President Barack Obama has designated J. Patricia Wilson Smoot as of the U.S. Parole Commission effective May 29, 2015.  Chairman Smoot, who has served as Acting Chairman since the retirement of former Chairman Isaac Fulwood on Jan. 30, 2015, was appointed to the U.S. Parole Commission by President Obama and confirmed by the U.S. Senate on Sept. 16, 2010.

While at the Commission, Chairman Smoot has spearheaded the USPC Mental Health Docket.  The USPC Mental Health Docket was established in 2012 as an alternative to incarceration for low-risk, non-violent offenders with mental health disorders and/or co-occurring disorders.  Through collaborative efforts with Court Services and Offender Supervision Agency, Department of Behavioral Health and Public Defender Service, a multidisciplinary team was formed in an effort to provide swift assistance and administrative sanctions for the targeted population.  To date, the USPC Mental Health Docket has connected a multitude of male and female offenders to in-patient and outpatient treatment services, as well as job training and mentoring programs.  Additionally, Chairman Smoot also served for several months as Acting General Counsel for the agency.

Before her appointment, Chairman Smoot served as Deputy State's Attorney for Prince George's County, Maryland, one of the largest prosecutor’s offices in the State of Maryland. She was appointed to the position in 2002.  As part of her duties, Chairman Smoot oversaw the Sex Offense and Child Abuse Unit, the Domestic Violence Unit, the Juvenile Division and the District Court Division, while serving as an advisor to the state’s attorney.

From 1994 to 2002, Chairman Smoot served as an Assistant U.S. Attorney of the District of Columbia.  She served, with distinction, as a trial attorney and received both the Department of Justice Special Achievement and the Victims of Crime Awards during that time.  Chairman Smoot ended her tenure in the U.S. Attorney's Office as Director of Professional Development, where she was responsible for attorney movement and management of the training programs for the 700-person office.

Chairman Smoot also served as a Public Defender in Prince George's County, Maryland, as an associate in a tort defense litigation firm in the district and as a judicial law clerk in the Superior Court for the District of Columbia.

Chairman Smoot has served on a number of boards and committees including the National Black Prosecutors Association, National African American Drug Policy Coalition, Maryland Coalition Against Sexual Abuse, the Governor's (Maryland) Sex Offender Advisory Board and Community Advocates for Families and Youth (CAFY).

Because of her work in and outside of the office, Chairman Smoot was named one of Maryland's Top 100 Women by the Daily Record for 2008 and again in 2011.  She has also been recognized by the PEERS Coalition for Innovative Leadership in Public Service in the District of Columbia and has received the Distinguished Service Award, from the Community Advocates for Families and Youth in Prince George's County, Maryland.

Chairman Smoot holds a B.A. in English and Sociology with a concentration in Legal Studies from Bucknell University and a J.D. from Columbus School of Law, Catholic University of America.

A Fort Buchanan Army Reserve Staff Sergeant pleaded guilty today to bulk cash smuggling of $113,050 and theft of government property worth $6,302 while serving in Afghanistan. 

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Rose Emilia Rodriguez-Velez of the District of Puerto Rico, Special Agent in Charge Carlos Cases of the FBI’s San Juan Division Field Office, Special Agent in Charge Gary J. Hartwig of U.S. Immigration and Customs Enforcement Homeland Security Investigations (ICE-HSI) Chicago Field Office, Special Inspector General for Afghanistan Reconstruction John F. Sopko, Director Frank Robey of the U.S. Army Criminal Investigation Command’s (CID) Major Procurement Fraud Unit, Acting Special Agent in Charge Paul Sternal of the Defense Criminal Investigative Service’s (DCIS) Mid-Atlantic Field Office and Brigadier General Keith M. Givens, Commander of the Air Force Office of Special Investigations (AFOSI) made the announcement.

Luis Ramon Casellas, 42, of Canovanas, Puerto Rico, pleaded guilty before U.S. Magistrate Judge Camille L. Velez-Rive of the District of Puerto Rico to three counts of bulk cash smuggling and one count of theft of government property.  Sentencing before U.S. District Judge Carmen Consuelo Cerezo of the District of Puerto Rico will be scheduled at a later date.

Since 2009, Casellas has been an Army Reservist Staff Sergeant on active status based at Fort Buchanan in Guaynabo, Puerto Rico.  In April 2013, Casellas was deployed by the Army to Kandahar Airfield in Afghanistan.  As part of his duties, Casellas was responsible for helping to break down smaller bases in preparation for the withdrawal of U.S. military forces from Afghanistan.  These duties included retrieving U.S. government property for future use and selling unsuitable material as scrap to Afghan contractors. 

Between June 17 and Aug. 9, 2013, Casellas was the leader of a three-person Army team that went to a Forward Operating Base (FOB) in Afghanistan to help break down that base.  In connection with his plea, Casellas admitted that, while this team was at the FOB, he stole tools and equipment, including laptops, belonging to the U.S. Department of Defense.  Casellas also admitted that, in July 2013, Casellas sent approximately eight boxes from the FOB through the U.S. Postal Service addressed to his wife in Puerto Rico, and that the boxes contained some of the stolen government property and undeclared U.S. currency totaling $50,500.

In addition, in August 2013, Casellas sent two boxes from Kandahar through UPS, again addressed to his wife, that were marked as “gifts for family.”  In connection with his plea, Casellas admitted that, although he declared that the items inside the boxes were valued at $700 and $400, respectively, one box contained some of the stolen government property as well as $41,750 in U.S. currency, and the other box contained $20,800 in U.S. currency.  These boxes were intercepted by U.S. Customs in Louisville, Kentucky.

This case was investigated by the Special Inspector General for Afghanistan Reconstruction, the FBI, ICE-HSI, Army CID, DCIS and AFOSI.  This case is being prosecuted by Trial Attorney Daniel P. Butler of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Julia M. Meconiates of the District of Puerto Rico. 

Casellas Plea Agreement

A Vietnamese national was sentenced to 13 years in prison for hacking into U.S. businesses’ computers, stealing personally identifiably information (PII), and selling to other cybercriminals his fraudulently-obtained access to PII belonging to approximately 200 million U.S. citizens.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting U.S. Attorney Donald Feith of the District of New Hampshire and Director Joseph P. Clancy of the U.S. Secret Service made the announcement.

Hieu Minh Ngo, 25, was sentenced today by U.S. District Court Judge Paul J. Barbadoro of the District of New Hampshire.  Ngo previously pleaded guilty to federal charges brought in the District of New Hampshire and the District of New Jersey, including wire fraud, identity fraud, access device fraud and four counts of computer fraud and abuse.

“From his home in Vietnam, Ngo used Internet marketplaces to offer for sale millions of stolen identities of U.S. citizens to more than a thousand cyber criminals scattered throughout the world,” said Assistant Attorney General Caldwell.  “Criminals buy and sell stolen identity information because they see it as a low-risk, high-reward proposition.  Identifying and prosecuting cybercriminals like Ngo is one of the ways we're working to change that cost-benefit analysis.”

“This case demonstrates that identity theft is a worldwide threat that has the potential to touch every one of us,” said Acting U.S. Attorney Feith.  “I want to acknowledge the excellent work of the United States Secret Service in identifying and capturing Mr. Ngo.  This case proves that the United States Attorney’s Office for the District of New Hampshire will work with law enforcement to investigate and prosecute identity thieves, even if they are halfway around the world.”

“The sentencing of this transnational cybercriminal illustrates another example of Secret Service success in the disruption and dismantling of global criminal networks,” said Director Clancy.  “This investigation and the resulting prosecution and sentencing should serve as a warning to criminals that we will relentlessly investigate, detect, and defend the Nation’s financial infrastructure.  This sentencing joins a long list of successes in combating financial crimes over our 150 year history.”

According to admissions made in connection with his guilty plea, from 2007 to 2013, Ngo operated online marketplaces from his home in Vietnam, including “superget.info” and “findget.me,” to sell packages of stolen PII.  These packages, known as “fullz,” typically included a person’s name, date of birth, social security number, bank account number and bank routing number.  Ngo also admitted to acquiring and offering for sale stolen payment card data, which typically included the victim’s payment card number, expiration date, CVV number, name, address and phone number.  Ngo admitted that he obtained some of the stolen PII by hacking into a New Jersey-based business and stealing customer information.

In addition to selling the “fullz,” Ngo admitted to offering buyers the ability to query online databases for the stolen PII of specific individuals.  Specifically, Ngo admitted that he offered access to PII for 200 million U.S. citizens, and that more than 1,300 customers from around the world conducted more than three million “queries” through the third-party databases maintained on his websites.

Ngo made nearly $2 million from his scheme.  The Internal Revenue Service has confirmed that 13,673 U.S. citizens, whose stolen PII was sold on Ngo’s websites, have been victimized through the filing of $65 million in fraudulent individual income tax returns.  

The case was investigated by the U.S. Secret Service’s Manchester Resident Office.  The case is being prosecuted by Senior Trial Attorney Mona Sedky of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Arnold H. Huftalen of the District of New Hampshire.

The case out of the District of New Jersey was investigated by the FBI, and is being prosecuted by the U.S. Attorney’s Office of the District of New Jersey.

The Department of Justice filed a civil forfeiture complaint today seeking to recover approximately $12.5 million in assets found in the United States that derive from bribery and kickback schemes in the Philippines spanning nearly a decade.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Assistant Director in Charge David Bowdich of the FBI’s Los Angeles Field Office made the announcement.

“Over nearly a decade, Janet Napoles allegedly stole millions of dollars in funds entrusted to her for development assistance and disaster relief for the people of the Philippines,” said Assistant Attorney General Caldwell.  “In an effort to disguise and enjoy her ill-gotten gains, Napoles purchased properties and other assets in the United States for herself and her family members, including a condominium at the Ritz and a Porsche.  The Justice Department will not allow the United States to become a playground for the corrupt or a place to hide and invest stolen riches.”

“The FBI is committed to ensuring that the U.S. financial system is not used to launder the proceeds of foreign bribery schemes,” said Assistant Director in Charge Bowdich.  “Nor is the United States a safe haven for the fruits of corruption.”

As alleged in the complaint, from approximately 2004 to 2012, Philippine businesswoman Janet Napoles, 51, paid tens of millions of dollars in bribes and kickbacks to Philippine politicians and other government officials in exchange for over $200 million in funding for purported development assistance and disaster relief.  Napoles’ non-governmental organizations (NGOs), however, then either failed to provide, or under-delivered on, the promised support.  The complaint further alleges that Napoles also diverted NGO funds for her own personal use and benefit, often draining accounts within days of government disbursements.  For this conduct, the Philippines’ Office of the Ombudsman has charged Napoles, two of her children and numerous current and former Philippine politicians and other government officials in connection with what has been nicknamed the “pork barrel scam.”

The complaint alleges that Napoles transferred over $12 million in Philippine government-awarded funds to bank accounts in the United States in the names of, or controlled by, her family members.  According the complaint, Napoles used the money to purchase numerous assets, including a condominium at the Ritz-Carlton in Los Angeles for her 21-year-old daughter.  The complaint seeks to forfeit the proceeds from the sale of the Los Angeles condominium, along with several other assets, including a motel near Disneyland in Anaheim, California; properties in Covina and Irvine, California; a 19 percent stake in a California-based consulting company; and a Porsche Boxster that was purchased for another daughter.

Napoles is currently serving a sentence of life in prison in the Philippines for her role in the kidnapping and detention of her cousin, Benhur Luy, who served as Napoles’s finance officer and tracked her schemes.

The complaint was brought under the Kleptocracy Asset Recovery Initiative, in which a team of dedicated prosecutors in the Criminal Division’s Asset Forfeiture and Money Laundering Section work in partnership with federal law enforcement agencies to forfeit the proceeds of foreign official corruption and, where appropriate, return those proceeds to benefit the people harmed by these acts of corruption and abuse of office.  Individuals with information about possible proceeds of foreign corruption located in or laundered through the United States should contact federal law enforcement or send an email to kleptocracy@usdoj.gov.

The investigation was conducted by the FBI’s Los Angeles Field Office.  The case is being handled by Trial Attorney Alexis J. Loeb of the Criminal Division’s Asset Forfeiture and Money Laundering Section, with substantial support from the U.S. Attorney’s Office of the Central District of California, the U.S. Marshals Service and the Criminal Division’s Office of International Affairs.  The Justice Department also thanks the Philippines’ Office of the Ombudsman, Anti-Money Laundering Council, National Bureau of Investigation and Department of Justice for their cooperation in this matter. 

Napoles Complaint

Co-Developer and Underwriter Also Plead Guilty

A Miami-area real estate developer and owner of a mortgage company, his business partner and a senior mortgage underwriter each pleaded guilty to a mortgage fraud scheme involving federally insured mortgages that caused losses of $64 million to the Federal Housing Administration (FHA).  Including these defendants, 25 individuals have pleaded guilty to offenses related to this scheme to date.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer for the Southern District of Florida and Special Agent in Charge Nadine Gurley of the U.S. Department of Housing and Urban Development Office of Inspector General (HUD-OIG) made the announcement.

Hector Hernandez, 57, of Miami; Aleida Fontao, 62, of Miami; and Olga Hernandez, 58, of Lake Mary, Florida, each pleaded guilty to conspiracy to commit wire fraud affecting a financial institution.  Hector and Olga Hernandez both pleaded guilty late yesterday, while Fontao pleaded guilty on July 7, 2015.  As part of his plea, Hector Hernandez also agreed to forfeit $8 million, which amounts to his profits from the scheme.

Hector Hernandez’s mortgage company, Great Country Mortgage Bankers, specialized in mortgage loans that were insured by the FHA, a division of HUD, as part of a program designed to make homeownership more accessible to first-time buyers and borrowers with lower income and imperfect credit history.  To qualify for these federally-insured mortgages, potential borrowers must meet certain income and other financial requirements.  Under the program, HUD relies on lenders like Great Country to review and approve only those borrowers who meet the employment, income and other financial requirements needed to qualify for an FHA mortgage.

According to admissions made in connection with the guilty pleas, although most of Great Country’s potential borrowers did not qualify for the FHA-insured loans, Hector Hernandez and his business partner, Aleida Fontao, directed Great Country employees, including underwriter Olga Hernandez, to falsify important documents in the potential borrowers’ loan applications to make them appear qualified.  In particular, Hector Hernandez and Fontao admitted to pressuring their employees to approve and close loans using earnings statements and verification of employment forms that made it appear as if the borrowers had higher incomes and more favorable work histories than they actually did, and documents falsely improving or explaining  borrowers’ credit histories.  As an underwriter responsible for reviewing and approving loan applications, Olga Hernandez admitted that she provided her coworkers with false information and that she endorsed the applications knowing that the borrowers did not actually qualify for the loans.

After Great Country closed the fraudulent loans, the company sold the loans to financial institutions for profit.  In connection with their guilty pleas, the defendants admitted that they offered kickbacks to the borrowers in the form of cash back after closing, which payments were not disclosed during the loan application process in order to hide the payments both from HUD and from the financial institutions that purchased the loans from Great Country.

The vast majority of the borrowers on these fraudulent loans failed to meet their monthly mortgage obligations and defaulted on their loans.  When these loans went into foreclosure, HUD, which had insured the loans, was required to pay the outstanding loan balances to the financial institution investors, resulting in substantial losses to the FHA of at least $64 million.

This case was investigated by HUD-OIG’s Miami Field Office.  This is being prosecuted by Senior Litigation Counsel David A. Bybee and Trial Attorneys Michael T. O’Neill and William E. Johnston of the Criminal Division’s Fraud Section.

An indictment was unsealed today charging nine defendants with offenses based on their roles in complex, international stock manipulation and money laundering schemes generating approximately $6.5 million in illicit proceeds.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Dana J. Boente of the Eastern District of Virginia and Assistant Director in Charge Andrew G. McCabe of the FBI’s Washington D.C. Field Office made the announcement.

Harold Bailey Gallison II, 57, of Valley Center, California; Anna Hiskey, 42, of Costa Rica; Michael Randles, 47, of Costa Rica; Roger Coleman, 79, of Las Vegas; Carl Kruse Sr., 75, of Miami; Carl Kruse Jr., 50, of Miami; Frank Zangara, 52, of Locust Valley, New York; Mark Dresner, 59, of Dix Hills, New York; and Charles Moeller, 46, of Sea Cliff, New York; were charged in an indictment filed June 24, 2015, and unsealed today in the Eastern District of Virginia.

The indictment charges Gallison, Hiskey, Kruse Jr. and Kruse Sr. with one count of conspiracy to commit wire fraud and one count of securities fraud in connection with a “pump-and-dump” securities manipulation scheme involving the common stock of Warrior Girl Corp., which was quoted on the Over-the-Counter (OTC) market under the ticker symbol WRGL.  The indictment also charges Gallison, Hiskey, Zangara, Moeller and Dresner with one count of conspiracy to commit wire fraud and one count of securities fraud in connection with a pump-and-dump securities manipulation scheme involving the common stock of Everock Inc., which was quoted on the OTC market under the ticker symbol EVRN.  In addition, the indictment charges Gallison, Randles, Hiskey and Coleman with one count of conspiracy to commit money laundering.

The indictment alleges that the defendants artificially “pumped” or inflated the trading volume and price of the securities by touting business activities and deceptive revenue forecasts, and by engaging in coordinated trading activity to create the appearance of increasing market demand.  The defendants then allegedly “dumped” or sold the securities at the inflated prices and laundered the proceeds from their scheme through bank accounts in the United States and overseas.

According to the allegations in the indictment, the scheme was facilitated through an offshore brokerage and money laundering platform controlled by Gallison that went by various names, including Sandias Azucaradas, Moneyline Brokers and Trinity Asset Services (collectively, Moneyline).  The defendants allegedly used Moneyline to create nominee accounts in the names of shell companies, and used those accounts to conceal both the true source and ownership of the securities and the flow of funds.

The conspirators also allegedly took elaborate steps to hide their illegal conduct from law enforcement, including the use of proprietary internal chat and telephone systems.  In a recorded call from 2010, Gallison told Randles that Moneyline maintained a private internal telephone system that did not go through a U.S. server on which he and Randles could hold “private conversation[s] that the Fed cannot get a wiretap on.”  In another conversation with Randles, Gallison noted that Moneyline’s proprietary internal chat system, which did not retain records of chats, was better than an internet service provider because “if the Fed came in with a search warrant, they’d take your computer and it’d have your last ninety days’ worth of Yahoo messengers and Skype chats.”

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

The case is being investigated by the FBI’s Washington D.C. Field Office.  The Securities and Exchange Commission, the Financial Industry Regulatory Authority and the Criminal Division’s Office of International Affairs also provided significant assistance.  The case is being prosecuted by Senior Trial Attorney N. Nathan Dimock of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys James P. Gillis and Zachary Terwilliger of the Eastern District of Virginia.

Moneyline Indictment

A Hawaii businessman was convicted yesterday following an 11-day jury trial in Honolulu of one count of corruptly endeavoring to obstruct the administration of the Internal Revenue Code and six counts of filing false individual income tax returns, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Florence T. Nakakuni of the District of Hawaii.  

The jury convicted Albert S.N. Hee, 61, of Kailua, Hawaii, of filing false income tax returns for tax years 2007 through 2012, and of obstructing the Internal Revenue Service (IRS) from 2002 through 2012.  According to court documents and the evidence introduced at trial, Hee owned Waimana Enterprises Inc., a telecommunications holding company based in Honolulu.  Over the course of a decade, Hee directed Waimana to pay millions of dollars in personal expenses on his behalf.  He falsely deducted the payments from his corporate tax returns as if they were legitimate business expenses, and failed to report the payments as income on his individual returns. 

“The jury’s verdict reflects the department’s unwavering commitment to U.S. taxpayers to aggressively pursue and prosecute individuals like Mr. Hee, who cheat the government to line their own pockets and finance their extravagant lifestyles,” said Acting Assistant Attorney General Ciraolo. 

Hee’s lavish spending included paying more than $96,000 for personal massages; paying his wife and children full-time salaries with benefits packages, even though they performed little to no work for the company; and paying more than $736,900 in college tuition and housing for his three children.  Hee also directed Waimana to pay various expenses on his personal credit card, including family trips to Walt Disney World, Tahiti, France, Switzerland, and a four-day vacation at the Mauna Lani resort on the Big Island of Hawaii, which Hee falsely characterized as a “stockholder’s meeting” and deducted as a business expense on the company’s tax return.

In 2008, Hee used company funds to purchase a home in Santa Clara, California, valued at $1.3 million.  Hee told his accountants that the property would be used as an employee retreat in an attempt to disguise it as a legitimate business expense.  However, Hee’s children testified at trial that from 2008 through 2012, they lived in the home while attending college in Santa Clara and did not pay rent to Waimana for their use of the property.  Hee’s son testified that the house was walking distance from the college campus, and that he and his sister rented other rooms of the house to their college friends, but kept the rent that they collected from their roommates and did not give it to their father’s company. 

At Hee’s scheduled Oct. 26 sentencing, he faces a statutory maximum sentence of three years in prison for each charge, a fine of up to $250,000 and restitution to the IRS. 

Acting Assistant Attorney General Ciraolo and U.S. Attorney Nakakuni commended the special agents of IRS–Criminal Investigation, who investigated the case, and Trial Attorney Quinn P. Harrington of the Tax Division and Assistant U.S. Attorneys Les Osborne and Larry Tong of the District of Hawaii, who are prosecuting the case. 

Settlement Preserves Competition That Benefits Radio Advertisers

Entercom Communications Corp. (Entercom) will be required to divest three radio stations in Denver, in order to proceed with its acquisition of Lincoln Financial Media Company (Lincoln).  Without these divestitures, the transaction would have resulted in higher prices and a reduced quality of service to purchasers of English-language radio advertising in Denver.

“Entercom and Lincoln own some of the most highly rated radio stations in Denver, and advertisers targeting radio listeners in Denver have benefitted from competition between them,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division.  “These divestures will preserve that competitive dynamic.”

The Antitrust Division filed a civil antitrust lawsuit today in the U.S. District Court of the District of Columbia to block the proposed acquisition.  At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the competitive harm alleged in the lawsuit.  According to the complaint, the proposed merger would have eliminated the head-to-head competition that currently exists between Entercom’s and Lincoln’s radio stations for the business of local and national companies that advertise to English-language listeners on radio stations in Denver.  Under the terms of the proposed settlement, Entercom has agreed to divest three stations in Denver to a department-approved buyer.

Entercom is incorporated in Pennsylvania and headquartered in Bala Cynwyd, Pennsylvania.  Lincoln is an indirect, wholly owned subsidiary of Lincoln National Corp.  Lincoln is organized under the laws of North Carolina, and headquartered in Atlanta.  Both Entercom and Lincoln operate broadcast radio stations in various metropolitan areas throughout the United States.

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

Entercom Complaint

Entercom Explanation

Entercom Hold Separate Stipulation and Order

Entercom Proposed Final Judgment

Entercom Competitive Impact Statement

Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division (ENRD) announced the appointment of key positions within his leadership staff. 

Varu Chilakamarri – Chief of Staff         

As Chief of Staff, Chilakamarri will advise Assistant Attorney General Cruden on strategic goals and initiatives, serve as a liaison to senior leadership offices and work on special projects, including helping to coordinate the development of the division’s new animal welfare program.

“Varu is an outstanding lawyer, and a dedicated and accomplished public servant who has already proven herself in a variety of challenging positions with this Justice Department,” said Assistant Attorney General Cruden.  “We are lucky to have her now with the Environment Division and I look forward to drawing on her wise counsel, impeccable judgment and administrative skill as we carry out our mission.” 

Ms. Chilakamarri has served as a career attorney in the Justice Department for the past nine years, most recently joining ENRD’s Appellate Section earlier this year.  Prior to that, she served in the Office of the Associate Attorney General, where she advised department leadership on Civil Division litigation, national security cases, immigration reform and worked to improve agency coordination in the enforcement of federal animal welfare laws.  Ms. Chilakamarri joined the Justice Department in 2006 through the Attorney General’s Honors Program as a Trial Attorney in the Civil Division’s Federal Programs Branch, where she was lead counsel representing federal agencies in a broad range of cases concerning the constitutionality of government policies, programs and statutes.  She was the recipient of an Attorney General’s Award for Outstanding Service in 2013 and she has also received awards from the Civil Division for her work on preemption cases involving state immigration laws, including in United States v. Arizona.  Before joining the Justice Department, she clerked for Judge R. Guy Cole in the U.S. Court of Appeals for the Sixth Circuit and Judge Timothy B. Dyk in the U.S. Court of Appeals for the Federal Circuit.  Ms. Chilakamarri graduated from Georgetown University Law Center, where she was Order of the Coif and Articles Editor for the Georgetown Law Journal.  She earned degrees in Environmental Science and Political Science from Ohio State University, with honors.

Patricia McKenna – General Counsel and Attorney Educational Coordinator

Assistant Attorney General Cruden named Patricia McKenna to the newly created position of General Counsel and Attorney Educational Coordinator.  In this role, Ms. McKenna has the dual responsibility of formulating and coordinating legal policies, plans and objectives on matters related to employee and labor relations, contract and procurement law, appropriations law and other programmatic, operational, administrative and general legal issues as well as serving as the principal division official responsible for managing, overseeing and administering ENRD’s attorney training program.  This new position places renewed emphasis on the importance of attorney training in the division.

“Patricia’s depth of experience makes her an ideal candidate to strengthen the human capital of the division and lead efforts to continually train and equip ENRD attorneys so they can grow professionally,” said Assistant Attorney General Cruden.  “With her valuable leadership and talent, I believe we can hone the skills that in turn will strengthen our representation of the United States in federal court.”

Ms. McKenna has been an attorney with the Environmental Enforcement Section (EES) of the Environment and Natural Resources Division for 16 years, the last nine as a Senior Attorney supervising EES matters in the Northeast and the Caribbean.  She has broad experience representing the United States in all of the major pollution control statutes and has worked extensively on environmental issues in the Caribbean, most notably the Puerto Rico Aqueduct and Sewage Authority and Virgin Island Water and Power Authority cases.  In addition, during her time at EES she has been actively involved in hiring and training for the division.  Ms. McKenna has also received multiple awards within the department, including the Attorney General’s John Marshall Award in 2002 and the Drenaye Houston Mentor Award in 2013, as well as many awards from the Environmental Protection Agency for her outstanding work.  Ms. McKenna began her career as a law clerk for Magistrate Judge A. Simon Chrein in the Eastern District of New York and spent three years as a general litigation associate at O’Melveny & Myers, LLP in New York City.  She graduated Order of the Coif from the College of William & Mary, Marshall Wythe School of Law and graduated magna cum laude from Siena College.

Deputy Attorney General Sally Quillian Yates released the following statement after the clemency announcement made today by President Obama:

“Last year, the President asked the Justice Department to develop criteria for identifying and recommending for executive clemency those non-violent, low-level offenders who received harsh sentences they would not receive if sentenced today.  The President's decision to commute the sentences of 46 more individuals today is another sign of our commitment to correcting these inequities.  We will continue to recommend to the President appropriate candidates for clemency, and we will continue to work with Congress on recalibrating our sentencing laws for non-violent drug offenders.”

Six Nigerian nationals were extradited from South Africa to Gulfport, Mississippi, to face a nine-count federal indictment in the Southern District of Mississippi alleging various Internet fraud schemes.  A total of 20 defendants are charged in this case.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Gregory K. Davis of the Southern District of Mississippi made the announcement.

Oladimeji Seun Ayelotan, 30; Rasaq Aderoju Raheem, 31; Olusegun Seyi Shonekan, 33; Taofeeq Olamilekan Oyelade, 30; Olufemi Obaro Omoraka, 26; and Anuoluwapo Segun Adegbemigun, 39, are charged along with 15 others in an Oct. 7, 2014, indictment with conspiracy to commit mail fraud, wire fraud, bank fraud, conspiracy to commit identity theft, use of unauthorized account access devices, theft of U.S. government funds and conspiracy to commit money laundering.  The charges stem from the defendants alleged participation in numerous Internet-based complex financial fraud schemes, including romance scams, re-shipping scams, fraudulent check scams and work-at-home scams, as well as bank, financial and credit card account takeovers.

According to the allegations in the indictment, from as early as 2001, the defendants identified and solicited potential victims through online dating websites and work-at-home opportunities.  In some instances, the defendants allegedly carried on fictitious online romantic relationships with victims for the purpose of using the victims to further certain objectives of the conspiracy.  For example, the indictment alleges that the defendants convinced victims to ship and receive merchandise purchased with stolen personal identifying information (PII) and compromised credit card and banking information, to deposit counterfeit checks, and to transfer proceeds of the conspiracy via wire, U.S. mail or express delivery services. 

To date, defendants Teslim Olarewaju Kiriji, 30; Olutoyin Ogunlade, 41; and Dennis Brian Ladden, 75, have been convicted of offenses relating to their roles in the schemes.  Defendants Susan Anne Villeneuve, 49; and Genoveva Farfan, 45; Sesan Olumide Farin, 40; Femi Alexander Mewase, 44; Rhulane Fionah Hlungwane, 24; and Adekunle Adefila, 40, are awaiting trial.  The United States is seeking extradition from Nigeria of defendants Kayode Bamidele, Ajayi Oluwaseyi Stephen and Emmanuel Adeniyi Osokomaiya.  Defendants Gabriel Oludare Adeniran and Oduntan Sikiru Lawani remain fugitives.

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

This case is being investigated by Homeland Security Investigations (HSI) and the U.S. Postal Inspection Service.  Significant assistance was also provided by the Criminal Division’s Office of International Affairs, the HSI Cyber Crimes Center, HSI Attachés in Pretoria and Dakar, U.S. Marshals Service’s International Investigations Branch and the Southern District of Mississippi, the South African Police Service (SAPS) Directorate of Priority Crimes Investigation (DPCI) Electronic Crimes Unit, the SAPS Interpol Extradition Unit, the South African National Prosecution Authority, and the South African Department of Justice and Constitutional Development.  The case is being prosecuted by Trial Attorney Robert Tully of the Criminal Division’s Organized Crime Gang Section and Assistant U.S. Attorneys Annette Williams and Scott Gilbert of the Southern District of Mississippi.

# # #

If you believe that you may have been a victim of criminal fraud committed by any of the defendants, please go to http://www.justice.gov/usao-sdms/scams and complete the questionnaire using the password scams.  Defendants allegedly used the following email addresses and names to perpetuate the scheme:

REDARMY_TX_HOST@YAHOO.COM      MOBICOALZ@GMAIL.COM

RWASSER@ROCKETMAIL.COM              FOLLYEDWARDS@YAHOO.COM

RDARWIN322@GMAIL.COM                      RDARWIN324@GMAIL.COM

KAREN_ROB01@YAHOO.COM                 FAYEKIMBERLY19@YAHOO.COM

FAYEKIMBERLY@YMAIL.COM                  TESCOSG@YAHOO.COM

GERVINOJ@YAHOO.COM                         GERVINOJ11@GMAIL.COM

JOHNVINO56@GMAIL.COM                       RASAQ_ADEROJU@YAHOO.COM

KEVINSMITH3949@YAHOO.COM              SMITHKEVIN902@GMAIL.COM

ANITA.LAUREN01@GMAIL.COM                ANITA.LAUREN1@GMAIL.COM

SPOWELL26AL@GMAIL.COM                    SPOWELL26AL3@YAHOO.COM

GENTILEMARK186@GMAIL.COM              RHULANEF@YAHOO.COM

LMG.ORCHID1827@GMAIL.COM               MARK2GENTLE@YAHOO.COM

MATT.MILLER4070@GMAIL.COM              JONES_DICKSON@YAHOO.COM

LLOYDFARELL0012008@YAHOO.COM    MARCHAS1963@GMAIL.COM

OLADIMEJISEUN2008@YAHOO.COM       STACYADAMS20009@YAHOO.COM

JUSTIN.WORSHAM@YAHOO.COM           OLUWA_NISHOLA@YAHOO.COM

MIMICOLE001@YAHOO.COM                    FNCYJEN@YAHOO.COM

FMPLUST12@GMAIL.COM                         SUSANV1418@YAHOO.COM             

MAXWELLSAMUEL59@YAHOO.COM        SEGSEA121@YAHOO.COM

STARENTERPRISE74@YAHOO.COM        FEMI_OMORAKA@YAHOO.COM

PETERLAWSON5050@YAHOO.COM         ADDIEP01@YAHOO.COM          

GLENNSATTELBERG1961@GMAIL.COM  HORLAMI84@YAHOO.COM

EMPLOYMENTOFFERS007@YAHOO.COM

Richard Wasser                                               Adeline Piper             

Glenn Sattelberg                                             Folly Edwards

Samuel Maxwell                                              Stacy Adams

Regina Darwin                                                Justin Worsham

Marlon Chase                                                 Karen Robinson

Dickson Jones                                                Mark Miller

Kimberly Faye                                                 Mark Smith

Lorene M. Garrett                                           John Gervino

Mark Gentile                                                   Sarah Powell

Kevin Smith                                                    Anita Lauren

Any information that you provide through the questionnaire may be helpful in the criminal investigation and prosecution of this case.  A federal investigator may contact you with additional questions or to request documents you may have.  Please note that submitting the questionnaire is not a substitute for consulting with your own attorney to determine what actions and remedies may be available to you through civil litigation.  If you have any questions related to this matter that are not addressed at the above websites, you may contact federal law enforcement authorities at USAMSS.Scams@usdoj.gov.

Ayelotan Second Superseding Indictment

Today, President Barack Obama granted commutations of sentence to 46 individuals.

The President granted commutations of sentence to the following 46 individuals:

• Jerry Allen Bailey – Charlotte, NC

  Offense: Conspiracy to violate narcotics laws (crack) (Western District of North Carolina)

  Sentence: 360 months’ imprisonment; 10 years’ supervised release (Apr. 2, 1996)

  Commutation Grant: Prison sentence commuted to expire on November 10, 2015.

• Shauna Barry-Scott – Youngstown, OH

         Offense: Possession with intent to distribute cocaine base (Northern District of Ohio)

         Sentence: 240 months’ imprisonment; 10 years’ supervised release (Oct. 18, 2005)

         Commutation Grant: Prison sentence commuted to expire on November 10, 2015.

• Larry Darnell Belcher – Martinsville, VA

  Offense:  Possession with intent to distribute cocaine; possession with intent to distribute marijuana (Western District of Virginia)

  Sentence:  Life imprisonment; 10 years’ supervised release (Dec. 15, 1997)

  Commutation Grant:  Prison sentence commuted to expire on November 10, 2015. 

• John L. Houston Brower – Carthage, NC

  Offense:  Distributed cocaine base (“crack”) (Middle District of North Carolina)

  Sentence:  Life imprisonment; 10 years’ supervised release (June 22, 2002)

  Commutation Grant:  Prison sentence commuted to expire on November 10, 2015. 

• Nathaniel Brown – Orange Park, FL

  Offense:  Conspiracy to distribute cocaine (more than five kilograms) and cocaine base (more than 50 grams); distribution of cocaine base (two counts) (Middle District of Florida)

  Sentence: Life imprisonment; 10 years’ supervised release (Aug. 1, 2002)

  Commutation Grant:  Prison sentence commuted to expire on November 10, 2015. 

• Norman O’Neal Brown – Hyattsville, MD

         Offense:  Distribute quantity of mixture or substance containing a detectable amount cocaine base (crack), aiding and abetting (five counts); possess with intent distribute quantity of mixture or substance containing detectable amount of cocaine base (crack), aiding and abetting (District of Maryland)

         Sentence:  Life imprisonment; 10 years’ supervised release (Jan. 15, 1993)

         Commutation Grant:  Prison sentence commuted to expire on November 10, 2015. 

• Joseph Burgos – Chicago, IL

          Offense:  Distribution of cocaine; use of a communication facility in the commission of a felony (Northern District of Illinois)

         Sentence:  360 months’ imprisonment; eight years’ supervised release; $200,000 fine (Sept. 2, 1993)

         Commutation Grant:  Prison sentence commuted to expire on November 10, 2015.

• Clarance Callies – San Antonio, TX

         Offense: Conspiracy to distribute in excess of 50 grams of a mixture or substance containing a detectable amount of cocaine base (“crack cocaine”); possession with intent to distribute in excess of 50 grams of a mixture or substance containing a detectable amount of cocaine base (“crack cocaine”) (Western District of Texas)

         Sentence: 240 months imprisonment; 8 years’ supervised release (Mar. 25, 2002)

         Commutation Grant: Prison sentence commuted to expire on November 10, 2015.

• Anthony Leon Carroll – Tampa, FL

         Offense:  Possession with intent to distribute cocaine base (Middle District of Florida)

         Sentence:  262 months’ imprisonment; 5 years’ supervised release (Sept. 3, 1999)

         Commutation Grant:  Prison sentence commuted to expire on November 10, 2015.

• Juan Diego Castro – Laredo, TX

  Offense:  Possession with intent to distribute a quantity in excess of five kilograms of cocaine (Southern District of Texas)

  Sentence:  240 months’ imprisonment; 10 years’ supervised release (Feb. 1, 2002)

  Commutation Grant:  Prison sentence commuted to expire on November 10, 2015.

• Joe Louis Champion – Houston, TX

  Offense: Conspiracy to possess with intent to distribute 376.9 grams of cocaine base (crack); aiding and abetting the possession with intent to distribute 376.9 grams of cocaine base (crack) (Southern District of Texas)

  Sentence:  Life imprisonment; 10 years’ supervised release; $4,000 fine (June 19, 1997)

  Commutation Grant: Prison sentence commuted to expire on November 10, 2015, and the remaining balance of the fine remitted.

• Cedric Culpepper – Orlando, FL

         Offense:  Possession with intent to distribute cocaine base; possession with intent to distribute five grams or more of cocaine base (Middle District of Florida)

         Sentence:  188 months’ imprisonment; 4 years’ supervised release (Nov. 15, 2004)

          Commutation Grant:  Prison sentence commuted to expire on November 10, 2015.

• Walter R. Dennie – Gary, IN

  Offense: Conspiracy to distribute cocaine (two counts) (Middle District of Florida)

  Sentence: 240 months’ imprisonment; 10 years’ supervised release (Apr. 25, 2002)

  Commutation Grant: Prison sentence commuted to expire on November 10, 2015.

• Steven D. Donovan – Oak Creek, WI

         Offense:  Conspiracy to possess with intent to distribute cocaine; interstate travel to promote distribution of cocaine; possession with intent to distribute cocaine (Eastern District of Wisconsin)

         Sentence:  Life imprisonment; 10 years’ supervised release (Oct. 16, 1992)

         Commutation Grant:  Prison sentence commuted to expire on November 10, 2015. 

• Romain Dukes – Chicago, IL

  Offense: Conspiracy to distribute cocaine base, “crack”; distribution of cocaine base, “crack” (two counts) (Southern District of Iowa)

  Sentence:  Life imprisonment; 10 years’ supervised release (Oct. 1, 1997)

  Commutation Grant:  Prison sentence commuted to expire on November 10, 2015. 

• Tony Lynn Hollis – Knoxville, TN

  Offense: Possession with intent to distribute 26.5 grams of cocaine base (Eastern District of Tennessee)

  Sentence: 262 months’ imprisonment; eight years’ supervised release (June 8, 2001)

  Commutation Grant: Prison sentence commuted to expire on November 10, 2015.

• Alex William Jackson – Mineral, VA

  Offense:  Conspiracy to distribute cocaine base (Western District of Virginia)

  Sentence:  262 months’ imprisonment; 60 months’ supervised release (Dec. 22, 1999); amended to 240 months’ imprisonment (June 25, 2008)

  Commutation Grant:  Prison sentence commuted to expire on November 10, 2015. 

• Jackie Johnson – Townsend, DE

  Offense:  Possession with the intent to distribute more than 50 grams of a cocaine base (District of Delaware)

  Sentence:  240 months’ imprisonment; 10 years’ supervised release (Jan. 30, 2007)

  Commutation Grant:  Prison sentence commuted to expire on November 10, 2015.

• Jerome Wayne Johnson – Fort White, FL

  Offense:    1. Cultivation of marijuana plants (Middle District of Florida)

  2. Conspiracy to manufacture, distribute, and possess with intent to distribute more than 1,000 marijuana plants (Northern District of Florida)

  Sentence:   1. 60 months’ imprisonment, 5 years’ supervised release (June 25, 2003)

  2. 20 years’ imprisonment, concurrent to sentence imposed above, 10 years’ supervised release (May 27, 2004)

  Commutation Grant: Prison sentence commuted to expire on November 10, 2015.

• Willie C. Johnson – Steele, MO

         Offense:  The defendant did knowingly conspire to distribute and possess with the intent to distribute cocaine base; the defendant did knowingly distribute cocaine base; the defendant did knowingly possess with the intent to distribute cocaine base (Eastern District of Missouri)

         Sentence:  360 months’ imprisonment; five years’ supervised release (Feb. 18, 2005); amended to 168 months’ imprisonment (Feb. 12, 2015)

         Commutation Grant:  Prison sentence commuted to expire on November 10, 2015.

• Mark Anthony Jones – Boynton Beach, FL

 Offense:   Distribution of cocaine base (Northern District of Florida)

 Sentence:  Life imprisonment; 10 years’ supervised release (July 28, 1999)

 Commutation Grant:  Prison sentence commuted to expire on November 10, 2015. 

• Roy Larry Lee – St. Petersburg, FL

         Offense: Conspiracy to possess with intent to distribute cocaine base (enhanced penalty); distribution of 50 grams or more of cocaine base (two counts) (Middle District of Florida)

         Sentence: Life imprisonment; 10 years’ supervised release (May 3, 1990)

         Commutation Grant: Prison sentence commuted to expire on November 10, 2015.

• Kenneth Lorenzo Lewis – Charlottesville, VA

  Offense:  Conspiracy to distribute cocaine base (Western District of Virginia)

  Sentence:  262 months’ imprisonment; five years’ supervised release (Nov. 17, 2000)

  Commutation Grant:  Prison sentence commuted to expire on November 10, 2015.

• Douglas M. Lindsay, II – Newberry, SC

         Offense:  Conspiracy to possess with intent to distribute and distribution of cocaine and cocaine base (District of South Carolina)

         Sentence:  Life imprisonment; five years’ supervised release (Dec. 20, 1996); amended to 293 months’ imprisonment (Mar. 4, 2015)

         Commutation Grant:  Prison sentence commuted to expire on November 10, 2015.

• Kevin Matthews – James Island, SC

  Offense:  Conspiracy to distribute and possess with intent to distribute cocaine base (District of South Carolina)

  Sentence:  232 months’ imprisonment; 10 years’ supervised release (Feb. 11, 2004)

  Commutation Grant:  Prison sentence commuted to expire on November 10, 2015.

• Marlon McNealy – St. Petersburg, FL

  Offense:  Conspiracy to commit racketeering (two counts); conspiracy to distribute cocaine base; knowingly and intentionally distributing 50 grams or more of cocaine base (three counts) (Middle District of Florida)

  Sentence:  Life imprisonment; 10 years’ supervised release (Aug. 18, 1993)

  Commutation Grant:  Prison sentence commuted to expire on November 10, 2015. 

• Brian Nickles – New Orleans, LA

  Offense:  Distribution of more than 50 grams of cocaine base (two counts) (Eastern District of Louisiana)

  Sentence:  240 months’ imprisonment; 10 years’ supervised release (Apr. 28, 2004)

  Commutation Grant:  Prison sentence commuted to expire on November 10, 2015.

• Jermaine Lee Osborne – Roanoke, VA

  Offense:  Conspiracy to possess with intent to distribute at least 50 grams of cocaine base (Western District of Virginia)

  Sentence:  240 months’ imprisonment; 10 years’ supervised release (May 2, 2006)

  Commutation Grant:  Prison sentence commuted to expire on November 10, 2015. 

• Marcus H. Richards – Miami, FL

  Offense: Conspiracy to distribute and to possess with intent to distribute more than five kilograms of cocaine and more than 50 grams of cocaine base (Northern District of Florida)

  Sentence:  240 months’ imprisonment; 10 years’ supervised release (June 13, 2005)

  Commutation Grant:  Prison sentence commuted to expire on November 10, 2015.   

• Patrick Roberts – Detroit, MI

  Offense:  Conspiracy to possess with intent to distribute and to distribute controlled substances (Eastern District of Michigan)

  Sentence:  Life imprisonment; 10 years’ supervised release (July 8, 1999)

  Commutation Grant:  Prison sentence commuted to expire on November 10, 2015.

   

• Bryant Keith Shelton – Kissimmee, FL

  Offense:  Distribution of cocaine base (Middle District of Florida)

  Sentence:  188 months’ imprisonment; five years’ supervised release (Apr. 1, 2003)

  Commutation Grant:  Prison sentence commuted to expire on November 10, 2015.

• Ezekiel Simpson – St. Louis, MO

  Offense:  Possession with intent to distribute cocaine base (Eastern District of Missouri)

  Sentence:  240 months’ imprisonment; 10 years’ supervised release (Feb. 3, 2005)

  Commutation Grant:  Prison sentence commuted to expire on November 10, 2015.

• Katrina Stuckey Smith – Montrose, GA

  Offense:  Conspiracy to possess with intent to distribute cocaine and cocaine base (Middle District of Georgia)

  Sentence:  292 months’ imprisonment; 10 years’ supervised release (July 20, 2000); amended to 240 months’ imprisonment (Apr. 2, 2008). 

  Commutation Grant:  Prison sentence commuted to expire on November 10, 2015.

• James Marion Stockton – Martinsville, VA

  Offense:  Possession with intent to distribute more than five grams of cocaine base; possession of a firearm during and in relation to a drug trafficking offense; possession of a firearm by a convicted felon; possession with intent to distribute cocaine base (Western District of Virginia)

  Sentence:  420 months’ imprisonment; eight years’ supervised release (May 27, 2003)

  Commutation Grant:  Prison sentence commuted to expire November 10, 2015.   

• Bart Stover – Ashland, OH

  Offense:  Conspiracy to possess with the intent to distribute marijuana and cocaine; use of a communication facility to facilitate the commission of drug trafficking offense, aiding and abetting (Northern District of Ohio)

  Sentence:  240 months’ imprisonment; 10 years’ supervised release (Apr. 12, 2005)

  Commutation Grant: Prison sentence commuted to expire on November 10, 2015.

   

• Robert Earl Thomas, Jr. – Houston, TX

  Offense:  Possession with intent to distribute a controlled substance (Eastern District of Texas)

  Sentence:  262 months’ imprisonment; five years’ supervised release (June 29, 1999)

  Commutation Grant:  Prison sentence commuted to expire on November 10, 2015.

   

• Bruce Todd – Atlanta, GA

         Offense:  Distribution of at least 50 grams of crack cocaine (Northern District of Georgia)

         Sentence:  262 months’ imprisonment; five years’ supervised release (Mar. 3, 2003)

         Commutation Grant:  Prison sentence commuted to expire on November 10, 2015.

• Jeffery Jerome Toler – Pensacola, FL

  Offense:  Conspiracy to possess with intent to distribute cocaine and cocaine base (Northern District of Florida)

  Sentence:  Life imprisonment; 10 years’ supervised release (June 13, 1996)

  Commutation Grant:  Prison sentence commuted to expire on November 10, 2015.

• Donald Vanderhorst – Charleston, SC

  Offense:  Conspiracy to possess with intent to distribute and distribution of five kilograms or more of cocaine and 50 grams or more of cocaine base (District of South

  Carolina)

  Sentence:  240 months’ imprisonment; 10 years’ supervised release (Mar. 15, 2006)          

  Commutation Grant:  Prison sentence commuted to expire on November 10, 2015.

   

• James Nathan Walton – Thibodeaux, LA

  Offense:  Possession with intent to distribute cocaine base (Western District of Louisiana)

  Sentence:  240 months’ imprisonment; 10 years’ supervised release (Sept. 16, 2004)

  Commutation Grant:  Prison sentence commuted to expire on November 10, 2015. 

   

• Telisha Rachette Watkins – Charlotte, NC

          Offense:  Conspiracy to possess with intent to distribute cocaine and cocaine base (Western District of North Carolina)

         Sentence:  240 months’ imprisonment; eight years’ supervised release (Oct. 25, 2007)

         Commutation Grant:  Prison sentence commuted to expire on November 10, 2015.

• Dunning Wells – Fort Myers, FL

        Offense:  Unlawful possession of a firearm; distribution of a quantity of cocaine; possession of a firearm during and in relation to a drug trafficking crime (Middle District of Florida)

        Sentence:  502 months’ imprisonment; six years’ supervised release (Feb. 20, 1992)

        Commutation Grant:  Prison sentence commuted to expire on November 10, 2015.

• Kimberly A. Westmoreland – Columbus, OH

  Offense:  Conspiracy to distribute in excess of 50 grams of cocaine base; carrying a firearm in relation to a drug trafficking crime (Southern District of Ohio)

  Sentence:  180 months’ imprisonment; five years’ supervised release (Jan. 21, 2004)

  Commutation Grant:  Prison sentence commuted to expire on November 10, 2015. 

• James Rufus Woods – Leasburg, NC

  Offense:   Possess with intent to distribute cocaine base (“crack”) (Middle District of North Carolina)

  Sentence:  Life imprisonment; 10 years’ supervised release (Nov. 23, 1998)

  Commutation Grant:  Prison sentence commuted to expire on November 10, 2015.

• John M. Wyatt – Las Cruces, NM

            Offense:  Possession with intent to distribute marihuana (Southern District of Illinois)

            Sentence:  262 months’ imprisonment; eight years’ supervised release; $500 fine (Aug.  30, 2004)

            Commutation Grant:  Prison sentence commuted to expire on November 10, 2015.

• Robert Joe Young – Joppa, AL

  Offense:  Conspiracy to possess with the intent to distribute a mixture and substance containing methamphetamine; possession with the intent to distribute a mixture and substance containing methamphetamine; use of a firearm during and in furtherance of a drug trafficking crime; possession with the intent to distribute a mixture and substance containing cocaine; carrying a firearm during and in relation to a drug trafficking crime; endeavoring to influence and impede the administration of justice (Northern District of Alabama)

  Sentence:  240 months’ imprisonment; 5 years’ supervised release (Dec. 16, 2002)

  Commutation Grant:  Prison sentence commuted to expire on November 10, 2015.

   

Government Moves for Pretrial Detention Based on Terrorist Attack Plans

An Adams, Massachusetts, man has been arrested and charged in connection with a plot to engage in terrorism on behalf of ISIL.  The announcement was made today by Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Carmen M. Ortiz of the District of Massachusetts and Special Agent in Charge Vincent Lisi of the FBI’s Boston Field Division.

A criminal complaint, charging Alexander Ciccolo, aka Ali Al Amriki, 23, with being a felon in possession of firearms was unsealed today.  Additional information regarding Ciccolo’s plans was filed this morning in advance of a detention hearing to be held tomorrow afternoon in Springfield, Massachusetts.

According to the complaint affidavit, on July 4, 2015, Ciccolo took delivery of four firearms which he had ordered from a person who was cooperating with members of the Western Massachusetts Joint Terrorism Task Force, and who had been communicating with Ciccolo about Ciccolo’s plans to engage in a terrorist act.  Ciccolo was arrested immediately after taking delivery of the firearms, which included a Colt AR-15 .223 caliber rifle, a SigArms Model SG550-1 556 caliber rifle, a Glock 17- 9mm pistol and a Glock 20-10 mm pistol.  Ciccolo had previously been convicted of a crime punishable by more than a year in jail and therefore was prohibited from possessing firearms.

In an affidavit filed in support of the government’s detention motion, it is alleged that Ciccolo is a supporter of the Islamic State of Iraq and the Levant (ISIL), a designated foreign terrorist organization.  According to the affidavit, Ciccolo spoke with a cooperating witness in recorded conversations about his plans to commit acts of terrorism inspired by ISIL, including setting off improvised explosive devices, such as pressure cookers filled with black powder, nails, ball bearings and glass, in places where large numbers of people congregate, such as college cafeterias.  Prior to his arrest, agents observed Ciccolo purchase a pressure cooker similar to that used in the Boston Marathon bombings.

It is also alleged that during a search of Ciccolo’s apartment after he was arrested, agents found several partially constructed “Molotov cocktails.”  These incendiary devices contained what appeared to be shredded Styrofoam soaking in motor oil.  Ciccolo had previously stated that this mixture would cause the fire from the exploded devices to stick to people’s skin and make it harder to put the fire out.

A detention hearing has been scheduled for July 14 at 3:30 p.m. at the U.S. District Court in Springfield, Massachusetts.

The charge of being a felon in possession of firearms provides a sentence of no greater than 10 years in prison, three years of supervised release, and a fine of $250,000.  Actual sentences for federal crimes are typically less than the maximum penalties.  Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.

This investigation is being conducted by the Western Massachusetts Joint Terrorism Task Force.  The case is being prosecuted by Assistant U.S. Attorneys Kevin O’Regan and Deepika Shukla of the District of Massachusetts and the National Security Division’s Counterterrorism Section.

The details contained in the charges are allegations.  The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

Ciccolo Complaint

Ciccolo Detention Memo

Ciccolo Detention Memo (Exhibit A)

Ciccolo Detention Memo (Exhibit B)

Ciccolo Detention Memo (Exhibit C)

A Montgomery County, Alabama, resident pleaded guilty to one count of mail fraud and one count of aggravated identity theft for his involvement in a stolen identity refund fraud (SIRF) scheme, Acting Assistant Attorney 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, Jerome Marcel Newton obtained the personal identifying information of others in various ways, including by paying other individuals to collect multiple identities or by recruiting people to provide their identities to him.  Although Newton resided in Alabama, a number of the identities were of people living in Pittsburgh.  Newton also obtained the identity information of prison inmates from jail records.  In 2011, Newton used the identities he obtained to file false tax returns, directing the Internal Revenue Service (IRS) to deposit the fraudulent refunds claimed on those returns into bank accounts that he controlled or onto prepaid debit cards.  Some of the prepaid debit cards were then mailed to addresses within the Middle District of Alabama.

Newton’s sentencing hearing has not yet been scheduled.  At sentencing, Newton faces a statutory maximum sentence of 20 years in prison and a $250,000 fine for the mail fraud count and a mandatory two-year minimum sentence and a $250,000 fine for the aggravated identity theft count.  Newton will also be subject to mandatory restitution.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Beck commended special agents of the IRS – Criminal Investigation and officers of the Sheriff’s Office for Douglas County, Georgia, who investigated the case, as well as Trial Attorneys Jason H. Poole and Michael C. Boteler of the Tax Division and Assistant U.S. Attorney Jonathan S. Ross of the Middile District of Alabama, who are prosecuting the case. 

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

Attorney General Loretta E. Lynch provided the following statement on the escape of Joaquin Guzman Loera "Chapo" from a Mexican prison:

“We share the government of Mexico's concern regarding the escape of Joaquin Guzman Loera ‘Chapo’ from a Mexican prison.  In addition to his crimes in Mexico, he faces multiple drug trafficking and organized crime charges in the United States.

“The U.S. government stands ready to work with our Mexican partners to provide any assistance that may help support his swift recapture.”

The United States filed a civil complaint today in federal court against Iowa Select Herbs LLC, of Cedar Rapids, Iowa, its president and CEO, Gordon L. Freeman, and a partial owner, Lois A. Dotterweich, to prevent the distribution of adulterated and misbranded dietary supplements, announced Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.

Iowa Select Herbs LLC manufactures and distributes a variety of dietary supplements, consisting primarily of extracts from various plants, including papaya leaf, echinacea, elderberry and nettle leaf.  The firm also produces a product called “Cold BeGone,” which purports to be a complex of natural ingredients.  The complaint alleges that the company’s dietary supplements are manufactured under conditions that are inadequate to ensure the safety of its products and also make unlawful claims to treat or prevent diseases.  The department filed the injunction action in the Northern District of Iowa on behalf of the U.S. Food and Drug Administration (FDA).

“The Department of Justice is committed to ensuring that dietary supplements are manufactured and distributed in compliance with the law,” said Principal Deputy Assistant Attorney General Mizer.  “We will pursue actions against manufacturers who do not manufacture their products under proper conditions or who make unlawful claims about them.”         

According to the complaint, an FDA inspection performed in August 2014 revealed that the company’s dietary supplements are adulterated within the meaning of the federal Food, Drug and Cosmetic Act because they are manufactured, prepared, packed or held in a manner that does not conform to Dietary Supplement Current Good Manufacturing Practices.  The complaint alleges, for example, that the company repeatedly failed to test its dietary ingredients, in order to verify their identity, before using them.  The complaint also alleges that the firm’s dietary supplements qualify as unapproved and misbranded drugs, in that they claim to treat or prevent a variety of diseases, including cancer, malaria and heart disease, but have never been submitted to the FDA for approval, and have never been found safe and effective for those purposes.

The government is represented by Trial Attorney Heide L. Herrmann of the Civil Division’s Consumer Protection Branch, with the assistance of Associate Chief Counsel for Enforcement Laura Akowuah of the Department of Health and Human Services’ Office of General Counsel – Food and Drug Division.

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

The Department of Justice announced today that the University of Montana Police Department (UMPD) has fully implemented the requirements of its agreement with the department to improve the UMPD’s response to reports of sexual assault.  The agreement, which was entered into in May 2013, resolved part of the department’s comprehensive investigation of the response by the Missoula, Montana, criminal justice system and the University of Montana to sexual assault.  Thomas R. Tremblay, the independent reviewer who assesses whether the terms of the agreement have been met, has determined – and the department has agreed – that the UMPD has met all of its obligations under the agreement and achieved the overall purpose of the agreement. 

The purpose of the agreement between the department and the UMPD was to better protect and vindicate the rights of sexual assault victims by transforming the UMPD’s response to reports of sexual assault.  To do this, the agreement required significant changes to the UMPD’s policies, practices and supervision.  These changes promote more reliable sexual assault investigations, and effective, nondiscriminatory law enforcement and community support for victims, the police department and its officers.  The UMPD’s implementation of the agreement has resulted in a host of historic advances in the Missoula response to sexual assault, including the following:

• development and institution of model policies and protocols for the UMPD’s response to reports of sexual assault, and for its communication and cooperation with its university and local law enforcement partners;

• extensive specialized training for first responders and detectives in the response to sexual assault;

• cooperation with the development and institution of an External Review Panel – one of the first of its kind – to review closed sexual assault cases for investigative comprehensiveness and indications of gender bias;

• completion of an audit of the community-wide response to sexual assault – one of the first community audits to focus exclusively on sexual assault – including all of the key law enforcement agencies, advocacy organizations and medical service providers serving victims of sexual assault in Missoula County; and

• community advocates and students reporting better communication and coordination with UMPD officers than ever before.

“Our agreement with the University of Montana Police Department following our investigation into the handling of sexual assault complaints made by women in Missoula has been a catalyst for powerful changes in the law enforcement, the university, and the community’s coordinated response to sexual assault,” said Vanita Gupta, the head of the Civil Rights Division.  “We are grateful for the efforts of the University of Montana, the UMPD and the entire Missoula community because, as a result of these reforms, the women of Missoula are safer, more trusting of the criminal justice system and subject to more fair and respectful treatment by campus police.  The University of Montana and the UMPD had the courage and leadership to acknowledge and address these problems on its campus, and as a result, they are poised to become a model for institutions of higher education and campus police departments grappling with these issues around the country.”

“Today signals a true accomplishment by the University of Montana and its police department,” said U.S. Attorney Michael Cotter of the District of Montana.  “They have worked tirelessly toward changes that are substantial, sustainable, and will benefit the community for generations to come.  Thanks to this community effort, today the university is safer and is a place where students can learn and thrive.” 

The full implementation of the department’s agreement with the UMPD marks the second completion of the four agreements stemming from the department’s multi-pronged investigation, launched in May 2012, regarding the handling of sexual assault complaints made by women in Missoula.  The investigation, conducted under the Violent Crime and Law Enforcement act of 1994, the Safe Streets Act, Title VI of the Civil Rights Act of 1964 and Title IX of the Education Amendments of 1972, evaluated the response to sexual assault at the University of Montana at Missoula, the UMPD, the Missoula Police Department (MPD) and the Missoula County Attorney’s Office.  The department entered into agreements with the university, the UMPD and the MPD in May 2013, to resolve findings related to those parties and address deficiencies in their response to sexual assaults.  The department, together with the Montana Attorney General’s Office, entered into an agreement with the Missoula County Attorney’s Office the following year, in June 2014.  The implementation of those agreements has already improved these parties’ response to sexual assaults.

These agreements, as well as a description of the Department of Justice’s work regarding sexual assault in Missoula are available at: http://www.justice.gov/crt/about/spl/.  The independent reviewer’s final compliance report, describing in detail his determination that the UMPD has successfully achieved full compliance with the Justice Department agreement, is forthcoming, and will be available on the Justice Department’s website upon its release.

A Detroit-area businessman and other co-conspirators were sentenced to prison this week for income and employment tax fraud in the U.S. District Court for the Eastern District of Michigan, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.

“Fraudulent business owners who underreport their income and employment taxes cheat not only the IRS and U.S. taxpayers, but also other businesses that comply with their tax obligations and seek to compete on a level playing field,” said Acting Assistant Attorney General Ciraolo.  “Today’s sentencing of Happy Asker and the sentences imposed on his co-conspirators demonstrate that there is a heavy price for this conduct, and for obstructing and misleading IRS agents in the course of their investigation.”

Happy Asker, 38, of West Bloomfield, Michigan, was sentenced today to serve 50 months in prison, three years of supervised release and ordered to pay $2.5 million in restitution to the Internal Revenue Service (IRS) and a special assessment of $3,300 by U.S. District Court Chief Judge Denise Paige Hood.  According to court documents and statements made during a 10-day jury trial in November 2014, Happy Asker was the president, founder and public face of the Happy’s Pizza franchise, a pizza chain based in Farmington Hills, Michigan, that operated restaurants throughout Michigan, Ohio and Illinois.  Asker was convicted of three counts of filing false income tax returns for the years 2006 through 2008, 28 counts of aiding and assisting in the filing of false income and payroll tax returns for several of Happy’s Pizza franchise restaurants for the years 2006 through 2009, and corruptly endeavoring to obstruct and impede the administration of the Internal Revenue Code.

Asker’s co-conspirators and other individuals involved in the tax scheme, Maher Bashi, 47, Tom Yaldo, 42, and Tagrid Bashi, 47, all of West Bloomfield; and Arkan Summa, 42, of Walled Lake, Michigan, all pleaded guilty for their roles prior to Asker’s trial.  On Oct. 23, 2014, Maher Bashi and Yaldo pleaded guilty to conspiracy to defraud the United States.  On July 15, 2014, Summa pleaded guilty to obstruction of the IRS and Tagrid Bashi pleaded guilty to willfully delivering false documents to the IRS. 

Maher Bashi, who served as Happy's Pizza's corporate chief operating officer, and Yaldo, an owner of numerous Happy's Pizza franchises, were also sentenced this week.  On July 7, Bashi was sentenced to serve two years in prison, three years of supervised release and ordered to pay $620,297 in restitution to the IRS.  Yaldo was sentenced to serve 18 months in prison, three years of supervised release and ordered to pay $314,078 in restitution to the IRS.

On April 1, Summa, an owner of numerous Happy’s Pizza franchises, was sentenced to serve 18 months in prison and ordered to pay $199,847 in restitution to the IRS.  Tagrid Bashi, a nominee Happy’s Pizza franchise owner, was sentenced to three years of supervised probation.

“The license to run a business is not a license to avoid paying taxes,” said Chief Richard Weber of IRS-Criminal Investigation.  “Mr. Asker and his co-defendants chose greed over legal business practices.  As business owners, they had a responsibility to withhold income taxes for their employees and then remit those taxes to the Internal Revenue Service, as well as file timely individual and corporate tax returns.  Time and again, our special agents untangle the web of financial transactions to bring to justice those that would try to cheat the government and the American taxpayer.”

Evidence at trial established that from 2004 through 2011, Asker, along with certain franchise owners and employees, executed a systematic and pervasive tax fraud scheme to defraud the IRS.  Gross sales and payroll amounts were substantially underreported on numerous corporate income tax returns and payroll tax returns filed for nearly all 60 Happy’s Pizza franchise locations.  From 2008 to 2010, Asker and his co-conspirators diverted for personal use more than $6.1 million in cash gross receipts from approximately 35 different Happy’s Pizza stores in the Detroit area, Illinois and Ohio.  In total, Asker and certain employees and franchise owners failed to report approximately $3.84 million of gross income and approximately $2.39 million in payroll taxes from the various Happy’s Pizza franchises to the IRS.  A portion of the unreported income was shared among most of the franchise owners, including Asker, in a weekly cash “profit split.”  As a result of the scheme, the IRS is owed more than $6.2 million in income and employment taxes.  The evidence also established that Asker intentionally misled IRS-Criminal Investigation special agents during voluntary interviews conducted with him in 2010.

Acting Assistant Attorney General Ciraolo commended special agents of IRS-Criminal Investigation, the Drug Enforcement Administration and the FBI, who investigated the case, and Senior Litigation Counsel Corey Smith and Trial Attorney Mark McDonald of the Tax Division, who prosecuted the case.  Ciraolo also thanked the U.S. Attorney’s Office of the Eastern District of Michigan for their substantial assistance.

The U.S. District Court for the District of Nevada entered a consent decree of permanent injunction against Bio Health Solutions LLC, of Reno, Nevada, and Mark Garrison, its manager, to prevent the distribution of RenAvast, an animal drug that is adulterated, the Department of Justice announced today.

“The department will not hesitate to bring enforcement actions against animal drug producers who do not follow the necessary procedures to comply with our nation’s animal drug laws,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Department of Justice’s Civil Division.

On July 9, the department filed a complaint in U.S. District Court at the request of the U.S. Food and Drug Administration (FDA) alleging that Bio Health Solutions and Garrison caused the shipment of RenAvast in interstate commerce in violation of federal law.  The complaint alleged that Bio Health Solutions markets, sells and distributes RenAvast, which the company describes as an animal supplement, and that the company intended that RenAvast be used to treat and prevent kidney disease and chronic renal failure in cats and dogs.

Under the federal Food, Drug and Cosmetic Act (FDCA), a new animal drug includes any drug intended for use for animals, the composition of which is such that it is not generally recognized as safe and effective for use under the conditions prescribed, recommended or suggested in its labeling.  A new animal drug that lacks FDA approval or otherwise fails to meet an exception under the law is deemed to be unsafe, and a new animal drug that is unsafe under the law is deemed to be adulterated.  The complaint alleged that defendants caused the shipment of RenAvast, an adulterated animal drug, into interstate commerce.

In conjunction with the filing of the complaint, the defendants agreed to settle the litigation and be bound by a consent decree of permanent injunction that prohibits them from introducing or delivering for introduction into interstate commerce, manufacturing, processing, packaging, labeling, holding, selling or distributing RenAvast.  In addition, these same restrictions apply to any other product intended to diagnose, cure, mitigate, treat or prevent disease, unless and until a new animal drug application has been approved, or the product meets the requirements for an investigational new animal drug exemption in the law.

According to the complaint, the FDA issued a warning letter to Garrison on Aug. 1, 2012.  The letter cited numerous statements throughout the defendants’ website and other promotional materials that showed the intended use of RenAvast was to prevent and/or treat kidney disease and chronic renal failure in cats.  The FDA’s letter warned Garrison that RenAvast could not be legally marketed because it was a new animal drug that was not approved by the FDA.

The complaint further alleged that in November 2012, a representative for the company informed the FDA that the company had complied with FDA requests to remove statements on its website and in other promotional materials that showed its intent that RenAvast be used to mitigate, treat and prevent chronic renal failure in cats and in dogs.  Nevertheless, the complaint alleged that after these assurances, Bio Health Solutions created a password-protected section on its website that contained numerous express disease claims.  In addition, as alleged in the complaint, the FDA conducted undercover purchases of RenAvast, and such purchases confirmed that the defendants continued to make claims about RenAvast that caused it to be an adulterated drug under the FDCA.

The government is represented by Trial Attorney David A. Frank of the Civil Division’s Consumer Protection Branch, with the assistance of Associate Chief Counsel Steven J. Tave of the Department of Health and Human Services’ Office of General Counsel-Food and Drug Division and Assistant U.S. Attorney Greg Addington of the District of Nevada.

A Detroit area hematologist-oncologist was sentenced today to serve 45 years in prison for his role in a health care fraud scheme that included administering medically unnecessary infusions or injections to 553 individual patients and submitting to Medicare and private insurance companies approximately $34 million in fraudulent claims.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Special Agent in Charge Paul M. Abbate of the FBI’s Detroit Field Office, Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Chicago Regional Office and Chief Richard Weber of the Internal Revenue Service – Criminal Investigation (IRS-CI) made the announcement.

Farid Fata, M.D., 50, of Oakland Township, Michigan, pleaded guilty in September 2014 to 13 counts of health care fraud, one count of conspiracy to pay or receive kickbacks and two counts of money laundering.  U.S. District Judge Paul D. Borman of the Eastern District of Michigan imposed the sentence and ordered Fata to forfeit $17.6 million.

“Rather than use his medical degree to save lives, Dr. Fata instead destroyed them in pursuit of profit,”  said Assistant Attorney General Caldwell.  “Time and again, Dr. Fata callously violated his patients' trust as he used false cancer diagnoses and unwarranted and dangerous treatments as tools to steal millions of dollars from Medicare, even stooping to profit from the last days of some patients' lives.  While no sentence can restore what was taken from his patients and their families, the sentence imposed ensures that never again will Dr. Fata lay hands on another patient.”

“Health care fraud has been a serious problem in Michigan, but no case has been as egregious as the conduct of Dr. Farid Fata,” said U.S. Attorney McQuade.  “Dr. Fata did not care for patients; he exploited them as commodities.  He over-treated, under-treated and outright lied to patients about whether they had cancer so that he could maximize his own profits.”

“Fata’s heinous acts did far worse than defraud government health care programs and breach his professional oath,” said Special Agent in Charge Abbate.  “Fata caused grievous emotional and physical harm, betraying the trust of hundreds of innocent patients by selfishly placing his personal financial gain over the health and welfare of those who entrusted him with their medical care.  The many brave individuals impacted by this defendant’s criminal acts had the strength to come forward, express their experiences of pain and suffering, and collaborate with law enforcement and prosecutors to ensure that Fata’s despicable actions were brought to an end and justice delivered.”

“It is startling and abhorrent when greed is so potent that it drives a medical professional to recklessly abandon the most basic and important principle of his profession, ‘First, Do No Harm,” said Special Agent in Charge Pugh.  “Dr. Fata did just that when he falsely diagnosed his patients with cancer and administered toxic chemotherapy with potentially harmful and even deadly side effects.  Today’s sentencing is a clear message that, working closely with our law enforcement partners, we will continue to investigate, charge and prosecute medical professionals who jeopardize the health of patients.”

“This is the most egregious case of fraud and deception that I have seen in my career," said Chief Weber.  “Dr. Fata not only defrauded the government out of millions of dollars, but he lied to his patients about their health and intentionally put their lives at risk.  In fact, because of his lies, some of those patients who he was entrusted to care for likely died as a result of his actions.  This defendant ‎greedily cared more about his own financial well-being than the lives of his patients.  This disgusting and diabolical scheme has hurt hundreds of patients and their families and stolen from them something that no punishment from the court can do to make them whole.”

As set forth at sentencing, Fata was a licensed medical doctor who owned and operated a cancer treatment clinic, Michigan Hematology Oncology P.C. (MHO), which had locations in Rochester Hills, Michigan; Clarkston, Michigan; Bloomfield Hills, Michigan; Lapeer, Michigan; Sterling Heights, Michigan; Troy, Michigan; and Oak Park, Michigan.  He also owned a diagnostic testing facility, United Diagnostics PLLC, located in Rochester Hills, Michigan.

In connection with his guilty plea, Fata admitted to prescribing and administering unnecessary aggressive chemotherapy, cancer treatments, intravenous iron and other infusion therapies to patients in order to increase his billings to Medicare and other insurance companies.  Fata then submitted fraudulent claims to Medicare and other insurers for these unnecessary treatments.

Fata also admitted to soliciting kickbacks from Guardian Angel Hospice and Guardian Angel Home Health Care in exchange for his referral of patients to those facilities.

Fata further admitted to using the proceeds of the health care fraud at his medical practice, MHO, to promote the carrying on of additional health care fraud at United Diagnostics, where he administered unnecessary and expensive positron emission tomography (PET) scans for which he billed a private insurer.

This case was investigated by the FBI, HHS-OIG and IRS-CI 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 Eastern District of Michigan.  This case is being prosecuted by Assistant Chief Catherine K. Dick, Deputy Chief Gejaa T. Gobena, and Trial Attorney Matthew C. Thuesen of the Fraud Section, and by Assistant U.S. Attorney Sarah Resnick Cohen, White Collar Crime Unit Chief John K. Neal, and Health Care Fraud Unit Chief Wayne F. Pratt of the U.S. Attorney’s Office of the Eastern District of Michigan.

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.

An Army National Guard official was sentenced today to 42 months in prison for accepting a $30,000 bribe in exchange for steering a $3.6 million contract to a retired sergeant major of the Minnesota Army National Guard and his consulting company.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Dana J. Boente of the Eastern District of Virginia, Acting U.S. Attorney Kelly T. Currie of the Eastern District of New York, Assistant Director in Charge Andrew McCabe of the FBI’s Washington Field Office, Acting Special Agent in Charge Paul Sternal of the Defense Criminal Investigative Service (DCIS) Mid-Atlantic Field Office and Director Frank Robey of the U.S. Army Criminal Investigative Command’s Major Procurement Fraud Unit (Army-CID) made the announcement.

Jason Rappoccio, 39, of Hampton, South Carolina, pleaded guilty on Feb. 3, 2015, to one count of conspiracy to commit bribery and one count of bribery.  U.S. District Judge Liam O’Grady of the Eastern District of Virginia imposed the sentence and ordered Rappoccio to forfeit $31,328.

Rappoccio was an active duty sergeant first class in the Army National Guard.  In connection with his guilty plea, Rappoccio admitted to accepting a $30,000 bribe from Timothy Bebus, a retired sergeant major of the Minnesota Army National Guard and owner of Mil-Team Consulting and Solutions LLC (Mil-Team).  In exchange, Rappoccio agreed to steer a $3.6 million contract to Mil-Team by awarding the contract to a Small Business Administration (SBA) 8(a) certified company, chosen by Bebus, that Rappoccio understood would sub-contract a portion of the work to Mil-Team.

Rappoccio admitted that the $30,000 bribe was structured to conceal the payment.  Specifically, Bebus gave $6,000 in cash directly to Rappoccio, and the remaining $24,000 was paid in a cashier’s check in the name of Rappoccio’s wife.

Rappoccio also admitted to accepting additional benefits in exchange for steering an additional $4 million contract to Mil-Team.  In particular, Rappoccio solicited and received from Bebus airline tickets for two of Rappoccio’s family members.  He also received NFL tickets worth over $1,300 from another co-conspirator.

In connection with this investigation into corruption within the National Guard Bureau, eight others, including Bebus, have been convicted of offenses related to the awarding of millions of dollars of Army National Guard marketing, retention and recruitment contracts.  The investigation is ongoing.

The case was investigated by the FBI’s Washington Field Office, with assistance from DCIS’s Mid-Atlantic Field Office and Army-CID’s Expeditionary Fraud Resident Agency’s Major Procurement Fraud Unit.  The case was prosecuted by Trial Attorney Alison L. Anderson of the Criminal Division’s Fraud Section, Assistant U.S. Attorney Jonathan Fahey of the Eastern District of Virginia and Assistant U.S. Attorneys Marisa Seifan and Martin Coffey of the Eastern District of New York.

A Parma, Ohio, resident was indicted by a grand jury sitting in Cleveland in the Northern District of Ohio for one count of tax evasion of payment for conduct spanning from 2001 through 2015, and five counts of failure to file federal income tax returns for tax years 2008 through 2012, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Department of Justice’s Tax Division. 

According to the allegations in the indictment, John Christopher Raschella worked as an insurance salesman, and also had a degree in accounting and had previously worked as a tax return preparer.  From 1989 through 2012, Raschella earned substantial income and failed to file timely federal income tax returns with the Internal Revenue Service (IRS) to report his insurance commissions as an independent contractor and other income that he earned in those years.  Even after Raschella received notices from the IRS indicating that he owed taxes, he failed to pay the amounts due.  From 1989 through 1991, 1993 through 1999, and 2001 through 2010, Raschella also delinquently filed tax returns on which he reported that he owed income taxes.  However, even in the 1992, 2000, 2011 and 2012 tax years, Raschella failed to pay all of the taxes due and owing, and the delinquent tax returns for some of those years contained false statements about Raschella’s home address, marital status, gross receipts and business expenses. 

The indictment further alleges that beginning in or around 2001, the IRS attempted to collect Raschella’s unpaid taxes by levying his bank accounts and insurance commissions.  In response to these actions, Raschella took steps to obstruct the IRS’ collection efforts.  He attempted to assign his insurance commissions to third parties, including nominee corporations that he established in Nevada and Utah.  He also directed that his insurance commissions be deposited into the bank account of his girlfriend, and leased and purchased three luxury vehicles that he registered in nominee names.  In or around 2010, Raschella caused an individual in the state of Texas to submit a fraudulent IRS Form for Release of Levy/Release of Property from Levy, to the company for which Raschella sold insurance in an effort to reduce the amount of money that the insurance company paid over to the IRS pursuant to a levy.  

If convicted, Raschella faces a statutory maximum sentence of five years in prison and a $250,000 fine for the tax evasion count, and a statutory maximum sentence of one year in prison and a $100,000 fine for each count of failure to file tax returns. 

Acting Assistant Attorney General Ciraolo commended special agents of IRS-Criminal Investigation, who investigated this case, and Trial Attorneys Melissa S. Siskind and Jeffrey A. McLellan of the Tax Division, who are prosecuting this case.  Ciraolo also thanked the U.S. Attorney’s Office of the Northern District of Ohio for providing substantial assistance.

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

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