District Not Recorded

Espar Inc. has been sentenced to pay a $14.9 million criminal fine after pleading guilty to participating in a scheme to fix prices for parking heaters used in commercial vehicles, the Department of Justice announced today.   

 Espar Inc. pleaded guilty to a one-count felony charge in the U.S. District Court of the Eastern District of New York on March 12.  At a hearing held today, the court formally accepted Espar’s plea agreement with the United States and sentenced the company in accordance with that agreement.   

“Today’s sentencing drives home the message that the Department of Justice will not tolerate price fixing that thwarts free competition by setting minimum prices and coordinating price increases,” said Assistant Attorney General Bill Baer of the Department of Justice’s Antitrust Division.  “This conspiracy among sellers of parking heaters resulted in many years of higher prices for aftermarket customers.  While the Antitrust Division is pleased with this final resolution of the charge against Espar, we will continue our efforts to root out anticompetitive practices in this industry.” 

According to the charge, Espar conspired with others to fix prices for parking heaters in the United States and elsewhere in North America from at least as early as Oct. 1, 2007, until Dec. 31, 2012.  Parking heaters are devices that heat the interior compartment of a motor vehicle independent of the operation of the vehicle’s engine.  Espar and its co-conspirators discussed parking heater prices for commercial vehicles, agreed to set a price floor for parking heater kits for commercial vehicles sold to aftermarket customers and agreed to coordinate the timing and amount of price increases for parking heaters for commercial vehicles sold to aftermarket customers.  The conspiring companies carried out the agreement and exchanged information for the purpose of monitoring and enforcing adherence to the agreement.  

Espar has pleaded guilty to a charge of price fixing in violation of the Sherman Act, which carries maximum penalties of a $100 million criminal fine for corporations.  The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime if either of those amounts is greater than the statutory maximum fine.               

Today’s sentencing is the result of an ongoing federal antitrust investigation handled by the Antitrust Division’s New York Office with assistance from the FBI’s New York Field Office.  Anyone with information concerning price fixing or other anticompetitive conduct in the parking heater industry should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258 or visit www.justice.gov/atr/contact/newcase.html.

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

The criminal information, filed in the Eastern District of Pennsylvania, charged Neil Godfrey, 76, of Santa Ana, California, with one count of wire fraud.  Godfrey owned and operated Check Site Inc., based in Santa Ana, which from 2006 to 2010 enabled fraudulent merchants to withdraw money from consumers’ bank accounts without the consumers’ knowledge or consent.  If convicted, Godfrey faces a statutory maximum sentence of 20 years in prison.

According to the information, Godfrey worked with at least two fraudulent merchants who 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

“Neil Godfrey used his understanding of the banking system to help his partners in crime steal money from hard-working, often low-income Americans,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “The amounts that were illegally withdrawn generally did not exceed a few hundred dollars per victim, but the scheme was so massive and went on so long that altogether it added up to millions of dollars in fraudulent withdrawals.  As this prosecution demonstrates, the Department of Justice will continue to prosecute individuals and corporations involved in this kind of fraud.”

The information alleged that, once the fraudulent merchant had obtained the consumer’s name and bank account information, the merchants involved in the scheme created a demand draft, also known as a remotely controlled check (RCC).  Unlike an ordinary check, an RCC is generally honored without the signature of the account holder.  Check Site submitted the RCC to the consumer’s bank.  When the RCC was processed, Check Site kept a fee and transferred the remainder of the withdrawal to the merchant.

The information alleged that Godfrey 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 web site 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.”

“The defendant in this case exploited his knowledge of the banking system and exposed hundreds of consumers to fraud,” said U.S. Attorney Zane David Memeger for the Eastern District of Pennsylvania.  “Those who circumvent our banking laws in order to enrich themselves by preying on unsuspecting consumers need to be investigated and vigorously prosecuted.”

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. 

A criminal information is an accusation.  A defendant is presumed innocent unless and until proven guilty.

The Department of Justice today sued four Michigan hospital systems that for years unlawfully agreed to allocate territories for marketing, depriving consumers and physicians of important information about competing providers and other benefits of unfettered competition.  Three of the systems – Hillsdale Community Health Center, Community Health Center of Branch County, Michigan, and ProMedica Health System Inc. – agreed to settle the charges.  The department will continue to litigate against a fourth, W.A. Foote Memorial Hospital, doing business as Allegiance Health, to prohibit agreements that unlawfully allocate territories for marketing of competing healthcare services. 

“These hospitals conspired to deprive consumers and physicians of important health information and education,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division.  “Instead of putting patients first, these hospitals secretly agreed not to compete.  This action will terminate the agreements limiting marketing and make sure the citizens of south-central Michigan will have access to the facts they need to make informed healthcare choices.”

As alleged in the complaint, hospitals compete to attract patients by advertising, direct mailings to patients, outreach to physicians and employers, conducting health fairs and offering free health screenings.  Hillsdale, Allegiance, Branch and ProMedica’s Bixby and Herrick Hospitals – the only hospitals in their respective counties – each competed through marketing to attract patients.  The complaint alleges that Hillsdale curtailed this competition for years by entering into agreements with Allegiance, Branch and ProMedica to limit the marketing of competing healthcare services.  According to the complaint, the defendants’ agreements deprived patients and physicians of information needed to make informed healthcare decisions.  Patients in Hillsdale County, Michigan, were also prevented from receiving free medical services – such as health screenings and physician seminars – that they would have received from Allegiance in the absence of its unlawful agreement with Hillsdale. 

The Antitrust Division, joined by the Michigan Attorney General’s Office, filed the civil antitrust lawsuit in the U.S. District Court for the Eastern District of Michigan, while simultaneously filing a proposed settlement that, if approved by the court, would resolve the lawsuit with respect to the three settling systems.

The proposed settlement prohibits Hillsdale, Branch and ProMedica from agreeing with other healthcare providers, including hospitals and physicians, to limit marketing or to divide any geographic market or territory.  The proposed settlement also prohibits communications among the defendants about their marketing activities, subject to limited exceptions.  The settling hospitals will also implement compliance measures tailored to prevent the recurrence of these types of anticompetitive practices in the future.

Hillsdale is a Michigan corporation headquartered in Hillsdale, Michigan, with a general acute-care hospital located in Hillsdale County, Michigan, that has 47 beds and a medical staff of over 90 physicians. 

Allegiance is a Michigan corporation headquartered in Jackson, Michigan, with a general acute-care hospital located in Jackson County, Michigan, that has 480 beds and a medical staff of over 400 physicians. 

Branch is a Michigan corporation headquartered in Coldwater, Michigan, with a general acute-care hospital located in Branch County, Michigan, that has 87 beds and a medical staff of over 100 physicians. 

ProMedica is an Ohio corporation headquartered in Toledo, Ohio, with locations in northwest Ohio and southern Michigan, including Bixby and Herrick Hospitals in Lenawee County, Michigan.  Bixby is a general acute-care hospital that has 88 beds and a medical staff of over 120 physicians.  Herrick is a general acute-care hospital with 25 beds and a medical staff of over 75 physicians.

The proposed settlement with Hillsdale, Branch and ProMedica, along with the department’s competitive impact statement, will be published in the Federal Register, as required by the Antitrust Procedures and Penalties Act.  Any person may submit written comments concerning the proposed settlement within 60 days of its publication to Peter J. Mucchetti, Chief, Litigation I Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street N.W., Suite 4100, 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.

Hillsdale Complaint.pdf (121.83 KB)

Hillsdale Stipulation and Order.pdf (228.83 KB)

Hillsdale CIS.pdf (63.91 KB)

The Justice Department announced today that it reached an agreement with Abercrombie & Fitch Inc. (Abercrombie), a clothing retailer headquartered in Columbus, Ohio.  The agreement resolves a complaint filed with the Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC), claiming that the company discriminated against a non-U.S. citizen in violation of the Immigration and Nationality Act (INA).   

The department’s investigation found that Abercrombie required a non-U.S. citizen, but not similarly-situated U.S. citizens, to produce specific documentary proof of her immigration status for the purpose of verifying her employment eligibility.  Specifically, the Department found that Abercrombie required the individual to present a green card.  The INA’s anti-discrimination provision prohibits employers from making specific documentary demands based on citizenship status or national origin when verifying an employee’s employment eligibility. 

Under the settlement agreement, Abercrombie will pay $3,661.14 in back pay to the complainant and a civil penalty to the United States; establish a back pay fund of $153, 932.00 to compensate other individuals who may have been harmed; and be subject to monitoring of its employment eligibility verification practices for two years.

“The division is committed to identifying and tearing down illegal barriers that prevent authorized workers from working,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “The Civil Rights Division commends Abercrombie for working with the division to resolve this matter expeditiously.”         

OSC is responsible for enforcing the anti-discrimination provision of the INA.  Among other things, the statute prohibits citizenship status and national origin discrimination in hiring, firing, or recruitment or referral for a fee; unfair documentary practices; retaliation and intimidation.  Trial Attorney Luz V. Lopez-Ortiz and Paralegal Ryan Thompson investigated this matter. 

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

Applicants or employees who believe they were subjected to: different documentary requirements based on their citizenship status, immigration status, or national origin; or  discrimination based on their citizenship status, immigration status or national origin in hiring, firing, or recruitment or referral for a fee, should contact OSC’s worker hotline for assistance.

The former co-owner of R&J Partnership Ltd., doing business as Reece’s Las Vegas Supply (RLVS), a gambling supplies store located in Dayton, Ohio, was sentenced today to serve two and one-half years in prison, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.

Reece Powers II, 76, was sentenced today to serve 30 months in prison following his guilty plea on March 31 to multiple federal offenses, including conspiracy to operate an illegal gambling business, operating an illegal gambling business, conspiracy to defraud the Internal Revenue Service (IRS) and witness tampering.  Powers was also sentenced to three years of supervised release following his prison sentence and ordered to pay a $400 special assessment, with restitution to be determined at a later date.  The charges were part of an indictment unsealed on Sept. 26, 2014.  The other defendants charged in that indictment and in related cases, including Douglas A. Sanders, Jason S. Pulaski, Michael E. Gedeon, Jenifer Williams, Walter F. Dyer, Virgil D. Rockwell and Allen G. Beck, were each sentenced yesterday and today after pleading guilty to illegal gambling, obstruction of justice and tax fraud offenses. 

According to court documents and statements made in court, between February 2004 and May 2011, Powers oversaw the recruitment of local non-profit charitable organizations to sponsor poker fundraisers that included casino-like card games, such as Texas Hold’em tournaments.  Powers entered into arrangements with the charitable organizations to control all of the funds generated from the poker fundraisers.

These poker fundraisers were exempted from the general prohibition against games of chance under then-existing Ohio laws, subject to the requirement that all the funds received from the games of chance, after deducting only prizes paid out and necessary expenses sanctioned under law, be transferred to the charitable organization for their sole benefit and use.  Powers, with the help of his co-conspirators, took a portion of the money generated from the poker fundraisers and used those funds to pay the events’ workers, among other things, in violation of Ohio law and federal gambling laws.

Powers provided false accountings to the charitable organizations of the funds received from the events and skimmed a portion of the money.  Powers either supervised or personally distributed illegal cash payments to his co-conspirators and employees who worked as card dealers, cashiers, chip sellers, pit bosses, tournament directors and managers.  Powers and his co-conspirators also falsely held themselves out as uncompensated volunteers at the poker fundraisers.

In 2009, Powers and Beck, a former business broker, conspired to defraud the IRS in attempting to sell RLVS.  Beck previously pleaded guilty to a conspiracy charge.  In Powers’ effort to evade taxes, Powers and Beck arranged the sale to make it appear as if the business and its associated real estate was sold for an amount less than its actual sale price.

In February 2010, Powers also tampered with a witness testifying before a federal grand jury by instructing the witness to testify falsely that the witness and other RLVS staffers did not get paid for working at the poker fundraisers.  Pulaski, Gedeon, Williams and Dyer each pleaded guilty to committing obstruction of justice by falsely testifying before a federal grand jury that they were uncompensated volunteers at the poker fundraisers. 

In addition to Powers’ sentence, U.S. District Judge Timothy Black of the Southern District of Ohio sentenced the other defendants as follows:

• Sanders was sentenced to serve 12 months and one day in prison and three years of supervised release, and ordered to pay a $200 special assessment;

• Pulaski was sentenced today to serve 12 months and one day in prison and three years of supervised release, and ordered to pay a $200 special assessment;

• Gedeon was sentenced to serve one day in prison and three years of supervised release to include two months of home incarceration, and ordered to pay a $200 special assessment;

• Williams was sentenced to serve one day in prison, three years of supervised release to include six months of home incarceration and 50 hours of community service, and ordered to pay a $200 special assessment;

• Dyer was sentenced to serve one day in prison and three years of supervised release, and ordered to pay a $3,000 fine and a $300 special assessment;

• Rockwell was sentenced to three years of probation, and to pay a $1,000 fine and a $100 special assessment; and

• Beck was sentenced to three years of probation and 100 hours of community service, and ordered to pay a $500 fine and a $100 special assessment.

Acting Assistant Attorney General Ciraolo commended the special agents of the IRS-Criminal Investigation, who investigated the case, and Assistant Chief Jorge Almonte and Trial Attorneys Christopher P. O’Donnell and Austin L. Furman of the Justice Department’s Tax Division, who prosecuted the case.  Ciraolo also thanked U.S. Attorney Carter M. Stewart of the Southern District of Ohio for the substantial assistance provided by his office. 

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

WASHINGTON – El Departamento de Justicia llegó a un acuerdo hoy con Abercrombie & Fitch (Abercrombie), un distribuidor de ropa internacional cuya sede se encuentra en New Albany, Ohio.   El acuerdo resuelve una queja presentada a La Oficina del Consejero Especial para Prácticas Injustas en el Empleo Relacionadas a la Inmigración (OSC por sus siglas en inglés), alegando que la compañía discriminó contra una empleada no ciudadana de los Estados Unidos en violación del Acto de Inmigración y Nacionalidad (INA por sus siglas en inglés).

La investigación del Departamento concluyó que Abercrombie le exigió a una empleada no ciudadana de los Estados Unidos, pero no a empleados cuidadanos Estadounidenses que se encontraban en una situación similar, a que presentara pruebas documentarias específicas de su estatus migratorio con el propósito de verificar su eligibilada para trabajar.  Específicamente, el Departamento concluyó que Abercrombie exigió que la empleada presentara una mica (tarjeta verde).  La provisión anti-discriminatoria del INA prohíbe que los empleadores exigen documentos específicos basado en el estatus de ciudadanía u origen nacional de un empleado mientras verifican la eligibilad para trabajar del empleado.  

Bajo el acuerdo, Abercrombie le pagará $3,661.14 en salario atrasado a la empleada y una multa a los Estados Unidos; establecerá un fondo de salario atrasado de $153,932.00 para compensar a otras personas que podían haber sido perjudicados; y será sujeta a monitoreo de sus practicas de verificación de eligibilidad para trabajar por dos años.

“La División esta comprometida a identificar y derrumbar las barreras ilegales que previenen a trabajadores con autorización de trabajo a trabajar,” dijo la Principal Deputada Asistente Procuradora General Vanita Gupta para la División de Derechos Civiles.  “La División de Derechos Civiles elogia a Abercrombie por trabajar con la División para resolver este asunto rápidamente.”

OSC es la oficina responsable por hacer cumplir con la provisión anti-discriminatoria de la INA.  Entre otras cosas, la ley prohíbe la discriminación por estatus de ciudadanía o de origen nacional durante la contratación, el despido, el reclutamiento o la referencia por comisión; las prácticas injustas de documentación; represalias e intimidación.  Este cargo fue investigado por la abogada Luz V. Lopez-Ortiz y Ryan Thompson, ayudante de abogado.

Para más información sobre las protecciones contra discriminación en el empleo según las leyes migratorias, llame a la línea directa de OSC para trabajadores al 1-800-255-7688 (1-800-237-2515, TTY para personas con discapacidad auditiva); llame a la línea directa de OSC para empleadores al 1-800-255-8155 (1-800-237-2515, TTY para personas con discapacidad auditiva); o para registrarse para un seminario gratis ofrecido a través del internet visite www.justice.gov/crt/about/osc/webinars.php, envíe un correo electrónico al osccrt@usdoj.gov, o visite el sitio de Internet www.justice.gov/crt/about/osc.

Los solicitantes o empleados que consideren que fueron sujetos a diferentes requisitos de verificación por su estatus de ciudadanía, estatus migratorio u origen nacional, o discriminación por estatus de ciudadanía, estatus migratorio, u origen nacional con relación a la contratación, el despido o el reclutamiento, deberán comunicarse a la línea dedicada a los trabajadores anteriormente citada para poderlos ayudar.

Download Abercrombie Settlement Agreement

Phase II Will Build on Momentum of Highly Effective Phase I to Further Enhance Interagency Anti-Trafficking Efforts

The Departments of Justice, Labor (DOL) and Homeland Security (DHS) today announced the launch of Phase II of the Anti-Trafficking Coordination Team (ACTeam) Initiative aimed at streamlining federal criminal investigations and prosecutions of human trafficking offenses.

Phase II ACTeams will be convened in up to six selected districts around the country, following a competitive, nationwide, interagency selection process.  The ACTeams, comprised of federal prosecutors and investigators representing multiple federal enforcement agencies, will implement a joint strategic action plan to develop high-impact federal investigations and prosecutions, vindicate the rights of human trafficking victims, bring traffickers to justice and dismantle human trafficking networks. 

“Human traffickers prey on some of the most vulnerable members of our society to exploit them for labor, for sex and for servitude of all kinds,” said Attorney General Loretta E. Lynch.  “Their crimes, appropriately described as modern-day slavery, have no place in a nation that has overcome the scourge of slavery.  That’s why the Department of Justice is committed—and I am personally determined—to hold human traffickers accountable, provide support to trafficking survivors, and stand up for the rights and the dignity that they deserve.”

“Labor trafficking affects workers who are vulnerable to exploitation for a number of reasons, who may not know their workplace rights, and may be afraid to raise their voices,” said Secretary Thomas E. Perez of DOL.  “The challenges we face as a nation and a government demand unprecedented levels of interagency collaboration.  Through these ACTeams, we’re bringing our respective departments’ collective resources and expertise to bear, building a whole even greater than the sum of our individual parts.  DOL will remain a vigorous and unfaltering partner during phase II.  Together we can ensure workers receive the wages they’ve earned, restore victims’ basic human rights and bring traffickers to justice.”

“The ACTeam Initiative has been an important tool in our collective ability to combat sex trafficking, forced labor and domestic servitude here in the United States,” said Secretary Jeh Johnson of DHS.  “This is not a problem that we can afford to ignore which is why, under a banner of shared responsibility and collaboration, the Departments of Justice, Labor and Homeland Security are recommitting ourselves to the fight against human trafficking by expanding the ACTeam Initiative.  Through the unified voice of the Blue Campaign, the Department of Homeland Security will continue to combat human trafficking through the guiding philosophy that we are at our best when we work together.”

These departments collaborated to develop the ACTeam Initiative to streamline rapidly expanding human trafficking enforcement efforts, focusing on forced labor, international sex trafficking and sex trafficking of adults by force, fraud and coercion.  Project Safe Childhood and the Innocence Lost National Initiative continue to focus on sex trafficking of minors and sexual exploitation of minors. 

Drawing together federal prosecutors and federal agents from multiple investigative agencies, ACTeams streamline coordination on the front lines of federal human trafficking investigations and prosecutions, while also enhancing collaboration between front-line enforcement efforts and national human trafficking subject matter experts in the Justice Department’s Human Trafficking Prosecution Unit, Executive Office of U.S. Attorneys and FBI Civil Rights Unit, DHS’s Immigration and Customs Enforcement-Homeland Security Investigations, DOL’s Wage and Hour Division and the Office of the Inspector General.  In 2011, the Attorney General and the Secretaries of DHS and DOL announced Phase I of the ACTeam Initiative and the designation of six Phase I Pilot ACTeam sites in Atlanta; El Paso, Texas; Kansas City, Missouri; Los Angeles; Memphis, Tennessee; and Miami, following a rigorous interagency selection process. 

During the ACTeam Phase I period, Fiscal Years 2012-2013, federal human trafficking prosecutions involving forced labor, international sex trafficking and sex trafficking of adults rose by 35 percent nationwide, reflecting strong partnerships among U.S. Attorneys’ Offices, the Civil Rights Division’s Human Trafficking Prosecution Unit, federal, state and local law enforcement agencies, and non-governmental victim assistance organizations and task forces led by U.S. Attorneys’ Offices. 

The ACTeams played a significant role in leading these nationwide advances.  In ACTeam Districts, prosecutions of forced labor, international sex trafficking and adult sex trafficking rose even more markedly than they did nationally, due to the force-multiplier effect of interagency commitment to implementing coordinated, joint anti-trafficking strategies and due to advanced training, expertise and operational support provided to the Phase I ACTeams.  Comparing federal forced labor, international sex trafficking and adult sex trafficking prosecutions during the ACTeam Phase I period of Fiscal Years 2012-2013, to the pre-Phase I period of Fiscal Years 2010-2011: 

Cases filed increased by:

• 119 percent in ACTeam Districts,
• 18 percent in non-ACTeam Districts; and
• 35 percent nationwide.

Defendants charged increased by:

• 114 percent in ACTeam Districts,
• 12 percent in non-ACTeam Districts; and
• 28 percent nationwide.

Defendants convicted increased by:

• 86 percent in ACTeam Districts,
• 14 percent in non-ACTeam Districts; and
• 26 percent nationwide.

Attorney General Loretta E. Lynch released the following statement today after the Supreme Court ruling in Texas Department of Housing and Community Affairs v. Inclusive Communities Project Inc.:

“I am pleased that the Supreme Court has affirmed that the Fair Housing Act encompasses disparate impact claims, which are an essential tool for realizing the Act’s promise of fair and open access to housing opportunities for all Americans.  While our nation has made tremendous progress since the Fair Housing Act was passed in 1968, disparate impact claims remain an all-too-necessary mechanism for rooting out discrimination in housing and lending.  By recognizing that laws, policies and practices with unjustified discriminatory effects are inconsistent with the Fair Housing Act, today’s decision lends support to hardworking Americans who are attempting to find good housing opportunities for themselves and their families.  Bolstered by this important ruling, the Department of Justice will continue to vigorously enforce the Fair Housing Act with every tool at its disposal – including challenges based on unfair and unacceptable discriminatory effects.”

A Phenix City, Alabama, resident was sentenced to serve more than 12 years in prison for leading a multi-million dollar stolen identity theft ring, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney George L. Beck Jr. of the Middle District of Alabama.

“Stolen identity refund fraud is a nationwide epidemic that causes substantial harm to the individuals whose identities are stolen, and a significant loss to the U.S. Treasury,” stated Acting Assistant Attorney General Ciraolo.  “Prosecuting those who engage in this criminal conduct is among our highest priorities, and as today’s sentence demonstrates, those who orchestrate these schemes will face lengthy periods of incarceration and steep monetary penalties.”

Tamaica Hoskins, 34, of Phenix City, was sentenced to serve 145 months in prison, three years of supervised release and ordered to forfeit $1,082,842 in proceeds from the scheme by U.S. District Judge Callie V.S. Granade of the Southern District of Alabama. 

According to court documents, between September 2011 and June 2014, ringleader Tamaica Hoskins, who was sentenced today, Roberta Pyatt, Lashelia Alexander and others used stolen identities to file more than 1,000 false federal income tax returns that fraudulently claimed more than $4 million in tax refunds.  Hoskins obtained stolen identities from various sources, including the identities of employees from a Columbus, Georgia, company.  In order to file the false tax returns, Hoskins and Pyatt obtained two Electronic Filing Identification Numbers using sham tax businesses.  On behalf of those sham tax businesses, they also applied to various financial institutions for bank products, such as blank check stock.  The conspirators directed the Internal Revenue Service (IRS) to mail U.S. Treasury checks to addresses under their control and to send the tax refunds to prepaid debit cards and financial institutions where the conspirators maintained and controlled bank accounts using the sham tax businesses.  When the tax refunds were deposited into the conspirators’ accounts at the financial institutions, the conspirators printed the refund checks using the blank check stock.  Hoskins and Pyatt each cashed the refund checks at several businesses located in Alabama and Georgia. 

Co-conspirator Alexander worked for a Walmart check cashing center in Columbus.  In January 2014, Alexander was approached by several co-conspirators about cashing fraudulent tax refund checks issued in the names of third parties and in return, Alexander would receive a portion of the refunds.  Hoskins and Pyatt electronically filed fraudulent federal income tax returns for 2013 using the personal identifying information of numerous identity theft victims.  Alexander cashed more than $100,000 in fraudulently obtained third-party refund checks containing forged endorsements.

At sentencing, prosecutors read impact statements from several victims whose identities were stolen and false tax returns were filed in their names.  One victim described the consequences of the fraud on her and her family, stating:

What your intentional theft did to me was so much more than just stealing money.  As a law student, a part-time employee and a full time mom[,] you stole time from me, time I will never get back, time spen[t] crying because of the avalanche effect of not receiving my income tax check back which I depended on and budgeted for, time checking my mailbox daily, time worrying about whether it was ever going to come, time explaining to my children how there are horrible people in the world who steal because they feel like the world owes them something.  Time spen[t] explaining to our youngest that she won’t be getting her braces this year to fix her extremely crooked teeth.  Time explaining that Christmas may have to be put on hold this year.  Luckily, we are fortunate to have family and friends who love and care enough about us that in our time of need[,] they stepped up to the plate without batting an eye.  We had to borrow money to buy law school books because the tax return was not coming.  Financially it was a serious hardship because when you do not have money for necessities[,] it puts an emotional strain on every part of your life.

Roberta Pyatt pleaded guilty to conspiracy to commit wire fraud and is scheduled to be sentenced in the Middle District of Alabama for her role in the conspiracy on July 16.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Beck Jr. commended special agents of IRS–Criminal Investigation, who investigated the case, and Trial Attorneys Michael C. Boteler and Gregory P. Bailey of the Tax Division and Assistant U.S. Attorney Todd Brown of the Middle District of Alabama, who are prosecuting the case.

Husband and wife owners of an Orlando health care clinic pleaded guilty today to engaging in a $2.5 million health care fraud scheme.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney A. Lee Bentley III of the Middle District of Florida and Special Agent in Charge Shimon R. Richmond of the Florida Region of U.S. Health and Human Services Office of Inspector General (HHS-OIG) made the announcement.

Juan Carlos Delgado, 58, and Nereyda Infante, 48, both of Orlando, Florida, each pleaded guilty to conspiracy to commit health care fraud before U.S. District Judge Paul G. Byron of the Middle District of Florida.  Sentencing hearings are scheduled for Sept. 29, 2015.

Delgado and Infante owned and operated several health care clinics in Orlando, Florida, under variations of the name Prestige Medical.  According to admissions made in connection with their guilty pleas, between February 2012 and September 2014, the defendants fraudulently billed Medicare approximately $2.5 million on behalf of the Prestige clinics for services that never were administered.  Specifically, Delgado and Infante admitted to billing Medicare over $1.2 million for pentostatin, an expensive anticancer chemotherapeutic medication used to treat Leukemia despite never administering any pentostatin.

The case is being investigated by HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office of the Middle District of Florida.  The case is being prosecuted by Trial Attorney Andrew H. Warren of the Criminal Division’s Fraud Section.

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

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

Juan Carlos Delgado Plea Agreement

Nereyda Infante Plea Agreement

Settlement Resolves Allegations and Administrative Claims Involving Schools in Five States

Education Affiliates (EA), a for-profit education company based in White Marsh, Maryland, has agreed to pay $13 million to the United States to resolve allegations that it violated the False Claims Act by submitting false claims to the Department of Education for federal student aid for students enrolled in its programs.  EA operates 50 campuses in the United States under various trade names, including All State Career, Fortis Institute, Fortis College, Tri-State Business Institute Inc., Technical Career Institute Inc., Capps College Inc., Driveco CDL Learning Center, Denver School of Nursing and Saint Paul’s School of Nursing, which provide post-secondary education training programs in several professions in the states of Alabama, Florida, Maryland, Ohio and Texas. 

“Today’s settlement is an excellent example of cooperation among multiple offices of the federal government to achieve a result that protects federal student aid funding and the interests of individual students,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “Schools have an obligation to live up to their commitment to the government and their students when they accept federal student aid funds.”

The government alleged that employees at EA’s All State Career campus in Baltimore altered admissions test results so as to admit unqualified students, created false or fraudulent high school diplomas and falsified students’ federal aid applications, and that multiple EA schools referred prospective students to “diploma mills” to obtain invalid online high school diplomas.  These allegations also led to criminal convictions of two All State Careers admission representatives, Barry Sugarman and Jesse Moore, and a test proctor, Jacqueline Caldwell. 

“Students who apply for federal financial aid to attend trade and professional schools are required to show that they have the necessary skills to complete the educational program and work in the field,” said U.S. Attorney Rod J. Rosenstein of the District of Maryland.  “This settlement resolves the government's allegations that Education Affiliates defrauded the government by changing students' test scores and enrolling students with invalid diploma mill high school ‘diplomas’ ordered online.”

“The various cases that were settled here include numerous allegations of predatory conduct that victimized students and bilked taxpayers,” said Under Secretary Ted Mitchell of the U.S. Department of Education.  “In particular, the settlement provides for repayment of $1.9 million in liabilities ordered by Secretary of Education Arne Duncan that resulted from EA awarding federal financial aid to students at its Fortis-Miami campus based on invalid high school credentials issued by a diploma mill.  Secretary Duncan made clear that such abusive behavior would not be tolerated, and we will continue to work with the Justice Department and other federal agencies to ensure that postsecondary institutions face consequences when they violate the law.”

The settlement agreement also resolves allegations related to EA schools in Birmingham, Alabama, Houston and Cincinnati, including violations of the ban on incentive compensation for enrollment personnel, misrepresentations of graduation and job placement rates, alteration of attendance records and enrollment of unqualified students. 

“Using fake high school diplomas is a particularly insidious abuse of the federal student aid system,” said Inspector General Kathleen Tighe of the U.S. Department of Education’s Office of Inspector General (OIG).  “Students received only a worthless piece of paper.”  Tighe commended the efforts of OIG staff and Department of Justice attorneys, whose outstanding investigative work led to this significant settlement.

The settlement resolves five lawsuits filed under the whistleblower provisions of the False Claims Act, which permit private citizens to sue on behalf of the United States and share in the recovery.  As part of this resolution, the five whistleblowers will receive payments totaling approximately $1.8 million.    

The settlements were the result of a coordinated effort by the U.S. Attorneys’ Offices of the District of Maryland, the Southern District of Texas, the Northern District of Alabama, Southern District of Ohio and the Middle District of Tennessee, as well as the Civil Division’s Commercial Litigation Branch, and the Department of Education and its OIG.     

The cases are captioned United States ex rel. Roman v. All State Career, Inc. and Education Affiliates, Inc., Civil Case No. JKB-10-1730 (D.Md.); United States ex rel. Thomas v. Education Affiliates, Inc., Civil Case No. JKB-14-332 (D.Md.); United States ex rel. Andrews v. Education Affiliates, Inc., et al., Civil Case No. H-13-2366 (S.D. Tex.); United States ex rel. Atkins, et al. v. Fortis Institute and Education Affiliates, LLC, Civil Case No. CV-14-1107-S (N.D. Ala.); and United States ex rel. McArthur, Gruff & Associates LLC v. Education Affiliates, Inc., Civil Case No. 1:14-CV-977 (S.D. Oh.).  The False Claims Act claims resolved by the settlement are allegations only, and there has been no determination of liability. 

The Department of Justice released the following statement regarding U.S. citizens who are taken hostage abroad:

When a U.S. citizen is taken hostage, the Department of Justice’s top priority is the safe return of the hostage.  The families who have been affected by hostage-takings have endured extraordinarily difficult circumstances.  In light of recent hostage-takings perpetrated by terrorist groups, some families have expressed concerns that their efforts to retrieve their loved one could lead to potential prosecutions under the statute prohibiting the provision of material support to designated foreign terrorist organizations.  In the face of their loved ones being held captive indefinitely by terrorist groups, families have understandably explored every option to secure their loved ones’ safe recovery. 

In these cases, the department has focused on helping the families, consistent with the government’s no-concessions policy, and will continue to focus on exploring all appropriate options.  The department does not intend to add to families’ pain in such cases by suggesting that they could face criminal prosecution.  Perhaps the best indication of how the department will exercise its prosecutorial discretion in enforcing the material support statute is the department’s past record of prosecuting cases under the statute.  The department has never used the material support statute to prosecute a hostage’s family or friends for paying a ransom for the safe return of their loved one.

DaVita Healthcare Partners, Inc., the largest provider of dialysis services in the United States, has agreed to pay $450 million to resolve claims that it violated the False Claims Act by knowingly creating unnecessary waste in administering the drugs Zemplar and Venofer to dialysis patients, and then billing the federal government for such avoidable waste.  Davita is headquartered in Denver, Colorado, and has dialysis clinics in 46 states and the District of Columbia.

“This settlement is an example of what can be accomplished as a result of the successful cooperation between the government and whistleblowers in protecting our vital federal health care programs,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.

This civil settlement resolves allegations brought in a whistleblower action that DaVita devised and employed dosing grids and/or protocols specifically designed to create unnecessary waste of the drugs Venofer and Zemplar.  These drugs are packaged in single-use vials, which are intended for one-time use. Sometimes, the amount of the drug in the vials does not match the dosage specified by the physician, resulting in the remainder of the drug in the vial being discarded.

At the time of the alleged scheme, Medicare would reimburse a dialysis provider for certain waste if the dialysis provider – acting in good faith – discarded the remainder of the drug contained in a single-use vial after administering the requisite dose and/or quantity of the drug to a Medicare patient. 

The whistleblowers’ complaint alleged that, to create unnecessary Zemplar waste, DaVita required its employees to provide Zemplar to dialysis patients pursuant to mandatory and wasteful “dosing grids.”  Zemplar, a Vitamin D supplement usually administered at every dialysis session, is packaged in single-use vial sizes of 2 mcg, 5 mcg, and 10 mcg. Davita allegedly created unnecessary waste by requiring its employees to provide Zemplar to dialysis patients pursuant to mandatory “dosing grids,” which were designed to maximize the amount of Zemplar administered to patients.  DaVita then allegedly billed the government not only for the amount of Zemplar administered to patients, but also for the amount “wasted.”

With regard to Venofer, an iron supplement packaged only in a single-use vial size of 100 mg during the relevant time period, DaVita allegedly enacted protocols that required nurses to administer this drug in small amounts, and at frequent intervals, to maximize wastage. For instance, in certain instances, DaVita’s protocol called for a patient to receive 25 mg of Venofer per week, which resulted in 300 mg of waste per month that was billed to the Government.  In contrast, if the order had been filled by giving the patient the entirety of a single 100 mg vial, once per month, no waste would have resulted.

In 2011, the Centers for Medicare and Medicaid Services changed the manner by which it reimbursed dialysis providers for such drugs.  As a consequence, wastage derived from single-use vials was no longer profitable, and, as a result, DaVita allegedly changed its practices and reduced its drug wastage dramatically.

“Through personal sacrifice and courage, two whistleblowers exposed knowingly wasteful dosing practices designed simply to increase profits and improperly drain the government’s resources,” said Acting U.S. Attorney John Horn of the Northern District of Georgia.  “This settlement returns hundreds of millions of dollars to the treasury that had been improperly obtained by DaVita through these wasteful practices.”

The allegations resolved today arose from a lawsuit filed and ultimately litigated to this succesful resolution by two whistleblowers, Dr. Alon Vanier and nurse Daniel Barbir, under the qui tam provisions of the False Claims Act.  Under the Act, private citizens can bring suit on behalf of the government for false claims and share in any recovery.  The United States may intervene in the action or, as in this case, the whistleblower may pursue the matter.    

This case was monitored by the U.S. Attorney’s Office of the Northern District of Georgia and the Civil Division’s Commercial Litigation Branch. 

The lawsuit is captioned United States ex rel. Alon J. Vainer, M.D., F.A.C.P. and Daniel D. Barbir, R.N., Plaintiffs v. DaVita, Inc. and Gambro Healthcare, Inc., and their respective subsidiaries and affiliated companies, Defendants, No. 1:07-cv-2509-CAP (N.D. Ga.). The claims settled by this agreement are allegations only; there has been no determination of liability.

Two residents of Tangipahoa Parish, Louisiana, pleaded guilty today to one count of conspiracy to defraud the United States and to commit theft of public money and mail fraud, with one defendant also pleading guilty to aggravated identity theft, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Kenneth Allen Polite Jr. of the Eastern District of Louisiana. 

According to court documents, Corey Lewis, also known as Coco, 37, and Craig Lewis, 40, conspired with each other and others to file false federal income tax returns using stolen identities including false claims for tax refunds.  The defendants and others used individuals’ names and social security numbers in order to prepare false tax returns.  They directed the Internal Revenue Service (IRS) to mail refund checks to addresses in Louisiana, including to post office boxes that were opened by co-conspirators.  Corey Lewis and others falsely endorsed and deposited the refund checks into bank accounts under their control.  The proceeds of the refund checks would then be divided amongst the co-conspirators.

The defendants are scheduled to be sentenced in U.S. District Court in the Eastern District of Louisiana on Sept. 22 and each face a statutory maximum sentence of five years in prison and a fine of $250,000 for the conspiracy count.  Corey Lewis also faces a mandatory minimum sentence of two years in prison for aggravated identity theft.  The defendants also face potential fines, forfeiture and restitution.  Brad Lewis, also known as Bird, 32, and Cedrick Mitchell, also known as Skeet, 39, previously pleaded guilty to the same conspiracy charge and await their sentencing hearings on Aug. 25 and Sept. 15, respectively.

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

Twelve Others Have Pleaded Guilty in the Case

Three leaders of MS-13 in Washington, D.C., were sentenced today to federal prison for conspiring to participate in racketeering activity and other charges stemming from their roles in murders, extortion and other violent crimes.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting U.S. Attorney Vincent H. Cohen Jr. of the District of Columbia, Special Agent in Charge Clark E. Settles of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations’ (ICE-HSI) Washington D.C. Field Office and Chief Cathy L. Lanier of the Metropolitan Police Department (MPD) made the announcement.

Noe Machado-Erazo aka Gallo, 32, of Wheaton, Maryland, was sentenced to life in prison plus 10 years in prison.  Jose Martinez-Amaya, aka Crimen, 28, of Brentwood, Maryland, was sentenced to life in prison plus 10 years in prison.  Yester Ayala, aka Freeway or Daddy Yankee, 24, of Washington, D.C., was sentenced to 30 years in prison.  Senior U.S. District Court Judge Royce C. Lamberth of the District of Columbia imposed the sentences.

“MS-13 is a brutally violent gang that has plagued communities in many parts of this country, including Washington, D.C.,” said Assistant Attorney General Caldwell.  “The lengthy sentences imposed on the MS-13 leaders convicted in this case reflect the vicious and calculated nature of the murders they committed and the gang they led.”

“This prosecution shows our commitment to purging MS-13’s bloody brand of violence from the District of Columbia,” said Acting U.S. Attorney Cohen.  “These killers brought lawless vengeance to our community and left a 14-year-old boy dead.  These gang members will now have decades in prison to reflect on their heinous crimes.”

“HSI continuously targets transnational gangs that wreak havoc on our American communities,” said Special Agent in Charge Settles.  “Today’s sentences are testament to the strong investigative work of our HSI special agents and the Metropolitan Police Department.”

“The action by the courts today further exemplifies our message to persons engaging in criminal gang activity: you will find no place for your activities here in Washington, D.C.,” said Chief Lanier.  “We will work as long as necessary to ensure this city, and the capital area, are free from the violence and harm gang activity brings into our communities.  The agents, officers, and attorneys have done a tremendous job bringing this case to a successful end.”

In August 2013, following a month-long trial, Machado-Erazo and Martinez-Amaya were found guilty of conspiracy to participate in racketeering activity, murder in aid of racketeering and possession of a firearm during a crime of violence.  Ayala was found guilty of conspiracy to participate in racketeering activity, two counts of murder in aid of racketeering, first-degree premeditated murder and second-degree murder.

MS-13 is a large gang that operates in the United States and Central America.  Members engage in racketeering activity including murder, narcotics distribution, extortion, robberies, obstruction of justice and other crimes.

According to evidence presented at trial, a number of small MS-13 groups, or cliques, operate in the Washington, D.C., area.  The evidence showed that the cliques have frequent contact with MS-13 leadership in El Salvador, and that they act in accordance with the MS-13’s international strictures, including the requirement that members remain unfailingly loyal to the gang.

The evidence presented at trial showed that both Machado-Erazo and Martinez-Amaya were members of the Normandie clique, and that Martinez-Amaya held a leadership position in the group; and that Ayala was a leader of the Sailors, another clique.  The evidence also showed that Machado-Erazo coordinated the activities of local MS-13 cliques.

At trial, the government presented evidence that Ayala helped carry out orders to murder Louis Alberto Membreno-Zelaya, a fellow MS-13 member who had removed his gang tattoos.  Membreno-Zelaya’s body was found on Nov. 6, 2008, in Northwest Washington, D.C.  He had been stabbed at least 20 times.

According to evidence presented at trial, Ayala also participated in the Dec. 12, 2008, murder of 14-year-old Giovanni Sanchez near the Columbia Heights Metro station in Washington D.C.  Giovanni was stabbed 11 times.

The evidence at trial also demonstrated that Machado-Erazo and Martinez-Amaya took part in the killing of Felipe Enriquez, an MS-13 member whose body was found on March 31, 2010, in Montgomery County, Maryland.  The government presented evidence that Enriquez was lured to a remote park where he was fatally shot by Martinez-Amaya.  Evidence presented during the trial showed that Machado-Erazo provided the gun used in the shooting.

The three defendants sentenced today are among numerous individuals charged in a 2010 indictment alleging criminal acts committed between 2008 and 2010 in the District of Columbia, Maryland, Virginia and other states, as well as in El Salvador.  Twelve defendants have pleaded guilty to charges in the case.

The case was investigated by ICE-HSI and the MPD.  Assistance was provided by the Montgomery County, Prince George’s County and Riverdale Park, Maryland, Police Departments; the Fairfax County, Virginia, Police Department; the State’s Attorney’s Office of Montgomery County; the U.S. Attorney’s Office of the District of Maryland and the U.S. Attorney’s Office of the Eastern District of Virginia.  Assistance also was provided by the Organized Crime Drug Enforcement Task Force.

This case was prosecuted by Trial Attorney Laura Gwinn of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney Nihar Mohanty of the District of Columbia.

A member of the Imperial Gangsters street gang was sentenced to 25 years in prison for murder and conspiracy to participate in racketeering activity, 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.

Julian Guillermo Serna, aka Big Ju, 25, of Munster, Indiana, pleaded guilty to the charges on Dec. 27, 2013.  Chief U.S. District Court Judge Philip P. Simon of the Northern District of Indiana imposed the sentence. 

According to evidence presented at the sentencing hearing, Serna shot and killed Mario Soriano, a member of a renegade clique of the 139th Street Imperial Gangsters, with whom he had engaged in shootouts previously.  Specifically, while riding in a car, Serna saw Soriano riding in another car.  When Soriano began to lower his window, Serna shot repeatedly into the car, killing Soriano.

Of the 24 Imperial Gangsters who were indicted in this case, all have pleaded guilty or been convicted at trial. 

This case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives; the FBI; and the East Chicago Police Department.  The Gary Police Department, the Hammond Police Department and the Lake County, Indiana, High Intensity Drug Trafficking Area Program provided assistance.  This case is being prosecuted by Trial Attorney Bruce R. Hegyi of the Criminal Division’s Capital Case Section and Assistant U.S. Attorney David J. Nozick of the Northern District of Indiana.

A Hill, New Hampshire, man pleaded guilty today to three counts of tax evasion in the U.S. District Court in the District of New Hampshire, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and Acting U.S. Attorney Donald Feith of the District of New Hampshire.

Ronald Martin formerly owned and operated Martin Construction in Northfield, New Hampshire, and employed between three to eight individuals at various times.  In 2008, 2009 and 2010, Martin’s business earned a total of approximately $1.2 million in gross revenue, but Martin did not file any federal corporate or individual income tax returns for Martin Construction or for himself and did not pay any federal income tax in any of those years.  Martin took steps to conceal the business revenue by directing that payments and invoices for selling scrap metal be made in the name of his nephew.  He also only deposited a small fraction of the income earned from Martin Construction into the business’ bank account.  Instead, he diverted a significant portion of the business income for personal expenditures.  In addition to failing to file tax returns and to pay individual and business income taxes, Martin also failed to file any federal employment tax returns or pay over to the Internal Revenue Service (IRS) any federal employment taxes for any of his employees.

A federal grand jury in the District of New Hampshire indicted Martin on three counts of tax evasion in July 2014.  Martin faces a statutory maximum sentence of five years in prison and a fine of $250,000 on each tax evasion count.  Martin’s sentencing hearing is scheduled for Oct. 20.  Martin currently is detained on unrelated pending state criminal charges.

Acting Assistant Attorney General Ciraolo and Acting U.S. Attorney Feith commended the special agents of IRS–Criminal Investigation, who investigated the case, and Assistant U.S. Attorney Mark S. Zuckerman of the District of New Hampshire and Senior Litigation Counsel Corey J. Smith of the Tax Division, who are prosecuting the case.

Former Des Moines, Iowa, Police Department Officer Colin J. Boone, 39, of Sioux Falls, South Dakota, was sentenced yesterday by U.S. District Court Judge Robert W. Pratt of the Southern District of Iowa to serve 63 months in federal prison for using unreasonable force during a 2013 arrest, announced Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division and U. S. Attorney Nicholas A. Klinefeldt of the Southern District of Iowa.

This case arose from Boone's use of excessive force against Orville Hill during Hill’s arrest on Feb. 19, 2013.  During the incident, Boone arrived at a scene where three fellow Des Moines police officers were holding Hill on the ground and a fourth officer was standing over the group.  Boone ran up to the group and kicked Hill in the face, knocking out two of Hill’s teeth and breaking his nose.  Other officers reported Boone’s conduct to supervisors after learning that Boone had submitted a written report in which he failed to account truthfully for his actions.  On March 13, 2015, a jury found Boone guilty of violating Hill’s civil rights by using unreasonable force.

“As this sentences makes clear, there are serious consequences when law enforcement officers betray the trust of their community by violating the rights of individuals,” said Principal Deputy Assistant Attorney General Gupta.  “The Department of Justice stands ready to hold accountable those who violate the civil rights laws.”

This investigation was conducted by the FBI, and was prosecuted by Deputy Chief Bobbi Bernstein of the Civil Rights Division and Assistant U.S. Attorney Kelly Mahoney of the Southern District of Iowa. 

Between 2009 and 2014, More Than 18,000 Individuals Charged With Human Smuggling by Federal Prosecutors

The Justice Department is committed to using its resources to bring to justice those that are breaking the law by smuggling migrants into the United States.  In Fiscal Year 2014 (FY14, Oct. 1, 2013, up to Sept. 30, 2014), the Justice Department filed criminal charges against 2,762 individuals for human smuggling or harboring immigrants.  Nearly 90 percent of the criminal charges filed in FY14 for smuggling took place in Texas (1,515), California (511), Arizona (394), Florida (75) and New York (31).  The announcement of these actions is just one part of ongoing, collaborative efforts to tackle unlawful migration.  These efforts also helped to address last year’s influx of Central American migrants, including unaccompanied children and families crossing into the Rio Grande Valley, and demonstrate a continued commitment to dismantling human smuggling operations that put so many lives at risk.

Individuals that facilitate smuggling acts need to be aware that they face criminal prosecution and fines.  They also need to be aware of the dangers faced by the individuals that are being smuggled and also that the Department of Justice will seek forfeiture of funds transferred to others in connection with a smuggling crime.  In addition, individuals trying to bring a family member to the United States by transferring funds to a coyote should be aware that those acts are against the law and their funds can be seized by the federal government.

The penalty for human smuggling if done for commercial benefit is up to 10 years in prison and an accompanying fine.  For example, in January, Ruth Fernandez Morales-Lopez pleaded guilty before U.S. District Judge Hilda G. Tagle of the Southern District of Texas to bringing in and harboring aliens and money laundering.  Morales-Lopez admitted that she was the person who decided, based on whether they paid their smuggling fees, which individuals could stay at the “stash house,” located in San Benito, Texas.  She further admitted that more than $1 million in her bank account was comprised of smuggling fees and that she structured her withdrawals from that account to circumvent the Bank Secrecy Act.  Morales-Lopez faces up to 10 years in federal prison for the smuggling charge and up to 20 years for money laundering.  The remaining five defendants in the case, all of whom pleaded guilty, each face up to 10 years of federal imprisonment.

Many of the stories revealed in court cases outline the severe examples of exploitation and violence against migrants.  For example, in April 2014, a federal jury in Del Rio, Texas, convicted Eduardo Rocha Sr., 44, for his role in a human smuggling ring operation in Carrizo Springs, Texas, known for torturing its victims and exploiting their families.  The evidence presented during the trial showed that Rocha Sr. extorted additional money from family members of migrants that already lived in the United States.  In some instances, he ordered his accomplices to subject migrants to brutal violence and mutilation while their family members were forced to listen over the phone. 

The Justice Department has a long history of working with the Department of Homeland Security and other federal partners to investigate and prosecute human smugglers.  These collaborative efforts lead to prosecutions of those responsible for the illegal entry of individuals, including unaccompanied minors.  The string of human smuggling convictions on the southwest border emphasizes the federal law enforcement resources being brought to bear to dismantle and disrupt these dangerous, criminal operations.  Human smuggling acts can also lead to extremely dangerous circumstances that pose a public safety threat and significant humanitarian concerns.  Many of the cases prosecuted by U.S. Attorney’s Offices throughout the country involve migrants who have been kidnapped, taken hostage, beaten, sexually assaulted, threatened or who have actually died as a result of living under some of the most perilous conditions.

Tragic stories have become all too familiar along the southwest border.  In October 2014, for example, Carlos Hernandez-Palma and Fernando Armenta-Romero were apprehended and sentenced for their role in the death of an undocumented immigrant woman that they abandoned in the wilderness of Otay Mountain near the San Diego border.  Court records revealed that the woman’s husband pleaded with the smugglers, to no avail, to call for assistance for his pregnant wife after she became gravely ill during the venture.  It would be several days before the U.S. Border Patrol found his wife’s body.  Her cause of death was attributed to hyperglycemia from being diabetic and hypothermia from environmental exposure.

In addition, the Justice Department is working with countries like Honduras, Guatemala, El Salvador and Mexico to identify and prosecute smugglers who are aiding unaccompanied children crossing the U.S. border.  The coordinated efforts also target facilitators operating in foreign countries.

These ongoing enforcement efforts started before last year’s surge of unaccompanied minors and the Justice Department will continue to be vigilant in bringing smugglers to justice.  In the years 2009 to 2014, the Justice Department charged more than 18,000 defendants with smuggling or harboring immigrants.

Internet Crimes Against Children (ICAC) Task Forces arrested 1,140 child predators from 41 states during a two-month, nationwide operation, the Office of Juvenile Justice and Delinquency Prevention (OJJDP) announced today.

The 61 ICAC Task Forces, funded through an OJJDP grant program, conducted Operation Broken Heart, a coordinated investigative operation to intensify efforts to identify and arrest child sexual predators during the months of April and May 2015. 

“Predators use technology in sinister and inventive ways to reach their child victims across state and national boundaries,” said Administrator Robert L. Listenbee of the OJJDP.  “Through collaborative efforts such as Operation Broken Heart, ICAC Task Forces and their law enforcement partners are countering these attacks by pooling resources and investigative expertise, increasing their ability to identify and arrest sexual predators and protect children.”

More than 3,000 federal, state and local law enforcement agencies participated in the operation, which targeted offenders who: possess, manufacture and distribute child pornography; engage in online enticement of children for sexual purposes; engage in the commercial sexual exploitation or prostitution of children; and engage in child sex tourism – traveling abroad for the purpose of sexually abusing children in other countries.  ICAC Task Forces first conducted Operation Broken Heart in 2014.  The task forces also delivered more than 2,200 presentations on Internet safety to more than 186,000 youth and adults during these two months.

“By arresting and prosecuting child predators across the country, our task forces are sending a clear message that we are working together better than ever before to bring these perpetrators to justice,” said Lt. Andrea Grossman of the Los Angeles Police Department, Commander of the Los Angeles Regional ICAC Task Force and chair of the ICAC Public Awareness and Outreach Committee.  “The ICAC Task Forces’ dedicated efforts and professionalism help fulfill the ultimate goal of keeping children safe.”

In 1998, OJJDP launched the ICAC Task Force Program to help federal, state and local law enforcement agencies enhance their investigative responses to offenders who use the Internet, online communication systems or computer technology to exploit children.  To date, the ICAC Task Forces have reviewed more than 516,000 complaints of child exploitation, which resulted in the arrest of more than 54,000 individuals.  In addition, since the ICAC program's inception, more than 465,000 law enforcement officers, prosecutors and other professionals have been trained on techniques to investigate and prosecute ICAC related cases.

For more information on local cases, the list of ICAC Task Force Commanders is available at: www.icactaskforce.org.

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

A Burke County, North Carolina, man has been charged with attempting to provide material support to the Islamic State of Iraq and the Levant (ISIL), a designated foreign terrorist organization, announced Assistant Attorney General for National Security John P. Carlin, Acting U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina and Special Agent in Charge John A. Strong of the FBI’s Charlotte, North Carolina, Division. 

The criminal complaint was filed today in federal court, charging Justin Nojan Sullivan, 19, of Morganton, North Carolina, with one count of attempting to provide material support to ISIL, one count of transporting and receiving a silencer in interstate commerce with intent to commit a felony, and one count of receipt and possession of an unregistered silencer, unidentified by a serial number.  Sullivan was arrested in his home on Friday, June 19, 2015, without incident.

“As alleged in the complaint, the defendant was planning assassinations and violent attacks in the United States and is charged with attempting to provide material support to ISIL and federal firearms violations,” said Assistant Attorney General Carlin.  “The National Security Division’s highest priority is counterterrorism and we will continue to pursue justice against those who seek to provide material support to designated foreign terrorist organizations.”

“Sullivan is charged with attempting to provide material support to ISIL, a designated terrorist organization that poses a serious threat to our country’s security,” said Acting U.S. Attorney Rose.  “My highest priority is to detect and prosecute violent extremists and protect innocent Americans from terrorist attacks.”

“Justin Sullivan intended to commit violent acts against innocent people in the U.S. to support the terrorist organization, ISIL,” said Special Agent in Charge Strong.  “As demonstrated in this case federal, state, and local law enforcement will work tirelessly to protect our communities from those who plot to carry out terrorist activities of any kind.”

The criminal complaint alleges that the FBI became aware of Sullivan’s plans to obtain a semi-automatic AR-15 rifle at the Hickory Gun Show in Hickory, North Carolina, on June 20, 2015, which he planned to use to kill a large number of U.S. citizens on behalf of ISIL.  According to the criminal complaint, an FBI undercover employee (UC) made contact with Sullivan beginning on or about June 6, 2015, during which time Sullivan described himself as “a mujahid,” and as a Muslim convert living in the eastern United States.  Sullivan also told the UC that “the war is here,” and gave the UC the opportunity to join what he called the Islamic State of North America, whose “doctrine is Guerilla Warfare in and out,” the complaint alleges.  The criminal complaint further alleges that over the next few days and during various conversations, Sullivan discussed with the UC, among other things, his various terrorist attack concepts and instructed the UC on how to obtain weapons, specifically “an AR-15 .223 with split ammo” at a gun show.

According to the complaint, on or about June 9, 2015, Sullivan discussed with the UC the possibility of making homemade silencers and asked the UC whether he would be able to make one.  When the UC said that he thought he could, Sullivan told the UC “Ill need to have one built by next week.”  The complaint alleges that Sullivan also told the UC “Yeah ill let u mail me…I plan on using it this mont[h],” and that Sullivan planned on doing “minor assassinations before the big attack for training.”  He also told that UC that “we are going to send a video to IS.”  According to the complaint, during a follow-up conversation, Sullivan told the UC again that he would need the suppressor “before the end of next week,” apparently referring to June 19, 2015. 

On June 19, 2015, the FBI, with the support of the Hickory, North Carolina, Police Department, the Burke County, North Carolina, Sheriff’s Office and the North Carolina State Highway Patrol, arrested Sullivan at his home and located the silencer at his residence, which Sullivan had received earlier that day.  No one was harmed during the arrest.

Sullivan is currently in federal custody.  Sullivan is expected to make his initial appearance in federal court today.  

The charge of conspiracy to provide material support to a designated foreign organization carries a maximum potential penalty of 20 years in prison and a $250,000 fine.  The charge of transporting and receiving a silencer in interstate commerce with intent to commit a felony carries a maximum potential penalty of 10 years in prison and a fine of $250,000.  The charge of receipt and possession of an unregistered silencer, unidentified by a serial number, carries a maximum potential penalty of 10 years in prison and a fine of $10,000.

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

The case was investigated by the FBI.  The case is being prosecuted by Assistant U.S. Attorney and Senior Litigation Counsel Michael E. Savage of the Western District of North Carolina and Trial Attorney Gregory Gonzalez of the National Security Division’s Counterterrorism section. 

Sullivan Complaint

Preet Bharara, the United States Attorney for the Southern District of New York, and Deputy Special Agent in Charge Michael Shea of U.S. Immigration and Customs Enforcement’s ("ICE") Homeland Security Investigations New England, announced today that a painting by Jean-Michel Basquiat called "Hannibal" (the "Basquiat"), as well as a Roman Togatus statue, were returned to Brazil at a repatriation ceremony at the United States Attorney’s Office in Manhattan, New York. The painting and the statue were smuggled into the United States in violation of customs law and were forfeited to the government as a result of civil forfeiture action brought by the United States.

Manhattan U.S. Attorney Preet Bharara stated: "Art and antiquities have special value and meaning that cannot readily be quantified. As a result, they have long been the subject of theft and deception, as well as a means to launder illicit proceeds. Art should serve to inspire the mind and nourish the soul, and not be allowed to become a conduit for crime."

HSI Deputy Special Agent in Charge Michael Shea stated: "It is always a pleasure to return cultural artifacts to the people of another nation. I would like to thank our special agents and partners at INTERPOL for their diligence in this investigation. ICE will do everything in its power to help preserve and safeguard a nation's history by identifying, locating, and recovering stolen antiquities."

In related repatriation ceremonies held on September 21, 2010, and May 9, 2014, the U.S. Attorney’s Office for the Southern District of New York returned to Brazil three paintings – "Modern Painting with Yellow Interweave" by Roy Lichtenstein (the "Lichtenstein"), "Figures dans une structure" by Joaquin Torres-Garcia (the "Torres-Garcia"), and "Composition abstraite" by Serge Poliakoff (the "Poliakoff") – that were smuggled into the United States.

The Basquiat and the Togatus once belonged to Brazilian banker Edemar Cid Ferreira. Ferreira, the founder and former president of Banco Santos, S.A. ("Banco Santos"), was convicted in Brazil of crimes against the national financial system and money laundering. In December 2006, Ferreira was sentenced in Brazil to 21 years in prison.

As part of the case, a Sao Paulo Court judge also ordered the search, seizure, and confiscation of assets that Ferreira, his associates, and members of his family had acquired with unlawfully obtained funds from Banco Santos. Those assets included the Basquiat, the Togatus, the Lichtenstein, the Torres-Garcia, the Poliakoff, and other artwork valued at $20 million to $30 million. The artwork was kept in several locations, including Ferreira’s home in the Morumbi neighborhood of Sao Paulo, the main offices of Banco Santos, and at a holding facility. When Brazilian authorities searched these locations, they found that several of the most valuable works of art were missing, including the Basquiat and the Togatus.

The Sao Paulo Court sought INTERPOL’s assistance after searching museums and institutions in Brazil for the missing artwork. In October and November 2007, INTERPOL and the Government of Brazil sought the assistance of the United States to locate and seize the missing works on behalf of the Brazilian government. The ensuing Southern District of New York and HSI investigation revealed that the Basquiat and the Togatus were shipped from the Netherlands to a secure storage facility in New York on August 21, 2007, and September 11, 2007, respectively. The invoices, however, failed to comply with U.S. customs laws in a number of respects. For example, the shipping invoices did not identify the pieces and falsely claimed that their value was $100 each. In fact, the Basquiat alone was recently appraised at $8 million.

HSI special agents based in New Haven, Connecticut, located and seized the Basquiat in November 2007, and the U.S. Attorney’s Office for the Southern District of New York filed a civil forfeiture Complaint alleging that the Basquiat had been brought into the United States illegally. Since the filing of the original Complaint in February 2008, the United States seized additional works of art and filed two amended Complaints seeking the forfeiture of the Lichtenstein, the Torres-Garcia, the Poliakoff, and the Togatus.

After extensive litigation, United States District Court Judge Richard J. Sullivan granted the government’s motion for summary judgment and entered an order forfeiting the Basquiat and the Togatus on May 10, 2013. The Second Circuit Court of Appeals affirmed Judge Sullivan’s order on September 9, 2014.

* * *

Mr. Bharara praised the investigative work of HSI in helping to locate and seize the painting. He was grateful for the assistance of the Department of Justice’s Office of International Affairs. Mr. Bharara thanked Brazilian authorities for their assistance in the case. He also acknowledged the assistance of the U.S. Department of State and the U.S. Embassy in Brazil for its assistance in the investigation.

The case is being handled by the Money Laundering and Asset Forfeiture Unit of the U.S. Attorney’s Office. Assistant U.S. Attorney Alexander Wilson is in charge of the litigation.

# # #

A Corona, California, man pleaded guilty today in U.S. District Court in Cincinnati to one count of conspiracy to commit mail and wire fraud for his participation in a large-scale, nationwide prescription drug diversion scheme.

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

According to court documents, from May 2010 through December 2012, Vin Nguyen, 45, and others conspired to distribute illegally-diverted prescription drugs while concealing the true, illicit sources of the drugs.  Nguyen purchased prescription drugs, including HIV medications, anti-psychotic medications and other brand name drugs, from various unlicensed and illegal sources in California and Florida.  Working with co-conspirators, Nguyen then sold the drugs to other drug diverters without the statutorily required pedigree documents stating the origin of the drugs.  Nguyen and his co-conspirators sold more than $6.5 million worth of diverted drugs. 

“Illegal prescription drug diversion threatens the security of America’s drug supply chain,” said Principal Deputy Assistant Attorney General Mizer.  “The Department of Justice will continue to protect American consumers by prosecuting those who engage in prescription drug diversion.” 

From December 2011 through December 2012, Nguyen and others sold diverted prescription drugs to David Miller and his company, Minnesota Independent Cooperative (MIC).  On May 6, David Miller and MIC were indicted in the Southern District of Ohio and charged with one count of conspiracy to commit mail and wire fraud, 10 counts of mail fraud and one count of conspiracy to make false statements and to distribute prescription drugs without a wholesale license.  Those charges remain pending. 

Nguyen and his co-conspirators used the company name “Modern Medical” when selling drugs to Miller and MIC.  Modern Medical is a real California company that had no involvement in the drug sales.  Nguyen and his co-conspirators simply hijacked the name to conceal their involvement and the true, illicit drug sources.

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

On Feb. 19, Yusef Yassin Gomez, the owner of B&Y Wholesale in Puerto Rico, pleaded guilty to one count of conspiracy to distribute prescription drugs without a wholesale license for his role in the conspiracy.

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

An Arkansas chiropractor pleaded guilty today in the U.S. District Court in the Western District of Arkansas to corruptly endeavoring to obstruct and impede the Internal Revenue Service (IRS), announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Conner Eldridge of the Western District of Arkansas.  He was previously convicted of federal tax crimes and sentenced to prison. 

According to court documents, Philip Roberts, 60, of Fort Smith, Arkansas, filed a series of false and fraudulent documents with the IRS in an effort to obstruct or impede the due administration of the internal revenue laws, including filing false financial instruments that claimed millions of dollars of transactions with both the Secretary of the Treasury and the IRS Commissioner, and filing IRS forms that falsely reported payments.  In 2000, after a jury trial, Roberts was convicted of two counts of willfully failing to file federal income tax returns and sentenced to serve 16 months in federal prison.  

Roberts’ sentencing hearing has not been scheduled yet before the Honorable U.S. District Judge Timothy L. Brooks of the Western District of Arkansas.  Roberts faces a statutory maximum sentence of three years in prison, one year of supervised release and a $250,000 fine for obstructing and impeding the IRS.   

Acting Assistant Attorney General Ciraolo and U.S. Attorney Eldridge commended special agents of the IRS and the Treasury Inspector General for Tax Administration, who investigated the case, as well as Trial Attorneys Robert Kemins and David Zisserson of the Tax Division and Assistant U.S. Attorney Kimberly Davis of the Western District of Arkansas, who are prosecuting the case.

The United States has filed a complaint against BAE Systems Tactical Vehicle Systems LP (BAE) for knowingly overcharging the Army for materials under a military truck contract, the Justice Department announced today.  BAE is a subsidiary of BAE Systems Inc., headquartered in Arlington, Virginia, which is owned by BAE Systems plc, a global defense, security and aerospace company headquartered in London.  BAE is located in Sealy, Texas. 

“Those who do business with the United States must act in good faith,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, the head of the Justice Department’s Civil Division.  “We will ensure that contractors do not abuse the military’s procurement process at the expense of our troops abroad and the taxpayers at home.”

In 2008, the Army Tactical Command Life Cycle Management Command, in Warren, Michigan, awarded BAE a contract to build more than 20,000 trucks for the military, known as Family of Medium Tactical Vehicles (FMTVs).  Government procurement law requires contractors negotiating government contracts above a threshold price, to disclose cost or pricing data relevant to the negotiations.  The purpose of requiring a contractor to disclose this information is to put the government on equal footing with the contractor and ensure a fair and reasonable price.  The government alleges that BAE knowingly inflated the price of the FMTV contract by concealing cost and pricing data on numerous parts and materials during contract negotiations, despite having certified that the data it had disclosed was accurate, complete and current.

“We expect government contractors to act with integrity when they fulfill their contractual obligations to the government,” said U.S. Attorney Kenneth Magidson of the Southern District of Texas.  “Breach of that trust results in being held accountable in court.”

“Private companies are entitled to earn an honest profit from procurement contracts with the U.S. government, but they may not knowingly overcharge the military for supplies and materials,” said U.S. Attorney Barbara McQuade of the Eastern District of Michigan.  “The conduct alleged in this complaint is akin to charging $600 for a hammer.”

The government’s complaint alleges claims under the Truth-in-Negotiations Act, which requires the truthful disclosure of cost or pricing data, and the False Claims Act, which prohibits knowingly submitting false claims for federal funds.   

The lawsuit is being handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office of the Southern District of Texas and the U.S. Attorney’s Office of the Eastern District of Michigan.  Investigative support is being provided by the Defense Contract Audit Agency, the Defense Criminal Investigative Service and the Army Criminal Investigation Command.  

The case is captioned United States v. BAE Systems Tactical Vehicle Systems, LP (E.D. Mich.).  The claims asserted in this case are allegations only; there has been no determination of liability. 

Amir Said Abdul Rahman Al-Ghazi, 38, a U.S. Citizen, was arrested this morning in North Olmstead, Ohio, on charges that he attempted to provide material support to the Islamic State of Iraq and the Levant (ISIL), possessed a firearm as a convicted felon and trafficked marijuana.

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.

“According to the allegations in the complaint, Al-Ghazi attempted to provide material support to ISIL and committed other federal weapon and drug offenses,” said Assistant Attorney General Carlin.  “Counterterrorism is the National Security Division’s highest priority and we will continue to pursue justice against those who seek to provide material support to designated foreign terrorist organizations.”

“Today’s charges are a stark reminder that the radical and dangerous philosophies espoused by groups such as ISIL can be spread in our community through computers and social media,” said U.S. Attorney Dettelbach.  “Law enforcement will remain vigilant in combating violent extremism in all its forms.”

“This arrest demonstrates law enforcement’s number one priority – to keep our communities and our nation safe,” said Special Agent in Charge Anthony.  “It is clear that no area is immune from the influence of ISIL and its recruitment machine.  We hope this arrest will serve as a strong message to others who may consider providing support to terrorists.  The FBI and our Joint Terrorism Task Force partners are committed to identifying and stopping these individuals.”

According to the complaint, 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.

Al-Ghazi was also charged with distributing a schedule 1 controlled substance – marijuana.  From the period of February 2014 through June 2015, Al-Ghazi sold almost two kilograms of marijuana to a confidential informant.  He was also charged with possessing a firearm even though he had multiple prior felony convictions.  On multiple occasions Al-Ghazi expressed his interest in purchasing an AK-47, eventually purchasing one from an FBI undercover employee on June 19, 2015.

This case is being investigated by the FBI’s Cleveland Division’s Joint Terrorism Task Force.  This case is being prosecuted by the U.S. Attorney’s Office of the Northern District of Ohio and the National Security Division’s Counterterrorism Section.

The charge and allegations contained in the complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

Al-Ghazi Complaint

The Department of Justice announced today that two banks, Bank Linth LLB AG (Bank Linth) and Bank Sparhafen Zurich AG (BSZ), have reached resolutions under the department’s Swiss Bank Program.

“With each agreement signed under the Swiss Bank Program, we are learning more and more about the schemes individuals are employing to hide their assets overseas,” said Acting Assistant Attorney General Caroline D. Ciraolo of the Department of Justice’s Tax Division.  “At this point, the message should be clear. Those who use foreign jurisdictions to evade their U.S. tax obligations will be held fully accountable and pay a heavy price for their conduct.”

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.

Bank Linth, one of the largest regional banks in Eastern Switzerland, was founded in 1848.  It is headquartered in Uznach, Switzerland, which is approximately 35 miles southeast of Zurich.  Bank Linth provided private banking and asset management services to U.S. taxpayers through private bankers based in Switzerland.  It opened, serviced and profited from accounts for U.S. clients with the knowledge that many were likely not complying with their tax obligations.

Bank Linth’s 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.  Bank Linth provided this assistance to U.S. clients in a variety of ways, including the following:

• Opening and maintaining accounts in the names of sham entities;

• Providing U.S. taxpayers with numbered accounts that hid the taxpayers’ identities;

• Facilitating U.S. taxpayers’ withdrawal of cash from undeclared accounts; and

• Agreeing to hold bank statements and other mail relating to accounts rather than sending them to U.S. taxpayers in the United States.

On several occasions, Bank Linth opened accounts for U.S. taxpayers through an external asset manager, and one of these accounts was opened in the name of a sham foundation.  In that instance, Bank Linth knowingly accepted and included in account records forms provided by the directors of the sham foundation that falsely represented the ownership of the assets in the account for U.S. federal income tax purposes.

In accordance with the terms of the Swiss Bank Program, Bank Linth described in detail the structure of its banking business, including its management and supervisory structure, and provided the names of management and legal and compliance officials.  Bank Linth further provided detailed and specific information related to its illegal U.S. cross-border business, including the bank’s misconduct, policies that contributed to that misconduct and the names of the relationship managers overseeing the bank’s U.S.-related business.  Bank Linth also obtained affidavits from bank employees regarding the bank’s conduct and related matters.

Since Aug. 1, 2008, Bank Linth held 126 U.S.-related accounts, with over $102 million in assets.  Bank Linth will pay a penalty of $4.15 million.

BSZ was founded in 1850 and has its sole office in Zurich.  BSZ knew that U.S. persons had a duty under U.S. law to report their income to the Internal Revenue Service (IRS) and to pay taxes on that income, including all income earned in accounts that BSZ maintained in Switzerland.  Despite this knowledge, BSZ opened, maintained and serviced accounts for U.S. persons that it knew or had reason to know were likely not declared to the IRS or the U.S. Treasury, as required by U.S. law.

After Aug. 1, 2008, U.S. persons opened 32 U.S.-related accounts at BSZ, and only one of them provided a Form W-9 to BSZ upon opening an account.  In most cases, the U.S. persons who opened accounts at BSZ during this period had been required to close their accounts at other Swiss banks, and BSZ knew or had reason to know that most of these accounts were likely not declared to the IRS.  Moreover, 22 of the U.S.-related accounts opened during this period were funded by transfers from banks that were or are the targets of Justice Department criminal investigation.

Two relationship managers at BSZ were responsible for managing most of its U.S.-related accounts in the period since Aug. 1, 2008, and one of those managers directly reported to BSZ’s chief executive officer.  BSZ relationship managers assisted U.S. persons in executing waiver forms that directed the bank not to acquire U.S. securities in their accounts.  BSZ knew that the purpose and effect of these forms was to avoid disclosing the identities of the U.S. persons to the IRS.

Until 2012, BSZ provided its U.S. clients with an option for hold-mail agreements, even though it understood that providing these agreements upon request could allow U.S. persons to keep evidence of their accounts outside of the United States in order to conceal assets and income from the IRS.  One U.S. client told his BSZ relationship manager by email that the hold-mail fee was “cheap insurance against having my dealings with you come to the attention of the government revenue authorities.”

BSZ also offered travel cash cards to its clients, including U.S. persons.  A client could instruct BSZ to load up to 10,000 Swiss francs, U.S. dollars or euros from his or her BSZ bank account onto a travel cash card.  The client could then use the card for purchases or remit unused balances back to the BSZ account.  U.S. persons’ use of these cards facilitated access to or use of undeclared funds on deposit at BSZ.  One BSZ relationship manager sent a brochure about travel cash cards to a U.S. client who did not wish to transfer money to the United States because of “surveillance” concerns.

In accordance with the terms of the Swiss Bank Program, BSZ described in detail the structure, operation and supervision of its U.S. cross-border business, including the names of relevant individuals and entities.  It also encouraged existing and prior holders of U.S.-related accounts to disclose their accounts to the IRS through the Offshore Voluntary Disclosure Program.

Since Aug. 1, 2008, BSZ held 91 U.S.-related accounts, with over $25 million in assets.  BSZ will pay a penalty of $1.81 million.

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

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

“With two more non-prosecution agreements with Bank Linth and Bank Sparhafen Zurich, the Swiss Bank Program continues to bring into compliance those U.S. taxpayers that hid behind bank secrecy laws or held undeclared offshore accounts,” said Deputy Commissioner Douglas O’Donnell of the IRS Large Business and International Division.  “The program provides Swiss banks a path to resolution.  These additional agreements demonstrate that efforts by the IRS and DOJ are both effective and successful.”

“The success of the Swiss Bank Program and the assistance IRS-Criminal Investigation provides is clear,” said Chief Richard Weber of IRS-Criminal Investigation (CI). “The Swiss Bank Program is proving to be tremendously successful not only for the number of participating banks but for the multiplier effect. With the vast amount of information these banks are providing and the investigative skills of IRS-CI special agents, we now have clear roadmaps identifying accountholders and facilitators as well as the ability to track the movement of money to other accounts in other countries. For those who may still be trying to hide cash or assets offshore, your time is up.”

Acting Assistant Attorney General Ciraolo thanked the IRS, and in particular, IRS-CI and the IRS Large Business and International Division for their substantial assistance, as well as Dara B. Oliphant, Gregory E. Van Hoey, and Michael R. Pahl, who served as counsel on these matters, Senior Litigation Counsel Nanette L. Davis, and Senior Counsel for International Tax Matters and Coordinator of the Swiss Bank Program Thomas J. Sawyer of the Tax Division.

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

Bank Linth (566.31 KB)

Bank Sparhafen Zurich (439.96 KB)

Reaz Qadir Khan, 51, a naturalized U.S. Citizen living in Portland, Oregon, was sentenced today to 87 months in prison by U.S. District Court Judge Michael W. Mosman of the District of Oregon in connection with the May 27, 2009, suicide bomb attack at Pakistan’s intelligence service (ISI) headquarters in Lahore, Pakistan.  The attack killed approximately 30 people and injured some 300 more.

Assistant Attorney General for National Security John P. Carlin, Acting U.S. Attorney Billy J. Williams of the District of Oregon and Special Agent in Charge Greg Bretzing of the FBI’s Portland Division made the announcement.

Khan previously entered a guilty plea admitting that he acted as an accessory after the fact to the crime of providing material support to terrorists.  In entering his plea, Khan admitted arranging for the delivery of approximately $2,450 to Maldivian Ali Jaleel, one of the suicide bombers responsible for the May 27, 2009, attack.  Khan also admitted to providing advice and financial assistance to Jaleel’s wives after the bombing, while knowing that providing such assistance would hinder and prevent the apprehension of Jaleel’s wives and others who may have helped in the attack.  The 87-month sentence was jointly recommended by the parties and concludes a lengthy investigation of Khan’s connection to the attack. 

“With today's sentence, the court held the defendant accountable and made it clear that no community should be subjected to the dangers posed by those seeking to assist violent extremists whether here or abroad,” said Acting U.S. Attorney Williams.  “Today's result would not have been possible without the hard work of the dedicated professionals in the law enforcement and intelligence communities.  I look forward to our continued work with Muslim communities in Oregon who are committed to ensuring that all people are safe from the threat of violent extremism.”

“The threads of violent extremism are weaving a path through many American cities,” said Special Agent in Charge Bretzing.  “As in the Khan case, sometimes that path leads to those who are willing to fund activities overseas.  In other instances, the path leads to homegrown extremists who are willing to commit heinous acts or to those who inspire them to do so.  As the threat becomes more insidious and difficult to track, we rely on our shared community to come forward to help us identify and isolate those who would do harm to our nation.  I would ask anyone with information about potential threats to call their local FBI office.”

This case was investigated by the FBI’s Joint Terrorism Task Force.  The prosecution was handled by Assistant U.S. Attorneys Ethan D. Knight and Charles F. Gorder Jr. of the U.S. Attorney’s Office in the District of Oregon.  Trial Attorney David P. Cora from the Counterterrorism Section of the Depart of Justice’s National Security Division assisted.

A California man pleaded guilty yesterday to one count of conspiracy to submit false claims, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Melinda Haag of the Northern District of California.

According to the plea agreement, Duffy R. Dashner, aka Kevin Dashner, 42, of Reseda, California, and his co-conspirators, including Mark R. Maness, operated a business called O.I.D. Process through which they helped others to prepare and file individual federal income tax returns that claimed false Original Issue Discount (OID) interest income and federal tax withholdings, resulting in fraudulent claims for tax refunds (OID returns).  Dashner and Maness charged clients of O.I.D. Process a non-refundable registration fee to join the organization, and a 20 percent “refund acquisition fee” for any refund check issued by the Internal Revenue Service (IRS).  Dashner and Maness also operated a website and conducted weekly conference calls with clients to promote their business and to assist clients in preparing and filing OID returns. 

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

Dashner’s sentencing hearing is scheduled for Oct. 2 in San Francisco before U.S. District Judge Susan Illston of the Northern District of California.  The statutory maximum sentence for conspiracy to submit false claims is 10 years in prison and a $250,000 fine.  Maness previously pleaded guilty to conspiracy to submit false claims against the United States and was sentenced in February 2015 to serve 41 months in prison, and ordered to pay $1,176,668 in restitution to the IRS.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Haag commended the special agents of IRS–Criminal Investigation, who investigated the case, and Trial Attorney Matthew J. Kluge of the Tax Division and Assistant U.S. Attorney Michael G. Pitman of the Northern District of California, who are prosecuting this case. 

Further Information:

Case #: CR 12-646-SI

Electronic court filings and further procedural and docket information are available on the U.S. District Court for the Northern District of California’s website.  Judges’ calendars with schedules for upcoming court hearings can also be viewed on the court’s website.  

A Berwyn Heights, Maryland, resident was indicted by a grand jury sitting in Greenbelt, Maryland, on four counts of failure to file federal individual and corporate federal income tax returns, Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division announced today.

David J. Simard purchased and sold real estate in the Maryland and Virginia areas, according to the superseding indictment filed in the District of Maryland.  Simard failed to file income tax returns for tax years 2006 and 2009, and failed to file corporate tax returns for tax years 2009 and 2010.  According to the superseding indictment, Simard was the owner, operator and president of Pegasus Home Corporation.  From 2009 through 2010, Pegasus sold more than 100 real estate properties.

If convicted, Simard faces a statutory maximum penalty of one year in prison and a $100,000 fine for each count. 

Acting Assistant Attorney General Ciraolo commended the special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorneys Christopher O’Donnell and Michael Vasiliadis of the Tax Division, who are prosecuting the case.

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

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

The Justice Department reached an agreement today with Accountemps, a division of Robert Half International Inc., a company based in Menlo Park, California, resolving claims that the company engaged in citizenship status discrimination in violation of the Immigration and Nationality Act (INA).

The department’s investigation, based on a charge by a naturalized U.S. citizen, concluded that Accountemps refused to refer the charging party for a federal government contract position because, as a naturalized citizen, the charging party was not born in the United States.  Under the INA, employers cannot discriminate against U.S. citizens based on their citizenship status, including refusing to hire them based on whether they were born in or outside the United States.

Under the settlement, Accountemps will continue to refer the charging party for positions for which she is qualified, pay a $2,500 civil penalty, train its staff on the anti-discrimination provision of the INA, and be subject to a one-year monitoring period.

“The INA’s anti-discrimination provision does not recognize different classes of U.S. citizens when it comes to the right to work in the United States,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “We applaud Accountemps for its cooperation in addressing the concerns raised in this matter.”

The Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) is responsible for enforcing the anti-discrimination provision of the INA.  Among other things, the statute prohibits discrimination in hiring, firing, recruitment and referral for a fee based on citizenship or immigration status.  For more information about protections against employment discrimination under immigration laws, call OSC’s worker hotline at 1-800-255-7688 (1-800-237-2515, TTY for hearing impaired); call OSC’s employer hotline at 1-800-255-8155 (1-800-237-2515, TTY for hearing impaired); sign up for a free webinar at www.justice.gov/crt/about/osc/webinars.php; email osccrt@usdoj.gov; or visit OSC’s website at www.justice.gov/crt/about/osc.   

Applicants or employees who believe they were subjected to: different documentary requirements based on their citizenship status, immigration status, or national origin; or discrimination based on their citizenship status, immigration status, or national origin in hiring, firing, or recruitment or referral, should contact the worker hotline above for assistance.

The Justice Department announced today that it reached a settlement agreement with three Memphis-area staffing agencies: Prestigious Placement; PFSWeb Inc.; and its subsidiary, Priority Fulfillment Services Inc.  The agreement resolves two complaints alleging discrimination under the Immigration and Nationality Act (INA).

The Justice Department’s investigation found that the companies refused to hire two qualified, Puerto Rican-born individuals because the companies believed that they were born in a foreign country.  The companies rejected the workers’ valid Puerto Rican birth certificates and demanded that the workers present naturalization certificates, even though Puerto Ricans are U.S. citizens by birth.  Under the anti-discrimination provision of the INA, employers cannot discriminate in hiring or place additional documentary burdens on workers during the employment eligibility verification process based on their citizenship or perceived citizenship.                               

Under the settlement agreement, the companies will compensate the charging parties for lost wages; pay civil penalties to the United States; undergo training on the anti-discrimination provision of the INA; revise their employment policies and training materials; and be subject to monitoring of their employment eligibility verification practices for two years.

“Puerto Ricans are native-born U.S. citizens who have the same right to work as any other U.S. citizen,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “They should not have to face these types of discriminatory barriers, and the Justice Department is committed to ensuring equal employment opportunities.”         

The Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) is responsible for enforcing the anti-discrimination provision of the INA.  Among other things, the statute prohibits citizenship status and national origin discrimination in hiring, firing or recruitment or referral for a fee; unfair documentary practices; retaliation; and intimidation. 

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

Applicants or employees who believe they were subjected to: different documentary requirements based on their citizenship, immigration status or national origin; or discrimination based on their citizenship, immigration status or national origin in hiring, firing or recruitment or referral, should contact the worker hotline above for assistance.

The Justice Department announced today that, jointly with the state of Mississippi and city of Meridian, Mississippi, it has reached settlement agreements to prevent and address unconstitutional youth arrests and probation practices by the Meridian Police Department and the Mississippi Division of Youth Services, and submitted them to the court for approval.  

In 2012, the department filed a lawsuit against the city of Meridian, the state of Mississippi, the Lauderdale County, Mississippi, Youth Court and the Youth Court Judges, alleging systematic violations of youths’ due process rights, in the matter of United States v. City of Meridian, et al.  If approved by the U.S. District Court in Jackson, Mississippi, the proposed agreements will resolve the department’s claims against the city of Meridian and state of Mississippi.  The agreements incorporate and build on reforms the city and state began during the United States’ investigation and subsequent litigation. 

The department’s allegations that defendants Lauderdale County and the Lauderdale County Youth Court Judges failed to provide basic due process protections for children have not been resolved, and remain in litigation.

The agreement with the city of Meridian addresses the Meridian Police Department’s prior practice of arresting students referred by the school district without assessing whether there was sufficient probable cause to justify the arrest.  The settlement agreement prohibits the city police department from arresting youth for behavior that is appropriately addressed as a school discipline issue, and requires documented probable cause determinations for any youth arrested for criminal offenses.  The agreement also requires the city police department to uphold constitutional protections following a youth’s arrest, mandating Miranda warnings as soon as a youth reasonably believes he or she is not free to leave and prohibiting officers from interviewing detained youth unless a guardian or attorney is present.

The agreement with the state of Mississippi addresses the department’s claims of unconstitutional youth probation practices by the Mississippi Division of Youth Services.  The settlement agreement requires state probation officers to implement measures to protect youths’ privilege against self-incrimination, including providing youths with age-appropriate explanations of their rights and the probationary process.  The agreement also includes requirements for the contracts that establish the restrictions and rules that youth on probation must comply with.  These contracts must be written in terms that are easily understandable to youths and that prevent arbitrary and discriminatory enforcement, and include a clear explanation of the youth’s rights.  The agreement prohibits probation officers from recommending incarcerating youths for violations of their probation contracts that would not otherwise amount to detainable offenses, unless and until all other reasonable alternatives to incarceration have been exhausted. 

“We commend the city of Meridian and the state of Mississippi’s Department of Human Services and Division of Youth Services for taking these important steps toward ensuring that school disciplinary issues are not inappropriately criminalized, ” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “Going forward, the Department of Justice expects to work with Meridian and the state of Mississippi to ensure that children’s constitutional rights are protected in police and probation practices.”

“These agreements will help protect the children of Meridian from deprivations of educational opportunity as well as due process,” said U.S. Attorney Gregory K. Davis of the Southern District of Mississippi.

Each agreement will be monitored by an independent auditor who will report publicly to the federal court.

Under the agreements, the city and state will work with the United States and independent auditors to establish community input programs.  These programs shall include semiannual open meetings, to be held in a publicly-accessible location, where the state and city will inform the public about progress in implementing the agreements and address community concerns related to the substantive areas covered by the agreements.   

These agreements also build on reforms that the department’s Educational Opportunities Section obtained in a 2013 settlement with the Meridian Public School District to address school discipline claims in a long-standing desegregation case.  To see the consent order, visit http://www.justice.gov/crt/about/edu/documents/classlist.php#race. 

The department filed this complaint under the Violent Crime Control and Law Enforcement Act of 1994, which gives the department the authority to seek a remedy for a pattern or practice of conduct that violates the constitutional or federal statutory rights of youths in the administration of juvenile justice.  Additional information about the Civil Rights Division is available on its website at www.justice.gov/crt. 

The Justice Department will be hosting a telephonic community conference call open to members of the public on Monday, June 22, 2015, at 6:30 p.m., CDT.  The purpose of this call is to provide community members with information about the investigation and complaint.  To participate in the call, dial the following toll-free number: 877-675-0879.  When prompted by the operator, provide your name and the pass code: 4611051.

A former chief executive officer of a red light camera vendor pleaded guilty today to participating in an eight-year bribery and fraud scheme, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Carter M. Stewart of the Southern District of Ohio and Special Agent in Charge Angela L. Byers of the FBI’s Cincinnati Field Office. 

Karen L. Finley, 55, of Cave Creek, Arizona, pleaded guilty before U.S. Magistrate Judge Terence P. Kemp of the Southern District of Ohio to a one-count information charging her with conspiracy to commit federal programs bribery and honest services wire and mail fraud.  Finley’s sentencing hearing will be scheduled at a later date.

From December 2005 to February 2013, Finley served as CEO of a red light camera enforcement company.  As part of her plea agreement, Finley admitted that, between 2005 and 2013, she participated in a scheme in which the company made campaign contributions to elected public officials in the cities of Columbus and Cincinnati through a consultant retained by the company.  According to admissions made in connection with her plea, Finley and others, including another executive of the company, agreed to provide the conduit campaign contributions with the understanding that the elected public officials would assist the company in obtaining or retaining municipal contracts, including a photo red light enforcement contract with the City of Columbus.  Finley also admitted she and her co-conspirators concealed the true nature and source of the payments by the consultant’s submission and the company’s payment of false invoices for “consulting services,” which funds the consultant then provided to the campaigns of the elected public officials.

The case was investigated by the FBI’s Cincinnati Field Office, Columbus Resident Agency, with the assistance of IRS-Criminal Investigations and the Ohio Bureau of Criminal Investigation.  The case is being prosecuted by Trial Attorney Edward P. Sullivan of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney J. Michael Marous of the Southern District of Ohio.

Finley Plea Agreement

WASHINGTON – El Departamento de Justicia llego a un acuerdo hoy con Accountemps, una división de la empresa Robert Half International, Inc., una compañía con sede en Menlo Park, California, resolviendo alegaciones de que la compañía estaba involucrada en discriminación a base del estatus de cuidadania en violación del Acto de Inmigración y Nacionalidad (INA por sus siglas en inglés).

La investigación del departamento, basada en una queja por una cuidadana Estadounidense naturalizado, concluyo que Accountemps se rehusó a referir a la denuciante para una posición de contrato con el gobierno federal por que, como cuidadana naturalizada, la denuciante no había nacido en los Estados Unidos.  Bajo el INA, los empleadores no pueden discriminar en contra de cuidadanos Estadounidenses basado en su estatus de cuidadania, incluyendo reuirse a contratarlos  a causa de que hayan sido nacidos fuera de los Estados Unidos.  

Bajo el acuerdo, Accountemps continuará refiriendo a la denunciante a posiciones para las  cuales ella califíque, pagará $2,500 en sanciones civiles, proveerá adistramiento para su personal acerca de la provision anti-discriminación del INA, y será sujeto a monitoreo por un periodo de un año.   

“La provision anti-discriminación del INA no reconoce diferencias en clases de cuidadanos Estadounidenses cuando se trata de su derecho a trabajar en los Estados Unidos,” dijo la Principal Deputada Assistente Procuradora General Vanita Gupta para la Divisiόn de Derechos Civiles. “Nosotros aplaudimos a Accountemps por su cooperación en resolver las preocupaciones planteadas por este asunto.”

La Oficina del Consejero Especial para Prácticas Injustas en el Empleo Relacionadas a  Inmigración es la oficina responsable por hacer cumplir con la provisión antidiscriminatoria de la INA.  Entre otras cosas, la ley prohíbe discriminación por estatus de ciudadanía o del origen nacional durante la contrataciόn, el despido, el reclutamiento o la referencia por comisiόn, las prácticas injustas de documentación, represalias, e intimidación.  Para más información sobre las protecciones contra discriminación en el empleo según las leyes migratorias, llame a la línea directa de OSC para trabajadores al 1-800-255-7688 (1-800-237-2515, TTY para personas con discapacidad auditiva), llame a la línea directa de OSC para empleadores al 1-800-255-8155 (1-800-237-2515, TTY para personas con discapacidad auditiva), o para registrarse para un seminario gratis ofrecido a través del internet visite www.justice.gov/crt/about/osc/webinars.php, envíe un correo electrónico al osccrt@usdoj.gov, o visite el sitio de Internet www.justice.gov/crt/about/osc.

Los solicitantes o empleados que consideren que fueron sujetos a (1) diferentes requisitos de verificación por su estatus de ciudadanía, estatus migratorio u origen nacional, o (2) discriminación por estatus de ciudadanía, estatus migratorio, u origen nacional con relación a la contratación, el despido y el reclutamiento o la referencia por comisión, deberán comunicarse a la línea dedicada a los trabajadores anteriormente citada para poderlos ayudar.

WASHINGTON – El Departamento de Justicia anunció que llegó a un acuerdo hoy con tres agencias de trabajo en Memphis: Prestigious Placement; PFSWeb, Inc.; y su sucursal, Priority Fulfillment Services, Inc. El acuerdo resuelve dos quejas alegando discriminación bajo la Ley de Inmigración y Nacionalidad (INA por sus siglas en inglés).

La investigación del Departamento de Justicia  encontró que las compañías se rehusaron a contratar a dos individuos de Puerto Rico quienes tenían suficientes cualificaciones porque las compañías creían que ellas nacieron en un país extranjero.  Las compañías negaron los certificados de nacimiento validos de Puerto Rico de las trabajadoras y exigieron que presentaran certificados de naturalización aunque los puertorriqueños son estadounidenses de nacimiento.  Bajo la provisión anti-discriminación de la INA, los empleadores no pueden discriminar durante la contratación o ponerle barreras adicionales a los trabajadores durante el proceso de verificación de elegibilidad de empleo basado en su ciudadanía o la ciudadanía percibida.

Bajo del acuerdo, las compañías recompensarán a los denunciantes sus sueldos perdidos; pagarán sanciones civiles as los Estados Unidos; se someterán a adiestramiento sobre la provisión anti-discriminación de la INA; cambiarán sus políticas de empleo y materiales de adiestramiento; y serán sujetos a monitoreo de sus prácticas de verificación de empleo por dos años.  

“Los puertorriqueños son ciudadanos nativos y tienen el mismo derecho a trabajar como cualquier otro estadounidense,” dijo la Principal Deputada Asistente Procuradora General Vanita Gupta para la División de Derechos Humanos “No deberían tener que enfrentar estos tipos de barreras discriminatorias, y el Departamento de Justicia está comprometido en asegurar la igualdad de oportunidades de empleo.”

La Oficina del Consejero Especial para Prácticas Injustas en el Empleo Relacionadas a Inmigración (OSC por sus siglas en inglés) es la oficina responsable por hacer cumplir con la provisión anti-discriminación de la INA. La ley prohíbe, entre otras cosas, discriminación basada en el estatus de ciudadanía y en el origen nacional en la contratación, el despido, o el reclutamiento o la referencia por comisión, las prácticas injustas de documentación, y represalia e intimidación.

Para obtener más información acerca de las protecciones contra la discriminación en el empleo según las leyes de inmigración, o para registrarse para un seminario gratis ofrecido a través del Internet, llame a la línea directa de la OSC para trabajadores al 1-800-255-7688  o al 1-800-237-2515, TTY (para personas con problemas de audición); llame a la línea directa de la OSC para empleadores al 1-800-255-8155 (1-800-237-2515, TTY para personas con problemas de audición); o visite el sitio web de la OSC en www.justice.gov/crt/about/osc.

Solicitantes o trabajadores que creen que fueron sometidos a: (1) requisitos diferentes de documentación o discriminación por causa de su estatus de ciudadanía, estatus migratorio o su origen nacional; o (2) discriminación por causa de su estatus de ciudadanía, estatus migratorio o el origen nacional en la contratación, el despido o el reclutamiento o referencia por comisión, deben comunicarse a la línea del trabajador de la OSC para obtener ayuda.

Two men were sentenced today for their roles in a sophisticated conspiracy to distribute child pornography online, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Joshua J. Minkler of the Southern District of Indiana. 

John D. Gries, 48, of Bayshore, New York, and James McCullars, 56, of Huntsville, Alabama, were sentenced to 30 years and to life in prison, respectively, by U.S. District Court Judge Sarah Evans Barker of the Southern District of Indiana.  In November 2014, the defendants were convicted by a federal jury of conspiracy to distribute and receive child pornography, conspiracy to advertise child pornography and engaging in a child exploitation enterprise.

According to evidence presented at trial, from 2000 to 2012, Gries and McCullars operated various members-only online chat rooms dedicated to the advertisement, distribution, receipt and possession of child pornography.  The trial evidence, as well as admissions by other defendants prosecuted in connection with “Operation Rounder,” showed that McCullars, Gries and other members of the conspiracy used these chat rooms and a number of online servers to expand their personal collections of materials depicting the exploitation of children, and sought to evade law enforcement through the use of sophisticated data encryption software.

Operation Rounder has identified nearly 100 children around the world who have been identified as victims of abuse.  Other defendants who have been convicted in connection with this investigation include:

John Edwards, 62, of Indianapolis, sentenced to 17.5 years;

Thomas Vaughn, 45, of Anderson, Indiana, sentenced to 11 years;

John Rex Powell, 43, of Fort Myers, Florida, sentenced to 30 years;

Donald Printup, 36, of Niagara Falls, New York, sentenced to 14 years;

Michael Fredette, 46, of Waterford, New York, sentenced to 27 years;

Robert Guillen, 43, of Wesley Chapel, Florida, sentenced to 14 years;

David Bebetu, 51, of Agoura Hills, California, sentenced to 12.5 years;

Stephen Harvey Dault, 48, of McKinney, Texas, sentenced to 17 years; and

Rick Ricardo Leon, 53, of Arlington, Virginia, sentenced to 12.5 years.

This case was investigated by the U.S. Postal Inspection Service, with assistance from the Indiana Internet Crimes Against Children Task Force and the Department of Justice’s High Technology Investigative Unit, as a part of Project Safe Childhood.  This case is being prosecuted by Trial Attorney Amy Larson of the Criminal Division’s Child Exploitation and Obscenity Section and Senior Litigation Counsel Steven D. DeBrota of the Southern District of Indiana.

Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims.  For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.

A Bergen County, New Jersey, man was charged today with conspiracy to provide material support to the Islamic State of Iraq and the Levant (ISIL), a designated foreign terrorist organization, announced Assistant Attorney General for National Security John P. Carlin, 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, New Jersey, Division.

Samuel Rahamin Topaz, 21, of Fort Lee, New Jersey, was arrested at his home on June 17, 2015, and is charged by complaint with one count of conspiring with others in New Jersey and New York to provide services and personnel to ISIL.  He made his initial appearance this afternoon before U.S. Magistrate Judge Cathy L. Waldor of the District of New Jersey.

“Samuel Topaz is alleged to have conspired with others to travel abroad to provide material support to ISIL,” said Assistant Attorney General Carlin.  “Counterterrorism is the National Security Division’s highest priority.  Stemming the flow of foreign fighters abroad and prosecuting those who attempt to provide material support to designated foreign terrorist organizations is key to our national security and public safety.”

“Providing fighters and resources to a terrorist organization like ISIL is a threat to our country and its citizens,” said U.S. Attorney Fishman.  “We will continue to use all the tools at our disposal to disrupt the efforts of those who are trying to do harm at home and abroad.”

“Material support of a terrorist organization is a violation of federal law,” said Special Agent in Charge Frankel.  “Topaz conspired to provide services and personnel to ISIL.  Topaz discussed his desire to travel to Syria to join ISIL.  Fortunately, this threat did not materialize due to the indefatigable efforts of the FBI’s Joint Terrorism Task Force.  Prevention of terrorism is the FBI’s top priority and I ask the citizens of New Jersey to assist us in this task by remaining vigilant and contacting the FBI or the police if they see or hear anything suspicious.”

According to documents filed in this case and statements made in court:

The FBI and the Joint Terrorism Task Force (JTTF) have been investigating a group of individuals from New York and New Jersey who have allegedly conspired to provide material support to ISIL.  Conspirator 1 (CC-1) was a resident of Rutherford, New Jersey, until departing the United States on May 5, 2015, allegedly to join ISIL.  Conspirator 2 (CC-2) was a resident of Queens, New York, until he was arrested June 13, 2015, in New York on terrorism charges.  Conspirator 3 (CC-3) is a resident of New Jersey.

On May 1, 2015, Topaz discussed CC-1’s plan to travel overseas to join ISIL.  CC-1 sent Topaz a message stating that he would be leaving in a few days and asked, “[d]id you do what i [sic] advised you to do.”  Topaz responded, “I’m saving my money for it bro trust me I got it.”   On May 4, 2015, Topaz stated that he had his passport but needed cash to purchase his ticket.   CC-2 replied, “My trip is looking months away[.] if u can take a loan out for 5k or even 2.5k then ur [sic] good, they take US dollars in dawla so u can eat and buy stuff, and they provide u with housing when u reach the land of Islam.”  Topaz and CC-2 then discussed that they would be reuniting with CC-1 in Turkey before going to the dawla.  CC-2 stated that CC-1 would go first, and then they would join him soon thereafter.

On May 21, 2015, Topaz and CC-3 discussed that they needed to “lay low” and refrain from taking action in furtherance of the conspiracy to provide material support to ISIL that might be detected by law enforcement.  Topaz also told CC-3 that they need to discuss “hijra” in person.  Topaz later told members of the JTTF that he and his conspirators used the term “hijra” (often spelled “hijrah”) to refer to traveling overseas to join ISIL.

On June 13, 2015, CC-2 was arrested by the FBI and charged in a criminal complaint filed with the U.S. District Court of the Eastern District of New York with conspiring to provide material support to ISIL.  On June 15, 2015, Topaz wrote to an unidentified individual that CC-2 had not been answering his phone and added, “We gotta leave ASAP.”

The count of conspiracy to provide material support to a designated foreign terrorist organization carries a maximum potential penalty of 15 years in prison and a fine of $250,000.

This case is being investigated by the FBI and JTTF.  This case is being prosecuted by Assistant U.S. Attorneys L. Judson Welle, Dennis C. Carletta, and Francisco J. Navarro of the District of New Jersey, with assistance from the National Security Division’s Counterterrorism Section.

The charge and allegations contained in the complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

Topaz Complaint

Attorney General Loretta E. Lynch and Department of Health and Human Services (HHS) Secretary Sylvia Mathews Burwell announced today a nationwide sweep led by the Medicare Fraud Strike Force in 17 districts, resulting in charges against 243 individuals, including 46 doctors, nurses and other licensed medical professionals, for their alleged participation in Medicare fraud schemes involving approximately $712 million in false billings.  In addition, the Centers for Medicare & Medicaid Services (CMS) also suspended a number of providers using its suspension authority as provided in the Affordable Care Act.  This coordinated takedown is the largest in Strike Force history, both in terms of the number of defendants charged and loss amount.   

Attorney General Lynch and Secretary Burwell were joined in the announcement by FBI Director James B. Comey, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Inspector General Daniel R. Levinson of the HHS Office of Inspector General (HHS-OIG) and Deputy Administrator and Director of CMS Center for Program Integrity Shantanu Agrawal, M.D.

The defendants are charged with various health care fraud-related crimes, including conspiracy to commit health care fraud, violations of the anti-kickback statutes, money laundering and aggravated identity theft.  The charges are based on a variety of alleged fraud schemes involving various medical treatments and services, including home health care, psychotherapy, physical and occupational therapy, durable medical equipment (DME) and pharmacy fraud.  More than 44 of the defendants arrested are charged with fraud related to the Medicare prescription drug benefit program known as Part D, which is the fastest-growing component of the Medicare program overall.

“This action represents the largest criminal health care fraud takedown in the history of the Department of Justice, and it adds to an already remarkable record of enforcement,” said Attorney General Lynch.  “The defendants charged include doctors, patient recruiters, home health care providers, pharmacy owners, and others.  They billed for equipment that wasn’t provided, for care that wasn’t needed, and for services that weren’t rendered.  In the days ahead, the Department of Justice will continue our focus on preventing wrongdoing and prosecuting those whose criminal activity drives up medical costs and jeopardizes a system that our citizens trust with their lives.  We are prepared – and I am personally determined – to continue working with our federal, state, and local partners to bring about the vital progress that all Americans deserve.”

“This Administration is committed to fighting fraud and protecting taxpayer dollars in Medicare and Medicaid,” said Secretary Burwell.  “This takedown adds to the hundreds of millions we have saved through fraud prevention since the Affordable Care Act was passed.  With increased resources that have allowed the Strike Force to expand and new tools, like enhanced screening and enrollment requirements, tough new rules and sentences for criminals, and advanced predictive modeling technology, we have managed to better find and fight fraud as well as stop it before it starts.”

According to court documents, the defendants participated in alleged schemes to submit claims to Medicare and Medicaid for treatments that were medically unnecessary and often never provided.  In many cases, patient recruiters, Medicare beneficiaries and other co-conspirators allegedly were paid cash kickbacks in return for supplying beneficiary information to providers, so that the providers could then submit fraudulent bills to Medicare for services that were medically unnecessary or never performed.  Collectively, the doctors, nurses, licensed medical professionals, health care company owners and others charged are accused of conspiring to submit a total of approximately $712 million in fraudulent billing.

“The people charged in this case targeted the system each of us depends on in our most vulnerable moments,” said Director James Comey.  “Health care fraud is a crime that hurts all of us and each dollar taken from programs that help the sick and the suffering is one dollar too many.” 

“Every day, the Criminal Division is more strategic in our approach to prosecuting Medicare Fraud,” said Assistant Attorney General Caldwell.  “We obtain and analyze billing data in real-time.  We target hot spots – areas of the country and the types of health care services where the billing data shows the potential for a high volume of fraud – and we are speeding up our investigations.  By doing this, we are increasingly able to stop schemes at the developmental stage, and to prevent them from spreading to other parts of the country.”

“Health care fraud drives up health care costs, wastes taxpayer money, undermines the Medicare and Medicaid programs, and endangers program beneficiaries,” said Inspector General Levinson.  “Today’s takedown includes perpetrators of prescription drug fraud, home health care fraud, and personal care services fraud, three particularly harmful types of fraud plaguing our health care system.  This record-setting takedown sends a message to would-be perpetrators that health care fraud is a risky way to line your pockets.  Our agents and our law enforcement partners stand ready to protect these vital programs and ensure that those who would steal from federal health care programs ultimately pay for their crimes.”

The Medicare Fraud Strike Force operations are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009 between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.  Since their inception in March 2007, Strike Force operations in nine locations have charged over 2,300 defendants who collectively have falsely billed the Medicare program for over $7 billion. 

Including today’s enforcement actions, nearly 900 individuals have been charged in national takedown operations, which have involved more than $2.5 billion in fraudulent billings.  Today’s announcement marks the first time that districts outside of Strike Force locations participated in a national takedown, and they accounted for 82 defendants charged in this takedown.

*********

In Miami, a total of 73 defendants were charged with offenses relating to their participation in various fraud schemes involving approximately $263 million in false billings for home health care, mental health services and pharmacy fraud.  In one case, administrators in a mental health center billed close to $64 million between 2006 and 2012 for purported intensive mental health treatment to beneficiaries and allegedly paid kickbacks to patient recruiters and assisted living facility owners throughout the Southern District of Florida.  Medicare paid approximately half of the claimed amount. 

In Houston and McAllen, Texas, 22 individuals were charged in cases involving over $38 million in alleged fraud.  One of these defendants allegedly coached beneficiaries on what to tell doctors to make them appear eligible for Medicare services and treatments and then received payment for those who qualified.  The company that paid the defendant for patients submitted close to $16 million in claims to Medicare, over $4 million of which was paid.     

In Dallas, seven people were charged in connection with home health care schemes.  In one scheme, six owners and operators of a physician house call company submitted nearly $43 million in billings under the name of a single doctor, regardless of who actually provided the service.  The company also significantly exaggerated the length of physician visits, often times billing for 90 minutes or more for an appointment that lasted only 15 or 20 minutes.   

In Los Angeles, eight defendants were charged for their roles in schemes to defraud Medicare of approximately $66 million.  In one case, a doctor is charged with causing almost $23 million in losses to Medicare through his own fraudulent billing and referrals for DME, including over 1000 expensive power wheelchairs and home health services that were not medically necessary and often not provided.  

In Detroit, 16 defendants face charges for their alleged roles in fraud, kickback and money laundering schemes involving approximately $122 million in false claims for services that were medically unnecessary or never rendered, including home health care, physician visits, and psychotherapy, as well as pharmaceuticals that were billed but not dispensed.  Among these are three owners of a hospice service who allegedly paid kickbacks for referrals made by two doctors who defrauded Medicare Part D by issuing medically unnecessary prescriptions. 

In Tampa, five individuals were charged with participating in a variety of schemes, ranging from fraudulent physical therapy billings to a scheme involving millions in physician services and tests that never occurred.  In one case, a licensed pain management physician sought reimbursement for nerve conduction studies and other services that he allegedly never performed.  Medicare paid the defendant over $1 million for these purported services.  

In Brooklyn, N.Y., nine individuals were charged in two separate criminal schemes involving physical and occupational therapy.  In one case, three individuals face charges for their roles in a previously charged $50 million physical therapy scheme.  In the second case, six defendants were charged for their roles in a $8 million physical and occupational therapy scheme.

In New Orleans, 11 people were charged in connection with $110 million in home health care and psychotherapy schemes.  In one case, four individuals who operated two companies – one in Louisiana and one in California – that mass-marketed talking glucose monitors (TGMs) across the country allegedly sent TGMs to Medicare beneficiaries regardless of whether they were needed or requested.  The companies billed Medicare approximately $38 million for the devices and Medicare paid the companies over $22 million.

The cases announced today are being prosecuted and investigated by Medicare Fraud Strike Force teams from the Fraud Section of the Justice Department’s Criminal Division and from the U.S. Attorney’s Offices of the Southern District of Florida, Eastern District of Michigan, Eastern District of New York, Southern District of Texas, Central District of California, Eastern District of Louisiana, Northern District of Texas, Northern District of Illinois and the Middle District of Florida; and agents from the FBI, HHS-OIG and state Medicaid Fraud Control Units.

In addition to the Strike Force, today’s enforcement actions include cases brought by the U.S. Attorney’s Offices of the Southern District of California, Southern District of Illinois, Northern District of Ohio, Western District of Kentucky, District of Maryland, District of Connecticut, District of Alaska and the Southern District of Georgia.

A complaint or indictment is merely a charge, and defendants are presumed innocent until proven guilty.

The court documents for each case will posted online, as they become available, here: http://www.justice.gov/opa/documents-and-resources-june-2015-medicare-fraud-strike-force-press-conference.

The Affordable Care Act has provided new tools and resources to fight fraud in federal health care programs. The law provides an additional $350 million for health care fraud prevention and enforcement efforts, which has allowed the Justice Department to hire more prosecutors and the Strike Force to expand from two cities to nine. It also toughens sentencing for criminal activity, enhances provider and supplier screenings and enrollment requirements, and encourages increased sharing of data across government.

In addition to providing new tools and resources to fight fraud, the Affordable Care Act clarified that for sentencing purposes, the loss is determined by the amount billed to Medicare and increased the sentencing guidelines for the billed amounts, which has provided a strong deterrent effect due to increased prison time, particularly in the most egregious cases.

 

Today, the Justice Department announced that a grand jury in the Southern District of Florida charged Miami Dade Police Department (MDPD) Detective William Kostopoulos, 47, with using his law enforcement authority to violate motorists’ civil rights.

The indictment charges Kostopoulos with making traffic stops of three motorists in order to steal their money and property, in violation of the motorists’ rights under the Fourth Amendment of the U.S. Constitution to be free from unreasonable seizures of their property.  The indictment also charges Kostopoulos with making misleading statements in order to prevent the communication of information about his alleged crimes to federal law enforcement officers.

This case is being investigated by the Federal Bureau of Investigation (FBI), with assistance from the Homestead, Florida, Police Department.  The matter is being prosecuted by Special Litigation Counsel Gerard Hogan and Trial Attorney Samantha Trepel of the Civil Rights Division as well as Assistant U.S. Attorney Tonya Long of the Southern District of Florida.

An indictment is a formal accusation of criminal conduct, not evidence of guilt.  The defendant is presumed innocent unless proven guilty.

A Louisiana media firm owner was sentenced yesterday to 135 months in prison for orchestrating an elaborate $1.2 million scheme to bill car dealerships in the Baton Rouge, Louisiana, and New Orleans areas for fictitious advertising services. 

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney J. Walter Green of the Middle District of Louisiana and Special Agent in Charge Jerome R. McDuffie of the IRS-Criminal Investigation (IRS-CI) New Orleans Field Office made the announcement.

Raymond C. Reggie, 52, of Mandeville, Louisiana, pleaded guilty on Oct. 27, 2014, to five counts of wire fraud.  Some of the conduct to which Reggie pleaded guilty he committed while on supervised release from a prior fraud conviction.  In addition to imposing the prison sentence, U.S. District Court Judge Shelly D. Dick of the Middle District of Louisiana ordered Reggie to pay $1,217,657 in restitution, and to forfeit the same amount.

Reggie owned and operated Nexlevel Group, a firm that purchased and managed advertising for car dealerships in Southeast Louisiana.  According to admissions made in connection with his guilty plea, Reggie billed the dealerships for fictitious advertising expenses, falsely representing that such expenses were actually incurred.  Reggie admitted that once the dealerships issued the checks for the bogus expenses, he diverted the funds for his personal use and enjoyment.  In total, the car dealerships issued 138 checks for more than $1.2 million for fictitious advertising services.

This case was investigated by the IRS-CI New Orleans Field Office.  The case was prosecuted by Senior Litigation Counsel Jack Patrick of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Rene Salomon and Ryan Crosswell of the Middle District of Louisiana.

The Justice Department announced that Graeme Phillip Harris pleaded guilty today in federal court to threatening African-American students and employees at the University of Mississippi by helping place a rope around the neck of the James Meredith statue on campus.

According to documents filed in connection with the plea, Harris admitted to joining with others to use the cover of darkness to hang a rope and an outdated version of the Georgia state flag—which prominently depicts the Confederate battle flag—around the neck of the statue, with the intent to threaten and intimidate African-American students and employees at the university.  The iconic statue honors Meredith’s role as the university’s first African-American student after its contentious 1962 integration.  The incident occurred in the early morning hours of Feb. 16, 2014.

Harris was indicted by a federal grand jury on March 27 on one count of conspiracy to violate civil rights and one count of using a threat of force to intimidate African-American students because of their race or color.  This plea resolves all charges against Harris in the matter.

“We will not tolerate threats of racial violence intended to intimidate students and university employees,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Justice Department’s Civil Rights Division.  “No one should have to endure threats or intimidation at our nation’s universities because of their race or the color of their skin.”

“The reprehensible actions of the defendant evoke painful memories of a shameful period in our past when some American citizens were subjected to threats and intimidation by lynching solely because of the color of their skin,” said U.S. Attorney Felicia C. Adams of the Northern District of Mississippi.  “Attempts to categorize the defendant’s offense conduct as a mere college prank only serve as a hollow denial of our collective history and a repudiation of the legacy of those who fought to obtain and preserve our historic civil rights.  The U.S. Attorney’s Office, in conjunction with the DOJ Civil Rights Division, will aggressively prosecute hate crimes and other civil rights violations which occur in our district.  I sincerely appreciate the assistance of the FBI and the University of Mississippi in the investigation and prosecution of this case.” 

“What these individuals did was not a prank,” said Special Agent in Charge Donald Alway of the FBI Jackson, Mississippi, Division.  “It was an intentional effort to belittle and intimidate persons of a particular race, and was exactly the type of action the federal civil rights statutes were enacted to prevent.  The FBI is committed to the protection of the civil rights of all citizens and will continue to investigate allegations of crime motivated by hate.”

The investigation, which is ongoing, is being conducted by the FBI Jackson Division’s Oxford Resident Agency and the University of Mississippi Police Department.  The case is being prosecuted by the Justice Department’s Civil Rights Division and the U.S. Attorney’s Office of the Northern District of Mississippi.

A Georgia man was sentenced today to 262 months in prison for engaging in sexually explicit conduct with minors and producing images and videos of that conduct during trips to Thailand, and transporting the child pornography into the United States.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Florence Nakakuni of the District of Hawaii and Executive Associate Director Peter Edge of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI) made the announcement.

Ronny Lee Waldrip, 64, of Douglasville, Georgia, pleaded guilty on Nov. 7, 2014, before U.S. Magistrate Judge Richard L. Puglisi to one count of sexual exploitation of a minor outside the United States for the purpose of producing visual depictions of such conduct.  Senior U.S. District Court Judge Helen Gillmor of the District of Hawaii presided over Waldrip’s sentencing, and also ordered that he pay $45,000 in restitution.

In connection with his guilty plea, Waldrip admitted that he traveled to Thailand on numerous occasions to engage in sexual conduct with minor females.  Specifically, he admitted that he traveled to Thailand in 2010 and 2011 for the purpose of inducing and enticing minors into engaging in sexual acts, and to photographing or recording such conduct without the victims’ knowledge or permission. 

Waldrip also admitted that, on Feb. 13, 2012, he traveled from Bangkok to Honolulu knowingly transporting a laptop computer containing images and videos of child pornography, including videos of him engaging in sexual acts with minor females, including three victims who were 14 and 15 years old at the time.  Waldrip further admitted to using the Internet to distribute the images and videos of the three minor victims to another U.S. citizen whom Waldrip knew was interested in child pornography. 

This case was investigated by ICE-HSI in Honolulu and Bangkok.  The Royal Thai Police and the Justice Department’s Office of International Affairs also provided assistance.  This case was prosecuted by Trial Attorneys Sarah Chang and Michael Grant of the Criminal Division’s Child Exploitation and Obscenity Section and Assistant U.S. Attorney Ron Johnson of the District of Hawaii. 

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

Hamilton Allegedly Tased Inmates Without Justification and Wrote False Reports to Cover Up Abuse

Dwight Hamilton, 51, of Atlanta, Georgia, a former sergeant with the DeKalb County Sheriff's Office, was arraigned today on charges of using excessive force against inmates at the DeKalb County Jail and for writing false reports about the incidents, announced Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division, U.S. Attorney John Horn of the Northern District of Georgia and Special Agent in Charge Britt Johnson of the Federal Bureau of Investigation (FBI).

According to the indictment and other information presented in court, Hamilton worked as a supervisory officer at the DeKalb County jail from 2005 to 2012, where, on two separate dates in January 2012, he used his taser multiple times on inmates without justification.  The indictment charges that in both instances, Hamilton’s use of excessive force violated the inmates’ constitutional rights and resulted in bodily injury.  The indictment also alleges that, following each of the tasing incidents, Hamilton wrote a false report with the intent to impede an investigation. 

Hamilton was arraigned before Magistrate Judge Janet F. King.

Members of the public are reminded that the indictment only contains charges.  The defendant is presumed innocent of the charges and it will be the government’s burden to prove the defendant’s guilt beyond a reasonable doubt at trial.

This case is being investigated by the FBI and is being prosecuted by Trial Attorney Christopher Perras of the Civil Rights Division and Assistant U.S. Attorney Brent Alan Gray.

For further information please contact the U.S. Attorney’s Public Affairs Office at USAGAN.PressEmails@usdoj.gov or (404) 581-6016. 

On June 18, Covenant Hospice Inc. agreed to pay $10,149,374 to reimburse the government for alleged overbilling of Medicare, Tricare and Medicaid for hospice services, the Department of Justice announced today.  Covenant Hospice Inc. is a non-profit hospice care provider which operates in Southern Alabama and the Florida Panhandle. 

“The hospice benefits provided by federal health care programs are intended to provide comfort and care to patients nearing the end of life,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “We will continue to ensure that these benefits are used for their intended purposes.”

The Medicare, Tricare and Medicaid hospice benefits are available for patients who have a life expectancy of six months or less if their disease runs its normal course.  Patients admitted to a hospice stop receiving care to cure their illnesses and instead receive medical care focused on providing them with relief from the symptoms, pain and stress of a terminal illness.

Medicare, Tricare and Alabama and Florida Medicaid reimburse for four different levels of hospice care: routine home care, continuous home care, inpatient respite care and general inpatient care.  The routine home care level is the lowest reimbursement rate and the highest reimbursement rate paid by the federal health care programs is for general inpatient care.  The level of care provided to a patient is subject to change based upon a variety of factors, including the patient’s condition and needs, and the availability of family members or other caregivers to meet those needs.  The reimbursement for general inpatient care is greater than that provided for routine home care based upon the expectation that patients requiring the former level of care have more acute medical and psychosocial needs that must be provided in an inpatient setting and are more costly to treat.  It is the responsibility of the hospice provider to ensure that a patient’s medical record contains the appropriate documentation to support the level of hospice care that is billed. 

“Careful and correct claims for reimbursement from critical federal health care programs are essential to the health of our economy,” said U.S. Attorney Pamela C. Marsh of the Northern District of Florida.  “Those public servants who worked hard to investigate the conduct and obtain this settlement deserve our deepest gratitude.  We will continue our efforts to ensure that federal dollars intended for compassionate care and legitimate patient needs are protected.”

Today’s settlement resolves allegations that between Jan. 1, 2009, and Dec. 31, 2010, Covenant Hospice Inc. improperly submitted hospice claims for general inpatient care that should have been billed at the routine home care level for Medicare, Tricare and Medicaid patients.  The government alleged that Covenant Hospice Inc.’s medical records did not support the medical necessity of the general inpatient care.

The federal government will recover $9,597,118.44 for Covenant Hospice Inc.’s overbilling to Medicare, Tricare and Medicaid, and Alabama and Florida will collectively recover $552,255.56 as a result of overbilling of their respective Medicaid programs.  The Medicaid program is jointly funded by the federal and state governments. 

This matter was handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office of the Northern District of Florida, the Department of Health and Human Services’ Office of the Inspector General, the Defense Health Agency of the U.S. Department of Defense, the Alabama Attorney General’s Office and the Florida Attorney General’s Office.

Jason Woodring, 38, of Jacksonville, Arkansas, was sentenced to 15 years in prison today on charges related to his attacks on Central Arkansas’ power grid between August and October 2013.  In addition to the term of imprisonment, Woodring will be required to pay $4,792,224 in restitution to Entergy for his attacks on the power lines and electrical tower near Cabot, Arkansas, and a switching station in Scott, Arkansas.  Woodring will also pay $48,729 to First Electric Cooperative for damage to the downed power lines and poles in Jacksonville.

Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Christopher R. Thyer of the Eastern District of Arkansas, Special Agent in Charge David T. Resch of the FBI’s Little Rock, Arkansas, Division and Resident Special Agent in Charge Grover Crossland of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Little Rock Field Office made the announcement.

Today, U.S. District Court Judge Billy Roy Wilson of the Eastern District of Arkansas accepted the plea agreement and imposed the recommended 15-year sentence.  On March 10, 2015, Woodring pleaded guilty to destruction of an energy facility for downing the Cabot power lines and for setting fire to the Scott power station.  He also pleaded guilty to using fire to commit a felony in relation to the arson in Scott, and to being an illegal drug user in possession of various firearms and ammunition.  Woodring also agreed to forfeit the firearms and ammunition.

Woodring’s 2013 attacks included sabotaging an electrical support tower and downing a 500,000-volt power line onto a railroad track near Cabot, which resulted in approximately $550,000 worth of damage; setting fire to and destroying an Extra High Voltage switching station in Scott, causing over $4 million in damages; and cutting down two power poles, which led to the temporary loss of power to approximately 9,000 people in Jacksonville.  Woodring was charged in an eight-count indictment by a federal grand jury on Nov. 6, 2013.

The case was investigated by the FBI’s Joint Terrorism Task Force; ATF; Union Pacific Police; Entergy; First Electric; the Lonoke County, Arkansas, Sheriff’s Office; Cabot Police; Arkansas State Police; the Conway, Arkansas, Police Department; the Little RockPolice Department; and the Arkansas Game and Fish Commission.  The case was prosecuted by Assistant U.S. Attorneys Michael S. Gordon and Cameron Charles McCree of the Eastern District of Arkansas, with the assistance of the National Security Division’s Counterterrorism Section.

Seven boa constrictors seized in connection with an illegal wildlife smuggling scheme have been returned to the government of Brazil, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney John W. Huber of the District of Utah. 

“This case exhibited many of the hallmarks that make illegal wildlife trafficking a growing international scourge, including actors motivated by greed who illegally smuggled rare and precious wildlife across international boundaries,” said Assistant Attorney General Caldwell.  “The return of the precious snakes to Brazil brings to an end this years-long international saga, and serves as an example of our commitment to working with law enforcement partners in Brazil and elsewhere to combat transnational crime.”

“The successful prosecution of Mr. Stone and the recovery and repatriation of the offspring from this rare and valuable leucistic boa constrictor are due to the exceptional cooperation between the United States and Brazilian authorities,” said U.S. Attorney Huber.  “The illegal wildlife trade threatens the survival of many threatened and endangered species and Mr. Stone’s conviction in this case demonstrates our resolve to prosecute those who engage in such activities.”

The seven boa constrictors are the offspring of a rare and extremely valuable white (leucistic) boa constrictor known as “Lucy” or “Diamond Princess” that was found in the Niterói district of Rio de Janerio in 2006.  Because of its rarity, Brazilian authorities housed the white boa at the Niterói Zoo, a private foundation that rescued and rehabilitated injured wild animals.  In January 2009, Jeremy Stone, a Utah-based collector, breeder and seller of reptiles, traveled to Brazil, secured possession of the snake and unlawfully returned with it back to the United States. 

After learning that Stone was marketing snakes bred from a rare white boa, the Brazilian government requested assistance from the United States in securing the return of the leucistic boa and any offspring.  Thereafter, pursuant to a mutual legal assistance treaty, federal investigators obtained a warrant authorizing the seizure of the snake and any offspring from Stone’s property in Utah.  In executing the warrant, agents from the FBI learned that the leucistic boa constrictor had died.  Agents turned the offspring over to the U.S. Marshals Service, which delivered the eight surviving offspring to the Hogle Zoo in Salt Lake City.  One of the snakes died shortly thereafter. 

In July 2014, Stone pleaded guilty plea to unlawfully transporting wildlife into the United States.  As part of his plea agreement, Stone agreed to forfeit the boa’s offspring to the United States.

In October 2014, the government of Brazil filed a petition asserting its ownership of the white boa and its offspring because it had been caught in the Brazilian wild.  Thereafter, the United States asked the court to amend the preliminary order of forfeiture to recognize Brazil’s claim to the snakes.  In February 2015, the court entered a final order of forfeiture awarding the white boa’s seven surviving offspring to the government of Brazil.

The Criminal Division’s Asset Forfeiture and Money Laundering Section and Office of International Affairs, as well as the U.S. Attorney’s Office of the District of Utah and the FBI, worked jointly with the government of Brazil to secure the repatriation of the seven offspring.

Dozens of Burns Reported When Coffee Pot Handle Repeatedly Broke

The Department of Justice and the Consumer Product Safety Commission (CPSC) jointly announced today the filing of a complaint against Spectrum Brands Inc., alleging that the company and its former subsidiary, Applica Consumer Products, failed to timely report a hazardous defect involving handles that detached from Black & Decker brand SpaceMaker coffee pots.    

Spectrum Brands is a Delaware corporation headquartered in Middleton, Wisconsin, that distributes a wide variety of brand-name small appliances, hardware, and home and garden products.  Applica Consumer Products was the Florida company that imported and distributed the coffeemaker.  Applica became a subsidiary of Spectrum in 2010, and the two companies merged in 2014.

The complaint, filed in U.S. District Court for the Western District of Wisconsin, charges that the companies knowingly violated the reporting requirements of the Consumer Product Safety Act with respect to defective carafe handles that could detach and cause hot coffee to pour onto consumers.  As set forth in the complaint, the coffeemakers generated hundreds of complaints from consumers over more than three years before Applica finally notified the CPSC of the carafe defect and recalled the product.  Dozens of consumers contacted the company to report burns related to the handle suddenly detaching.  The complaint, filed by the Department of Justice on behalf of the CPSC, seeks civil penalties and permanent injunctive relief.

The government also alleges that, in addition to failing to notify the CPSC of the defect  “immediately” as required by law, the companies continued to distribute a small number of the defective coffeemakers to retailers even after the recall was announced.

“Hundreds of consumers complained to the company about this dangerous defect over the years,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “We rely on companies to report these safety issues immediately, as the law requires, to prevent unnecessary injuries.  The Department of Justice will continue to protect the public against companies that put profits over safety.”

“We believe Spectrum Brands and Applica Consumer Products knew about the hazard with these coffeemakers for years,” said CPSC Chairman Elliot F. Kaye.  “Despite the fact that these firms were required to report potential hazards and risks to CPSC immediately, it appears they chose to profit from continued sales instead.  Their failure to follow the law and report, resulted in dozens of injuries to unsuspecting customers.”

The companies distributed the coffeemakers from 2008 to 2012.  The complaint alleges that beginning as early as 2009 and continuing until April 2012, the companies received approximately 1,600 consumer complaints about defective carafe handles.  The coffeemakers were recalled in June 2012. 

The matter is being handled by the Civil Division’s Consumer Protection Branch and the CPSC’s Office of the General Counsel.

The claims made in the complaint are allegations only, and there has been no determination of liability.

Vanita Gupta, head of the Civil Rights Division, and U.S. Attorney A. Lee Bentley III of the Middle District of Florida announced today the indictment by a federal grand jury of U.S. Bureau of Prison (BOP) Correction Officers (COs) William Houghton and Eddie Rodas-Castro. 

The indictment charges CO Houghton with violating the civil rights of an inmate inside the Coleman Correctional Facility in Coleman, Florida, on March 22, 2014, by striking the inmate repeatedly in the head and face, causing him injury.  The indictment also charges CO Houghton and CO Rodas-Castro with obstruction of justice by falsifying BOP reports and making false statements to federal investigators regarding the assault. 

This case is being investigated by the FBI and the U.S. Department of Justice’s Office of Inspector General, and is being prosecuted by Trial Attorney Roy Conn of the Civil Right Division and Assistant U.S. Attorney Robert Bodnar of the Middle District of Florida.

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

A Chicago man was indicted by a grand jury sitting in the Northern District of Illinois for using stolen identities to file false federal income tax returns, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Zachary T. Fardon of the Northern District of Illinois.

Carlos L. Smith was arraigned earlier today on a 34-count indictment.  He was charged with 14 counts of wire fraud, nine counts of theft of government funds, six counts of aggravated identity theft and five counts of filing false income tax returns.  According to the allegations in the indictment, beginning in February 2013 and continuing through April 15, 2015, Smith operated CLS Financial Services, a company that assisted with credit repair, business consulting and tax return preparation.  Smith used individuals’ names and social security numbers to prepare false tax returns that each claimed thousands of dollars in tax refunds.  The U.S. Treasury refund checks were mailed to addresses linked to Smith or directly deposited into bank accounts that Smith controlled.  Smith also filed fraudulent tax returns in his own name.  In total, Smith prepared false tax returns that claimed refunds of more than $400,000.

If convicted, Smith faces a statutory maximum sentence of 20 years in prison for each wire fraud count, a statutory maximum sentence of 10 years in prison for each theft of government funds count, a mandatory minimum sentence of two years in prison for aggravated identity theft, and a statutory maximum sentence of three years in prison for each count of filing false income tax returns.  Smith also faces potential financial penalties, including fines and restitution.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Fardon commended special agents of IRS-Criminal Investigation and the U.S. Postal Inspection Service, who investigated the case, and Trial Attorneys Sonia M. Owens, John T. Mulcahy and Ryan R. Raybould of the Tax Division, who are prosecuting the case.  Ciraolo also thanked the U.S. Attorney’s Office in Chicago for their substantial assistance.