District Not Recorded

A federal grand jury in San Juan, Puerto Rico, returned an indictment against five individuals for participating in bid rigging and fraud conspiracies at an auction for public school bus transportation contracts in Puerto Rico’s Caguas municipality, the Department of Justice announced today.

A seven-count felony indictment was filed yesterday in U.S. District Court of the District of Puerto Rico in San Juan against five bus transportation company owners: Gavino Rivera-Herrera, Luciano Vega-Martínez, Alfonso Gonzales-Nevarez, José L. Arroyo-Quiñones and René Garay-Rodríguez. 

Count one charges the bus owners with participating in a conspiracy to rig bids and allocate the market for public school bus transportation services in the Caguas municipality.  The second count charges the bus owners with conspiracy to commit mail fraud and counts three through seven charge the bus owners with committing mail fraud.  According to the indictment, the defendants and others defrauded, and conspired to defraud, the Puerto Rico Department of Education and the Caguas municipality, among others, in order to fraudulently obtain contracts for school bus transportation services.

These charges relate to a 2013 Caguas municipality auction, at which four-year contracts for public school bus transportation were awarded.  The indictment alleges that the defendants participated in the charged offenses from around August 2013 until at least May 2015. 

“The defendants are charged with depriving taxpayers, the Municipality of Caguas and the Puerto Rico Department of Education of the benefits of a competitive bidding process for school bus contracts,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division.  “This is unacceptable.  The Division will continue its efforts to protect U.S. citizens across the country and hold accountable those who subvert competition.”

“Today’s case is the latest in our ongoing efforts to investigate and prosecute financial crimes, one of the priorities of the Department of Justice,” said U.S. Attorney Rosa Emilia Rodríguez-Vélez of the District of Puerto Rico.  “These arrests serve as a reminder that federal law enforcement agencies intend to vigorously prosecute those who manipulate the economic system to enrich themselves at the expense of the government.”

"Price fixing victimizes the consumer which in this case are the honest, hardworking and tax paying citizens living in Puerto Rico,” said Special Agent in Charge Carlos Cases of the FBI’s San Juan Division.  “Let there be no doubt, the FBI, along with law enforcement partners, will continue to investigate, charge and prosecute any individuals involved in these type of acts."

The bus owners are charged with bid rigging and market allocation in violation of the Sherman Act, which carries a maximum sentence of 10 years in prison and a $1 million criminal fine for individuals.  The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than $1 million.  Each count of mail fraud, and conspiracy to commit mail fraud, carries a maximum sentence of 20 years in prison and a $250,000 fine.

This is the first case resulting from an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in Puerto Rico’s school bus transportation services industry.  This investigation is being conducted by the Antitrust Division’s Washington Criminal I Section, the U.S. Attorney’s Office of the District of Puerto Rico, the FBI’s Puerto Rico Field Office and the U.S. Department of Education Office of Inspector General.  Anyone with information in connection with this investigation is urged to call the Antitrust Division’s Washington Criminal I Section at 202-307-6694, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Puerto Rico Field Office at 787-754-6000.

A federal court has barred a Doral, Florida, man and his businesses from preparing federal tax returns for others, the Justice Department announced today.

The civil injunction order, to which Eleuterio Almanzar consented, was entered by U.S. District Court Judge Jose E. Martinez of the Southern District of Florida.  The government’s complaint alleged that Almanzar prepared federal income tax returns for customers that understate the tax that is due or seek refunds larger than are appropriate.  The injunction also bars Almanzar’s businesses, Almanzar Tax Accounting & Consulting Corp. and Almanzar Financial Services Corp., from continuing to prepare tax returns.

According to the complaint, the tax understatements were the result of improper education credits, first time homebuyer tax credits, earned income tax credits, charitable deductions and business expense deductions that Almanzar claimed for his customers without performing the required due diligence and despite the absence of any supporting documentation.  Because some of these credits are refundable credits, the improper claims often resulted in refunds that were larger than appropriate, according to the suit.  The Internal Revenue Service (IRS) interviewed several of Almanzar’s customers, who stated that the improper deductions and credits were not based on information they provided to Almanzar, and that they did not know that the improper deductions and credits had been taken on their tax return until after their return was filed.

The injunction requires Almanzar to provide a list of customers that identifies by name, social security number, address, e-mail address, telephone number and tax periods all persons for whom he has prepared federal tax returns or claims for refund since Jan. 1, 2009.

For the returns Almanzar prepared since 2009, which the IRS examined, the average tax deficiency was $3,249 per return, according to the complaint.  Given the number of returns Almanzar has prepared since 2009, he has potentially caused millions of dollars of harm to the U.S. Treasury.  

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

Today the Department of Justice proposed legislation that would require states or localities whose territory includes part or all of an Indian reservation, an Alaska Native village, or other tribal lands to locate at least one polling place in a venue selected by the tribal government. 

“The Department of Justice is deeply committed to ensuring that every eligible individual is able to exercise his or her fundamental right to vote,” said Attorney General Loretta E. Lynch.  “That’s why, today, I am calling on Congress to help remove the significant and unnecessary barriers that for too long have confronted American Indians and Alaska Natives attempting to cast their ballots.  The legislation we recommend today will make this nation stronger by extending meaningful voting opportunities to native populations, by encouraging full participation in our democratic institutions, and by bringing us closer to our most cherished ideals.”

“As citizens of a nation founded upon the principles of liberty and equality, Native Americans have faced unacceptable barriers to participating in the franchise, a situation aggravated by a history of discrimination, poverty and — significantly — great distances from polling places,” said Acting Associate Attorney General Stuart Delery.  “In spite of many reforms made possible by the Voting Rights Act and other measures, voting rates among Native Americans remain disproportionately low.  The legislation proposed today would address this unacceptable gap and we look forward to working with Congress to see it enacted.”

American Indians and Alaska Natives have faced significant obstacles that have prevented them from enjoying equal access to polling places and equal opportunities to cast a ballot.  In addition to suffering from a long history of discrimination, the distance many American Indian and Alaska Native citizens must travel to reach a polling place presents a substantial and ongoing barrier to full voter participation.  Following formal consultations with Indian tribes, the Department of Justice believes that there is a pressing need for federal legislation to ensure equal access to voting by Native American voters.

Today, the Department of Justice sent a letter to Congress with a legislative proposal, which would ensure that American Indian and Alaska Natives have access to at least one polling place in their communities to cast their ballots and require a number of additional obligations to ensure parity with other polling places.

This legislative proposal, a stand-alone bill, would:                           

• Enable Native Americans to vote on or near tribal lands, by requiring any state or local election administrator whose territory includes part or all of an Indian reservation, an Alaska Native village, or other tribal lands to locate at least one polling place in a venue selected, and made available for the purpose of conducting elections, by the tribal government.

• Require states to make voting machines, ballots, and other voting materials and equipment available at these tribally located polling places to the same extent that they are available at other polling places in the state.

• Require states to provide compensation and other benefits to election officials and poll workers at these polling places to the same extent as at other polling places in the state.

• Require states to use the same voting procedures at these polling places as at other polling places in the state — potentially including election-day voting, early voting, the hours during which polling places are open, the operation of voting mechanisms or systems, and same-day registration.

• Allow states to meet their obligations by either creating new polling places or relocating existing ones.

• Allow tribes with larger populations or land bases to request more than one polling place.

• Make the states’ obligations contingent on the tribe filing a timely request and certifying that it has arranged for access to, and appropriate staffing for, the polling facility.

• Require the tribe to ensure that the staffers for the polling place are properly trained.

• Require the tribe to ensure that the polling place will be open and accessible to all eligible citizens who reside in the precinct, regardless of whether they are Indians or non-Indians.

The Department of Justice is committed to ensuring equal access to voting for Native American voters.  This proposal would address serious voting obstacles faced by citizens who are members of Indian tribes and Alaska Native villages; provide equal access to polling places for all eligible citizens, including members of tribes and villages; reinforce our nation’s commitment to the fundamental right to vote; and strengthen the government-to-government relationship between the United States and tribal nations.   

In 1975, recognizing the barriers to full participation that Native Americans continued to confront, Congress expressly included American Indians and Alaska Natives as protected groups under the special provisions of the Voting Rights Act.  Sections 4 and 5 of the Voting Rights Act prohibited many jurisdictions with large American Indian or Alaska Native populations from changing their voting laws until they could prove that the change would not create new barriers to effective participation.  A number of jurisdictions with large Native American populations that have limited English proficiency — in six states, including Alaska — are also covered by Section 203 of the Voting Rights Act, which requires bilingual election materials and assistance.

Despite these reforms, participation rates among American Indians and Alaska Natives continue to lag behind turnout rates among non-Native voters.  For example, in Alaska, turnout among Alaska Natives often falls 15 to 20 or more percentage points below the non-Native turnout rate.  The causes of these disparities are complex, but the reality is that political participation by Native Americans consistently trails that of non-Natives and unequal access to polling places is a significant contributing factor.   

Review the legislation at www.justice.gov/tribal/department-justice-proposes-legislation-improve-access-voting-american-indians-and-alaska.

A Detroit federal grand jury returned a one-count indictment against two executives of a Japanese automotive parts manufacturer for their participation in a conspiracy to fix prices and rig bids of automotive parts, the Department of Justice announced today.

The indictment, filed today in the U.S. District Court for the Eastern District of Michigan, charges Norio Teranishi, formerly of NGK Spark Plug Co. Ltd., and Hisashi Nakanishi of NGK Spark Plug, with conspiring to fix the prices of spark plugs, standard oxygen sensors, and air fuel ratio sensors, sold to DaimlerChrysler AG, Ford Motor Company, Fuji Heavy Industries (Subaru), General Motors Company, Honda Motor Company Ltd., Nissan Motor Co. Ltd., Toyota Motor Corporation, and certain of their U.S. subsidiaries.

Teranishi is the former General Manager of Sales and Vice-Head of the Automotive Component Group at NGK Spark Plug.  During the alleged conspiracy, Nakanishi served as the Managing Director of NGK Spark Plug Europe.  

The indictment alleges, among other things, that beginning at least as early as January 2000 and continuing until at least July 2011, Teranishi and Nakanishi, and their co-conspirators participated in, and directed, authorized or consented to the participation of subordinate employees in, meetings with co-conspirators and reached collusive agreements to rig bids, allocate the supply, and fix the price of spark plugs, standard oxygen sensors, and air fuel ratio sensors sold to certain automobile manufacturers, in the United States and elsewhere.

“As a result of Antitrust Division’s automotive parts investigation, more than 50 individuals have been held accountable for corrupting the competitive process in this important global market,” said Deputy Assistant Attorney General Brent Snyder of the Antitrust Division’s Criminal Enforcement Program.  “The Antitrust Division will continue to vigorously prosecute those individuals who engaged in criminal antitrust violations in this vital market.”

“The criminal manipulation of the global automotive parts market through price fixing and bid rigging is a serious offense,” stated Special Agent in Charge Paul M. Abbate of the FBI’s Detroit Field Office.  “The FBI, together with the Department of Justice Antitrust Division, will continue to aggressively pursue those who seek to commit criminal antitrust violations in order to gain a competitive advantage through corruption of the global marketplace.”

NGK Spark Plug is a corporation organized and existing under the laws of Japan with its principal place of business in Nagoya, Japan.  On Oct. 8, 2014, NGK Spark Plug pleaded guilty and agreed to pay a $52.1 million criminal fine for its role in the conspiracy.

Including Teranishi and Nakanishi, 55 individuals have been charged in the government’s ongoing investigation into market allocation, price fixing and bid rigging in the automotive parts industry.  Additionally, 35 companies have pleaded guilty or agreed to plead guilty and have agreed to pay a total of more than $2.5 billion in criminal fines.

Teranishi and Nakanishi are charged with price fixing and bid rigging in violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million criminal fine for individuals.  The maximum fine for an individual 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 indictment is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by the Antitrust Division’s criminal enforcement sections and the FBI.  Today’s charge was brought by the Antitrust Division’s Washington Criminal I Section and the FBI’s Detroit Field Office, with the assistance of the FBI headquarters’ International Corruption Unit.  Anyone with information on price fixing, bid rigging and other anticompetitive conduct related to other products in the automotive parts industry should contact the Antitrust Division’s Citizen Complaint Center at 888-647-3258, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Detroit Field Office at 313-965-2323.

Defendant Also Ordered to Forfeit More Than $1.28 Million

A California man was sentenced to 13 months in prison today for his operation of the myRedBook.com website to facilitate prostitution.  This represents the first federal conviction of a website operator for facilitation of prostitution.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Melinda Haag of the Northern District of California, Special Agent in Charge David J. Johnson of the FBI’s San Francisco Field Office and Special Agent in Charge José M. Martinez of the Internal Revenue Service-Criminal Investigation (IRS-CI) Oakland Field Office made the announcement.

Eric Omuro, also known as Red, 53, of Mountain View, California, pleaded guilty on Dec. 11, 2014, before U.S. District Judge William H. Orrick of the Northern District of California to using a facility of interstate commerce with the intent to facilitate prostitution.  As part of his plea agreement, Omuro agreed to forfeit more than $1.28 million in cash and property, as well as the sfRedBook.com and myRedBook.com domain names.

In connection with his guilty plea, Omuro admitted that from April 2010 until June 25, 2014, he owned, managed and operated a website known as myRedBook.com, which was previously known as sfredbook.com.  Omuro admitted that the website hosted advertisements posted by prostitutes containing explicit photos, graphic descriptions of sexual services offered and rates for the sexual services.  The advertisements were searchable by geographic location, including cities throughout California, other U.S. states and Canada.

Omuro admitted that members of his website and prostitutes typically used acronyms for sex acts, which were defined in graphic detail in the website’s “Terms and Acronyms” section.  While prostitutes could post advertisements for free, myRedBook.com offered additional options for a fee.  For example, prostitutes could pay a fee to have their advertisement featured more prominently on the website.  Similarly, customers could access myRedBook.com for free.  If a customer purchased a membership, however, the customer obtained early and enhanced access to prostitute reviews, enhanced prostitute review search options and access to additional VIP forums, among other things.

According to an affidavit submitted in connection with the sentencing hearing, the FBI identified more than 50 juveniles who were also advertised on myRedBook for the purpose of prostitution.

This case was investigated by the FBI’s San Francisco Field Office, the IRS-CI and the Oakland, California, Police Department.  The case is being prosecuted by the Criminal Division’s Child Exploitation and Obscenity Section and U.S. Attorney’s Office of the Northern District of California.  The Criminal Division’s Office of International Affairs provided assistance to the prosecution.

The former assistant administrator of Riverside General Hospital was sentenced today to 40 years in prison for his role in a $116 million Medicare fraud scheme.  To date, 10 individuals have pleaded guilty or been convicted for their involvement in the scheme.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Kenneth Magidson of the Southern District of Texas made the announcement.

Mohammad Khan, 65, of Houston, the assistant administrator who oversaw many of the partial hospitalization programs (PHPs) at Riverside General Hospital, pleaded guilty in February 2012 to conspiracy to commit health care fraud, conspiracy to pay and receive kickbacks and paying illegal kickbacks.  He was sentenced by U.S. District Court Judge Sim Lake of the Southern District of Texas.  He was also ordered to pay restitution in the amount of $31,321,200.

According to admissions made in connection with his guilty plea, from January 2008 through February 2012, Khan and others at Riverside General Hospital operated a scheme to defraud Medicare by submitting claims for PHP services that were not medically necessary and, in some cases, never provided.  Prior to Khan’s arrest, Riverside submitted over $116 million in claims to Medicare for PHP services purportedly provided to the recruited beneficiaries, when in fact, the PHP services were medically unnecessary or never provided.  Khan also admitted that he and his co-conspirators paid kickbacks to patient recruiters and to owners and operators of group care homes in exchange for which those individuals delivered ineligible Medicare beneficiaries to the hospital’s PHPs.

Others involved in the fraudulent scheme already have pleaded guilty and are awaiting sentencing.  Earnest Gibson III, the former president of Riverside; his son, Earnest Gibson IV, who operated a Riverside PHP; Regina Askew, a patient file auditor and group home operator; and Robert Crane, a patient recruiter, were all convicted after jury trial in November 2014 and await sentencing.  William Bullock, an operator of a Riverside satellite location, as well as Leslie Clark, Robert Ferguson, Waddie McDuffie and Sharonda Holmes, who were involved in paying or receiving kickbacks, also have pleaded guilty to their roles in the scheme.

The case was investigated by the FBI, Internal Revenue Service Criminal Investigation and Texas Attorney General’s Medicaid Fraud Control Unit, with assistance from Health & Human Services’ Office of the Inspector General, Railroad Retirement Board’s Office of Inspector General and Office of Personnel Management’s Office of Inspector General.  The case was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office of the Southern District of Texas.  The case is being prosecuted by Assistant Chief Laura M.K. Cordova 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 nearly 2,100 defendants who collectively have billed the Medicare program for more than $6.5 billion.  In addition, the HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

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

The Department of Justice, the Environmental Protection Agency (EPA), the District of Columbia and DC Water today announced an agreement to modify  a 2005 federal consent decree allowing DC Water to incorporate green infrastructure in its long-term strategy for curtailing combined sewer overflows (CSOs).

The modification, filed yesterday in federal district court in Washington, D.C., gives DC Water the go-ahead to pursue an integrated green/gray infrastructure approach to address water quality issues in the Rock Creek and Potomac watersheds resulting from combined sewer overflows.  This integrated approach utilizes green infrastructure in a targeted and sound engineering manner to reduce combined sewer overflows.  Green infrastructure uses vegetation, soils and natural processes that mimic nature, to soak up and store rainwater water where it falls to control wet weather pollution and create healthier urban environments. 

“This innovative plan will significantly reduce sewer overflows into our rivers and capture rainwater in the area’s ecologically important watersheds,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division.  “This plan puts Washington, D.C. among America’s green city innovators, and it reflects the Justice Department’s and EPA’s commitment to work with cities to safeguard public health, adapt to climate change, and improve aging sewer infrastructure using smart and environmentally sound solutions.” 

“This modification represents significant efforts by all the parties to make green infrastructure an integral part of the solution to curtailing sewer overflows and protecting urban waters,” said Regional Administrator Shawn M. Garvin for EPA.  “We expect that the green infrastructure components of this modification will provide a model of sustainability for others to follow.”

The green infrastructure projects in Rock Creek and Potomac watersheds are slated to begin in 2015 and 2016 respectively, providing more immediate pollution reductions, enhancements to community livability and green jobs opportunities.  

Specifically the consent decree modification includes:

• Using green infrastructure to retain the first 1.2 inches of rainwater on 365 acres in the Rock Creek area and 133 acres in the Potomac watershed.
   
• Potentially eliminating the Rock Creek storage tunnel and significantly decreasing the size of the Potomac tunnel depending upon the success demonstrated by green infrastructure.
   
• The district providing the public space necessary for DC Water to construct the proposed green infrastructure  projects and making changes to district regulations, codes, standards, guidelines and policies needed for implementation.
   
• Requiring the district and DC Water to work together to coordinate capital projects and expenditures for implementing green infrastructure, enabling the efficient use of resources and minimizing costs to rate-payers and taxpayers.

As part of the agreement, DC Water will have an additional five years to complete implementation in the Potomac and Rock Creek watersheds beyond those provided for in the original 2005 consent decree, which established a compliance schedule to construct tunnels in the Anacostia, Potomac and Rock Creek watersheds.  The schedule for completing the Anacostia tunnel remains unchanged.

Under this consent decree, DC Water will continue moving forward under this consent decree on the construction of the overall CSO control project which is known as the Clean Rivers Program.  This program involves completion of, in addition to the components described above, control structures and tunnels for the Anacostia watershed, which contributes more than 65 percent of the sewage discharged to District waters annually.  Major portions of this tunnel system are scheduled for completed and in operation in 2018.  When the Anacostia tunnel complex is fully completed in 2025, it will nearly eliminate combined sewer overflows to the Anacostia in an average rainfall year.

In November 2011, DC Water proposed to EPA to incorporate green infrastructure into its overflow control strategies for the Potomac and Rock Creek watersheds.  As part of the request, DC Water submitted analysis demonstrating that modified CSO controls in the Potomac and green infrastructure in Rock Creek could provide equivalent pollution reductions to those in the original plan and were economically feasible. 

In early 2014, after conducting a public participation process, DC Water filed a request to EPA to modify the plan for CSO controls and deadlines set forth in the 2005 consent decree.  During the consent decree modification discussions, DC Water has continued to move forward in a timely fashion to enhance its nutrient reduction treatment systems at the Blue Plains Advanced Wastewater Treatment Plant.  This is an important element of the Chesapeake Bay watershed restoration effort because the Blue Plains facility is the largest point source of nutrient pollution in the Chesapeake Bay drainage area.  

The proposed consent decree modification is subject to a 30-day public comment period once it is published for public notice in the federal register and must be approved by the court. The proposed consent decree modification will be available at: www.justice.gov/enrd/consent-decrees

Christopher Hayes, the President and owner of a Florida auction house was sentenced today in federal court in West Palm Beach, Florida, to 36 months in prison followed by two years of supervised release for his role in the illegal wildlife smuggling conspiracy in which he bought, sold and smuggled rhinoceros horns and objects made from rhino horn, elephant ivory and coral that were smuggled from the United States to China.  Hayes’ corporation, Elite Estate Buyers Inc., located in Boynton Beach, Florida, was ordered to pay a $1.5 million criminal fine to the Lacey Act reward fund.  The court also banned the corporation from trading wildlife during a five year term of probation. 

The sentences were announced today by Assistant Attorney General John C. Cruden for the Department of Justice’s Environment and Natural Resources Division, U.S. Attorney Wifredo Ferrer for the Southern District of Florida and Director Dan Ashe for the U.S. Fish and Wildlife Service (FWS). 

“Those involved in the auction business have a special responsibility to make sure that their business does not further the illegal trade in wildlife,” said Assistant Attorney General Cruden.  “Each illegally-traded horn or tusk represents not an antique object but a dead animal.  Wildlife trafficking entails poaching, bribery, smuggling and organized crime.”

“Illegal wildlife trade threatens the survival of many endangered species,” said U.S. Attorney Ferrer.  “The Department of Justice has made it a priority to protect our natural resources.  Our enforcement efforts are in place to stop illegal trade practices that endanger the conservation of nature.”

“This case highlights the part seemingly legitimate auction houses and other businesses can play in the illegal trafficking of wildlife and wildlife products – as well as the direct connection U.S. businesses and citizens have to this international crisis,” said Director Ashe.  “This conviction of Elite Estate Buyers – the first of such a company and its president – demonstrates our resolve in going after all those involved in the illegal wildlife trade and should serve as a warning to similar operations, both here in the United States and abroad, that they are on our radar screen and will be brought to justice for their role in the destruction of these animals.”

According to a factual statement filed in court at the time of their guilty plea, Hayes and Elite admitted to being part of a felony conspiracy in which the company helped smugglers traffic in endangered and protected species in interstate and foreign commerce and falsified records and shipping documents related to the wildlife purchases in order to avoid the scrutiny of the FWS and U.S. Customs and Border Protection.  Elite aided foreign buyers by directing them to third-party shipping stores that were willing to send the wildlife out of the country with false paperwork.  Charges were brought after Hayes purchased endangered black rhinoceros horns from an undercover special agent with the U.S. Fish & Wildlife Service. 

According to records filed in court, Hayes and his company sold six endangered black rhino horns.  Two of the horns were sold for $80,500 to Ning Qiu, a Texas resident involved in smuggling the horns to China.  Qiu has pleaded guilty to being part of a broader conspiracy to smuggle rhinoceros horns and items made from rhinoceros horns to Zhifei Li, the owner or an antique business in China and the ringleader of a criminal enterprise that smuggled 30 rhinoceros horns and numerous objects made from rhinoceros horn and elephant ivory worth more than $4.5 million from the United States to China.  Qiu was sentenced to serve 25 months in prison on May 14, 2015, in Frisco, Texas, and Li was sentenced in June 2014 to a prison term of 70 months in New Jersey. 

Elite and Hayes also admitted to selling items made from rhinoceros horn, elephant ivory and coral to the President of an antiques business in Canada, who they then directed to a local shipper that agreed to mail the items in Canada without required permits.  That individual, Xiao Ju Guan, was sentenced to 30 months in prison on March 25, 2015 in New York.

The prosecution of Elite and Hayes is part of Operation Crash, a continuing effort by the Special Investigations Unit for the FWS’ Office of Law Enforcement in coordination with the Department of Justice to detect, deter and prosecute those engaged in the illegal killing of rhinoceros and the unlawful trafficking of rhinoceros horns and elephant ivory.

The investigation is continuing and is being handled by the FWS Office of Law Enforcement, the U.S. Attorney’s Office for the Southern District of Florida and the U.S. Department of Justice’s Environmental Crimes Section.  The prosecution of Hayes and Elite was conducted by Assistant U.S. Attorney Thomas Watts-Fitzgerald for the Southern District of Florida and Trial Attorney Gary N. Donner of the Environmental Crimes Section.

A licensed physician and former owner of a Detroit-area medical practice pleaded guilty today for his role in a $4.2 million health care fraud scheme.

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

Hicham Elhorr, M.D., 47, of Dearborn, Michigan, pleaded guilty before U.S. District Judge Nancy G. Edmunds of the Eastern District of Michigan to one count of conspiracy to commit health care fraud.  A sentencing hearing is scheduled for Oct. 20, 2015.

Elhorr owned House Calls Physicians P.L.L.C., which was located in Allen Park, Michigan.  According to admissions in his plea agreement, from approximately August 2008 to September 2012, Elhorr conspired with others to commit health care fraud by billing Medicare for purported in-home physician services that were not provided by licensed physicians.  Elhorr admitted that he employed unlicensed individuals who held themselves out as licensed physicians and purported to provide physician home visits and other services to Medicare beneficiaries in Michigan.  The unlicensed individuals prepared medical documentation that Elhorr and other licensed physicians signed as if they had performed the visits when, in fact, Elhorr and the other licensed physicians had not treated the beneficiaries.  The visits were then billed as if performed by the licensed physicians.

According to court documents, between approximately March 2008 and September 2012, House Calls Physicians billed Medicare more than $11.5 million for the cost of physician home services.  Of that amount, Elhorr admitted that he caused the submission of approximately $4.2 million in false and fraudulent claims.

This case was investigated by the FBI and HHS-OIG and brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office of the Eastern District of Michigan.  This case is being prosecuted by Assistant Chief Catherine K. Dick and Trial Attorneys Matthew C. Thuesen and F. Turner Buford 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 nearly 2,100 defendants who have collectively billed the Medicare program for more than $6.5 billion.  In addition, the HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

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

Medco Health Solutions Inc., a wholly-owned subsidiary of the pharmacy benefit manager Express Scripts Holding Company, of Missouri, has agreed to pay the government $7.9 million to settle allegations that it engaged in a kickback scheme in violation of the False Claims Act, the Justice Department announced today.  Medco provides pharmacy benefit management services to clients who receive subsidies under the Medicare Retiree Drug Subsidy program.

“We will continue to pursue pharmacy benefit managers that enter into kickback arrangements with pharmaceutical manufacturers,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “Hidden financial agreements between drug manufacturers and pharmacy benefit managers can improperly influence which drugs are available to patients and the price paid for drugs.”

The settlement resolves allegations that Medco solicited remuneration from AstraZeneca, a pharmaceutical manufacturer, in exchange for identifying Nexium as the “sole and exclusive” proton pump inhibitor on certain of Medco’s prescription drug lists known as formularies.  The United States alleged that Medco received some or all of the remuneration from AstraZeneca in the form of reduced prices on the following AstraZeneca drugs: Prilosec, Toprol XL and Plendil.  The United States contended that this kickback arrangement between Medco and AstraZeneca violated the Federal Anti-Kickback statute, and thereby caused the submission of false or fraudulent claims for Nexium to the Retiree Drug Subsidy Program.  In January 2015, the United States and AstraZeneca reached a $7.9 million settlement to resolve kickback allegations arising out of the same conduct.

“By this agreement we are making important strides in holding pharmacy benefit managers accountable not only in Delaware but nationwide,” said U.S. Attorney Charles M. Oberly III of the District of Delaware.  “I am proud of the tireless work by this office to investigate this case.”

“Pharmacy benefit managers that seek or accept kickbacks will be held accountable for their improper conduct,” said Special Agent in Charge Nick DiGiulio of the U.S. Department of Health and Human Services-Office of Inspector General (HHS-OIG).  “We will continue to crack down on kickback arrangements, which can undermine drug choices for patients and corrode the public’s trust in the health care system.”

This civil settlement resolves a lawsuit filed under the qui tam, or whistleblower, provision of the False Claims Act, which allows private citizens with knowledge of false claims to bring civil actions on behalf of the government and to share in any recovery.  The lawsuit was filed by former AstraZeneca employees Paul DiMattia and F. Folger Tuggle, whose share of the settlement has not been determined.

The settlement with Medco was the result of a coordinated effort among the Civil Division, the U.S. Attorney’s Office of the District of Delaware and HHS-OIG.

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $24 billion through False Claims Act cases, with more than $15.3 billion of that amount recovered in cases involving fraud against federal health care programs.

The False Claims Act lawsuit was filed in the U.S. District Court for the District of Delaware and is captioned United States ex rel. DiMattia et al. v. Medco Health Solutions, Inc., No. 13-1285 (D. Del.).  The claims settled by this agreement are allegations only; there has been no determination of liability.

Attorney General Loretta E. Lynch presided over the Justice Department’s Missing Children’s Day ceremony on Wednesday, May 20, 2015, at 2 p.m.  The event honored three law enforcement officers and an assistant principal for their efforts to recover missing children, rescue children from abuse and prosecute sexual predators.

“This Department of Justice will never pause; will never rest; and will never cease in our effort to protect this country’s young people," said Attorney General Lynch.  "We will do everything we can to find children who have gone missing, to reunite them with their loved ones, and to stand beside them and their families as they do the hard work necessary to recover their lives and restore their futures.  And we will continue to expand and advance this work together."

Speakers included Assistant Attorney General for the Office of Justice Programs Karol V. Mason, Office of Juvenile Justice and Delinquency Prevention (OJJDP) Administrator Robert L. Listenbee, and an abduction survivor and child advocate Carlina White.  More than 250 people attended the annual ceremony, including families of missing children, law enforcement officers, advocates, and others who support programs to recover missing and exploited children. 

During the ceremony, the department recognized efforts to protect children and presented the following awards:

The Attorney General’s Special Commendation recognizes an Internet Crimes Against Children (ICAC) task force or affiliate agency for significant investigative contributions.  Recipient:  Special Agent William Thompson, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, for identifying 28 child victims in 10 states who were manipulated into sharing sexually explicit images of themselves.

The Missing Children’s Law Enforcement Award recognizes a law enforcement officer who made a significant investigative contribution to the safety of children.  Recipient: Cpl. Christopher Heid, Child Recovery Unit, Maryland State Police, for investigating 109 missing children cases and recovering 99 children, as well as participating in 227 human trafficking investigations, and developing an anti-trafficking training program that has educated more than 550 law enforcement officers and victim advocates.

The OJJDP Administrator Missing Children’s Citizen Award honors private citizens for their unselfish acts to safely recover missing or abducted children.  Recipient:  Assistant Principal Jenee’ Littrell, Chaparral High School, El Cajon, California, for supporting an investigation by local law enforcement and the U.S. Departments of Justice and Homeland Security that led to the arrest of 22 people who had recruited nearly 100 middle and high school girls for a gang-related prostitution ring.

The Missing Children’s Child Protection Award honors a law enforcement officer who made a significant investigative contribution to protect children from abuse or victimization.  Recipient:  Special Agent Paul Wolpert, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, for uncovering the videotaped sexual abuse of children between one and five years old.  His investigation led five women to plead guilty to producing child pornography, and to the conviction and life sentence of one man on 31 counts, including producing child pornography.

Since 2000, OJJDP has also hosted a national poster contest for fifth-graders to raise greater awareness about missing children.  This year Sydney Kekel from City School in Grand Blanc, Michigan, received the Missing Children’s Day Art Contest Award.

Affirming its long-standing commitment to help find missing children, the U.S. Postal Service® issued a new stamp on May 18, 2015.  Designed by Ethel Kessler, the new Forever® stamp features a photograph by Harald Biebel showing a small bunch of purple forget-me-nots with a lone flower against a white background.  The forget-me-not is the symbol for International Missing Children’s Day, which occurs on the same day as National Missing Children’s Day, May 25.

President Ronald Reagan proclaimed May 25, 1983, the first National Missing Children’s Day to remember Etan Patz, a six-year-old boy who disappeared from a New York City street corner on May 25, 1979.  Missing Children’s Day honors his memory and the memories of children still missing. 

About the Office of Justice Programs (OJP)

OJP, headed by Assistant Attorney General Karol V. Mason, provides federal leadership in developing the nation’s capacity to prevent and control crime, administer justice and assist victims.  OJP has six components: the Bureau of Justice Assistance; the Bureau of Justice Statistics; the National Institute of Justice; the Office of Juvenile Justice and Delinquency Prevention; 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.

Dr. Sean Orr of Jacksonville, Florida, has agreed to pay $150,000 to settle allegations that he violated the False Claims Act by providing medically unnecessary services and drugs to federal health care program beneficiaries, the Department of Justice announced today.  Dr. Orr is a neurologist formerly employed by Baptist Neurology Inc. and Baptist Medical Center-Jacksonville. 

“The public relies on doctors to treat their patients with integrity and not waste taxpayer dollars,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “The Justice Department will continue to hold accountable physicians who make false diagnoses or otherwise provide medically unnecessary treatment.”   

This settlement resolves allegations that, from September 2009 to April 2012, Orr knowingly misdiagnosed certain patients with various neurological disorders, such as multiple sclerosis (MS), which caused federal health care programs to be billed for medically unnecessary services and drugs.  The alleged misconduct affected beneficiaries in the Medicare, TRICARE and the Federal Employees Health Benefits programs.  The settlement is based on Orr’s ability to pay.   

“Our office will relentlessly pursue physicians who misdiagnose and harm patients to satisfy their financial greed,” said U.S. Attorney A. Lee Bentley III of the Middle District of Florida.  “We expect physicians to act honestly, with integrity, and in accordance with the approved standards of medical care.  When they do not, we all suffer.”

“Physicians who knowingly misdiagnose serious illnesses and provide unnecessary services in order to bill federal healthcare programs violate the trust their patients and the taxpayers have in the medical profession,” said Special Agent in Charge Shimon R. Richmond of the U.S. Department of Health and Human Services’ Office of Inspector General (HHS-OIG).  “Our agency will continue to thoroughly investigate health care professionals involved in such duplicity and waste.”   

In 2014, the government settled related allegations against Baptist Health System Inc. – Orr’s former employer and the parent company for Baptist Neurology Inc. and Baptist Medical Center-Jacksonville – for $2.5 million. 

“Dr. Orr violated the trust placed in him by his patients,” said Inspector General Patrick E. McFarland of the U.S. Office of Personnel Management (OPM).  “Federal employees deserve health care providers who meet the highest standards of ethical and professional behavior.  Today’s settlement reminds all providers that they must observe those standards, and reflects the commitment of federal law enforcement organizations to pursue improper and illegal conduct that puts the health and wellbeing of their patients at risk.” 

The government’s investigation was initiated by a qui tam, or whistleblower, lawsuit filed under the False Claims Act by Verchetta Wells, a former Baptist Neurology Inc. employee.  The act allows private citizens to file suit for false claims on behalf of the government and to share in the government’s recovery.  Wells will receive $26,250 from the settlement with Orr. 

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $24 billion through False Claims Act cases, with more than $15.3 billion of that amount recovered in cases involving fraud against federal health care programs.

This settlement is the result of a coordinated effort among the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office of the Middle District of Florida, HHS-OIG, the Defense Health Agency’s Program Integrity Office, and OPM’s Office of Inspector General.

The claims resolved by this settlement are allegations only, and there has been no determination of liability.  The lawsuit against Orr was filed in the U.S. District Court for the Middle District of Florida and is captioned United States ex rel. Wells v. Sean Orr, M.D. et al.

Citicorp, JPMorgan Chase & Co., Barclays PLC, The Royal Bank of Scotland plc Agree to Plead Guilty In Connection With The Foreign Exchange Market and Agree to Pay More Than $2.5 Billion In Criminal Fines

Five major banks – Citicorp, JPMorgan Chase & Co., Barclays PLC, The Royal Bank of Scotland plc and UBS AG – have agreed to plead guilty to felony charges.   Citicorp, JPMorgan Chase & Co., Barclays PLC, and The Royal Bank of Scotland plc have agreed to plead guilty to conspiring to manipulate the price of U.S. dollars and euros exchanged in the foreign currency exchange (FX) spot market and the banks have agreed to pay criminal fines totaling more than $2.5 billion.  A fifth bank, UBS AG, has agreed to plead guilty to manipulating the London Interbank Offered Rate (LIBOR) and other benchmark interest rates and pay a $203 million criminal penalty, after breaching its December 2012 non-prosecution agreement resolving the LIBOR investigation.

Attorney General Loretta E. Lynch, Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Assistant Director in Charge Andrew G. McCabe of the FBI’s Washington Field Office and Director Aitan Goelman of the Commodity Futures Trading Commission’s Division made the announcement. 

“Today’s historic resolutions are the latest in our ongoing efforts to investigate and prosecute financial crimes, and they serve as a stark reminder that this Department of Justice intends to vigorously prosecute all those who tilt the economic system in their favor; who subvert our marketplaces; and who enrich themselves at the expense of American consumers,” said Attorney General Lynch.  “The penalty these banks will now pay is fitting considering the long-running and egregious nature of their anticompetitive conduct.  It is commensurate with the pervasive harm done.  And it should deter competitors in the future from chasing profits without regard to fairness, to the law, or to the public welfare.”

“The charged conspiracy fixed the U.S. dollar – euro exchange rate, affecting currencies that are at the heart of international commerce and undermining the integrity and the competitiveness of foreign currency exchange markets which account for hundreds of billions of dollars worth of transactions every day,” said Assistant Attorney General Baer.  “The seriousness of the crime warrants the parent-level guilty pleas by Citicorp, Barclays, JPMorgan and RBS.”

“The five parent-level guilty pleas that the department is announcing today communicate loud and clear that we will hold financial institutions accountable for criminal misconduct,” said Assistant Attorney General Caldwell.  “And we will enforce the agreements that we enter into with corporations.  If appropriate and proportional to the misconduct and the company’s track record, we will tear up an NPA or a DPA and prosecute the offending company.”

“These resolutions make clear that the U.S. Government will not tolerate criminal behavior in any sector of the financial markets,” said Assistant Director in Charge McCabe.  “This investigation represents another step in the FBI’s ongoing efforts to find and stop those responsible for complex financial schemes for their own personal benefit.  I commend the special agents, forensic accountants, and analysts, as well as the prosecutors for the significant time and resources they committed to investigating this case.”

According to plea agreements to be filed in the District of Connecticut, between December 2007 and January 2013, euro-dollar traders at Citicorp, JPMorgan, Barclays and RBS – self-described members of “The Cartel” – used an exclusive electronic chat room and coded language to manipulate benchmark exchange rates.  Those rates are set through, among other ways, two major daily “fixes,” the 1:15 p.m. European Central Bank fix and the 4:00 p.m. World Markets/Reuters fix.  Third parties collect trading data at these times to calculate and publish a daily “fix rate,” which in turn is used to price orders for many large customers.  “The Cartel” traders coordinated their trading of U.S. dollars and euros to manipulate the benchmark rates set at the 1:15 p.m. and 4:00 p.m. fixes in an effort to increase their profits. 

As detailed in the plea agreements, these traders also used their exclusive electronic chats to manipulate the euro-dollar exchange rate in other ways.  Members of “The Cartel” manipulated the euro-dollar exchange rate by agreeing to withhold bids or offers for euros or dollars to avoid moving the exchange rate in a direction adverse to open positions held by co-conspirators.  By agreeing not to buy or sell at certain times, the traders protected each other’s trading positions by withholding supply of or demand for currency and suppressing competition in the FX market.

Citicorp, Barclays, JPMorgan and RBS each have agreed to plead guilty to a one-count felony charge of conspiring to fix prices and rig bids for U.S. dollars and euros exchanged in the FX spot market in the United States and elsewhere.  Each bank has agreed to pay a criminal fine proportional to its involvement in the conspiracy: 

• Citicorp, which was involved from as early as December 2007 until at least January 2013,has agreed to pay a fine of $925 million;

• Barclays, which was involved from as early as December 2007 until July 2011, and then from December 2011 until August 2012, has agreed to pay a fine of $650 million;

• JPMorgan, which was involved from at least as early as July 2010 until January 2013, has agreed to pay a fine of $550 million; and

• RBS, which was involved from at least as early as December 2007 until at least April 2010, has agreed to pay a fine of $395 million.

Barclays has further agreed that its FX trading and sales practices and its FX collusive conduct constitute federal crimes that violated a principal term of its June 2012 non-prosecution agreement resolving the department’s investigation of the manipulation of LIBOR and other benchmark interests rates.  Barclays has agreed to pay an additional $60 million criminal penalty based on its violation of the non-prosecution agreement.  

In addition, according to court documents to be filed, the Justice Department has determined that UBS’s deceptive currency trading and sales practices in conducting certain FX market transactions, as well as its collusive conduct in certain FX markets, violated its December 2012 non-prosecution agreement resolving the LIBOR investigation.  The department has declared UBS in breach of the agreement, and UBS has agreed to plead guilty to a one-count felony charge of wire fraud in connection with a scheme to manipulate LIBOR and other benchmark interest rates.  UBS has also agreed to pay a criminal penalty of $203 million.

According to the factual statement of breach attached to UBS’s plea agreement, UBS engaged in deceptive FX trading and sales practices after it signed the LIBOR non-prosecution agreement, including undisclosed markups added to certain FX transactions of customers.  UBS traders and sales staff misrepresented to customers on certain transactions that markups were not being added, when in fact they were.  On other occasions, UBS traders and sales staff used hand signals to conceal those markups from customers.  On still other occasions, certain UBS traders also tracked and executed limit orders at a level different from the customer’s specified level in order to add undisclosed markups.  In addition, according to court documents, a UBS FX trader conspired with other banks acting as dealers in the FX spot market by agreeing to restrain competition in the purchase and sale of dollars and euros.  UBS participated in this collusive conduct from October 2011 to at least January 2013.

In declaring UBS in breach of its non-prosecution agreement, the Justice Department considered UBS’s conduct described above in light of UBS’s obligation under the non-prosecution agreement to commit no further crimes.  The department also considered UBS’s three recent prior criminal resolutions and multiple civil and regulatory resolutions.  Further, the department also considered that UBS’s post-LIBOR compliance and remediation efforts failed to detect the illegal conduct until an article was published pointing to potential misconduct in the FX markets. 

Citicorp, Barclays, JPMorgan, RBS and UBS have each agreed to a three-year period of corporate probation, which, if approved by the court, will be overseen by the court and require regular reporting to authorities as well as cessation of all criminal activity.  All five banks will continue cooperating with the government’s ongoing criminal investigations, and no plea agreement prevents the department from prosecuting culpable individuals for related misconduct.  Citicorp, Barclays, JPMorgan and RBS have agreed to send disclosure notices to all of their customers and counter-parties that may have been affected by the sales and trading practices described in the plea agreements.

Today, in connection with its FX investigation, the Federal Reserve also announced that it was imposing on the five banks fines of over $1.6 billion; and Barclays settled related claims with the New York State Department of Financial Services (DFS), the Commodity Futures Trading Commission (CFTC) and the United Kingdom’s Financial Conduct Authority (FCA) for an additional combined penalty of approximately $1.3 billion.  In conjunction with previously announced settlements with regulatory agencies in the United States and abroad, including the Office of the Comptroller of the Currency (OCC) and the Swiss Financial Market Supervisory Authority (FINMA), today’s resolutions bring the total fines and penalties paid by these five banks for their conduct in the FX spot market to nearly $9 billion. 

This investigation is being conducted by the FBI’s Washington Field Office.This prosecution is being handled by the Antitrust Division’s New York Office and other criminal enforcement sections and the Criminal Division’s Fraud Section.The Justice Department appreciates the substantial assistance provided by the CFTC, OCC, FINMA, FCA, DFS, Securities and Exchange Commission, Federal Reserve Board, and the U.K. Serious Fraud Office.  The Criminal Division’s Office of International Affairs and the U.S. Attorney’s Office in the District of Connecticut have also provided assistance in this matter.

A federal court in Sacramento, California, has permanently barred a former Ripon, California, man from preparing tax returns for others, the Justice Department announced today.

The civil injunction order, to which Sarad Chand consented, was entered by U.S. District Judge Garland E. Burrell Jr. of the Eastern District of California.  According to stipulation, the defendant admitted to repeatedly preparing federal tax returns that understated his customers’ federal tax liabilities.

The complaint alleged that Chand, and others working with him under the business name S. Chand Tax & Accounting Services, prepared tax returns that falsely claimed inflated or fabricated tax credits or deductions.  The suit noted that Chand most frequently prepared returns that falsely inflated unreimbursed employee business expenses.  Chand also created Schedule Cs (Profit or Loss From Business) with false income, while for other clients he created false losses or inflated expenses, according to the suit.  According to the complaint, these fabrications served to improperly reduce the customers’ taxable income and resulted in reduced tax liability or inappropriate tax refunds.  Moreover, according to the complaint, Chand also led his customers to believe that he was a former Internal Revenue Service (IRS) employee, when he was not.

The suit also noted that on May 15, 2014, Chand pleaded guilty to aiding and assisting in the preparation and presentation of a false and fraudulent tax return.  As part of his plea agreement, Chand agreed to the entry of a permanent civil injunction. 

The suit alleged that the IRS had completed examinations of 919 of the approximately 8,155 tax returns Chand prepared from 2008 to 2012, and that nearly all of  the examined returns resulted in a finding of deficiency or denial of a refund claim.  The 886 returns found to be inaccurate had a total tax understatement of more than $2.7 million.

The injunction requires Chand to provide a list of customers for whom he has prepared federal tax returns or claims for refund since Jan. 1, 2012.

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

ConAgra Grocery Products LLC, a subsidiary of ConAgra Foods Inc., today agreed to plead guilty and pay $11.2 million in connection with the shipment of contaminated peanut butter linked to a 2006 through 2007 nationwide outbreak of salmonellosis, or salmonella poisoning, the Department of Justice announced today.  ConAgra Grocery Products LLC is based in Omaha, Nebraska, with a manufacturing facility in Sylvester, Georgia.

Acting Associate Attorney General Stuart F. Delery, Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division and U.S. Attorney Michael J. Moore of the Middle District of Georgia announced the filing of a criminal information against ConAgra Grocery Products alleging a misdemeanor violation of the federal Food, Drug and Cosmetic Act.  The company signed a plea agreement admitting that it introduced Peter Pan and private label peanut butter contaminated with salmonella into interstate commerce during the 2006 through 2007 outbreak.  The plea agreement provides that ConAgra Grocery Products will pay a criminal fine of $8 million and forfeit assets of $3.2 million.  The criminal fine is the largest ever paid in a food safety case. 

“As parents, we can make sure that our kids look both ways before they cross the street and wear a helmet when they ride their bikes,” said Acting Associate Attorney General Delery.  “But we have to rely on the companies that make their food to make sure it is safe.  That’s why the Department of Justice is dedicated to using all the tools we have to ensure the processors and handlers of our food live up to their legal obligations to keep the public’s safety in mind.”

“The safety of the nation’s food supply is a top concern, and every company, large and small, must take appropriate measures to ensure that their products don’t make customers sick,” said Principal Deputy Assistant Attorney General Mizer.  “No company can let down its guard when it comes to these kinds of microbiological contaminants.  Salmonellosis is a serious condition, and a food like peanut butter can deliver it straight to children and other vulnerable populations.”

In February 2007, the U.S. Food and Drug Administration (FDA) and the Centers for Disease Control and Prevention (CDC) announced that an ongoing outbreak of salmonellosis cases in the United States could be traced to Peter Pan and private label peanut butter produced and shipped from the company’s Sylvester peanut butter plant.  The company voluntarily terminated production at the plant on Feb. 14, 2007, and recalled all peanut butter manufactured there since January 2004.  The CDC eventually identified more than 700 cases of salmonellosis linked to the outbreak with illness onset dates beginning in August 2006.  The CDC estimated that thousands of additional related cases went unreported.  The CDC did not identify any deaths related to the outbreak. 

The criminal information, filed in the Middle District of Georgia, specifically alleges that on or about Dec. 7, 2006, the company shipped from Georgia to Texas peanut butter that was adulterated, in that it contained salmonella and had been prepared under conditions whereby it may have become contaminated with salmonella.  The company admitted in the plea agreement that samples obtained after the recall showed that peanut butter made at the Sylvester plant on nine different dates between Aug. 4, 2006, and Jan. 29, 2007, was contaminated with salmonella.  Environmental testing conducted after the recall identified the same strain of salmonella in at least nine locations throughout the Sylvester plant. 

“We, as consumers, take for granted that the food we feed our families is safe,” said U.S. Attorney Moore.  “We count on the companies who prepare and package the things we eat to be just as concerned with the product we put in our mouths as they are with the profit they put in their pockets.  The proposed criminal fine and sentence in this case should sound the alarm to food companies across the country – we are watching, and we are expecting you to hold yourselves to a standard reflective of the trust that your consumers have placed in you.  No more excuses.  A lot of people got very sick because of the conduct in this case and we are committed to doing all we can to make sure that does not happen again.”

As part of the plea agreement, the company admitted that it had previously been aware of some risk of salmonella contamination in peanut butter.  On two dates in October 2004, routine testing at the Sylvester plant revealed what later was confirmed to be salmonella in samples of finished peanut butter.  Company employees attempting to locate the cause of the contamination identified several potential contributing factors, including an old peanut roaster that was not uniformly heating raw peanuts, a storm-damaged sugar silo, and a leaky roof that allowed moisture into the plant and airflow that could allow potential contaminants to move around the plant.  As stated in the plea agreement, while efforts to address some of these issues had occurred or were underway, the company did not fully correct these conditions until after the 2006 through 2007 outbreak.  In public statements after the 2007 recall, company officials hypothesized that moisture entered the production process and enabled the growth of salmonella present in the raw peanuts or peanut dust.

The company also admitted in the plea agreement that between October 2004 and February 2007, employees charged with analyzing finished product tests at the Sylvester plant failed to detect salmonella in the peanut butter, and that the company was unaware some of the employees did not know how to properly interpret the results of the tests.

“U.S. consumers expect and deserve the highest standards of food safety and integrity,” said Acting Commissioner Dr. Stephen Ostroff of the FDA.  “Today’s plea agreement reflects the FDA’s commitment to ensuring the safety of the nation’s food supply and demonstrates that those who risk the health of Americans will be held accountable.”

Following the outbreak and shutdown, the company made significant upgrades to the Sylvester plant to address conditions the company identified after the 2004 incident as potential factors that could contribute to salmonella contamination.  The company also instituted new and enhanced safety protocols and procedures regarding manufacturing, testing and sanitation, which it affirmed in the plea agreement it would continue to follow.

Information about the case and any upcoming court hearings can be found on the Justice Department’s website in the “Food and Dietary Supplements” section.  The case is being prosecuted by the U.S. Attorney’s Office of the Middle District of Georgia and the Civil Division’s Consumer Protection Branch.  This matter was investigated by the FDA’s Office of Criminal Investigations.

The proposed plea agreement and recommended sentence is not final until accepted by the U.S. District Court.

Under a settlement agreement with the United States and the state of Michigan, AK Steel Corporation will pay a civil penalty of $1.35 million for past violations of the Clean Air Act at its Dearborn, Michigan facility, implement a variety of procedures to reduce future violations and install dynamic air filtration systems at the Salina Elementary and Salina Intermediate Schools across Ferney Street from the plant, announced the Department of Justice, the Environmental Protection Agency (EPA) and the Michigan Department of Environmental Quality (MDEQ).                                                      

The settlement will resolve 42 violation notices issued by MDEQ and two notices of violation issued by EPA alleging violations resulting from a wide variety of air emission sources issued against Severstal, the previous owner of the Dearborn facility.  AK Steel purchased the facility in September 2014 and has taken responsibility for past violations and improving its compliance with environmental regulations.

“This settlement will result in better management and monitoring practices at the AK Steel facility and measures that will help prevent and reduce dust and hazardous air pollution in neighboring communities,” said Assistant Attorney General John C. Cruden for the Department of Justice’s Environment and Natural Resources Division.  “In agreeing to this judicially enforceable settlement, AK Steel is committed to prevent the violations of its predecessor from recurring, inform the public about its future environmental compliance and provide cleaner air for local school children.”

“People living in Dearborn and southwest Detroit have long been concerned about air pollution from this steel mill,” said Regional Administrator Susan Hedman for EPA.  “The consent decree will result in improved air quality in these communities and help prevent future violations of the Clean Air Act.”

The consent decree will require AK Steel to develop an environmental management system for the facility with third-party auditing every six months, annually inspect and continuously monitor the performance of the pollution control equipment at the facility’s basic oxygen furnace and implement a fugitive dust control policy to prevent large particulate emissions into the adjacent neighborhoods.  Upon full implementation of the consent decree requirements, particulate matter emissions, including metal hazardous air pollutants, from AK Steel should be reduced by approximately 100 tons per year.

“Manufacturing facilities that are located near neighborhoods and schools have a responsibility to protect the clean air that residents breathe,” said U.S. Attorney Barbara L. McQuade for the Eastern District of Michigan.  “This settlement will directly improve air quality for our community in Dearborn and Southwest Detroit.”   

“This is welcome news for residents who live near the steel mill,” said Director Dan Wyant of MDEQ.  “We are pleased to finally have the past environmental violations addressed and resolved and we look forward to a strong working relationship with new plant owners AK Steel.”

“We have an obligation to protect our air, lands and waterways across the state of Michigan,” said Attorney General Bill Schuette for the state of Michigan.  “This is a step forward for cleaner air for the residents of Dearborn.”

The settlement was lodged with the U.S. District Court for the Eastern District of Michigan and is subject to a 30-day public comment period and final court approval.  It can be viewed at www.justice.gov/enrd/Consent_Decrees.html

United Parcel Service Inc. (UPS) has agreed to pay $25 million to resolve allegations that it submitted false claims to the federal government in connection with its delivery of Next Day Air overnight packages, the Justice Department announced today.  UPS is a package delivery company based in Atlanta.

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

“This conduct affected numerous federal agencies,” said U.S. Attorney Dana J. Boente of the Eastern District of Virginia.  “We place high importance on the integrity of companies that provide services to the government.  Combating all manners of fraud on the government is a high priority in the Eastern District of Virginia.”  

UPS provides delivery services to hundreds of federal agencies through contracts with the U.S. General Services Administration (GSA) and U.S. Transportation Command, which provides support to Department of Defense agencies.  Under these contracts, UPS guaranteed delivery of packages by certain specified times the following day.  The settlement announced today resolves allegations that from 2004 to 2014, UPS engaged in practices that concealed its failure to comply with its delivery guarantees, thereby depriving federal customers of the ability to request refunds for the late delivery of packages.  In particular, the government alleged that UPS knowingly recorded inaccurate delivery times on packages to make it appear that the packages were delivered on time, applied inapplicable “exception codes” to excuse late delivery  (such as “security delay,” “customer not in,” or “business closed”), and provided inaccurate “on-time” performance data under the federal contracts.  

“The United States should get what it pays for, nothing less,” said Acting Inspector General Robert C. Erickson of the GSA.

The civil settlement resolves a lawsuit filed under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and obtain a portion of the government’s recovery.  The civil lawsuit was filed in the Eastern District of Virginia by Robert K. Fulk, a former employee of UPS, who will receive $3.75 million.

The resolution in this matter was the result of a coordinated effort between the U.S. Attorney’s Office of the Eastern District of Virginia, the GSA Office of Inspector General (OIG), the Federal Deposit Insurance Corporation OIG, the Defense Criminal Investigative Service, and the Treasury Inspector General for Tax Administration and the Department of Treasury OIG, with assistance from the Department of Veterans Affairs OIG.

The lawsuit is captioned United States ex rel. Fulk v. United Parcel Service, Inc., et al., No. 1:11cv890 (E.D. Va.).  The claims resolved by this settlement are allegations only, and there has been no determination of liability. 

The Department of Justice and the Environmental Protection Agency (EPA) announced a settlement with Marathon Petroleum Corporation today that resolves various alleged Clean Air Act violations at ten Marathon facilities and requires Marathon to take steps to reduce harmful air pollution emissions at facilities in three states.  The Department of Justice and EPA allege that Marathon failed to comply with certain Clean Air Act fuel quality emissions standards and recordkeeping, sampling and testing requirements. These violations may have resulted in excess emissions of air pollutants from motor vehicles, which can pose threats to public health and the environment.  Marathon self-reported many of these issues to EPA.

Under a consent decree lodged in U.S. District Court for the Northern District of Ohio, Marathon will spend over $2.8 million on pollution controls to reduce emissions of volatile organic compounds on 14 fuel storage tanks at its distribution terminals in Indiana, Kentucky and Ohio.

Marathon will also pay a $2.9 million civil penalty and retire 5.5 billion sulfur credits, which have a current market value of $200,000.  Sulfur credits are generated when a refiner produces gasoline that contains less sulfur than the federal sulfur standard.  These credits can be sold to other refiners that may be unable to meet the standard.

“The changes required by this settlement will positively impact air quality in communities across the Midwest,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division.  “All Americans deserve to enjoy the benefits of clean air, land, and water.  These benefits spring from our nation’s bedrock environmental laws and we will use them vigorously in the pursuit of environmental justice.”

“Fuel standards established under the Clean Air Act play a major role in controlling harmful air pollution from vehicles and engines,” said Assistant Administrator Cynthia Giles for EPA’s Office of Enforcement and Compliance Assurance.  “If unchecked, these pollutants can seriously impair the air we breathe, especially during summer months when they can reach higher levels.  This settlement incorporates innovative pollution control solutions to reduce air pollution in overburdened communities.

“This agreement will help reduce air pollution emissions in Ohio and elsewhere,” said U.S. Attorney Steven M. Dettelbach for the Northern District of Ohio.  “We’re pleased this settlement will protect the air we breathe while promoting the use of next-generation technology.”

In their complaint, The Justice Department and EPA allege that Marathon:

• Produced about 356 million gallons of reformulated gasoline at its Texas City, Texas, refinery during 2007 that did not meet Clean Air Act standards for reducing volatile organic compounds. Volatile organic compounds are one of the primary constituents of smog and react in sunlight to form ground-level ozone. Breathing ozone can trigger a variety of health problems including chest pain, coughing, throat irritation and congestion and can worsen bronchitis, emphysema and asthma. Children, the elderly and people who have lung diseases such as asthma are particularly prone to these problems.

• Produced more than 40 million gallons of gasoline at the Texas City, Texas, refinery in 2009 that exceeded standards for sulfur levels. The goal of the Clean Air Act program that regulates sulfur in gasoline is to minimize emissions from vehicles and to ensure emissions control systems function effectively.

• Sold about 12 million gallons of gasoline that contained elevated levels of ethanol.

• Sold about 1 million gallons of gasoline at its Tampa, Florida, terminal in 2013 that exceeded standards for volatility, known as the Reid Vapor Pressure, that help control ground level ozone during summer months. Gasoline with higher volatility results in increased emissions of volatile organic compounds, which contribute to the formation of ground level ozone.

• Failed to comply with numerous sampling, testing, recordkeeping and reporting requirements for fuel production. EPA discovered these violations during inspections of Marathon refineries and laboratories in 2008 and 2009. The sampling, testing, recordkeeping and reporting requirements of the fuels program provide the foundation for EPA’s compliance program.

Marathon will also install geodesic domes, fixed roofs, or secondary rim seals and deck fittings on 14 fuel storage tanks at several of its fuel distribution terminals in order to reduce emissions of volatile organic compounds.  Marathon is also required to use innovative pollutant detection technology during the implementation of the environmental mitigation projects.  Marathon will use an infrared gas-imaging camera to inspect the fuel storage tanks in order to identify potential defects that may cause excessive emissions.  If defects are found, Marathon will conduct up-close inspections and perform repairs where necessary.

EPA’s Next Generation Compliance Strategy promotes advanced emissions and pollutant detection technology so that regulated entities, the government and the public can more easily see pollutant discharges, environmental conditions and noncompliance.  Many of the facilities where the pollution controls will be installed are located in areas that may present environmental justice concerns.

More information about EPA’s Next Generation Compliance Strategy is available at: http://www2.epa.gov/compliance/next-generation-compliance.

The proposed consent decree is subject to a 30 day public comment period and is available on EPA’s website at http://www.justice.gov/enrd/consent-decrees.

 Attorney General Loretta E. Lynch traveled to Cincinnati, Ohio, today for the first stop in her national Community Policing Tour to highlight collaborative programs and policing practices designed to advance public safety, strengthen police-community relations and foster mutual trust and respect.  The Attorney General also announced that she will visit Birmingham, Alabama; Pittsburgh, Pennsylvania; East Haven, Connecticut; Seattle, Washington; and Richmond, California.

The Attorney General was joined by U.S. Attorney Carter M. Stewart for the Southern District of Ohio, Director Ron Davis for the Community Oriented Policing Services (COPS) Office, Mayor John Cranley for the city Cincinnati, and Cincinnati Police Chief Jeffrey Blackwell.

While in Cincinnati, the Attorney General met with youth and law enforcement at Chase Elementary School to witness firsthand the city’s Right to Read Program in which Cincinnati police officers work with University of Cincinnati students to mentor and tutor children.  At Chase Elementary, the Attorney General played “Jeopardy” with the elementary school students.  She, the Attorney General, was gratified to hear how the young students described police as peace keepers and protectors of the community.  In her remarks to the students and local officers, the Attorney General said, “It’s tremendous what you’ve been doing,” to show how integral law enforcement can be in the lives of our communities.  She also described the innovative approach in Cincinnati as a model for other departments to follow.

After visiting the school, the Attorney General spoke briefly to reporters and took a few questions about her interactions with the children and the importance of community policing.

“What I saw were children being engaged, children learning, children finding that learning can be fun, children learning about senses – about the world around them –  at an age where, I think educators will tell you, it is really crucial that we not lose our children and they not fall out of the educational system and that they develop that love for learning,” Attorney General Lynch told reporters.  “But I also saw children who were aware of the larger community around them and had a very good sense of what law enforcement does – law enforcement at its best because they are seeing law enforcement at best. So in their interactions in the future they will have that context into which to put them as well as law enforcement will have those interactions into which to put them.”

The Attorney General also visited the Cincinnati Police Department for a meet and greet with police officers.  She commended the department’s efforts to reach out to the community, saying, “It's very easy for the cameras to show up when something's on fire, but we also want them to see the work that you're doing day in and day out.”  She also thanked the officers on behalf of the Justice Department for the “hard work” they do every day and spoke to officers that were hired with COPS Office hiring grants.  The Justice Department through its COPS Office yesterday announced five separate grant funding opportunities of up to $163 million for law enforcement agencies to help implement the recommendations made by the President’s Task Force on 21st Century Policing.

Following her meeting with police officers, the Attorney General ate lunch with U.S. Attorney Stewart, COPS Director Davis, and Cincinnati Police Chief Blackwell at local restaurant Skyline Chili.

Following a tour led by the curator of the National Underground Railroad Freedom Center, the Attorney General convened a meeting with city officials, law enforcement, local and faith leaders, young people and other members of the community to discuss ways in which the success Cincinnati has seen in building trust between law enforcement and the community can be replicated in cities across the nation.

“Every city deserves an outstanding, world-class police force that works alongside local residents to protect public safety,” said Attorney General Lynch. “And every officer deserves the tools, training, and support they need to do their jobs as safely and effectively as possible.”  Her full remarks can be found here.

The Attorney General also visited with Department of Justice employees at the office of the U.S. Attorney for the Southern District of Ohio.  Following that meeting, the Attorney General met with the family of John Crawford III, a 22-year African-American man, was shot and killed by a Beavercreek, Ohio police officer inside a Wal-Mart store while Crawford held a BB gun. 

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

Felony charges against Eric Hulsman were filed on March 27, 2015, in the U.S. District Court of the Northern District of Georgia in Atlanta.  According to court documents, from at least as early March 6, 2007, and continuing at least until Dec. 6, 2011, in Fulton County, Georgia, and from at least as early as Jan. 2, 2007, and continuing at least until Jan. 1, 2008, in DeKalb County, Georgia, Hulsman conspired with others not to bid against one another, but instead designated a winning bidder to obtain selected properties at public real estate foreclosure auctions.  Hulsman was also charged with a conspiracy to use the mail to carry out a scheme to fraudulently acquire title to selected Fulton and DeKalb properties sold at public auctions, to make and receive payoffs and to divert money to co-conspirators that would have gone to mortgage holders and others by holding second, private auctions open only to members of the conspiracy.  The selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions.

“Homeowners and lenders in Fulton and DeKalb counties deserved free and fair public real estate foreclosure auctions,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division.  “The defendant conspired with others to keep for themselves money that should have gone to those homeowners and lenders.  The division remains committed to rooting out this kind of anticompetitive conduct at foreclosure auctions.”

The primary purpose of the conspiracies was to suppress and restrain competition and to conceal payoffs in order to obtain selected real estate offered at Fulton and DeKalb county public foreclosure auctions at non-competitive prices.  When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner.  According to court documents, these conspirators paid and received money that otherwise would have gone to pay off the mortgage and other holders of debt secured by the properties, and in some cases, the defaulting homeowner.

“Today’s guilty plea of another real estate investor engaged in unfair bidding practices is further evidence of the FBI’s support for the U.S. Department of Justice’s Antitrust Division in ensuring that public foreclosure auctions remain a level playing field for all,” said Special Agent in Charge J. Britt Johnson of the FBI’s Atlanta Field Office.  “Anyone with information regarding such criminal activities as seen in this case should promptly call their nearest FBI field office.”

A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals.  The maximum fine for a Sherman Act charge may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime if either amount is greater than the statutory maximum fine.  A count of conspiracy to commit mail fraud carries a maximum penalty of 20 years in prison and a fine in an amount equal to the greatest of $250,000, twice the gross gain the conspirators derived from the crime or twice the gross loss caused to the victims of the crime by the conspirators.

Including Hulsman, eight cases have been filed as a result of the ongoing investigation being conducted by Antitrust Division’s Washington Criminal II Section and the FBI’s Atlanta Division, and the U.S. Attorney’s Office of the Northern District of Georgia.  Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions in Georgia should contact Washington Criminal II Section of the Antitrust Division at 202-598-4000, call the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258 or visit www.justice.gov/atr/contact/newcase.htm.

The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force.  The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations.  Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants.  For more information on the task force, please visit www.StopFraud.gov.

A Phenix City, Alabama, resident and former state employee was sentenced to serve more than seven years in prison for her role in a stolen identity tax refund fraud 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.

Tamika Floyd was sentenced by U.S. District Court Judge W. Keith Watkins to serve 87 months in prison, three years of supervised release and ordered to pay $3,092,885 in restitution.  Floyd pleaded guilty on Oct. 2, 2014, to one count of conspiracy to file false claims and one count of aggravated identity theft.  Floyd’s co-conspirators, including Keisha Lanier, Tracy Mitchell, Latasha Mitchell, Talarious Paige and others, pleaded guilty on April 1 and are scheduled to be sentenced on Aug. 7.

According to court documents, between 2006 and 2014, Tamika Floyd worked at two Alabama state agencies located in Opelika, Alabama: the Department of Public Health and the Department of Human Resources.  In both positions, she had access to the personal identifying information of individuals.  Beginning in 2012, Floyd was approached by co-conspirator Lanier.  As part of the scheme, Floyd stole names and personal information from the state agencies and provided the information to Lanier to be used to file false federal income tax returns.  Most of the stolen identifying information consisted of names of teenagers.  Lanier then provided the stolen information to co-conspirators Tracy Mitchell, Latasha Mitchell, Paige and others to use to file false tax returns.  These co-conspirators filed more than 3,000 fraudulent federal income tax returns claiming more than $7.5 million in tax refunds using the stolen information provided by Floyd.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Beck Jr. commended special agents of Internal Revenue Service (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 A. Brown of the Middle District of Alabama, who are prosecuting the case. 

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

Chinese Professors Alleged to Have Stolen Valuable Technology from Avago Technologies and Skyworks Solutions to Benefit a PRC University

On May 16, 2015, Tianjin University Professor Hao Zhang was arrested upon entry into the United States from the People’s Republic of China (PRC) in connection with a recent superseding indictment in the Northern District of California, announced Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Melinda Haag of the Northern District of California and Special Agent in Charge David J. Johnson of the FBI’s San Francisco Division.

The 32-count indictment, which had previously been sealed, charges a total of six individuals with economic espionage and theft of trade secrets for their roles in a long-running effort to obtain U.S. trade secrets for the benefit of universities and companies controlled by the PRC government.

“According to the charges in the indictment, the defendants leveraged their access to and knowledge of sensitive U.S. technologies to illegally obtain and share U.S. trade secrets with the PRC for economic advantage,” said Assistant Attorney General Carlin.  “Economic espionage imposes great costs on American businesses, weakens the global marketplace and ultimately harms U.S. interests worldwide.  The National Security Division will continue to relentlessly identify, pursue and prosecute offenders wherever the evidence leads.  I would like to thank all the agents, analysts and prosecutors who are responsible for this indictment.”

“As today’s case demonstrates, sensitive technology developed by U.S. companies in Silicon Valley and throughout California continues to be vulnerable to coordinated and complex efforts sponsored by foreign governments to steal that technology,” said U.S. Attorney Haag.  “Combating economic espionage and trade secret theft remains one of the top priorities of this Office.”

“The conduct alleged in this superseding indictment reveals a methodical and relentless effort by foreign interests to obtain and exploit sensitive and valuable U.S. technology through the use of individuals operating within the United States,” said Special Agent in Charge Johnson.  “Complex foreign-government sponsored schemes, such as the activity identified here, inflict irreversible damage to the economy of the United States and undercut our national security.  The FBI is committed to rooting out industrial espionage that puts U.S. companies at a disadvantage in the global market.”

According to the indictment, PRC nationals Wei Pang and Hao Zhang met at a U.S. university in Southern California during their doctoral studies in electrical engineering.  While there, Pang and Zhang conducted research and development on thin-film bulk acoustic resonator (FBAR) technology under funding from U.S. Defense Advanced Research Projects Agency (DARPA).  After earning their doctorate in approximately 2005, Pang accepted employment as an FBAR engineer with Avago Technologies (Avago) in Colorado and Zhang accepted employment as an FBAR engineer with Skyworks Solutions Inc. (Skyworks) in Massachusetts.  The stolen trade secrets alleged in the indictment belong to Avago or Skyworks.

Avago is a designer, developer and global supplier of FBAR technology, which is a specific type of radio frequency (RF) filter.  Throughout Zhang’s employment, Skyworks was also a designer and developer of FBAR technology.  FBAR technology is primarily used in mobile devices like cellular telephones, tablets and GPS devices.  FBAR technology filters incoming and outgoing wireless signals so that a user only receives and transmits the specific communications intended by the user.  Apart from consumer applications, FBAR technology has numerous applications for a variety of military and defense communications technologies.

According to the indictment, in 2006 and 2007, Pang, Zhang and other co-conspirators prepared a business plan and began soliciting PRC universities and others, seeking opportunities to start manufacturing FBAR technology in China.  Through efforts outlined in the superseding indictment, Pang, Zhang and others established relationships with officials from Tianjin University.  Tianjin University is a leading PRC Ministry of Education University located in the PRC and one of the oldest universities in China.

As set forth in the indictment, in 2008, officials from Tianjin University flew to San Jose, California, to meet with Pang, Zhang and other co-conspirators.  Shortly thereafter, Tianjin University agreed to support Pang, Zhang and others in establishing an FBAR fabrication facility in the PRC.  Pang and Zhang continued to work for Avago and Skyworks in close coordination with Tianjin University.  In mid-2009, both Pang and Zhang simultaneously resigned from the U.S. companies and accepted positions as full professors at Tianjin University.  Tianjin University later formed a joint venture with Pang, Zhang and others under the company name ROFS Microsystem intending to mass produce FBARs.

The indictment alleges that Pang, Zhang and other co-conspirators stole recipes, source code, specifications, presentations, design layouts and other documents marked as confidential and proprietary from the victim companies and shared the information with one another and with individuals working for Tianjin University.

According to the indictment, the stolen trade secrets enabled Tianjin University to construct and equip a state-of-the-art FBAR fabrication facility, to open ROFS Microsystems, a joint venture located in PRC state-sponsored Tianjin Economic Development Area (TEDA), and to obtain contracts for providing FBARs to commercial and military entities.

The six indicted defendants include:

• Hao Zhang, 36, a citizen of the PRC, is a former Skyworks employee and a full professor at Tianjin University.  Zhang is charged with conspiracy to commit economic espionage, conspiracy to commit theft of trade secrets, economic espionage and theft of trade secrets.  Zhang was arrested upon entry into the United States on May 16, 2015.
• Wei Pang, 35, a citizen of the PRC, is a former Avago employee and a full professor at Tianjin University.  Pang is charged with conspiracy to commit economic espionage, conspiracy to commit theft of trade secrets, economic espionage and theft of trade secrets.
• Jinping Chen, 41, a citizen of the PRC, is a professor at Tianjin University and a member of the board of directors for ROFS Microsystems.  Chen is charged with conspiracy to commit economic espionage and conspiracy to commit theft of trade secrets.
• Huisui Zhang (Huisui), 34, a citizen of the PRC, studied with Pang and Zhang at a U.S. university in Southern California and received a Master’s Degree in Electrical Engineering in 2006.  Huisui is charged with conspiracy to commit economic espionage and conspiracy to commit theft of trade secrets.
• Chong Zhou, 26, a citizen of the PRC, is a Tianjin University graduate student and a design engineer at ROFS Microsystem.  Zhou studied under Pang and Zhang, and is charged with conspiracy to commit economic espionage, conspiracy to commit theft of trade secrets, economic espionage and theft of trade secrets.
• Zhao Gang, 39, a citizen of the PRC, is the General Manager of ROFS Microsystems.  Gang is charged with conspiracy to commit economic espionage and conspiracy to commit theft of trade secrets.

The maximum statutory penalty for each of the charges alleged in the superseding indictment is as follows:

• Count One: conspiracy to commit economic espionage: 15 years imprisonment; $500,000 fine or twice the gross gain/loss; three years’ supervised release; and $100 special assessment. 
• Count Two: conspiracy to commit theft of trade secrets: 10 years imprisonment; $250,000 fine or twice the gross gain/loss; three years’ supervised release; and $100 special assessment. 
• Counts Three Through Seventeen: economic espionage; aiding and abetting: 15 years imprisonment; $500,000 fine or twice the gross gain/loss; three years’ supervised release; and $100 special assessment. 
• Counts Eighteen Through Thirty-Two: theft of trade secrets; aiding and abetting: 10 years imprisonment; $250,000 fine or twice the gross gain/loss; three years’ supervised release; and $100 special assessment. 

Zhang was arrested on May 16, 2015, upon landing at the Los Angeles International Airport on a flight from the PRC.  He made his initial appearance yesterday afternoon in Los Angeles before the U.S. Magistrate Judge Alicia G. Rosenberg of the Central District of California, who ordered the defendant transported in custody to San Jose for further proceedings.  His next scheduled appearance will be before the U.S. District Judge Edward J. Davila of the Northern District of California, at a date to be determined.

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

The investigation is being conducted by the FBI’s Palo Alto Resident Agency/San Francisco Division.  The case is being prosecuted by Assistant U.S. Attorneys Matt Parrella and Dave Callaway of the Northern District of California, in consultation with the National Security Division’s Counterespionage Section.

Zhang Superseding Indictment

Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Preet Bharara of the Southern District of New York announced that a Glen Ridge, New Jersey, man was sentenced yesterday to serve six months in prison for failing to report income on his tax returns for the 2007, 2008 and 2009 tax years. 

Matthew Libous, 37, was convicted at a bench trial in White Plains, New York, in January 2015.  U.S. District Judge Vincent L. Briccetti imposed yesterday’s sentence.

According to the superseding indictment and the evidence presented at trial:

Libous engaged in the practice of law from 2006 through 2008.  Libous deposited the fees he received into his personal bank account but never reported them on his tax return.  In 2008, Libous became a minority partner and manager of Wireless Construction Solutions LLC (WCS), a company that maintained cellular telephone towers.  Libous caused WCS to pay thousands of dollars in his personal expenses on his behalf from 2008 to 2011.  Judge Briccetti found today that Libous failed to report more than $97,000 in income, leading to a tax loss of more than $38,000.

* * *

In addition to the prison sentence, Libous was sentenced to one year of supervised release, a $25,000 fine, 100 hours of community service and costs of prosecution.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Bharara thanked Internal Revenue Service-Criminal Investigation and the investigators from the U.S. Attorney's Office for the Southern District of New York, who investigated the case, and Assistant U.S. Attorney James McMahon and Tax Division Trial Attorney and Special Assistant U.S. Attorney Andrew Kameros of the Southern District of New York-White Plains Division, who prosecuted the case.

Across Town Movers, a San Diego-based storage company, and its owner, Daniel E. Homan, have agreed to pay nearly $170,000 to resolve allegations by the Department of Justice that it unlawfully sold U.S. Navy service members’ stored goods.

The settlement resolves a lawsuit filed in March by the Department of Justice’s Civil Rights Division and the U.S. Attorneys’ Office for the Southern District of California.  The lawsuit alleged that Across Town Movers had a practice of selling active-duty service members’ storage lots without obtaining necessary court orders. 

The lawsuit was filed under the Servicemembers Civil Relief Act (SCRA), which protects the rights of service members while on active duty by suspending or modifying certain civil obligations.  Under the SCRA, a storage lien may not be enforced against service members during, or 90 days subsequent to, their period of military service without a court order. 

Among the aggrieved service members is Master Chief Petty Officer Thomas E. Ward, now retired, who will receive $150,000 as compensation for his auctioned personal property.  A long-time car enthusiast and 30-year veteran, Master Chief Ward placed his valuable car parts and many household items into storage when he was deployed overseas.  He entrusted Across Town Movers to keep his personal property safe until he returned to his home in San Diego.  Just before completing his final tour, Master Chief Ward learned that Across Town Movers had auctioned all of his stored personal property, including rare, vintage car parts, without providing any notice or obtaining a court order.  Moreover, Across Town Movers allegedly continued to collect payment of storage fees from the government after it sold Master Chief Ward’s goods.

“This settlement will not only provide relief to ten service members, but also will ensure that business practices change to better protect others,” said Acting Associate Attorney General Stuart F. Delery.  “I want to thank the United States Navy for referring this case to the Department of Justice.  I’m hopeful that through the department’s newly created Servicemembers and Veterans Initiative, we will continue to build on our strong ties with federal partners and protect the rights of all the brave men and women who serve in our Armed Forces.”

“We hope that this consent order will send a clear message to all storage companies that before they auction off anyone’s belongings, they should check the Defense Department’s military database and their own files to see if the customer is protected by the Servicemembers Civil Relief Act,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “The Department of Justice is committed to protecting the rights of the men and women who serve in our Armed Forces, and we will continue to devote time and resources to make sure that they are given the legal protections they deserve.”

“Federal law protects our military service members and their dependents from businesses taking certain adverse actions against them,” said U.S. Attorney Laura E. Duffy of the Southern District of California.  “These protections permit service members to devote their full attention to defending the United States.  While Master Chief Ward was overseas focusing on defending our country, he understandably did not expect the very company paid to safeguard his valuable property to instead auction it off in his absence. Across Town Movers’ $150,000 payment provides Master Chief Ward the opportunity to repurchase his lost goods.”

Across Town Movers must also compensate other aggrieved service members for unlawfully auctioning their goods. 

Furthermore, as part of the settlement, a consent order has been entered that requires Across Town Movers to make systemic changes to its business practices, including developing new policies and procedures consistent with  the SCRA and providing SCRA training to its employees.  Across Town Movers is enjoined from engaging in future SCRA violations. 

A consent order incorporating the terms of this settlement was on Friday, May 14, 2015, in the Southern District of California.  This matter resulted from a referral to the Justice Department by the U.S. Navy.   

Service members and their dependents who believe that their SCRA rights have been violated should contact the nearest Armed Forces Legal Assistance Program office.  Office locations may be found at http://legalassistance.law.af.mil/content/locator.php.  Additional information on the Justice Department’s enforcement of the SCRA and other laws protecting service members is available at www.servicemembers.gov.

This matter is being handled by an attorney from the Civil Rights Division’s Housing and Civil Enforcement Section and Assistant U.S. Attorneys Dylan M. Aste and Leslie M. Gardner of the Southern District of California. 

The Department of Justice today announced that United States District Judge Jose E. Martinez of the Southern District of Florida sentenced defendant Carmen Cadena, 48, a Mexican national, to serve five years in prison for her role in a brutal family-run sex trafficking organization.  The defendant shall also be ordered to pay restitution and hearing is set on August 10, 2015 to determine the amount.

The defendant pleaded guilty on Jan. 26, 2015, for her role in furthering the criminal conspiracy to lure vulnerable, undocumented Mexican women and girls—some as young as 14 years old—into the United States on false promises of legitimate jobs.  Members of the Cadena organization would then use force and violence, sexual assaults and threats to harm to the victims and their families to compel the victims to engage in prostitution in South Florida, 12 hours a day, six days a week and turn over the proceeds to the defendants in order to pay smuggling debts the defendants imposed.  When victims ran away, members of the Cadena organization searched for them and subjected them to beatings and rapes upon capture.  

Sixteen defendants were charged in a superseding indictment filed in 1998.  Mexican authorities arrested Cadena and extradited her to the U.S. in December 2014.  Five other family members have been convicted, including Cadena’s husband, Juan Luis Cadena-Sosa, who pleaded guilty in 2008 and was sentenced to 15 years; Cadena’s uncle-in-law, Rogerio Cadena, who pleaded guilty in 1999 and was sentenced to 15 years; and three of Cadena’s brothers-in-law, Abel Cadena-Sosa, who was convicted in Mexico and sentenced to 24 years, and Hugo and Rafael Cadena-Sosa, who pleaded guilty in 2002 and 2014, and were sentenced to five years and 15 years respectively. 

Six other defendants previously pleaded guilty in federal court in connection with the scheme, and one was convicted in state court for a murder outside a Cadena-run brothel. 

“Today’s sentence marks the culmination of our long fight for justice over the past 16 years on behalf of the young women and girls whose lives were torn apart by the unspeakable violations they endured at the hands of their traffickers,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “The relentlessness of our efforts is rivaled only by the courage the survivors demonstrated in coming forward and partnering with us for over a decade to see the perpetrators brought to justice.  We are humbled by their resilience and resolve, and we are unwavering in our commitment to combating modern-day slavery.”

“Since 1998, the U.S. Attorney’s Office has worked tirelessly with international, federal, state and local law enforcement agencies to bring to justice sixteen defendants who preyed on vulnerable women and children through documented violence and horrific sexual abuse,” said U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida.  “Today’s sentencing of Defendant Carmen Cadena allowed those who were exploited to bear witness to justice.”

“The sentencing of Carmela Cadena concludes a significant investigation of human trafficking and civil rights violations that included the investigative efforts and collaboration of several federal, state and local law enforcement agencies,” said Special Agent in Charge George L. Piro of the FBI’s Miami Field Office.  “This investigation brought to an end a brutal family-run sex trafficking organization and helped raise awareness about human trafficking and involuntary servitude in the form of forced prostitution.”

Acting Assistant Attorney General Gupta and United States Attorney Ferrer praised the collaborative efforts of multiple law enforcement agencies involved throughout the investigations and subsequent prosecutions over the years, including the Federal Bureau of Investigation, the Department of Homeland Security’s Customs and Border Protection and Immigration and Customs Enforcement, the Bureau of Alcohol, Tobacco and Firearms, Florida Department of Law Enforcement, Palm Beach County Sheriff’s Office, West Palm Beach Police Department, Okeechobee County Sheriff’s Office, Fort Pierce Police Department, Avon Park Police Department, Boynton Beach Police Department, and Lee County Sheriff’s Office.  The case is being prosecuted by Assistant United States Attorney Adam McMichael and Trial Attorney Matthew Grady of the Civil Rights Division’s Human Trafficking Prosecution Unit. 

The Justice Department today filed a lawsuit against the corporate owner and agent of the Gentle Manor Estates, a 173-lot mobile home park located in Crown Point, Indiana, for discriminating against families with children in violation of the Fair Housing Act.

The lawsuit, filed in the U.S. District Court for the Northern District of Indiana, alleges that Gentle Manor Estates, LLC and John Townsend, the corporate owner and agent, respectively, of the Gentle Manor Estates, violated the Fair Housing Act by maintaining and enforcing a discriminatory policy of refusing to allow families with children to live at the mobile home park.  The allegations are based on evidence generated by the department’s Fair Housing Testing Program, in which individuals pose as renters to gather information about possible discriminatory practices.

“For over 25 years, the Fair Housing Act has prohibited housing providers from discriminating against families with children,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Justice Department’s Civil Rights Division.  “The Justice Department will continue its vigorous enforcement of the Fair Housing Act to ensure that families with children have equal access to housing opportunities.”

The lawsuit seeks an order prohibiting the defendants from engaging in future unlawful discrimination.  It also seeks the payment of a civil penalty and monetary damages for the individuals who were refused the opportunity to rent at Gentle Manor Estates because of familial status.

Individuals who may have information related to this lawsuit should contact the Justice Department toll-free at 1-800-896-7743, mailbox 9994, or e-mail the Justice Department at fairhousing@usdoj.gov.  The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability.  More information about the Civil Rights Division and the laws it enforces is available at www.usdoj.gov/crt.

The complaint is an allegation of unlawful conduct.  The allegations must still be proven in federal court.

A German citizen was sentenced today to six years in prison for operating a web-based bulletin board for child pornography.

The sentence was announced by Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Postal Inspector in Charge Gary Barksdale of the U.S. Postal Inspection Service’s (USPIS) Washington, D.C., Division, Postal Inspector in Charge Robert Wemyss of the USPIS Los Angeles Division and Special Agent in Charge Claude Arnold of the U.S. Immigration and Customs Enforcement’s Office of Homeland Security Investigations (ICE-HSI) Los Angeles.

Klaus Von Der Heide, 51, of Berlin, pleaded guilty on July 15, 2014, in U.S. District Court for the District of Columbia to one count of conspiring to promote child pornography, one count of promoting child pornography and one count of transporting child pornography.

According to his plea agreement, from April 2011 through February 2014, Von Der Heide and others conspired to operate Cam-Foundation, a secure web-based bulletin board that traded images of child pornography, mostly in the form of self-produced webcam images.  Members could join this group only upon invitation and after approval by the group’s administrators, including Von Der Heide.  As of February 2014, 719 members belonged to Cam-Foundation, which was hosted on computer servers under Von Der Heide’s control and located in Germany.

Von Der Heide, as the lead administrator, maintained Cam-Foundation and controlled the design, creation and management of the site, and oversaw its day-to-day operations.  Von Der Heide published rules and guidelines regarding membership, posting and accessing images on the site and payment to belong to the site.  Von Der Heide solicited fees from Cam-Foundation members to be paid directly to him in order to cover the cost of a new cloud storage system that he controlled.  Von Der Heide encouraged Cam-Foundation members to meet him in person within the United States to personally hand him money for Cam-Foundation membership.  He traveled to the United States to collect the money and was arrested by federal law enforcement.

The case was investigated by the USPIS Washington, D.C., and Los Angeles Divisions and the HSI Los Angeles in collaboration with the HSI-led Orange County, California, Child Exploitation Task Force.  This case was prosecuted by Trial Attorney Jennifer Toritto Leonardo of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS).

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

A former Bank of America executive was sentenced today for his participation in a conspiracy and scheme to defraud related to bidding for contracts for the investment of municipal bond proceeds and other municipal finance contracts, the Department of Justice announced today.

Phillip D. Murphy, the former managing director of Bank of America’s municipal derivatives group from 1998 to 2002, was sentenced to serve 26 months in prison by U.S. District Judge Max O. Cogburn Jr. of the U.S. District Court of the Western District of North Carolina.

On Feb. 10, 2014, Murphy pleaded guilty to participating in multiple fraud conspiracies and schemes with various financial institutions and brokers from as early as 1998 until 2006.  Bank of America and other financial institutions, acting as “providers,” offered a certain type of contract – known as an investment agreement – to state, county and local governments and agencies, and not-for-profit entities, throughout the United States.  These public entities sought to invest money from a variety of sources, primarily the proceeds of municipal bonds that they had issued to raise money for, among other things, public projects.  Public entities typically hire a broker to assist them in investing their money and to conduct a competitive bidding process to determine the winning provider.

“Individual accountability is the cornerstone of protecting the integrity of our financial markets,” said Deputy Assistant Attorney General Brent Snyder of the Antitrust Division’s Criminal Enforcement Program.  “This sentence is a result of our continued resolve to vigorously prosecute bank executives whose greed and illegal schemes undermine our free and fair financial markets.”

According to court documents, Murphy conspired with employees of Rubin/Chambers Dunhill Insurance Services Inc., also known as CDR Financial Products, a broker of municipal contracts, and others.  Murphy also pleaded guilty to conspiring with others to make false entries in the reports and statements originating from his desk, which were sent to bank management.  Murphy conspired with CDR and others to increase the number and profitability of investment agreements and other municipal finance contracts awarded to Bank of America.  Murphy won investment agreements through CDR’s manipulation of the bidding process in obtaining losing bids from other providers, which is explicitly prohibited by U.S. Treasury regulations.  As a result, various providers won investment agreements and other municipal finance contracts at artificially determined prices.  Murphy also submitted intentionally losing bids for certain investment agreements and other contracts when requested, and, on occasion, agreed to pay or arranged for kickbacks to be paid to CDR and other co-conspirator brokers.

In conjunction with the bid rigging, Murphy and his co-conspirators submitted numerous intentionally false certifications that were relied upon by both municipalities and the Internal Revenue Service (IRS).  These false certifications misrepresented that the bidding process had been conducted in a competitive manner that was in conformance with U.S. Treasury regulations.  These false certifications caused municipalities to award contracts to Bank of America and other providers based on false and misleading information.  The false certifications also impeded and obstructed the ability of the IRS to collect revenue owed to the U.S. Treasury.

“We trust those in positions of leadership and power to do the right thing when it comes to taking care of our money,” said Chief Richard Weber of the IRS’s Criminal Investigation.  “When that trust is broken through these types of criminal activities, than those individuals need to be held accountable.  Today's sentencing reflects our commitment to ensuring fairness for those engaged in these types of investments.”

“By knowingly exploiting vulnerabilities in the bidding process, Murphy ignored policies put in place to allow for the ethical distribution of municipal bond proceeds,” said Assistant Director in Charge Diego Rodriguez of the FBI’s New York Field Office.  “In the end, he brokered a deal that served his own best interests.  Today’s sentence is proof of our continued determination to root out those whose business practices contribute to the deterioration of healthy competition in the municipal bidding process.”

Including Murphy, 17 individuals and one corporation have been convicted or pleaded guilty as a result of the Antitrust Division’s municipal bonds investigation.

The sentence announced today resulted from an investigation conducted by the Antitrust Division’s New York Office, the FBI and IRS-CI.  The division also coordinated its investigation with the U.S. Securities and Exchange Commission, the Office of the Comptroller of the Currency and the Federal Reserve Bank of New York.  The U.S. Attorney’s Office of the Western District of North Carolina provided valuable assistance in this matter. 

The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force.  The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations.  Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants, including more than 2,900 mortgage fraud defendants.  For more information on the task force, please visit www.StopFraud.gov.

Anyone with information concerning bid rigging and related offenses in any financial market should contact the Antitrust Division’s New York Office at 212-335-8000, the FBI at 212-384-5000, the IRS-CI at 212-436-1761, or visit www.justice.gov/atr/contact/newcase.html.

Justice Department Announces $163 Million in Grant Opportunities to Advance 21st Century Policing Recommendations

WASHINGTON – Attorney General Loretta E. Lynch will travel to Cincinnati TOMORROW, TUESDAY, MAY 19, 2015, as part of a national Community Policing Tour that will highlight collaborative programs and innovative policing practices designed to advance public safety, strengthen police-community relations and foster mutual trust and respect.  The Attorney General will be joined by U.S. Attorney Carter M. Stewart of the Southern District of Ohio, Director Ron Davis of the Community Oriented Policing Services (COPS) Office, Mayor John Cranley of Cincinnati, and Cincinnati Police Chief Jeffrey Blackwell for a convening with city officials, law enforcement, local leaders, young people and other members of the community at the National Underground Railroad Freedom Center. 

While in Cincinnati, the Attorney General will also visit the Right to Read Program at Chase Elementary School where Cincinnati police officers work with University of Cincinnati students to tutor and mentor children.  Later in the day, the Attorney General will visit with the Cincinnati Police Department where she will have an opportunity to thank officers for their hard work and speak to officers that were hired with COPS Office hiring grants. 

The Community Policing Tour will build on President Obama’s commitment to engage with law enforcement and other members of the community to implement key recommendations from the 21st Century Policing Task Force report.  To help with that effort, the Justice Department through its COPS Office announced five separate grant funding opportunities of up to $163 million for law enforcement agencies to help implement the recommendation made by the President’s Task Force on 21st Century Policing.

Additional cities on the tour will be announced at the convening on community policing in Cincinnati.

ATTORNEY GENERAL TOURS CHASE ELEMENTARY SCHOOL WITH STUDENTS AND LAW ENFORCEMENT:

WHO:            

Attorney General Loretta E. Lynch

Cincinnati Police Chief Jeffrey Blackwell

WHEN:         

TUESDAY, MAY 18, 2015

11:00 a.m. EDT

WHERE:      

Chase Elementary School

4154 Turrill Street

Cincinnati, OH 45223

OPEN PRESS

(Media Gather Time: 10:00-10:20 a.m. EDT; main entrance)                                                                                                                                       

ATTORNEY GENERAL HOLDS COMMUNITY POLICING CONVENING AT NATIONAL UNDERGROUND RAILROAD FREEDOM CENTER:

WHO:            

Attorney General Loretta E. Lynch

U.S. Attorney Carter M. Stewart for the South District of Ohio

Director Ron Davis of the COPS Office

Mayor John Cranley of Cincinnati

Cincinnati Police Chief Jeffrey Blackwell

WHEN:         

TUESDAY, MAY 18, 2015

2:00 p.m. EDT

WHERE:      

National Underground Railroad Freedom Center

50 East Freedom Way

Cincinnati, OH 45202

OPEN PRESS

(Media Gather Time: 1:00 p.m. EDT; check-in location in lobby)

NOTE:  All media must present government-issued photo I.D. (such as a driver’s license) as well as valid media credentials.  Members of the media must RSVP to press@usdoj.gov by Tuesday, May 19, 2015, at 9:00 a.m. EDT.  Cameras planning to cover the event should arrive an hour prior to the start time.  Space is limited and not guaranteed.  Press inquiries regarding logistics should be directed to Kevin Lewis at kevin.s.lewis@usdoj.gov and Sabrina Curtis at Sabrina.curtis@usdoj.gov.

A federal jury in Chicago on May 15, 2015, convicted the administrator and biller of a Schaumburg, Illinois, in-home visiting physician group for their participation in a $4.5 million health care fraud scheme that included billing Medicare for services rendered to patients who were dead and services rendered by medical professionals who worked over 24 hours in a day.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Zachary T. Fardon of the Northern District of Illinois, Special Agent in Charge Robert J. Holley of the FBI’s Chicago Division and Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Chicago Regional Office made the announcement.

According to evidence presented at trial, Rick E. Brown, 58, of Rockford, Illinois, the President of Home Care America Inc., controlled the daily operations of a physician practice, Medicall Physicians Group Ltd.  Mary C. Talaga, 54, of Elmwood Park, Illinois, was the company’s biller who submitted Medicall’s Medicare claims and was employed by Home Care America.  Brown and Talaga falsely billed Medicare for services that were never provided to patients.  The services fraudulently billed included services rendered to patients who were actually dead, as well as services purportedly provided by medical professionals after they had ended their employment and by medical professionals who worked over 24 hours per day.  Evidence showed that Brown forged physician signatures on medical documents, and Talaga directed physicians to create false documentation after she had billed for services that had not been documented or provided.

Brown and Talaga were each found guilty of one count of conspiracy to commit health care fraud, six counts of health care fraud and three counts of false statements relating to a health care matter.  They were charged in a superseding indictment returned on March 25, 2015.  Medicall submitted approximately $12 million in claims to Medicare, approximately $4.5 million of which were shown to be fraudulent at trial.

The sentencing hearing for Brown is scheduled for Aug. 10, 2015, and the sentencing hearing for Talaga is scheduled for Aug. 7, 2015. 

The investigation was conducted jointly by the FBI and HHS-OIG and 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 Northern District of Illinois.  The case is being prosecuted by Trial Attorney Brooke Harper and Senior Trial Attorney Jon Juenger 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 nearly 2,100 defendants who have collectively billed the Medicare program for more than $6.5 billion.  In addition, the HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

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

Three defendants were sentenced for their roles in an international child pornography web-based bulletin board that was targeted by state and federal investigators and prosecutors participating in Operation Moon Runner.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Michael W. Cotter of the District of Montana and Special Agent in Charge Mary Frances Rook of the FBI’s Salt Lake City Division made the announcement.

On May 14, 2015, Daniel Brown, 26, of Taylor, South Carolina, was sentenced to 180 months in prison after a jury convicted him of conspiracy to advertise child pornography.  On May 15, 2015, John Merchberger, 48, of Dayton, Maine, was sentenced to 220 months in prison and Marc Edoria, 24, of Elk Grove, California, was sentenced to 180 months in prison.  Chief U.S. District Judge Dana L. Christensen of the District of Montana imposed the sentence.

According to court documents, the board was created in September 2011 and specialized in the advertisement, distribution and receipt of child pornography.  The board was broken-up into subforums where members were required to post images that corresponded to specific child pornography studios or topics such as webcams or candid photographs.  The rules of the board required members to post images of minor females once every certain number of weeks.  Failure to post images within the required time period resulted in suspension from the board.  The board permitted members to leave comments and to request more images of child pornography from board members.

According to admissions made in connection to their guilty pleas, Merchberger assisted in running the board at various times, while Edoria was an advanced member of the board.  According to evidence presented at trial, Brown was also an advanced member of the board.  All three defendants posted notices and advertisements of child pornography on the board, along with images of children being sexually abused.

The investigation, referred to as Operation Moon Runner, is an ongoing cooperative effort between the Criminal Division’s Child Exploitation and Obscenity Section; FBI; Montana Department of Criminal Investigations; Helena, Montana, Police Department; Polson, Montana, Police Department; U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, Montana Internet Crimes Against Children Task Force and the Northumbria Police Department in the United Kingdom.

Trial Attorney Maureen C. Cain of the Criminal Division’s Child Exploitation and Obscenity Section and Assistant U.S. Attorney Cyndee L. Peterson of the District of Montana prosecuted the case.

This case was initiated under the Department of Justice’s Project Safe Childhood initiative which was launched in 2006 to combat the proliferation of technology-facilitated crimes involving the sexual exploitation of children.  Through a network of federal, state and local law enforcement agencies and advocacy organizations, Project Safe Childhood attempts to protect children by investigating and prosecuting offenders involved in child sexual exploitation.  It is implemented through partnerships including the Montana Internet Crimes Against Children (ICAC) Task Force.  The ICAC Task Force Program was created to assist state and local law enforcement agencies by enhancing their investigative response to technology facilitated crimes against children. 

 Attorney General Loretta E. Lynch released the following statement on the sentencing of Dzhokhar Tsarnaev:

“Dzhokhar Tsarnaev coldly and callously perpetrated a terrorist attack that injured hundreds of Americans and ultimately took the lives of three individuals: Krystle Marie Campbell, a 29-year-old native of Medford; Lingzi Lu, a 23-year-old Boston University graduate student from China; and Martin Richard, an 8-year-old boy from Dorchester who was watching the marathon with his family just a few feet from the second bomb.  In the aftermath of the attack, Tsarnaev and his brother murdered Sean Collier, a 27-year-old patrol officer on the MIT campus, extinguishing a life dedicated to family and service. 

“We know all too well that no verdict can heal the souls of those who lost loved ones, nor the minds and bodies of those who suffered life-changing injuries from this cowardly attack.  But the ultimate penalty is a fitting punishment for this horrific crime and we hope that the completion of this prosecution will bring some measure of closure to the victims and their families.  We thank the jurors for their service, the people of Boston for their vigilance, resilience and support and the law enforcement community in Boston and throughout the country for their important work.”

Khalid al Fawwaz, 52, a citizen of Saudi Arabia, was sentenced today to life in prison for multiple terrorism offenses relating to his participation in al Qaeda’s conspiracy to kill Americans.

Assistant Attorney General for National Security John P. Carlin and U.S. Attorney Preet Bharara of the Southern District of New York made the announcement.  U.S. District Court Judge Lewis A. Kaplan of the Southern District of New York imposed the sentence in a proceeding attended by victims of the 1998 bombings of the U.S. embassies in Nairobi, Kenya, and Dar es Salaam, Tanzania.  Fawwaz’s sentencing follows a six-week jury trial in January and February of this year, at which Fawwaz was convicted of all four counts with which he was charged. 

“Fawwaz is a terrorist who for years served Usama bin Laden and held many positions within al Qaeda,” said Assistant Attorney General Carlin.  “With this sentence, he is being held accountable for his role in al-Qaeda's conspiracy to kill U.S. nationals worldwide during the 1990s.  This case is a testament to our commitment to bringing to justice those who threaten the United States and our interests around in the world, no matter how long it may take.”

“Khalid al Fawwaz, who played a critical role for al Qaeda in its murderous conspiracy against America, will now spend the rest of his life in a federal prison,” said U.S. Attorney Bharara.  “As one of Osama bin Laden's original and most trusted lieutenants, Fawwaz led an al Qaeda training camp in Afghanistan and a terrorist cell in Kenya before serving as bin Laden’s media adviser in London.  Fawwaz was bin Laden's bridge to the West, facilitating interviews of bin Laden in Afghanistan by Western media and disseminating bin Laden's 1996 declaration of jihad against America and his 1998 fatwah directing followers to kill Americans anywhere in the world.  To that end, on Aug. 7, 1998, al Qaeda operatives bombed our embassies in Kenya and Tanzania, murdering 224 innocent people and wounding thousands more.  Fawwaz conspired with a murderous regime, and the result was a horrific toll of terror and death.  The price he will pay, appropriately severe as it is, cannot possibly compensate his victims and their families.”

According to the evidence presented at trial:

During the early 1990s, Fawwaz trained at al Qaeda’s Jawar military training camp in Afghanistan and then became the emir, or head, of al Qaeda’s al Siddiq military training camp in Afghanistan.  In approximately 1993, Fawwaz moved to Nairobi, where he served as one of the leaders of the al Qaeda members there, during a time that al Qaeda was sending fighters through Nairobi to Somalia to fight, and to train Somalis to fight, U.S. and U.N. forces in Somalia.  Fawwaz was also a leader of al Qaeda in Nairobi when al Qaeda began its preparations to attack the U.S. Embassy there.

The evidence further showed that, in 1994, Fawwaz began to act as Osama bin Laden’s media representative in London.  Fawwaz served as bin Laden’s conduit to Western media, screening requests for interviews of bin Laden and facilitating travel to Afghanistan for journalists who were permitted interviews.  Fawwaz also publicized bin Laden’s threats of violence against the United States.  Among other things, Fawwaz delivered bin Laden’s August 1996 Declaration of Jihad against the United States to a journalist for publication and helped arrange for the publication of a February 1998 fatwa, signed by bin Laden and others, that claimed it was the individual duty of every Muslim to kill Americans, civilian and military, in any country where it was possible to do so.  In addition, Fawwaz provided al Qaeda with advice about how best to disseminate its message of terror to the West, and helped obtain items that were difficult to obtain in Afghanistan, such as generators, vehicles and communications equipment, for al Qaeda.  In addition, a list of al Qaeda members recovered in Kandahar, Afghanistan, by the U.S. military in late 2001 contained Fawwaz’s alias and had him numbered ninth on the list.

Following Fawwaz’s arrest in England in September 1998, Fawwaz challenged his extradition to the United States for more than a decade.  He arrived in the Southern District of New York in October 2012.

* * *

Fawwaz’s sentencing follows convictions for conspiring to kill U.S. nationals, conspiring to murder officers and employees of the United States and conspiring to destroy buildings and property of the United States, each of which carried a maximum term of life in prison.  Fawwaz was also convicted of conspiring to attack national defense utilities, which carried a maximum term of 10 years in prison.

Assistant Attorney General Carlin joined U.S. Attorney Bharara in praising the outstanding efforts of the FBI’s New York Joint Terrorism Task Force – which principally consists of agents from the FBI and detectives from the New York City Police Department.  Carlin and Bharara also thanked the U.S. Marshals Service and the U.S. Department of Justice’s Office of International Affairs for their efforts, as well as the New Scotland Yard for its cooperation in the investigation and prosecution.

The case is being prosecuted by the Terrorism and International Narcotics Unit of the U.S. Attorney’s Office of the Southern District of New York.  The case was prosecuted by Assistant U.S. Attorneys Sean S. Buckley, Adam Fee, Nicholas J. Lewin and Stephen J. Ritchin of the Southern District of New York, with assistance from Trial Attorney Joseph N. Kaster of the National Security Division’s Counterterrorism Section.

The Department of Justice announced today that Finter Bank Zurich AG (Finter), located in Zurich, Switzerland, reached a resolution under the department’s Swiss Bank Program.

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

Under the program, banks are required to:

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

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

• Cooperate in treaty requests for account information;

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

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

• Pay appropriate penalties.

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

According to the terms of the non-prosecution agreement signed today, Finter agrees to cooperate in any related criminal or civil proceedings, demonstrate its implementation of controls to stop misconduct involving undeclared U.S. accounts and pay a $5.414 million penalty in return for the department’s agreement not to prosecute Finter for tax-related criminal offenses.

Finter was founded in 1958 in Chiasso, Switzerland, and has a branch office in Lugano, Switzerland.  Since Aug. 1, 2008, Finter has maintained 283 U.S.-related accounts with an aggregate maximum balance of approximately $235 million. 

Since its establishment and continuing through at least October 2011, Finter, through its managers, employees and others, 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 from the Internal Revenue Service (IRS).  After August 2008, when Swiss bank UBS AG publicly announced that it was the target of a criminal investigation by U.S. tax authorities, Finter accepted accounts from U.S. persons exiting other Swiss banks. 

Finter provided services that allowed U.S. clients to eliminate the paper trail associated with the undeclared assets and income, including “hold mail” services and numbered and coded accounts.  In addition, Finter assisted clients in using sham entities as nominee beneficial owners of undeclared accounts, solicited Forms W-8BEN that falsely stated under penalties of perjury that the sham entities beneficially owned the assets in the undeclared accounts, and provided cash cards and credits cards linked to the undeclared accounts. 

In resolving its criminal liabilities under the program, Finter encouraged U.S. accountholders to come into tax compliance and participate in the IRS Offshore Voluntary Disclosure Program.  While Finter’s U.S. accountholders 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 Finter’s non-prosecution agreement, its noncompliant U.S. accountholders must now pay that 50 percent penalty to the IRS if they wish to enter the IRS Offshore Voluntary Disclosure Program.

Acting Assistant Attorney General Caroline D. Ciraolo of the Tax Division thanked the IRS and in particular, IRS-Criminal Investigation and IRS’s Large Business and International Division for their substantial assistance, as well as Senior Litigation Counsel John E.  Sullivan and Trial Attorney Mark Kotila of the Tax Division, who served as counsel on this matter, 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.

A federal court has barred a New Iberia, Louisiana, woman and her business from preparing federal tax returns for others, the Justice Department announced today.

The civil injunction order, to which Joyce Bougere-Keyes consented, was entered by U.S. Magistrate Judge Patrick Hanna of the Western District of Louisiana.  The government’s complaint alleged that Bougere-Keyes, and her business, Joyce Tax & Financial Service LLC, prepared federal income tax returns for customers that reported fabricated and/or inflated business income and expenses on Schedules C (Profit or Loss from Business) to fraudulently maximize the amount of the earned income tax credit for her customers.  As described in the complaint, many of the defendant’s customers reported that they were unaware their returns contained business income or expenses, or confirmed that the returns otherwise misrepresented these items.  The Internal Revenue Service (IRS) audited 71 federal income tax returns filed by the defendant’s customers for tax year 2010, which resulted in the disallowance of $210,571 in improperly claimed earned income tax credits on those returns alone, according to the suit.

The complaint further alleged that Bougere-Keyes improperly claimed education credits for taxpayers who were not entitled to them. 

Bougere-Keyes has prepared more than 7,500 individual income tax returns since 2009, according to the suit.  Based on the number of years the defendant has been preparing tax returns and the types of fraudulent conduct alleged, the loss to the U.S. Treasury caused by the defendant’s conduct is likely more than $1 million, according to the complaint.

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

Ning Qiu, 43, of Frisco, Texas, an appraiser of Asian art, was sentenced today by U.S. District Judge Thad Heartfield, in Beaumont, Texas, to 25 months in prison to be followed by three years of supervised release for conspiring to smuggle rhinoceros horns and objects made from rhino horn and elephant ivory, worth nearly $1 million, from the United States to China.  Qiu was also directed to pay a $150,000 fine, which was directed to the Lacey Act Reward Fund.

The sentence was announced by Assistant Attorney General John C. Cruden for the Department of Justice’s Environment and Natural Resources Division, U.S. Attorney John M. Bales for the Eastern District of Texas and Director Dan Ashe for the U.S. Fish and Wildlife Service (USFWS). 

Qiu had worked for seven years as an Asian antique appraiser for an auction house in Dallas, Texas.  Qiu previously pleaded guilty before U.S. Magistrate Judge Don D. Bush to an information charging him with conspiracy to smuggle and violate the Lacey Act.  Qiu was identified as part of “Operation Crash” – a nationwide effort led by the USFWS and the Department of Justice to investigate and prosecute those involved in the black market trade of rhinoceros horns and other protected species.

In papers filed in federal court, Qiu admitted to acting as one of three antique dealers in the United States who Zhifei Li, the admitted “boss” of the conspiracy, paid to help obtain wildlife items and smuggle them to Li via Hong Kong.  Li was sentenced to serve 70 months in prison on May 27, 2014, in federal district court in Newark, New Jersey, for playing a leadership and organizational role in the smuggling conspiracy by arranging for financing to pay for the wildlife, purchasing and negotiating the price, directing how to smuggle the items out of the United States and obtaining the assistance of additional collaborators in Hong Kong to receive the smuggled goods and then smuggle them to mainland China.  

“Qiu was a key player in a web of wildlife traffickers who used his role as an antique dealer to illicitly smuggle wildlife items, including rhino horn and elephant ivory, from the United States to China,” said Assistant Attorney General Cruden.  “We will continue to investigate and prosecute those who are involved in this dark trade, which fuels poaching and is driving some of the world’s most iconic species to the brink of extinction.”

“Ning Qiu’s unseemly business of trafficking in the horns of endangered rhinos is over and now he will serve a just sentence of imprisonment,” said U.S. Attorney Bales.  “I only hope that others still involved in what is a nasty, brutally cruel exercise will observe the outcome of “Operation Crash” and immediately cease and desist their detestable practices.  I commend the excellent work by the agents and prosecutors.”

“The sentencing today of Ning Qiu is yet another successful prosecution resulting from Operation Crash and a further step in the global fight against wildlife trafficking and its dire consequences for rhinos, elephants and other wildlife,” said Director Ashe for USFWS.  “This case is a stark reminder of the role businesses and criminals based in the United States play in driving the current illegal slaughter of wildlife.  It also illustrates the consequences these criminals will inevitably face for their greed and indifference to its horrific result.”

Rhinoceros are a herbivore species of prehistoric origin and one of the largest remaining mega-fauna on earth.  They have no known predators other than humans.  All species of rhinoceros are protected under United States and international law.  Since 1976, trade in rhinoceros horn has been regulated under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), a treaty signed by over 175 countries around the world to protect fish, wildlife and plants that are or may become imperiled due to the demands of international markets.

Qiu admitted to meeting Li in 2009 through his work at the auction house in Dallas, Texas, and entering into a conspiracy with Li whereby Qiu traveled throughout the United States to purchase raw and carved rhinoceros horns and elephant ivory for Li, often receiving specific instructions from Li on which items to buy and how much to pay.  Upon purchasing the items, Li transferred funds directly into Qiu’s bank accounts in the United States and China.  After acquiring the items for Li, Qiu arranged for them to be smuggled to a location in Hong Kong, which was provided by Li.  In December 2013, another one of Li’s suppliers, Qiang Wang aka Jeffrey Wang was sentenced in the Southern District of New York to 37 months in prison.

As part of his plea, Li admitted that he sold raw rhinoceros horns worth approximately $3 million, approximately $17,500 per pound, to factories in China where raw rhinoceros horns are carved into fake antiques known as Zuo Jiu, which means “to make it as old” in Mandarin.  In China, there is a centuries-old tradition of drinking from an intricately carved “libation cup” made from a rhinoceros horn.  Owning or drinking from such a cup is believed by some to bring good health and true antiques are highly prized by collectors.  The escalating value of such items has resulted in an increased demand for rhinoceros horn that has helped fuel a thriving black market, including recently carved fake antiques.  The leftover pieces from the carving process were sold for alleged “medicinal” purposes even though rhino horn is made of compressed keratin, the same material in human hair and nails and has no proven medical efficacy.

Between 2009 and 2013, Qiu purchased and smuggled to Hong Kong at least five raw rhinoceros horns weighing at least 20 pounds.  Qiu smuggled the raw rhino horns by first wrapping them in duct tape, hiding them in porcelain vases and falsely describing them on customs and shipping documents, including by labeling them as porcelain vases or handicrafts. Qiu purchased several of the horns he smuggled to China from Elite Decorative Arts, an auction house located in Boynton Beach, Florida.  Elite Decorative Arts has entered a guilty plea in District Court in West Palm Beach, Florida, for its role in illegally trafficking and smuggling wildlife, including rhinoceros horns, elephant ivory and items made from coral.  Elite is scheduled to be sentenced on May 20, 2015.

The investigation is continuing and is being handled by the USFWS’s Office of Law Enforcement, the U.S. Attorney’s Office for the Eastern District of Texas and the Department of Justice’s Environmental Crimes Section.  The government is represented by Assistant U.S. Attorney James Noble and Trial Attorney Gary N. Donner of the Environmental Crimes Section of the Environment and Natural Resources Division.

The Justice Department announced that South Bend, Indiana, Police Department Officer Theodore Robert, 40, has been charged with a criminal civil rights violation for allegedly assaulting and injuring an arrestee at the St. Joseph County Jail.  The incident at the jail occurred on May 30, 2010.

According to the indictment, South Bend Police Officer Theodore Robert, while acting under the color of law, willfully deprived G.H., an arrestee, of the right to be free from unreasonable searches and seizures.  This includes the right to be free from the use of unreasonable force by a person acting under color of law.  Specifically, Officer Robert assaulted G.H., resulting in bodily injury to G.H.

An indictment is merely an allegation, and the defendant is presumed innocent until proven guilty.

The Department of Justice Civil Rights Division enforces a federal provision regarding deprivation of rights under color of law.  This provision makes it a crime for a person acting as a law enforcement officer to willfully deprive a person of a right or privilege protected by the Constitution or laws of the United States.

The investigation by the South Bend Resident Agency of the FBI is ongoing.  The case is being prosecuted by Trial Attorneys Stephen Curran and Sanjay Patel of the Civil Rights Division, with the assistance of the U.S. Attorney’s Office for the Northern District of Indiana.

A jury in New Orleans convicted four employees of medical service clinics yesterday for their roles in a $50 million Medicare fraud scheme.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Kenneth A. Polite of the Eastern District of Louisiana, Special Agent in Charge Michael J. Anderson of the FBI’s New Orleans Field Office, Special Agent in Charge Mike Fields of the Department of Health and Human Services’ Office of the Inspector General (HHS-OIG) Dallas Regional Office and Louisiana Attorney General James D. “Buddy” Caldwell made the announcement.

Barbara Smith, M.D., 66, of Metairie, Louisiana; Roy Berkowitz, M.D., 69, of Slidell, Louisiana; Beverly Breaux, 67, of New Orleans; and Joe Ann Murthil, 57, of New Orleans, were convicted on all counts after a five-day jury trial before Chief U.S. District Court Judge Sarah S. Vance of the Eastern District of Louisiana.

Evidence introduced at trial showed that the defendants and others carried out a home health care fraud scheme in and around New Orleans through multiple companies over the course of more than 10 years.  Smith and Berkowitz falsely claimed that thousands of Medicare recipients were homebound and required nursing or therapy services to be provided in their homes.  Breaux was a registered nurse who falsely certified that these patients were homebound, and falsely claimed to have treated patients that she had not seen.  Murthil was an office manager and biller at one home health company who assisted with the payment of illegal kickbacks to patient recruiters.  Murthil also submitted false claims to Medicare stating that patients were homebound when some of these patients had jobs, had not received services or did not want services.  From 2007 through 2014, the companies in this scheme submitted more than $56 million in claims to Medicare, the vast majority of which were fraudulent.  Medicare paid approximately $50.7 million on these claims.

Sentencing for the defendants is scheduled for Aug. 26, 2015.  In total, 13 defendants have been charged for their roles in this scheme.  Nine other defendants previously pleaded guilty.

This case was investigated by the FBI, HHS-OIG and the Louisiana Attorney General’s Medicaid Fraud Control Unit, and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office of the Eastern District of Louisiana.  This case was prosecuted by Trial Attorneys William Kanellis and Antonio Pozos and Assistant Chief Ben Curtis 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 nearly 2,100 defendants who have collectively billed the Medicare program for more than $6.5 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 (HEAT), go to: www.stopmedicarefraud.gov.

PharMerica Corporation has agreed to pay the United States $31.5 million to resolve a lawsuit alleging that they violated the Controlled Substances Act by dispensing Schedule II controlled drugs without a valid prescription and violated the False Claims Act by submitting false claims to Medicare for these improperly dispensed drugs, the Justice Department announced today. 

“Pharmacies put patients at risk when they dispense Schedule II narcotics, which have the highest potential for abuse of any prescription drug, without a valid prescription from a physician,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Department of Justice’s Civil Division.  “Today’s settlement demonstrates our commitment to the fight against the misuse of controlled substances.”

PharMerica is a long-term care pharmacy that dispenses medications to residents of long-term care facilities, including nursing homes and skilled nursing facilities.  Many of the prescriptions filled by PharMerica are for controlled substances listed in Schedule II under the Controlled Substances Act.  Schedule II drugs, such as oxycodone and fentanyl, can cause significant harm if used improperly and have a high potential for abuse.

The government’s suit alleged that PharMerica pharmacies operating across the country routinely dispensed Schedule II controlled drugs in non-emergency situations without first obtaining a written prescription from a treating physician.  According to the complaint, PharMerica’s actions violated the Controlled Substances Act by enabling nursing home staff to order narcotics, and pharmacists to dispense them, without confirming that a physician had made a medical judgment as to whether the narcotics were necessary and should be administered to the resident.  Under the settlement, PharMerica has agreed to pay $8 million to resolve these allegations. 

The government’s complaint also alleged that PharMerica violated the False Claims Act by knowingly causing the submission of false claims to Medicare Part D for improperly dispensed Schedule II drugs.  The False Claims Act imposes treble damages and penalties for the knowing submission of false claims for federal funds.  PharMerica has agreed to pay $23.5 million to resolve its alleged False Claims Act violations.

“Today’s significant settlement represents a single but critical significant step toward promoting integrity in the administration of public health programs,” said U.S. Attorney James L. Santelle of the Eastern District of Wisconsin.  “This civil litigation and its meaningful resolution demonstrates that our fight against health care fraud is helping to protect all Americans, including the elderly, people with disabilities and other who may be vulnerable to mistreatment and abuse.”

The False Claims Act claims resolved by today’s settlement were originally brought by Jennifer Denk, a pharmacist formerly employed by PharMerica, under the whistleblower provisions of the act, which authorize private parties to sue on behalf of the United States and to receive a portion of any recovery.  The act permits the United States to intervene and take over the lawsuit, as it did in this case with respect to some of Ms. Denk’s allegations.  Ms. Denk will receive $4.3 million as her share of the settlement.

“DEA registrants are responsible to handle controlled substances in compliance with the Controlled Substances Act,” said Special Agent in Charge Dennis Wichern of the Drug Enforcement Administration (DEA) Chicago Field Division.  “Failure to do so increases the potential for diversion and jeopardizes the public health and safety”.

“The DEA is committed to investigating organizations that are not in compliance with the Controlled Substances Act,” said Special Agent in Charge Michael J. Ferguson of the DEA New England Field Division.  “Our obligation is to ensure public safety and public health and we are committed to working with our law enforcement and regulatory partners nationwide to ensure that these rules and regulations are followed.”

“The legal requirement that narcotics like oxycodone be prescribed by a physician is a crucial patient protection, which is especially important to safeguard the health of the vulnerable elderly and disabled patients in long term care facilities,” said Special Agent in Charge Lamont Pugh of the U.S. Department of Health and Human Services-Office of Inspector General (HHS-OIG).  “Our agency is dedicated to protecting the taxpayer-funded Medicare and Medicaid programs as well as the millions of beneficiaries who rely on those programs for their health and well-being.”

As part of the settlement announced today, the settling defendant has also agreed to enter into a corporate integrity agreement with the HHS-OIG, which obligates PharMerica to undertake substantial internal compliance reforms and to submit federal health care program claims for an independent review for the next five years. 

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $24 billion through False Claims Act cases, with more than $15.3 billion of that amount recovered in cases involving fraud against federal health care programs.

The settlement with PharMerica was the result of a coordinated effort among the Civil Division, the U.S. Attorney’s Office of the Eastern District of Wisconsin, the U.S. Attorney’s Office of the District of Rhode Island, HHS-OIG and the DEA. 

The lawsuit is captioned U.S. ex rel. Denk v. PharMerica Corp., No. 09-cv-720 (E.D. Wis.).  The claims resolved by the settlement are allegations only; there has been no determination of liability.

A federal judge today ordered a Colorado company to stop selling hazardous high-powered magnets that had been the subject of a product recall by their manufacturer as part of an agreement with the Consumer Product Safety Commission (CPSC), the Justice Department announced.  U.S. District Court Judge Christine M. Arguello of the District of Colorado found that Zen Magnets LLC and its owner, Shihan Qu, were violating the Consumer Product Safety Act by selling magnets that were purchased from a New Jersey company shortly before the magnets were recalled.

Last week, the department filed a complaint seeking injunctive relief and civil penalties against Zen Magnets and Qu. 

The complaint alleged that Zen Magnets purchased 917,000 tiny, high-powered magnets from a New Jersey firm one week before that firm signed an agreement with the CPSC to recall the magnets.  Once the magnets were recalled, their sale by any party was prohibited.  Nonetheless, despite repeated warnings by the CPSC, Qu’s Denver-based company continued to sell the magnets.

The magnets are sold in sets and generally marketed as desk toys.  When swallowed by children or teens, the magnets clamp together and can cause serious internal injuries. 

“The Department of Justice will continue to work with the Consumer Product Safety Commission to enforce our consumer protection laws and protect consumers from dangerous products,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “Efforts to evade the law and sell products that have already been recalled will not be tolerated.” 

In issuing the preliminary injunction, Judge Arguello found a substantial likelihood that the defendants had violated the Consumer Product Safety Act and a cognizable danger of recurring violations in the future.  The ruling said that Zen Magnets “has essentially turned its pledge to continue to defy the CPSC into a marketing campaign” and has “openly vowed” not to stop selling the recalled magnets absent an injunction.  Thursday’s ruling followed a three-hour evidentiary hearing on Monday in Denver.

“Zen Magnets insisted on selling a dangerous product to the public, even after repeatedly being warned to stop by the Consumer Product Safety Commission,” said U.S. Attorney John Walsh of the District of Colorado.  “The magnets in this case can cause serious harm to people – particularly to children – if swallowed, by causing rips in the digestive system leading to grave infection.   Given the company’s refusal to stop selling the product, this office, working with the Consumer Product Safety Commission, did not hesitate to seek a court order to protect the public.   Today’s order is a victory for public safety, and for the safety of young children.”

Zen Magnets is separately challenging a rule issued by the CPSC that went into effect April 1, but was temporarily stayed until April 20.  The rule requires magnets or magnet sets to be large enough so that they cannot be swallowed or weak enough so they are unlikely to clamp together if ingested.

In issuing that rule, the CPSC noted the risk of injury that the rule addresses.  When a person ingests more than one magnet from a magnet set, there is potential for damage to intestinal tissue.  The magnets are attracted to each other in the digestive system, damaging the tissue that becomes trapped between the magnets.  In several incidents, surgery was required to remove magnets that children had swallowed.

The rule, which Zen Magnets is challenging before the 10th Circuit Court of Appeals, applies only prospectively.  The preliminary injunction issued by Judge Arguello applies to the 917,000 tiny magnets that Zen Magnets acquired in July 2014, shortly before the manufacturer agreed to recall the magnets, and all other magnets that were commingled with the recalled magnets.

The case is being handled by Trial Attorney Patrick Jasperse of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Jamie Mendelson of the District of Colorado.

Defendant Allegedly Lied About Pledging Allegiance to Self-Proclaimed Leader of ISIL

A Mesquite, Texas, man was arrested earlier today by the FBI on a criminal complaint charging him with making a false statement to the FBI, announced Assistant Attorney General for National Security John P. Carlin, Acting U.S. Attorney John Parker of the Northern District of Texas and Special Agent in Charge Thomas M. Class Sr. of the FBI’s Dallas Field Office.

Bilal Abood, 37, an Iraqi-born naturalized U.S. citizen who migrated to the United States in 2009, made his initial appearance in federal court the Northern District of Texas this afternoon.  Abood will remain in custody pending a probable cause and detention hearing set for May 15, 2015.

According to the complaint, on March 29, 2013, Abood attempted to depart the United States from Dallas Fort Worth International Airport, but was not allowed to board the flight.  While at the airport, FBI agents asked Abood about his planned travel, and he initially advised agents that he was merely planning to travel to Iraq to visit family.  During a subsequent interview, agents asked Abood again about his attempted travel – specifically asking if he intended to go to Syria to fight, and Abood stated that was not his intent.  Later in that interview, however, Abood admitted that his intent on March 29, 2013, was to go to Syria to fight against the Assad regime, claiming he wanted to fight with the Free Syrian Army (FSA).

On approximately April 29, 2013, Abood left the United States through Mexico and traveled through various countries in order to get to Turkey.  Upon Abood’s return to the United States on Sept. 16, 2013, the FBI interviewed him again.  In that interview, Abood admitted traveling to Syria through Turkey, and claimed that he went there to fight with the FSA and that he had stayed in an FSA camp.  Abood stated that he became frustrated with a lack of action and wanted to return to the United States.  He denied ever providing financial support to al-Nusrah Front (ANF), the Islamic State of Iraq and the Levant (ISIL) or any other terrorist organization.

A review of Abood’s computer on July 9, 2014, pursuant to a federal search warrant, revealed Abood pledged an oath to Abu Bakr al-Baghdadi, the leader of ISIL, on June 19, 2014.  The search warrant also revealed that Abood had been on the internet viewing ISIL atrocities such as beheadings, and had used his twitter account to tweet and retweet information on al-Baghdadi.

On April 14, 2015, FBI agents went to Abood’s residence to return his computer that was seized in the 2014 search warrant.  Abood admitted that he knew it was a crime to lie to an FBI agent, and Abood denied to the agents that he had ever pledged allegiance to al-Baghdadi.

The maximum statutory penalty for the offense charged in the complaint is eight years in federal prison and a $250,000 fine.

A complaint is merely a formal charging document and is not evidence of guilt.  Every defendant is presumed innocent until and unless proven guilty. 

The matter is being investigated by FBI’s Dallas Division.  The prosecution is being handled by the U.S. Attorney’s Office of the Northern District of Texas, with assistance from the National Security Division’s Counterterrorism Section.

Bilal Abood Complaint

The former Executive Director of the Virgin Islands Legislature was sentenced to five years in prison today, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Ronald W. Sharpe of the District of the Virgin Islands.

Louis “Lolo” Willis, 57, a resident of St. Thomas, was sentenced by U.S. District Court Judge Curtis V. Gomez of the District of the Virgin Islands.  On Nov. 19, 2014, a jury in the Virgin Islands convicted Willis of four counts of federal programs bribery and extortion under color of official right.

According to evidence presented at trial, Willis was the executive director of the Legislature between 2009 and 2012.  His responsibilities included oversight of the major renovation of the Legislature building and awarding and entering into government contracts in connection with the project.  Willis was also responsible for authorizing payments to the contractors for their work.  Evidence presented at trial demonstrated that Willis accepted bribes, including $13,000 in cash and checks, from contractors in exchange for using his official position to secure more than $350,000 in work for the contractors and to ensure they received payment upon completion.

This case was investigated by the FBI’s San Juan Field Office’s St. Thomas Resident Agency, the Internal Revenue Service-Criminal Investigation and the Office of the Virgin Islands Inspector General.  The case is being prosecuted by Trial Attorney Justin Weitz of the Criminal Division’s Public Integrity Section, Trial Attorney Traccee Plowell of the Criminal Division’s Office of Enforcement Operations, Trial Attorney Jennifer Blackwell of the Environment and Natural Resources Division’s Environmental Crimes Section and Assistant U.S. Attorney Delia Smith of the District of the Virgin Islands.

A Detroit federal grand jury returned a one-count indictment against the former Executive Managing Director of a Japanese automotive parts manufacturer for his participation in a conspiracy to fix prices and rig bids of automotive parts, the Department of Justice announced today.

The indictment, filed today in the U.S. District Court of the Eastern District of Michigan, charges Michitaka Sakuma, a former director and member of the board of directors of T.RAD Co. Ltd., with conspiring to fix the prices of radiators sold to Honda Motor Co. Ltd., Toyota Motor Corp., and certain of their subsidiaries in the United States and elsewhere.

“Today’s charge demonstrates that the Antitrust Division will continue to hold senior executives accountable for directing and authorizing subordinate employees to engage in criminal conduct,” said Deputy Assistant Attorney General Brent Snyder of the Antitrust Division’s Criminal Enforcement Program.  “Senior executives should expect that they will be pursued and prosecuted when they knowingly permit and direct collusive conduct to occur under their management.”

Sakuma participated in the conspiracy first as a general manager in charge of Toyota sales and then as the executive managing director in charge of all sales at T.RAD.  Sakuma was also a member of the board of directors at T.RAD.

The indictment alleges, among other things, that beginning at least as early as October 2003 and continuing until at least February 2010, Sakuma and his co-conspirators participated in meetings with co-conspirators and reached collusive agreements to rig bids, allocate supply and fix the price of radiators sold to Honda and Toyota. 

T.RAD is a corporation organized and existing under the laws of Japan with its principal place of business in Tokyo, Japan.  On Nov. 12, 2013, T.RAD pleaded guilty and agreed to pay a $13.75 million criminal fine for its role in the conspiracy.  On Dec. 9, 2014, Kosei Tamura, the general manager in charge of Honda sales at T.RAD, pleaded guilty of participating in the same conspiracy and was sentenced to serve one year and one day in a U.S. prison.

Including Sakuma, 53 individuals have been charged in the government’s ongoing investigation into market allocation, price fixing and bid rigging in the automotive parts industry.  Additionally, 35 companies have pleaded guilty or agreed to plead guilty and have agreed to pay a total of more than $2.5 billion in criminal fines.

Sakuma is charged with price fixing and bid rigging in violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million criminal fine for individuals.  The maximum fine for an individual 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 indictment is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by the Antitrust Division’s criminal enforcement sections and the FBI.  Today’s charge was brought by the Antitrust Division’s Washington Criminal I Section and the FBI’s Detroit Field Office, with the assistance of the FBI headquarters’ International Corruption Unit.  Anyone with information on price fixing, bid rigging and other anticompetitive conduct related to other products in the automotive parts industry should contact the Antitrust Division’s Citizen Complaint Center at 888-647-3258, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Detroit Field Office at 313-965-2323

Enviro-Safe Refrigerants Inc. of Pekin, Illinois, has agreed to pay a $300,000 civil penalty and cease marketing and sale of unapproved flammable hydrocarbon refrigerants as substitutes for ozone depleting substances (ODS).  ODS are being phased out of production and importation because they deplete the Earth’s stratospheric ozone layer.  As part of the United States’ transition away from ODS, the Environmental Protection Agency’s (EPA) Significant New Alternatives Policy (SNAP) Program evaluates and approves substitute refrigerants so that they can safely and legally replace ODS.  EPA evaluates these potential substitute refrigerants according to health, safety and environmental criteria.  The Clean Air Act addresses ODS and establishes standards and requirements where a substitute for an ODS is sought to be introduced to the marketplace.

According to the two-count complaint, filed simultaneously with the settlement today in the Central District of Illinois, Enviro-Safe allegedly violated Clean Air Act requirements through the marketing and sale of two flammable hydrocarbon refrigerant products, ES 22a and ES 502a, as substitutes for ODS without providing the requisite information to EPA for review and approval.  EPA has not approved any flammable hydrocarbon as a replacement for ODS in systems not specifically designed for flammable refrigerants and has warned that use of flammable refrigerants in those systems presents a risk of fire or explosion.

“With this settlement, Enviro-Safe will pay a penalty, stop its nationwide sales of unapproved flammable refrigerants and ozone depleting substances, and notify consumers of potential safety hazards from these products,” said Assistant Attorney General John C. Cruden of the Department of Justice’s Environment and Natural Resources Division.  “This civil action illustrates how the requirements of the Clean Air Act guard consumer safety and the health of our environment each and every day.”

“The actions Enviro-Safe will be required to take under this consent decree will protect consumers and the environment from a potentially dangerous product,” said Regional Administrator Susan Hedman of EPA.

In addition to paying a penalty and halting non-compliant sales, the company will also state on the label of any flammable refrigerant, its website and other marketing materials that the refrigerant is “flammable to an open flame or spark” and to “proceed with caution if used in systems designed for non-flammable refrigerants.”  Labels must also include any use restrictions for approved substitutes.  The company will notify by mail all known past customers that purchased products labeled “ES 12a,” “ES 22a” and “ES 502a” of potential safety hazards associated with such products.

The consent decree is subject to a 30-day comment period and final approval by the court. A copy of the consent decree is available on the Department of Justice website at www.usdoj.gov/enrd/Consent_Decrees.html.

WASHINGTON – El Departamento de Justicia anunció hoy que ha cerrado su revisión del Programa de Acceso Idiomático del Tribunal Superior del Condado de Mohave, Arizona.  El cierre se produce después de la conclusión exitosa por el tribunal de sus obligaciones bajo un acuerdo para brindar servicios de asistencia idiomática a todos los usuarios del tribunal con conocimientos limitados del idioma inglés [Limited English Proficient (LEP)].  La División de Derechos Civiles comenzó a trabajar con el Tribunal Superior del Condado de Mohave en 2013 después de haber recibido una queja de un usuario del tribunal en la que alegaba que el tribunal discriminaba con base en el origen nacional en violación del Título VI de la Ley de Derechos Civiles de 1964 al negarse a brindarle un intérprete sin cargo en un asunto de derecho de familia.  El Título VI exige que los destinatarios de asistencia financiera federal, tal como los tribunales, brinden servicios idiomáticos competentes sin cargo a personas LEP en todos los procesos y trámites judiciales. 

            Con la asistencia del departamento, el Tribunal Superior del Condado de Mohave ha realizado una serie de mejoras a su Programa de Acceso Idiomático, entre las que se incluyen:

• Actualización del Plan de Acceso Idiomático del Tribunal de modo que indique claramente que todas las partes LEP, los testigos, las víctimas y cualquier persona con interés en un caso recibirán servicios de intérprete en todos los procesos judiciales sin cargo, independientemente del tipo de caso, de los ingresos del usuario del tribunal o del idioma que hable.
• Creación e implementación de un sistema de quejas acerca de servicios idiomáticos.
• Mejora del acceso a servicios fuera de la sala del tribunal para todos los usuarios del tribunal a través de empleados bilingües, tarjetas “Yo hablo” disponibles en la oficina del secretario del juzgado, carteles multilingües, formularios traducidos en el portal en Internet del tribunal y servicios de intérprete telefónicos o por video disponibles para el uso de todos los empleados.
• Capacitación de todo el personal del tribunal sobre la importancia de proveer servicios idiomáticos adecuados.
• Optimización de la comunicación con partes implicadas de la comunidad.
• Trabajar con el sistema judicial estatal en mejorar la eficiencia y la calidad de los servicios de interpretación y traducción.

“Felicito al liderazgo y al personal del Tribunal Superior de Mohave por su labor para brindarles a todas las comunidades acceso igualitario a la justicia, independientemente del idioma que hablen”, señaló la Secretaria de Justicia Auxiliar Adjunta Principal Vanita Gupta de la División de Derechos Civiles.  “A medida que Mohave y otros tribunales de Arizona siguen mejorando los servicios idiomáticos, les brindaremos con gusto la asistencia que requieran”. 

El departamento viene trabajando con tribunales de todo el país en mejorar el suministro de servicios idiomáticos a personas LEP.  Se puede encontrar una serie de recursos de acceso idiomático de tribunales estatales en la siguiente dirección: http://www.lep.gov/resources/resources.html#SC.  En 2014, el departamento lanzó una “Herramienta de planificación de acceso idiomático y asistencia técnica para tribunales” que les brinda a los sistemas judiciales una serie de preguntas que considerar al desarrollar e implementar planes para brindar asistencia idiomática.

Haga clic aquí para más información sobre la FCS.  Para más recursos relacionados con las personas LEP, diríjase al portal Interagencias Federal sobre personas LEP.

Three subsidiaries of North Carolina-based Duke Energy Corporation, the largest utility in the United States, pleaded guilty today to nine criminal violations of the Clean Water Act at several of its North Carolina facilities and agreed to pay a $68 million criminal fine and spend $34 million on environmental projects and land conservation to benefit rivers and wetlands in North Carolina and Virginia.  Four of the charges are the direct result of the massive coal ash spill from the Dan River steam station into the Dan River near Eden, North Carolina, in February 2014. The remaining violations were discovered as the scope of the investigation broadened based on allegations of historical violations at the companies’ other facilities.

Under the plea agreement, both Duke Energy Carolinas and Duke Energy Progress, must certify that they have reserved sufficient assets to meet legal obligations with respect to its coal ash impoundments within North Carolina, obligations estimated to be approximately $3.4 billion.

Officials from the Justice Department’s Environment and Natural Resources Division and the three U.S. Attorney’s Offices in North Carolina, the Environmental Protection Agency’s (EPA) Office of Enforcement and Compliance Assurance, EPA’s Office of Inspector General, the Internal Revenue Service (IRS) Criminal Investigations and the North Carolina State Bureau of Investigation (SBI) made the announcement following a plea hearing at the federal courthouse in Greenville, North Carolina today.     

“The massive coal ash spill into North Carolina’s Dan River last year was a crime and it was the result of repeated failures by Duke Energy’s subsidiaries to exercise controls over coal ash facilities,” said Assistant Attorney General John C. Cruden of the Justice Department’s Environment and Natural Resources Division.  “The terms of these three plea agreements will help prevent this kind of environmental disaster from reoccurring in North Carolina and throughout the United States by requiring Duke subsidiaries to follow a rigorous and independently verifiable program to ensure they comply with the law.”

“Duke Energy's crimes reflect a breach of the public trust and a lack of stewardship for the natural resources belonging to all of the citizens of North Carolina,” said U.S. Attorney Thomas G. Walker for the Eastern District of North Carolina.  “The massive release at the Dan River coal ash basin revealed criminal misconduct throughout the state – conduct that will no longer be tolerated under the judgment imposed by the court today.”

“Duke’s subsidiaries discharged potentially toxic pollutants that put at risk North Carolina’s water quality and wildlife and today’s outcome ensures they will be held responsible for violating federal environmental requirements,” said Acting U.S. Attorney Jill W. Rose for the Western District of North Carolina.  “The defendants will now have to comply with the terms imposed by the court, including paying hefty financial penalties and making significant financial contributions toward improving the quality of impacted waterways, wetlands and our water supply system.”

“Duke’s actions adversely impacted the Dan River ecosystem and caused residents who live near and rely on the water supply much apprehension about the safety of the river,” said Criminal Chief Cliff Barrett for the U.S. Attorney’s Office in the Middle District of North Carolina.  “Today’s plea holds Duke accountable for this result and charts a course to remediate the impact of these spills.”

“Over two hundred sixteen million Americans rely on surface water as their source of drinking water,” said Assistant Administrator Cynthia Giles for EPA’s Office of Enforcement and Compliance Assurance.  “Duke Energy put that precious resource at risk in North Carolina as the result of their negligence.  Companies that cut corners and contaminate waters on which communities depend, as Duke did here, will be held accountable.”

On Feb. 20, 2015, the three U.S. Attorney’s Offices in North Carolina filed separate criminal bills of information in their respective federal courts, alleging violations of the Clean Water Act at the following Duke facilities: the Dan River steam station (Rockingham County), the Cape Fear steam electric plant (Chatham County), the Asheville steam electric generating plant (Buncombe County), the H.F. Lee steam electric plant (Wayne County) and the Riverbend steam station (Gaston County).  The alleged violations included unlawfully failing to maintain equipment at the Dan River and Cape Fear facilities and unlawfully discharging coal ash and/or coal ash wastewater from impoundments at the Dan River, Asheville, Lee and Riverbend facilities. 

As part of their plea agreements, Duke Energy Business Services LLC, Duke Energy Carolinas LLC and Duke Energy Progress Inc. will pay a $68 million criminal fine and a total $24 million community service payment to the National Fish and Wildlife Foundation for the benefit of the riparian environment and ecosystems of North Carolina and Virginia.  The companies will also provide $10 million to an authorized wetlands mitigation bank for the purchase of wetlands or riparian lands to offset the long-term environmental impacts of its coal ash basins.  In addition, they will pay restitution to the federal, state and local governments that responded to the Dan River spill and be placed on a period of supervised probation for five years.

Duke’s subsidiaries operating 18 facilities in five states, including 14 in North Carolina, will also be required to develop and implement nationwide and statewide environmental compliance programs to be monitored by an independent court appointed monitor and be regularly and independently audited.  Results of these audits will be made available to the public to ensure compliance with environmental laws and programs.  The companies’ compliance will be overseen by a court-appointed monitor who will report findings to the court and the U.S. Probation Office as well as ensuring public access to the information.

Approximately 108 million tons of coal ash are currently held in coal ash basins owned and operated by the defendants in North Carolina.  Duke Energy Corporation subsidiaries also operate facilities with coal ash basins in South Carolina, approximately 5.99 million tons of coal ash, Kentucky, approximately 1.5 million tons of coal ash, Indiana, approximately 35.6 million tons of coal ash and Ohio, approximately 5.9 million tons of coal ash.

The companies must also meet the obligations imposed under federal and state law to excavate and close coal ash impoundments at the Asheville, Dan River, Riverbend and Sutton facilities.          

Additionally, at the insistence of the United States, the holding company Duke Energy Corporation has guaranteed the payment of the monetary penalties and the performance of the nationwide and statewide environmental compliance plans.

“Duke’s environmental crimes required a special financial review of their actions to which we were proud to join our partners in investigating,” said Special Agent in Charge Thomas J. Holloman, III of the IRS Criminal Investigation.  “The considerable fines, formal apologies and massive cleanup initiatives will impact the Duke image and brand, assuring the public that corporations will be held accountable for their gross actions involving the environment, wildlife and the communities of this great state.”

“The SBI worked closely with the Environmental Protection Agency Criminal Investigation Division and the Internal Revenue Service in this matter,” said Acting Director B.W. Collier of the North Carolina SBI.  “This type of collaboration is critical to ensuring a thorough and intensive review on cases such as this.  The SBI remains committed to the public interest and is prepared to continue assisting the U.S. Attorney’s office.”

The criminal investigation was conducted by the Criminal Investigation Division, Region Four and the Office of Inspector General of EPA, Criminal Investigations of the IRS and North Carolina State Bureau of Investigation with assistance from the Federal Bureau of Investigation and the Department of Defense Criminal Investigative Service.

The Justice Department announced today that it has closed its review of the Language Access Program of the Mohave County, Arizona Superior Court.  The closure follows the court’s successful completion of its obligations under an agreement to provide language assistance services to all limited English proficient (LEP) court users.  The Civil Rights Division began working with the Mohave County Superior Court in 2013 following the receipt of a complaint by a court user alleging that the court discriminated on the basis of national origin in violation of Title VI of the Civil Rights Act of 1964 by refusing to provide her an interpreter free of charge in a family law matter.  Title VI requires recipients of federal financial assistance, such as courts, to provide competent language services free of charge to LEP individuals in all court proceedings and operations. 

With the department’s assistance, the Mohave County Superior Court has made a number of improvements to its Language Access Program, including:

• Updating the Court Language Access Plan to clearly state that all LEP parties, witnesses, victims and anyone with an interest in a matter will be provided interpreter services in all court proceedings free of charge regardless of case type, court user income, or language spoken.
• Creating and implementing a language services complaint system.
• Improving access to services outside the courtroom for all court users through bilingual employees, “I Speak” cards available in the clerk’s office, multilingual signage, translated forms on the court’s website, and telephonic or video interpreter services available for all employees to use.
• Training all court staff on the importance of providing appropriate language services.
• Enhancing communication with stakeholders in the community.
• Working with the state court system to improve the efficiency and quality of interpreter services and translations.

“I commend the Mohave Superior Court leadership and staff for their efforts to provide all communities with equal access to justice regardless of the language they speak,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “As Mohave and other courts across Arizona continue to improve language services, we welcome the opportunity to provide assistance when needed.” 

The department has worked with courts across the country to improve the provision of language services to LEP individuals.  Information on an array of state court language access resources can be found here: http://www.lep.gov/resources/resources.html#SC.  In 2014, the department released a “Language Access Planning and Technical Assistance Tool for Courts” which provides court systems with a series of questions to consider as they develop and implement plans to provide language assistance.

Please click here for further information about FCS.  For additional LEP-related resources, please go to the Federal Interagency LEP website.

Attorney General Loretta E. Lynch released the following statement on the confirmation of Sally Quillian Yates as Deputy Attorney General:

“I am pleased to congratulate Sally Yates on her confirmation as Deputy Attorney General – a vital position she has already held in an acting capacity and in which I am confident she will continue to excel.  I thank the members of the United States Senate for their prompt action on her nomination.

“At every stage of her career, Sally has demonstrated her dedication to the rule of law, her devotion to the cause of justice and her commitment to all those whom the law protects and empowers.  Her leadership and her skill have earned her the respect and the trust of law enforcement professionals at every level.  And her exemplary work on a wide range of issues – from combating public corruption to prosecuting acts of terrorism – has proven that she is equal to any task. 

“During the time we served together as U.S. Attorneys and through these first few weeks of my tenure as Attorney General, Sally has been an indispensable ally, an outstanding professional, and a judicious and expert advisor.  I congratulate her once again on her confirmation, and I look forward to all that the Department of Justice will continue to achieve with the help of her exceptional leadership.”

A registered nurse who owned a medical supply company was sentenced today in Los Angeles to four years in federal prison for her role in an $8.3 million Medicare fraud scheme.

Assistant Attorney General Leslie R. Caldwell of the Criminal Division, Acting U.S. Attorney Stephanie Yonekura of the Central District of California, Special Agent in Charge Glenn R. Ferry of the U.S. Department of Health and Human Services, Office of Inspector General’s (HHS-OIG) Los Angeles Region, Assistant Director in Charge David L. Bowdich of the FBI’s Los Angeles Field Office and Special Agent in Charge Erick Martinez of the IRS-Criminal Investigation’s Los Angeles Field Office made the announcement.

Olufunke Ibiyemi Fadojutimi, 43, of Carson, California, was convicted by a jury on July 31, 2014, of conspiracy to commit health care fraud, seven counts of health care fraud and one count of money laundering.  In addition to the prison term, U.S. District Judge Christina A. Snyder of the Central District of California ordered Fadojutimi was ordered to pay restitution in the amount of $4,372,466, jointly and severally with a co-defendant.

During trial, the evidence showed that Fadojutimi, a registered nurse and the former owner of Lutemi Medical Supply, fraudulently billed Medicare for more than $8 million of durable medical equipment that was not medically necessary.  The evidence specifically showed that, between September 2003 and May 2010, Fadojutimi and others paid cash kickbacks to patient recruiters in exchange for patient referrals, and additional kickbacks to physicians for fraudulent prescriptions for medically unnecessary durable medical equipment, such as power wheelchairs.  Fadojutimi and others then used these prescriptions to support fraudulent claims to Medicare. 

As a result of this fraud scheme, Fadojutimi and others submitted approximately $8.3 million in false and fraudulent claims to Medicare, and received almost $4.3 million on those claims.    

The case was investigated by the FBI, IRS, and HHS-OIG’s Los Angeles Regional Office, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California.  The case was prosecuted by Trial Attorneys Fred Medick and Blanca Quintero 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 nearly 2,100 defendants who have collectively billed the Medicare program for more than $6.5 billion.  In addition, HHS’s Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

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

A former Oklahoma City law enforcement officer and owner of “Polygraph.com” pleaded guilty today to obstruction of justice and mail fraud for training customers to lie and conceal crimes during polygraph examinations.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting Assistant Commissioner Anthony Triplett of U.S. Customs and Border Protection’s Office of Internal Affairs and Special Agent in Charge James E. Finch of the Federal Bureau of Investigation’s (FBI) Oklahoma City Field Office made the announcement.

“Lying, deception and fraud cannot be allowed to influence the hiring of national security and law enforcement officials, particularly when it might affect the security of our borders,” said Assistant Attorney General Caldwell.  “Today’s conviction sends a message that we pursue those who attempt to corrupt law enforcement wherever and however they may try to do so.”

Douglas Williams, 69, of Norman, Oklahoma, pleaded guilty to a five-count indictment charging him with mail fraud and obstruction.  Williams was indicted on Nov. 14, 2014, in the Western District of Oklahoma.

According to admissions made in connection with his plea, Williams, the owner and operator of “Polygraph.com,” marketed his training services to people appearing for polygraph examinations before federal, state and local law enforcement agencies and federal intelligence agencies, as well as people required to take polygraph examinations under the terms of their parole or probation.

Williams further admitted that he trained an individual posing as a federal law enforcement officer to lie and conceal involvement in criminal activity from an internal agency investigation.  Williams also admitted to having trained a second individual posing as an applicant seeking federal employment to lie and conceal crimes in a pre-employment polygraph examination.  Williams, who was paid for both training sessions, admitted to having instructed the individuals to deny having received his polygraph training.

The investigation is being investigated by U.S. Custom and Border Protection’s Office of Internal Affairs and the FBI’s Oklahoma City Field Office.  The case is being prosecuted by Trial Attorneys Heidi Boutros Gesch and Brian K. Kidd of the Criminal Division’s Public Integrity Section.